Public sector pay – a freeze with some global warming attached.


              When the government announced its two year pay freeze I asked some questions and pointed out that different departments had different ideas about what constituted a pay freeze. Whilst some thought it meant not paying individuals more, others thought individuals could still move up within grades and receive seniority or performance related enhancements. I suggested to Cabinet Office  Ministers they might like to come up with a common definition and enforcement across the civil service.

              Today’s FT reveals that they did not, and explains how some departments are more generous than others. I am in the process of collecting information to write on the general topic of public sector pay, but now find the FT has done some of the work for me which is most revealing. The net result of the pay freeze is public sector pay is increasing at around the same slow rate as private sector pay overall.

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  1. Rebecca Hanson
    Posted August 28, 2012 at 10:24 am | Permalink

    Does the slow rise you are observing in the public sector take account of the 4.5% pay cut we are actually experiencing due to increases in pension contributions John?

    • Electro-Kevin
      Posted August 28, 2012 at 12:08 pm | Permalink

      That ‘cut’ is also happening in the private sector, Rebecca. Our contributions were increased by £60 this month.

      OK. I work in a subsidised section of the economy but others in the private sector have lost final salary pensions and must plan for the shortfall.

    • lifelogic
      Posted August 28, 2012 at 1:10 pm | Permalink

      The cut in private sector pensions is in general even higher (most are defined contribution) this due to the huge forcing down of annuity rates and the poor returns and equities and tighter pension tax laws, regulations, restrictions and fees.

      If the net result of the pay freeze is that public sector pay is increasing at around the same slow rate as private sector pay overall then the state sector will clearly remain 50% overpaid (when pensions are included) relative to the private sector who fund them. Is this reasonable and what Cameron wants? Especially when they work fewer hours, have better conditions and tack more sick leave and sick pay too?

      • Rebecca Hanson
        Posted August 28, 2012 at 1:27 pm | Permalink

        Could you give a specific example of a private sector case where substantial cuts in pensions have been accompanied by an increase in contributions equivalent to 4.5% of wages lifelogic?

        • lifelogic
          Posted August 28, 2012 at 2:42 pm | Permalink

          Most in the private sector have money purchase schemes with some or often no contribution from the employer. Annuity rates have fallen some 20%+ so the employee need to put perhaps 20% more in to have the same pension. In addition Brown’s non recovery of dividend tax hit them and new contribution limits too. So no not 4.5% but circa 25% actually from 2008 to date. Not a single example but just what has actually happened to the majority of the private sector who have any private pension.

          See the annuity rate changes over time from Hargreaves Lansdown (link to graph below). Perhaps just be gratefully you do not have to buy one – the state just give you the pension income (after extracting it from the private sector workers). State pension are about 8-10 times more valuable than the average private sector one. Many have non at all beyond the state pension provision. Some evidence to suggest the state sector live longer too, making it even more costly.

          You cannot get away from the fact that the private sector (including pensions) is nearly 50% better remunerated and for fewer work hours and more sick leave – it is very clear if you look at the numbers.

          • Bazman
            Posted August 28, 2012 at 5:50 pm | Permalink

            If that company is making billions in profit in this country maybe you could explain why the said company does not have to pay a decent pension to it’s workforce and not rely on the state to fund their workforces old age. No problem for the directors it seems. You seem to think that the private sector does not have to pay pensions as the state ones are higher.

          • lifelogic
            Posted August 28, 2012 at 7:51 pm | Permalink

            @Bazman – the company may be making very little indeed or nothing at all and just trying to survive. They are operating in competition with other companies operating where they do not have such incompetent and profligate governments to carry. If push comes to shove they will close down and set up somewhere more conducive.

          • Rebecca Hanson
            Posted August 28, 2012 at 8:22 pm | Permalink

            lifelogic 4.5% of total pay – not 4.5% of what we used to contribute to our pensions.

            It’s all very clear if you look at the numbers.

          • Bazman
            Posted August 30, 2012 at 9:10 pm | Permalink

            If they are making their profits from the British customer or government,they are going nowhere. When does any company or boss not plead poverty lifelogic? Tell us when. Really when?

        • Sebastian Weetabix
          Posted August 28, 2012 at 2:49 pm | Permalink

          Yes. I personally have been switched from a defined benefit scheme which would have given me a pension that was 50% of my salary to a defined contribution scheme where I will be lucky to get 30% (based on current actuarial projections -this can only go down due to demographics) of my final salary, and my personal contribution has increased from 4% of my salary to 10% over the last 3 years. Oh, I also suffered a pay freeze for the last 4 years and haven’t had a discretionary bonus since 2008.

