Public sector fat cats – update

running_with_money_pound_bags_500_wht_15383There are now almost 400 public servants receiving pensions of at least £100,000 a year. This number has doubled since I last wrote this post 3 years ago.

The  recipients are from the NHS, military, teaching, civil service and the judiciary.

There has been a surge in the pensions of NHS chiefs and consultants with the number increasing to 241 from 97 in 2011. The sharpest increase however was in the number of top civil servants which more than quadrupled from 12 to 53 over the same period.

There has also been a doubling of the number of people receiving more than £50,000 a year .

The number of pensioners receiving more than the average pay of £27,000 has increased by a third to over 100,000.

These pensions were based on final salary schemes and their replacements are probably on career average salary schemes.

Updated September 2014

Government Ministers demanded a pay cut of 5% for Council CEOs being paid £150,000 pa or more and 10% if they were paid more than £200,00. It appears that only 7 of the 129 have done so. TheTimes yesterday (04/01/11) reported that Eric Pickles, the Communities Secretary, was furious. Yesterday his deputy ordered Councils “to stop dragging their feet” and protect front-line services after a planned 4-year 30% cut in central government grants. “It’s disappointing that so many earning six-figure salaries are not leading from the front in these tough economic times” he said.

Apparently there are 20,000 public servants being paid more than £117,000 per year which cost the taxpayer an extra 1/2 penny on basic rate tax and the earnings of Council bosses grew by 5.5% a year between 2001 and 2008, similar to the increases in Council Tax bills.

The Personal Finance Editor of the Times, commenting (4 December 2010) on the Fair Pay Review, and the recommendation that top pay should be capped at 20 times the salary of the lowest paid employee’s salary, scoffed at the idea that Councils must always pay top rates to get the right person and asked what would happen if these bosses have their pay capped. As he says they can hardly go off to manage a council in Switzerland can they?

The minister had written to CEOs last Summer urging them to take immediate steps to reduce their salaries after an outcry about public sector “fat cats”.The Times said that only two of those earning over £200,00 had agreed to have their pay cut. Many had argued that their wages were far lower than those in the private sector (well let’s see if they could get a job in the private sector in the first place!) and have opted for redundancy instead. They don’t seem to grasp the concept of being a public servant any more let alone the idea of servant leadership.

All local government staff had their pay frozen last year and are expecting the same again this year. Tens of thousands of workers have already been made redundant – many of them from low-paid jobs and who won’t enjoy the packages received by the CEOs.

Of those who did take a pay cut, one was the CEO at Essex County, Joanna Killian who took a drop of 5% even though she was on almost £290,00 and therefore should have taken a 10% cut, and Kevin Lavery, CEO at Cornwall Council, who took a £30,000 cut from his £200,000 salary ie 15%. In a council not far from here the CEO is retiring and his deputy taking over on £30,000 pa less than his former boss  – close to a 20% reduction. So there are some authorities getting the message but the rest probably wouldn’t understand the meaning of leadership anyway!

Updated 3 May 2011: Andrea Hill, Chief Executive of Suffolk County Council  and one of the higher paid CEOs on £218,000, has been criticised in the press for agreeing over 1/2 million pounds-worth of gagging orders for departing staff at a time when the Council has to make savings of £44 million. She has also refused to take a cut in salary (10% was requested by the government for those earning over £200,000) as she says she has refused two pay rises.

It is also reported that she  has been on leadership coaching sessions which cost £14,000. Despite all this she further enraged public opinion by having professional photographs taken which cost the Council £1,500. Not sure why she needed to do that other than to boost her ego and make the best of herself but you can see the results on the Council web-site and elsewhere.

It seems she has now been slapped down about her hotel and travel expenses but if you want to read her side of the story click here.

Updated 3 June 2011: Things are moving apace at Suffolk County Council. The leader, Jeremy Pembroke, has stepped down. He was leading the outsourcing and change agenda “New Strategic Direction” which would have outsourced most if not all of the Council’s services. That programme has now been put on hold.

He also appointed Chief Executive Andrea Hill on her £200k plus salary. Mrs Hill has become the focus of media attention particularly when it appeared the Council had paid for some glamour photography for her. She is now on extended leave whilst there is an inquiry into whistle blowers’ reports about her alleged bullying and complaints about her extravagant expenses claims.

Updated 5 July 2011: Andrea Hill has finally proved too much of a distraction to the Council and will be leaving after 3 months on extended leave (plenty of time to polish her CV and put those glamour shots to good use).

According to the Times (05/07/11) she will be leaving with a full year’s payout of almost £220,000 (she refused to take the government recommended 10% pay cut as she thought “she was worth it”)  which has not gone down well with hard-pressed ratepayers. The good news is that her replacement will be on a lower salary reflecting economic realities but the public sector is still rewarding failure far too often.

NB This post was originally part of: Why are we worrying about gender differentials?

Updated 25 July 2011: To add insult to injury some civil servants are receiving generous redundancy packages running into hundreds of thousands of pounds.

Particularly irksome is the news, reported in the Sunday Times (24/7/11), that Bernadette Kenny, who was head of personal taxation at HMRC  until she stepped down after denying that her staff had made mistakes when they got the tax wrong for 6 million tax-payers – received a £150k lump sum when she retired on a £50k a year pension six years early. She is now working for the CoE’s pension fund. The newspaper says she is a roman catholic so she’s probably been to confession.

Apparently these eye-watering amounts were paid under the old compensation rules and the new ones are meant to be fairer to the lower paid and capped for the higher-paid.

The TaxPayers Alliance isn’t happy and feel that some people viz Bernadette Kenny, have been rewarded for failure. How often do we see that in the public sector?

Updated 4 September 2011: It seems CEOs of quangos are doing very nicely in terms of their pensions. We are talking about people who would have been civil servants before we created quangos eg NHS Blood, H&SE, regional development agencies, and the newer Care Quality Commission.

As civil servants they would have enjoyed a non-contributory final salary pension but now have gold-plated £1 M pension pots.  Even the head of the Olympic Delivery Authority, which is not a permanent organisation and will be wound up after the event, has put £1.3M into the CEO’s pension pot with more to be added. (This latter is sheer lunacy, a generous contract would have been sufficient).

Updated 12 September 2011:  Another fat-cat quango chief in the headlines this weekend. Kevin Roberts was CEO of the quango, the Agricultural & Horticultural Development Board (AHDB), and left in April just in time to avoid the 50p tax rate, thus saving almost £30k, and cleverly spreading his pay, benefit, and bonus of over £220,000 and his similar sized redundancy package over two tax years.

He picked up the £218k redundancy cheque when he was made redundant in 2008 from the Meat and Livestock Commission because he didn’t want to relocate 50 miles from his home at the time. This despite the fact he was immediately appointed head of the super quango which replaced it and four other agricultural levy boards!

And the icing on the cake is that he moved immediately into a job as Director General of the NFU – sort of gamekeeper turned poacher – which is located just a few hundred yards from the AHDB building.

In Greece the government has decided to appease angry public opinion by docking every elected official 1 month’s salary. This sounds dramatic until you realise they get 14 months salary a year with bonuses at Easter, in the Summer and at Xmas (we won’t mention spinster pensions for unmarried daughters and Foresters getting extra pay for working outdoors…).

However this is on top of a 30% reduction in their bonuses announced in March as part of the country’s austerity measures.

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