Thursday, 10 August 2017

Public Sector pen pushers are rewarded, private sector wealth creators are not

The latest storm over unchecked, unaccountable EU expenses claims are but the tip of the iceberg. Private sector companies used to provide defined benefit pensions so the workers knew what their pensions on retirement would be. Gordon Brown raided and these schemes in 1997 when he took away the tax reliefs and other allowances for. It was UK politics at its worst a stealth tax intoduced for short term political reasons that our great media did not consider important.

Now 20 years on private defined benefit pension schemes are all but extinct and have been closed to new entrants for many years. Gordon's pension and those of his Civil Service advisers was of course defined benefit as are all public schemes. Many like the police and civil service are unfunded and paid out of taxation or the rates.Teachers and local authority schemes are certainly defined benefit but may have a contributory element. The scheme I was in, USS, was contributory but is now reported as having a £20 bn black  that will need filling. As a retiree I am safe but younger academics are not.

The hard fact is that it is private enterprise and firms that create wealth and the public sector that consumes wealth.

In the Bible it says thou shalt not muzzle the Ox that treads the corn but that is exactly what we are doing. Wealth creators are poorly rewarded public sector box tickers are pandered too.

Public sector salaries and their linked defined benefit schemes in local authorities, heath authorities etc have medium rank unqualified minions paid more than the PM. The argument we have to pay the market rate or they will leave is nonsense. Where will they go to? It would be good for the UK if they went into private industry but that of course entails a massive drop in salary and future pension. Turkeys don't vote for Xmas. The public sector are the market in theses box ticking non jobs so the only palace these people can go to is another public sector job, the revolving door syndrome that HMG can control if it has the political courage to do so..

Rather than hitting the poor, HMG should establish national salary scales over the whole public sector. I have no problem if that involves a small raise for T May as long as all public sector salaries are set off that.

I can only point to my own former employer, the Bank of England, with its vastly overpaid, useless, Governor Carney earning £800k pa plus free accommodation etc whilst Janet Yellen who runs the US Fed and is responsible for a banking system and economy at least ten times the size of the UK earns £200k pa!  The Yanks have got it right public service is its own reward.


Stephen Harness said...

I suppose the head of the IMF Christine Lagarde comes to mind as she supposedly has no tax liability on her salary.

Eric Edmond said...

Very true Mr Harness. It also applies to other international agencies like the UN