          People in the private sector dream of having public sector pension arrangements. I will not pay more tax and work for longer to protect your pension and salary when mine is going down the toilet. You need to get real about this country’s economic situation and your own cosseted position in the public sector.

          • Bazman
            Posted August 28, 2012 at 6:49 pm | Permalink

            And they still laughably believe that they would be better off with private healthcare ant he fault of that private healthcare being bad would be the NHS.

          • Rebecca Hanson
            Posted August 28, 2012 at 8:32 pm | Permalink

            Sebastian that’s very similar to what’s happened in the public sector. Were you not aware of that?

          • peter geany
            Posted August 28, 2012 at 9:57 pm | Permalink

            Could not have said it better. I would add in all the quantive easing which is just inflation for another day. No we in the private sector are being screwed all round and tonight we get the LibDim leader rolling out the mansion tax again. When will they understand????????????

          • lifelogic
            Posted August 29, 2012 at 6:37 am | Permalink

            @Bazman – yes you are better in the state pension system – but only because all the private sector has to be milked almost to death in order to fund it all. If we were all in the state system who would they milk to pay for it all?

            The NHS could be hugely improved upon it is an absurd structure for the provision of healthcare.

          • lifelogic
            Posted August 29, 2012 at 7:23 am | Permalink

            @Rebecca Hanson – yes I understand 4.5% of total pay (less tax relief) but the costs of providing the pension can be perhaps be 8 times what you actually contribute. The rest is paid by tax payers, often ones with no pension at all, above the state pension. The position for many in the private sector is clearly hugely worse and they would have to pay perhaps 20 -40% of their wages into a private pension in order to match this state sector pension.

          • Rebecca Hanson
            Posted August 29, 2012 at 8:40 am | Permalink

            @lifelogic. Yes it could be. If you lived to be 190. But then that would be the case in the private sector too wouldn’t it.

            Seriously lifelogic – I’m easy to find through linkedin. Just get in touch and you’re welcome to come and work through the calculations in detail.

          • APL
            Posted August 29, 2012 at 9:04 am | Permalink

            Lifelogic: “The position for many in the private sector is clearly hugely worse and they would have to pay perhaps 20 -40% of their wages into a private pension in order to match this state sector pension.”

            More than ten years ago, I was advised by our company pension adviser that I should increase my pension contributions to 15% of gross pay, if I were to expect any reasonable pension at all. That was in addition to the 7% paid on my behalf by the company.

        • JimF
          Posted August 28, 2012 at 3:38 pm | Permalink

          That’s easy to answer
          Private sector annuity rates since 2007 down 50% – all on the back of money printing to feed the public sector wage and pension machine.
          An increase in contributions of 4.5% for private sector workers wouldn’t even touch the sides of the problem.

          • Rebecca Hanson
            Posted August 28, 2012 at 8:26 pm | Permalink

            Again Jim I think you’re confusing the 4.5%. It’s 4.5% of total pay not of pension contributions.

            So yes it would touch the sides of the problem.

        • alan jutson
          Posted August 28, 2012 at 4:08 pm | Permalink


          A Private Pension in the 1980’s with a £100,000 pension fund would have paid an annuity of approx £15,000 per year for life.

          In 2012 the same £100,000 Private Pension fund would now pay out about £5,500 per year for life.

          Thus a private pension fund over the last 25-30 years, has been reduced by about 70% in its returns to the policy holder.

          Please also bear in mind that all contributions are 100% from your own personal income, nothing extra from an employer, the only other help is from government tax relief.

          This of course is the usual money purchase scheme, where no rates of return are guaranteed at the outset as the market dictates the rate of return at the time you choose to retire.

          Please compare with something like the NHS pension scheme (the new one not the old one) which is about 6 times, yes 6 times as generous as a private money purchase scheme, (figures and comments from their own booklet).
          Where the more generous old scheme is still guaranteed for life up until the date that the new scheme was introduced.
          In other words all old entitlement is still honoured.

          Trust this helps.

          • Rebecca Hanson
            Posted August 28, 2012 at 8:26 pm | Permalink

            Indeed Alan. Public sector pay was set up so that part of it went directly to subsidising pensions to strongly encourage everyone to save for their retirement, which they did.

