If there’s a gravy train, where’s the station?

We are living in the age of austerity- or so we are repeatedly told. And sure enough, one of the first groups of people to come under fire are those back-scratchin’, swill-eatin’, money-wastin’ “faceless bureaucrats”. Yes, scourge of Daily Mail and Middle England (apart from Julian up the road, “yes I know he works for the Department of Something-or-Other, but his wife does a simply delightful casserole”), the public sector is under fire. At the moment, the Telegraph and Mail have taken it upon themselves to trim down the fat cats, to put a bit of slimming drug in the bowl of taxpayer-provided milk. But the question which nobody seems to be asking is, how did they get that way in the first place?

The defence which is usually put forward by aforementioned fat-cats and their trade groups is a very revealing one- take this example, of the Telegraph going after housing association bosses. The obligatory right-of-reply statement, buried halfway down the article, says that the bosses declare that these large salaries are necessary to “attract and retain chief executives of the highest calibre.”

This leads on to two points:
1) Public sector salaries are set in order to keep pace with private sector salaries. Public sector salaries reflect the trend of the last 30 years in this country, where top-level pay has risen dramatically, whereas, in real terms, average pay has stayed at roughly the same level. Income inequality, as measured by the Gini Coefficient, has risen dramatically since 1979- a trend which has been most pronounced under Thatcher, but has also continued under the Labour government.

BUT the more significant point is this:

2) The Public Sector feels the need to keep pace with the private. One of the major trends of the last 20 years has been the blurring of the line between the private and public sectors. Just look at how many of the services around us are now provided by private or semi-private companies- everything from street cleaning, to schools, and housing. One of the logical consequences of this, is that it’s often assumed that “what works in the private sector, must therefore work in the public”. Whilst in things like, say, managing your team, this might be true, this also means that, by this logic, someone who does well in the private sector must also do well in the public. And how do we measure doing well in business? Well, you make a lot of money.

You can see where this is going, can’t you?

The logic runs: management techniques that work well in one place, must work well in another. People who are good managers, are successful businessmen. Successful businessmen, are highly paid. Therefore, if we are to get good public sector managers, we have to pay them a lot!

OK, I’ve perhaps been oversimplifying a bit. But what you can see is that this process takes a lot of logical jumps. And it overlooks one MAJOR problem.

The point of the private and public sectors is different.

It’s Business 101 that the purpose of a company is to make money, and deliver profits to its shareholders. By contrast, the point of a taxpayer-funded public sector organisation is obvious- to serve the taxpayers who fund it. The purpose of a public service organisation, is public service.

And this is where the modern logic of public sector management gets it wrong.

The kind of people that should be recruited by the public sector, are people who are not as financially motivated as people who say, become city headhunters or corporate lawyers. Instead, the ethos of public service should be serving the public! In the kind of environment where the altruistic nature of a public sector job is its main selling point, then we can get away from situations where a housing boss can earn £400,000 a year, while most of his staff earn £16,000. But until we see why this situation has come about, then we cannot do anything to make long-term solutions to it.

Published in: on June 2, 2010 at 11:08 am  Leave a Comment  
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