Tuesday 1 June 2010

So, should any political adviser earn more than the PM?

The Coalition Government has done well in publishing a list of the highest paid public servants, ahead of Will Hutton's review of public sector pay.

Left Foot Forward was quick to spot that the list's terms of reference conveniently missed out one of the best paid of all - with Andy Coulson's reported salary as head of communications for number 10 lifting the bar significantly.

John Prescott has developed the theme in a letter to David Cameron - suggesting that reports of Coulson's salary suggest he could be paid more than £2 million from the taxpayer over a five year term. The challenge seems to be encouraging a somewhat more rapid response to being open about the details of new appointments too.

No doubt economists will be found to point out that one problem with the "earns more than the PM" benchmark is that the supply of Prime Ministers is relatively wage-inelastic.

But the Coalition must surely expect to be held to its commitment to the "new politics" - and to set an example by acting on its belief that transparency will help to restrain runaway salaries in taxpayer funded roles, and Vince Cable's call today for "more discipline" in public sector pay today.

The logical conclusion of their rhetoric would be for Dave and Nick to make a commitment that no new political appointee to the government would earn more than the Prime Minister.

Given the opportunity of public service at the heart of power, surely Andy Coulson, Steve Hilton and those (relatively few) political appointees who might be affected would be willing to serve for the same fairly generous salary as David Cameron?


Daan said...

"The logical conclusion of their rhetoric would be for Dave and Nick to make a commitment that no new political appointee to the government would earn more than the Prime Minister."

-Surely, given that you've just pointed out that "the supply of PMs is relatively wage-inelastic", it would be better to make it that no civil servant can earn more than 10 times the lowest paid worker?
I think there is a risk of forgetting in Whitehall that the median household income in the UK is less than £25,000 a year... MPs wages put them in the top 5% of earners nationally.

(Sorry if you were simply saying that that is what the coalition rhetoric would lead to, without necessarily agreeing with it... either way, Coulson's wage is excessive and hypocritical)

Sunder Katwala said...


Thanks. Yes, my point is that I think the Coalition would now find it very hard to defend political appointments at above the PM's salary, in terms of their own arguments. I rather suspect that we might get the salaries quite soon, and perhaps they will all be just miraculously below this, and/or that any amount above might be met by eg party donors or something. (But I am not 110% sure that there won't have been some late changes to achieve this).

That doesn't close down a more radical proposal such as yours.

From their point of view, they can legitimately say they are waiting for Will Hutton, etc. (Cameron has mooted 20:1 which probably affects very few people).

Daan said...


You're probably right that Coulson's pay will be docked by the time it is published (if it hasn't been already).

I think I'm going to have to admit that 10:1 was a bit arbitrary... but I've now done a bit of research and is we assume a £7.60/hour London living wage for the lowest paid workers, and that they work 1,653 hours a year (OECD figure for the average hours worked per person in employment annually in the UK as of 2008- I think it includes both full- and part-time workers, though), then that amounts to a mean of just under £12,000 a year for the lowest-paid workers.

This would mean that under 10:1 the Prime Minister would have to have a paycut, while under 20:1 only four people who had their salaries published today would have to have a paycut (which confirms your idea that 20:1 sounds tougher than it is in reality...).

The OECD figures (which are quite interesting, if you're into demographics) can be found here: http://stats.oecd.org/Index.aspx?DataSetCode=CSP2010

Zio Bastone said...

‘No doubt economists will be found to point out that one problem with the "earns more than the PM" benchmark is that the supply of Prime Ministers is relatively wage-inelastic.’

Ah, but Veblen trumps all that.

Sunder Katwala said...


thanks, but you must expand on Veblen!

I would not have thought of the Premiership is necessary a site of conspicuous leisure - holidays with the Berlusconis or Macmllan reading Jane Austen in the no 10 garden apart - but I admit to having no specialist knowledge of the subject at all.

Zio Bastone said...

Expand? You tempt me to grow earnest.

Let me start with Veblen’s socio-economics, which distinguishes between the ‘instrumental’ (useful productivity) on the one hand and, on the other, what he calls the evolving ‘ceremonial’ (the ‘symbolic pantomime’ of ‘invidious comparison’, ‘pecuniary emulation’, consumption, parasitism, waste and predation). For Veblen social institutions instantiate different worldviews. He also argues that a shift towards the ceremonial is associated with a corresponding shift away from use and into a sense of ownership.

Where I think he assists us now is in getting away from viewing price as merely a function of scarcity plus demand and in looking instead at how expenditure confers importance: on both the recipient and the expender. That was the nub of my little quip. He also gets us looking more closely at price and/or expenditure as a form of information.

At any rate, just to expand on that, what neo-liberalism, New Public Management and the shift towards cognitive capitalism over the past 30 years or so seem together to have brought about is a series of fiefdoms, a ghastly new sort of ownership (de facto) and an absolute culture of waste, in which high salaries have become the basic semiotic of success: ‘This is an important formerly public institution because we pay this guy gazillions,’ plus its counterpart, ‘I am a very important quasi, or formerly, public servant because I am paid gazillions.’

And that, I think, is a Veblen effect.

Moreover, because we do also live in a culture in which the gesture overwhelms the act, in which public policy differences arise from the need to compete rather than vice versa, village explainers on behalf of the new managerialism such as Campbell or Coulson are particularly privileged, though that is another story.

As to the ludicrous fireworks which spelt out ‘Viva Tony’ at Berlusconi’s probably abusive, interestingly funded villa Certosa on Sardinia’s costa Smeralda, that is Hirsch rather than Veblen, though of course related. Just one example of how Berlusconi has quite often tried to use entertaining other countries’ leaders as a form of rental payment on enhanced international status. Or, alternatively, one can see one of Robert Frank’s positional arms races, also related, not only in the obscenity of bankers’ bonuses (‘These guys almost bankrupted us, and yet we still need bonuses to recruit and retain the best.’) but also in RBS’s ridiculous purchase of an overpriced chunk of ABN.

Positional behaviour, in short, is part of the ‘ceremonial’ and is not well described by demand curves.

Sunder Katwala said...

Thank you. That was entertaining as well as informative.