            While in the private sector huge tracts of people didn’t.

            So what’s the logic in changing the system for the public sector so that it’s the same as the one for the private sector?

            The logic is that it’s a way of getting a pay cut through without it looking like it’s a pay cut.

            Intelligent logic would, of course, have encouraged private sector employers to do the same.

          • Steven_L
            Posted August 28, 2012 at 11:06 pm | Permalink

            Yes, the boomers are going to be forced to lend their pension pots to HM Treasury at zero percent interest rates. All in order to prop up their beloved housing ladder ponzi scheme, provide their ‘free’ healthcare and state benefits.

            It might even work, then again maybe there’ll be a government bond crash or a sterling crisis before they kick the bucket instead.

          • alan jutson
            Posted August 29, 2012 at 6:53 am | Permalink


            Your original comment asked for an example.

            I gave you one which shows the very real and huge differences between Private and Public sector pension contributions, benefits and rates..

            If you now want to talk about other things.

            If Public sector pay was reflected in lower salaries but made up with enhanced Pension rights (as indeed it was decades ago) then you may have a point, but the fact is now that Public sector pay in many cases is higher than the Private sector, as well as having better pension rights at a lower individual cost.

            Anyone who has a public sector pension should regard themselves as fortunate. simply because they seem to have no idea how bad the Private schemes have performed.

            Mr Brown did not help matters either, with his £5 billion a year tax on Pension fund performance .

            So good luck to all those with a public sector pension, but for gods sake do not moan about it, because ALL taxpayers fund it, not just those who are in the scheme.

          • Rebecca Hanson
            Posted August 29, 2012 at 8:42 am | Permalink

            That’s right Alan. If you put the words ‘public sector’ in front pension then easy living and mansions immediately appear.

            Just like if you put the work ‘academy’ after a school perfection in behaviour and attainment suddenly appear.

          • A different Simon
            Posted August 29, 2012 at 9:51 am | Permalink

            Alan ,

            “In 2012 the same £100,000 Private Pension fund would now pay out about £5,500 per year for life.”

            If you wanted a pension which was index linked to inflation that £100,000 would buy a 65 year old a pension starting at less than £3,500 a year .

            I know you know this , just think it is important to compare like for like in a topic concerning public sector pay .

            The low annuity rates reflect the expectation that growth rates will be zero or negative over the next few decades .

            People aren’t going to lock money into a pension unless they are forced or can see it’s worth it – which it isn’t at the moment .

          • alan jutson
            Posted August 29, 2012 at 10:46 am | Permalink

            You are correct, I was simply showing the flat rate returns without inflation adjustment, if you do include inflation adjustment then your lower return value is nearer the mark.

            The Public sector pension (at least the NHS one) also offers the surviving spouse a 50% payment of the original sum for as long as they live as well, just to add to the difference.

            As for Rebecca’s comment about mansions, it of course depends upon the original salary and the number of years contributions, which is the same for any scheme.
            the more you pay in the more you get out (if the fund performs in the case of Private schemes)

            I just wish those who had such good Public sector scheme would just recognise their situation and that fact, and not bleet about being hard up, when its my taxes, which could have gone into my own pension, that have helped pay for it.
            Its sort of, complaining, moaning, and rubbing your face in it as well, that I can’t stand.

          • Bazman
            Posted August 30, 2012 at 9:17 pm | Permalink

            You seem to forget that public sector workers are also taxpayers. Do you argue that they are in some way not doing any useful work or contributing to society by this work? Is a private company with a government contract only a state subsidised company doing no useful work and should be closed as the workers are paid by the state? Maybe the massive profits of some of these so called private companies should be used to provide a decent pension in line with the public sector and not just give benefits to a few whilst externalising the cost old old age onto society?

          • lifelogic
            Posted September 2, 2012 at 1:03 pm | Permalink

            Bazman, indeed many in the state sector are not doing any useful work or contributing to society – very often they are just taxing licencing and inconveniencing the wealth producers in some way or other or producing new absurd regulations.

            Furthermore many in the private sector are not doing anything useful other than complying with absurd demands of the state. Most of the lawyer dealing with employment law for a good example or most of the green energy industry, funded by absurd government grants.

            All their wages come from taxes on the private sector or borrowing some, I agree, is retained under PAYE system but someone in the private sector has to fund them they do not just fund themselves.

