Anti-capitalism + £500,000 public sector salary cap

12 October 2015

The first is an observation on the politics of capitalism at the Party conference season. I spoke to the Solace annual conference on Friday, and asked attendees if, like me, they had been called a “Tory scumbag” by the anti-capitalist protestors in Manchester. Very wonderfully, Jane Dudman, editor of the excellent public service leaders pages at the Guardian, put her hand up and said that she had too.

This does suggest to me that the anti-capitalist side could be more discriminating in their targets (#shouldhavegonetospecsavers perhaps).

The bigger point is that the basic debate on capitalism was back at centre stage at the Conservative conference in particular. Provoked by the protesters, and no doubt by the election of Jeremy Corbyn, many Conservatives felt that the free market approach was now in question. Speaking at the Reform open fringe held in partnership with the London Stock Exchange and the BVCA, Greg Hands MP said that arguably the anti-capitalist side had won the last General Election, by around 39 per cent of the vote to 37 per cent.

On reflection, the protesters might feel that they had misjudged the conference as much as they misjudged Jane Dudman. I did not pick up any hint of a desire for unfettered, unregulated capitalism red in tooth and claw. On the contrary, the debate on the fringe was entirely about building a capitalism that welcomes profit-making, ethical behaviour, social responsibility and economic stability at the same time. The anti-capitalist movement might not agree but the free market debate has changed since the financial crisis, in a way that they would support.

The second subject is the public sector salary cap at the level of the Prime Minister’s salary of around £140,000. Reform has argued before that the cap is a bad idea because it measures the input (salary) rather than the outcome (value for money achieved by a government employee). It’s fine to pay people more than David Cameron if they are generating value at that level. Anyone who can turn around an NHS region, for example, is going to save billions of pounds over the years. It would be in all of our interest to pay that person multiples of the Number 10 salary if that is justified. The Government has recognised this in some areas, for example allowing the Ministry of Defence to recruit people of commercial experience on close-to-market salaries for its new procurement arm.

If we are to have a cap, perhaps it could at least reflect the true level of the salary. The annual salary may be £142,500 but the true figure is much higher than that because of the sums that Prime Ministers can earn later in their career, which must be at the level of millions per year for some years at least.

Could we compromise that the public sector salary cap should be (say) £500,000 per year? And that decisions on salary should be taken on value for money.

Andrew Haldenby, Director, Reform




12 October, 2015

Yes, it is only right that a candidate for a senior Civil Service role who is imported from the Private Sector should be paid at the going market rate. But the new CEO of MoD’s procurement organisation DE&S has been appointed not only for his commercial acumen but to deliver year-on-year reductions in its operating costs (of £1300 million per annum) demanded by the Treasury. One way this can be achieved is by aggressively bearing down on overhead costs – by searching out and replacing people at every level of the hierarchy – that is, those on the payroll at Abbey Wood who are not adding any value to business operations, only costs – with a new type of post-holder, the Task Performer/Manager. The Task Performer/Manager is similar to a Player/Manager in sport in that he combines the role of a person who gets on with the all-important task of doing the work, as well as, performing the essential but, intermittent management tasks of assembling the team, leading, mentoring and coordinating with other Task Performer/Managers. The most important elements of the Task Performer/Manager’s responsibilities include: a. Setting (and revising) the Technical Requirement in consultation with the User and providing direction to Bidders. b. Designing and utilising a Marking Scheme that has previously been revealed to ITT recipients. c. Running the competition and removing Bidders progressively, one-by-one – at the start, and at the end of each Contract performance phase. d. Carrying out the policing function of monitoring and scrutinising the performance of Contractors during each Contract performance phase. e. Selecting the winning Defence Contractor and ultimately overseeing his performance during the full term of the main Contract to make sure he delivers against his promise. Incidentally, it is not the job of Task Performer/Managers to partake in detailed design decisions relating to evolving Technical Solutions, do ‘analysis’ work, make trade-off choices or tutor Contractors on how to satisfy the Requirement. A substantial amount of time spent doing this work (recorded on timesheets) is chargeable as Direct labour to the entity paying for the work to be done, i.e. the Front Line Commands, whilst the remainder is Indirect Labour. This utility function is best suited to professionally qualified, multi-disciplined, performance-orientated people imported from the Private Sector whose first and foremost instinct is to solve the problem and get the job done, notwithstanding the constraints. Additionally, this approach provides certainty that continuity of direction will be provided to Contractors during the full period of the acquisition programme, a huge improvement on the practice of simply rotating here-today-gone-tomorrow acquisition officials. A further benefit to be derived from appointing Task Performer/Managers is that the risk that the wrong person who does not possess the appropriate subject matter expertise in the relevant discipline will end up being selected is eliminated, at a stroke – an all too frequent occurrence right now, which would explain why DE&S is institutionally inept and inefficient.