John Humphrys was sounding pleased with himself on the Today Programme the other day. Nothing unusual there, you might say. He was attempting to skewer a minister because civil service managers at the UK Border Agency were being paid a bonus.

At first hearing it seemed as though they were each getting in excess of £300,000 for doing their own job. It was only on careful hearing that it became apparent that the figure was the total bonus pool and that the bonuses amounted to little more than £10,000 a piece.

The justification for the payments was that they were clearing up the chaos of immigration files left by predecessor organisations. The proper line of questioning was: why did the Government manage its affairs so poorly? But the thrust of the interview was that here were public servants pulling one over on the taxpayer.

The hypocrisy is breathtaking. Today Programme celebrities can pull in that sort of money in a few – probably very few – speaking engagements. Their celebrity status has been earned at the licence payers’ expense. Their employer, the BBC, has itself become notorious for excessive salaries to senior managers who work in an organisation largely protected from commercial risk. It also blows millions on Ross dross TV.

The tests, surely, of whether bonuses or large salaries are acceptable are: (1) is the activity being rewarded desirable and (2) are the salaries determined in a free labour market?

Apply these tests to the UK border agency and the answer is that they bonuses are probably reasonable. If we apply them, by contrast, to the salaries of Chief Executives of councils then there is an element of doubt.

The tabloid press (itself prone to pay some very large salaries) suggests that no public servant should be paid more than the Prime Minister. This is superficially attractive until you remember that the majority of a prime minister’s earnings come after he or she leaves office. Blair, despite or because of his treachery over the Iraq War, is earning millions. So the comparison is disingenuous.

Apply the tests: is it desirable to have competent people running councils? Yes: a badly run council can literally kill people. Is it a free market? Probably not free enough. Councillors who set these salaries check what their main rivals are paying. Their main rivals will then do the same when they in turn come to set salaries and so remuneration levels tend to get bidded up.

And bankers? Apply the tests again. Desirable activity? Definitely not: by all means spend all your time in a casino but don’t come and demand a subsidy from me when you lose all your chips.

Is the market free? The bankers’ bonuses are affordable all and only because of state intervention. So letting them keep even 25% of their 2009 bonuses is far too generous.


Cllr Chris White

This post originally appeared on Liberal Democrat Voice

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