        • James Sutherland
          Posted August 30, 2012 at 10:31 am | Permalink

          Rebecca, you’d have a long hard search to find a private sector employed which had a pension setup generous enough to HAVE 4.5% there to cut in the first place!

          Mine was matched up to 3%. Then the company ran out of money and cut everything very substantially, including salaries and headcount, which of course reduced the pension costs proportionally.

      • Credible
        Posted August 28, 2012 at 3:39 pm | Permalink

        The people I know who work in the public sector work hard in increasingly difficult circumstances and do it for moderate or low pay.

        • Sidney Falco
          Posted August 28, 2012 at 6:01 pm | Permalink

          Unlike those in the private sector who have cushy jobs in easy circumstances and have money lavished on them by their generous (profit motivated) private sector bosses.

          At least that is what I assumed you were implying.

          • Rebecca Hanson
            Posted August 28, 2012 at 8:27 pm | Permalink

            Credible’s comment doesn’t imply that to me Sidney.

          • Credible
            Posted August 28, 2012 at 9:29 pm | Permalink

            Not at all. There was no intention of knocking the private sector.
            Just pointing out that not everyone in the public sector is lazy and useless as previous posts imply.

    • Lindsay McDougall
      Posted August 28, 2012 at 2:50 pm | Permalink

      That 4.5% increase in pensions contributions is a quid pro quo for the very high pensions that you get.

      • Rebecca Hanson
        Posted August 28, 2012 at 8:28 pm | Permalink

        I think you’re thinking of the pensions the recently retired have Lindsay, not the pensions of those who are hit by these increases.

        • Rebecca Hanson
          Posted August 28, 2012 at 8:29 pm | Permalink

          Of course you might be thinking of MPs pensions in which case fair point. But they’re in a bubble that bears no relation to the rest of society.

          • lifelogic
            Posted August 29, 2012 at 9:49 am | Permalink

            Much of the private sector cannot save for pensions as they are hugely over taxed already much of it to pay for the state sector ones. They could not pay their rents and eat if they did so. They cannot copy the state ones as they simply do not have the money left to do so due to the over large and wasteful state sector.

          • Sebastian Weetabix
            Posted August 29, 2012 at 2:46 pm | Permalink

            @Rebecca Hanson; re “similar to what has happened in the public sector” -what utter balls. You are on a final salary scheme. You have not seen a collapse in your pension. You are quite clearly obtuse.

          • Rebecca Hanson
            Posted August 29, 2012 at 5:24 pm | Permalink

            I can’t afford to pay into a pension at the minute Sebastian. I can’t afford to do anything really apart from try to stay afloat, I don’t have make-up or new clothes or contact lenses or anything like that. But I can afford for my kids to be in some clubs and I’m grateful for that.

            My husband’s in the public sector though so you’re welcome to get in touch and go through the details of what’s changed. He knows because he can compare how it was earlier in his career with how it is now. I think he’s on a career average pension not a final salary one but I’m not 100% sure of that so I’ll check when I get the chance.

            By the way – I chat over linkedin or whatever to lots of anonymous posters and I never give their real identities away. Not my style. However I’m sometimes tempted give away the identities of posters who are trying to be anonymous and are clearly failing if they are saying really disturbing things they shouldn’t be saying. But then again I don’t really need to as it’s so blooming obvious. For if you search for Rebecca Hanson and Ricky Tarr you’ll see that I regularly chat to a ‘mystery character’. Any guesses as to who it is?

            Reply: You may be pleased to know that MPs have had their salaries frozen for 2 years – with no increments etc – and have had a rise in their pension contributions to 11.9%.

          • Rebecca Hanson
            Posted August 29, 2012 at 9:42 pm | Permalink

            Checked. It’s career average. Thought so. That’s what most people in the public sector are now on.

            I already knew that John. So effectively MPs have had their pay cut by a few % haven’t they? I think that’s typical for the public sector except MPs have the same pension rights whereas for most public sector workers their pensions now resemble the private sector.

          • Bazman
            Posted August 30, 2012 at 9:26 pm | Permalink

            When the trains are running with empty first class carriages and still making a profit what does that tell you about the so called private sector? Some companies make billions from the government lifelogic. They can afford to pay decent pensions. Did banking at the peak ever pay a decent pension to the counter staff. This makes a state funded pension band then? Your fantasies are often bordering propaganda from a foreign regime or you are just brainwashed like the BBC lefty arty-farty types that you so despise, but in an apologist capitalist fantasy. I have a more simple answer, but it would be deleted.

