Merryn's Blog

How to cut the public sector pay bill

The Chief Constable of West Yorkshire believes he knows how to cut bloated public sector pay at a stroke. His ideas are good, but his plans don't go far enough.

The best article in today's newspapers comes from West Yorkshire's Chief Constable, Norman Bettison, writing in the Times. He says he is "not worth" the £213,000 a year he costs the tax payer.

I think most of us will probably agree with him: he may be excellent at his job but, regardless of his excellence, two hundred grand plus is just too much for the taxpayer to be expected to shell out for anyone. We've writtenbefore on how we got ourselves into the ridiculous position of paying tens of thousands of public employees these insane salaries, so I won't go into that here. The question now is simply how we put an end to it.

Subscribe to MoneyWeek

Become a smarter, better informed investor with MoneyWeek.

David Cameron has a sort of solution he doesn't want the top salaries in the public sector to be more than 20 times the bottom. But this won't change much it still allows salaries well over £200,000.

Bettison has another. He suggests the 'Micawber Plan'. Under this, all public sector pay and pension provision would simply be frozen, with "no exclusions or special pleading." He'd start with the top 25%, then move down in later years, hence ensuring that not only would real salaries be cut across the board, but differentials in pay would be cut too. That, he says, "should do the trick and sustain the public services".

Advertisement
Advertisement - Article continues below

I like it. But you know what? It just doesn't go far enough. Far better, surely, to say that no one in the public sector should earn more than, say, £150,000 (the level at which Labour believes people are being paid enough to pay a special rate of rich people's income tax). And then to cut all salaries below that by a set percentage. Say 15% off all salaries between £100,000 and £150,000, 10% off all from £75,000 to £100,000 and 5% from £50,000 to £75,000. That should do the trick, too. Just faster.

Advertisement

Recommended

Visit/519858/how-long-can-the-good-times-roll
Economy

How long can the good times roll?

Despite all the doom and gloom that has dominated our headlines for most of 2019, Britain and most of the rest of the developing world is currently en…
19 Dec 2019
Visit/516758/beyond-the-brexit-talk-the-british-economy-isnt-doing-too-badly
Economy

Beyond the Brexit talk, the British economy isn’t doing too badly

The political Brexit pantomime aside, Britain is in pretty good shape. With near-record employment, strong wage growth and modest inflation, there is …
17 Oct 2019
Visit/economy/uk-economy/600824/how-the-bbc-can-survive-the-end-of-the-tv-licence
UK Economy

How the BBC can survive the end of the TV licence

The TV licence that funds the BBC is looking way past its sell-by date, says Matthew Lynn. Here's how it could survive without it
16 Feb 2020
Visit/economy/uk-economy/600837/rishi-sunak-new-chancellor-spending-splurge
UK Economy

Britain has a new chancellor – get ready for a major spending splurge

The departure of Sajid Javid as chancellor and the appointment of Rishi Sunak marks a change in the style of our politics. John Stepek explains what's…
14 Feb 2020

Most Popular

Visit/investments/property/house-prices/600840/the-biggest-risk-facing-the-uk-housing-market-right-now
House prices

The biggest risk facing the UK housing market right now

For house prices to stagnate or even fall would be healthy for the property market, says John Stepek. But there is a distinct danger that isn't going …
17 Feb 2020
Visit/economy/600838/money-minute-monday-17-february-good-news-ahead-for-the-uk-economy
Economy

Money Minute Monday 17 February: good news ahead for the UK economy?

Today's Money Minute looks to a week in which we get the latest employment and inflation numbers, plus retail figures for January and a slew of eurozo…
17 Feb 2020
Visit/currencies/600842/eur-usd-euro-slide-against-us-dollar
Currencies

The euro’s slide against the US dollar looks set to continue

The euro has been in a bear market against the US dollar for two years now. And on a broader scale since 2008. A decline like that is telling us somet…
19 Feb 2020
Visit/517625/tr-european-growth-trust-why-investors-shouldnt-overlook-europe
Sponsored

Why investors shouldn’t overlook Europe

SPONSORED CONTENT - Ollie Beckett, manager of the TR European Growth Trust, tackles investor questions around Europe’s economic outlook and the conseq…
6 Nov 2019