          • A different Simon
            Posted August 30, 2012 at 10:57 pm | Permalink

            Rebecca ,

            You have made a lot of good points but you must be able to see that the latest is absurd ?

            Quote “whereas for most public sector workers their pensions now resemble the private sector.”

            If you really believe this then you don’t have the slightest understanding of what having to make arrangements for your old age are like for the majority of the population .

            There aren’t any pensions in the private sector , none , nada , nyet , they don’t exist . How in any way can this be compared with the public sector where you have the luxury of arguing the differences between final salary and career average ?

    • Caterpillar
      Posted August 28, 2012 at 8:17 pm | Permalink

      I think the problem in the Govt’s treatment of public sector pensions is the switch from RPI to CPI for accrued rights. A switch going froward is a different matter, people can chose to leave the public sector and work in the private sector if they feel aggrieved. The retrospective switch though is, I think, unethical, it will not only effect people who may currently be earning public sector salaries that are at least competitive with the private sector but it effects people who worked for the public sector when the salaries were not competitive – when the pension made up for the lower take home.

      My position with the Govt and public sector; (i) retrospective targeting is disgraceful and destroys any trust, (ii) future targeting allows a relatively free (though not free enough) labour market to respond.

      It would have been a very simple compromise to continue with accrued rights being index linked to RPI but any new rights switching to CPI, and (I think) court rulings that have now taken place have knock on effects to index linking more broadly than the public sector.

    • A different Simon
      Posted August 29, 2012 at 9:33 am | Permalink

      Rebecca ,

      Of all the professions where the state sector has a monopoly teachers have faired less well than most in the remuneration stakes .

      I have sympathy with public workers who are expected to make provision for their old age while a lot of others will make no effort to save what they could and will just throw themselves at the mercy of the state .

      All of us have to make do with spending less money during our working lives and putting more away for the future .

      Pensions are far too important to entrust to private sector employers (which are unlikely to be around in 5 years time , let alone 50) and the financial services industry . Furthermore companies should be about creating jobs and prosperity , not doing the states administration for free .

      Pensions are something which the state should be doing for everyone .

      5 out of 6 of the children you are teaching will never have access to a viable secondary pension .

      Children need proper independent education on financial services to protect them from John’s friends in the City of London because they own the regulator .

      As a teacher could you provide this given that you will never gain first hand experience of struggling to make provisions for your old age because the pension is all taken care of for you and other people will take all the risk of investment shortfall ?

      During staffroom conversations , how much do teachers consider the pension benefit to be typically worth as a percentage on top of wages ?

      • Rebecca Hanson
        Posted August 29, 2012 at 10:02 pm | Permalink

        A different Simon – I’m not going back to teaching in state schools so long as Ofsted remains a completely unaccountable tool for bullying and destroying schools which operates in direct contradiction to all the standards all our other regulators are obliged to uphold. I’m done being inspected 7 times a year by ignorant inspectors who impose ignorant interventions and destroy good teachers. Last time I went through an inspection I had relentless nightmares about it and I’m scared if I had to go through it again I’d walk out and let everyone down. Michael Gove has made it clear that relentlessly labelling schools as being failing and putting them through special measures is his way of improving schools (especially schools in challenging areas as no allowances are made for background these days) so I’m out and yes I’m struggling to plan for my old age. Unlike my friends who chose to do law or medicine or accountancy, all of which I could have done. But I was inspired to teach instead. I wasn’t motivated by having lots of money – like most teachers having enough to lead a decent life where you don’t let people down and you can raise your kids properly was all that I was bothered about. If you’re bothered about having any more than that you don’t go into teaching. But if salaries are suddenly cut you can’t fulfill the obligations you have and that’s a major issue for people. Lots of teachers I know are operating without savings and with nothing they can cut in their budgets. This is particularly true as as a teacher you don’t earn enough to make it worth working if you’ve got a couple of young children so families are either on one income or might as well be. Please don’t think I’m complaining about wages in teaching – I’m just trying to describe it as it is to help people think clearly about how things are so they can be realistic about what can be changed and what the consequences will be if they are changed.

        I am however complaining both about Ofsted and about Michael Gove using is as his personal weapon. Why the heck isn’t anyone doing anything to stop him? It would be so easy to do.

        • A different Simon
          Posted August 30, 2012 at 1:07 pm | Permalink

          Thanks for your reply Rebecca ,

          If you are teaching in an independent school you should still as far as I am aware be able to continue in the TPS though John Hutton proposed closing the TPS to teachers in the independent sector . Worth taking advantage of it while you can .

          Another way of looking at the extra 4.5% of gross wages is not as a pay-cut but as a price rise for providing a pension which will be more expensive than first thought .

          What are your thoughts regarding teaching youngsters about money so they are less open to exploitation and will demand better financial products ?

          I heard a teacher explain that she taught about pensions and said each generation pays the previous generations pensions . I found the way she talked about unfunded pay as you go pensions scary – she could get a job with the Treasury if the Ofsted inspections got to much for her!

          In your experience what do teachers think their pension is worth as a benefit as a percentage on top of wages , 10% , 15% , 20%,25% ?

          Take your points about childcare costs and schools from challenging areas . Seems like Gove’s ideas will solely be to the benefit of schools with proactive parents but do nothing to help those children where the parents do not appreciate the value of education so do not get involved .

          Accountancy will probably be decimated by Indian I.C.T. visas in the same way as I.T. has been particularly for junior staff and people coming out of Uni .
          Over the medium to long-term I would expect teachers to become appreciated more and fare better in the remuneration stakes than accountants , except those who work for the big 4 .

          • Rebecca Hanson
            Posted August 30, 2012 at 8:59 pm | Permalink

            “Another way of looking at the extra 4.5% of gross wages is not as a pay-cut but as a price rise for providing a pension which will be more expensive than first thought .”

            That would be an untrue way of looking at it Simon.

            It was done as a pay cut concealed as being something else.

            This was particularly obvious in the case of teachers pensions where Francis Maude went on telly to talk about the necessity of the changes due to pension funds being in crisis and so on.

            But of course it was all lies because there were no funds in crisis. The unions had approached the government to proactively request cuts and to set up systems of adjustment to ensure it was always in balance and this had been done.

            So they could have portrayed it as being what you suggested but that wouldn’t have been any more true than the story they did actually use.

            My friends who are accountants earn vastly more than my friends who are teacher A different Simon and will therefore have higher absolute pensions even if they are a lower %age of their pay.

          • A different Simon
            Posted August 31, 2012 at 10:24 am | Permalink

            Are your account friends able to get the guaranteed , no risk return of inflation + 3.5% which SCAPE offers ?

            The highest guaranteed return available to everyone else is from National Savings and Investments inflation linked products and they pay less than 0.5% above inflation .

            If you train maths teachers then you will know that the doubling time for 3.5% real growth is 20 years whilst for 0.5% it is 144 years .

            There is no way most of us can get such a high rate of real return without taking considerable risk .

            My points are that –
            – your accountant friends are very lucky that they entered accountancy when they did .
            – the remuneration for teachers is likely to increase in the long term whilst for accountants it will decrease along with job security . Accountancy can be outsourced anywhere in the World or done here by taxpayers subsidised I.C.T. visas just like I.T. is being .
            – you are comparing your lot to the tiny minority of private sector staff who have access to any sort of pension . You may as well be comparing yourself to the bankers .
            – the majority of people in the private sector have no chance of any sort of occupational pension . My brother and a 60 year old Air Canada worker are the only private sector workers out of perhaps 30 I talk with who have any sort of occupational pension .

        • A different Simon
          Posted August 30, 2012 at 1:11 pm | Permalink

          PS Rebecca ,

          Regarding regulators , do we have any good ones ?

          – FSA – worse than useless as they give the false impression that things are OK
          – Ofgem – deliberately push gas and electricity prices up to aid with ruinables .
          – Ofsted – you explained why

          • Rebecca Hanson
            Posted August 30, 2012 at 8:52 pm | Permalink

            Yes we have some good ones. And if they are not good then the organisations they regulate have some protection from being destroyed by them in that they can hold them accountable if their behaviour is not transparent or consistent and if the sanctions served against them are not proportionate to the nature of the issue identified.

            But Ofsted have and exemption from being accountable to state schools regarding these standards.

            WHY? Why should the be allowed to conceal their reasons for doing things, behave inconsistently between schools and bully schools with punitive sanctions for specific things they haven’t been able to instantly fix?

        • alan jutson
          Posted August 30, 2012 at 1:39 pm | Permalink


          “Why the heck …….”

          Perhaps many do not feel as you do about him and his policies !

          Sure some feel he is doing OK , otherwise the teachers Unions would be trying to do something about it.

          I have to say, because I am not directly involved (our kids left school more than a decade ago) I am not fully up to speed with all of the changes.
          But then perhaps that is the problem, too many changes every year, so everyone is confused, even teachers, examination boards and the government and pupils as well..

          I have to say I do feel sorry for the kids in all of this, they seem to have been promised so much, but rewarded with so little from the system.

          Oh and whilst I am on, most Private Pension schemes are not average salary as you suggest, but simple money purchase schemes, thus your final fund and Pension is never known until the date you decide to retire because it reklies upon the stock market and the performance of fund managers..

          Private Pensions have proved to be such a disaster over the past decades, few now even bother to invest in them, as returns are so poor.

          • A different Simon
            Posted August 30, 2012 at 5:43 pm | Permalink

            Right about private pensions .

            Why won’t the state offer a pension plan though invested in real assets along the lines of a sovereign wealth fund ?

            It wouldn’t take much and the returns for the nation would be far better than anything the financial services industry offers especially the NEST disaster which the coalition are determined to do .

            Perhaps that is the problem , they don’t want to do the financial services industry out of money for nothing .

          • Rebecca Hanson
            Posted August 30, 2012 at 9:01 pm | Permalink

            Because instead of paying into such funds the current works have to pay the pensions of the current retired. Who else is going to pay them?

  2. Mike Wilson
    Posted August 28, 2012 at 10:31 am | Permalink

    I’d love to know who is getting pay rises in the private sector. Where do the figures come from? No-one I know has had a pay rise for several years now. Some have had hours cut, some have lost their jobs – some have been told ‘no pay rises for the forseeable future’.

    Who on earth is doing so well and/or are struggling to find staff such that they put salaries up?

    • forthurst
      Posted August 28, 2012 at 11:30 am | Permalink

      Trainee banksters, already the best remunerated, because of all the scandals, they are having to be bribed with even more of our money to enter a life of crime. It is not clear whether this is across the board, or applicable only to non-US brands or those which haven’t paid their political party dues in order to be indemnified from prosecution.

    • Rebecca Hanson
      Posted August 28, 2012 at 11:43 am | Permalink

      If you track existing staff it could be that some have received standard increments Mike. I know a lot haven’t as they are stuck at the top of their grade and there are few promotions.

      But I suspect there have been falls in take home pay and that John has not calculated in the effect of the extra pension contributions (/pay cuts by the back door). I’d like to see the figures.

      Reply: I am relying on the official earnings figures which come out every month and show public and private sector growth in money actually paid.

      • alan jutson
        Posted August 28, 2012 at 4:22 pm | Permalink


        You are correct, those at the top of their salary scales have got nothing, and are in a pay freeze, those who had not reached the top of their grade (not ability but years of service, salary scales) still get their increases each year until they are at the top of their salary scale.

        Then of course you can have regrading, if you were at the top of a scale 5 salary and you got promoted or re-defined to a grade 6 scale, you automatically gained an increase because the lowest grade 6 pays more than the highest grade 5, you can then get another 5 years of scale increases until you are top of grade 6 scale.

        Do remember that you also gain additional holiday entitlement for additional years of service.

        Salary scales are not the norm in the Private sector, and holiday entitlement is perhaps not as generous.

        Private sector employer contributions to a pension scheme are a lot less as well, typically between 3-5% of salary.

        In the NHS it is nearer to 14% of salary paid in by the NHS (Taxpayer)

        Thus a taxpayer who has trouble funding their own pension contributions, is funding the the better public sector pensions through taxation.

      • APL
        Posted August 28, 2012 at 6:41 pm | Permalink

        Rebecca Hanson: “But I suspect there have been falls in take home pay and that John has not calculated in the effect of the extra pension contributions (/pay cuts by the back door).”

        Oh dear! ‘falls in take home pay’, well how does a 90% fall in take home pay grab you? Sorry don’t have much sympathy these days for folk in the public sector whinging about not getting a pay rise.

        Practically impossible to sack ’em, regardless of the performance, gold plated pensions that they contribute some ludicrous amount from their own salary to, but all we get is ‘whinge whinge whinge’.

        Fancy being ‘stuck at the top of their grade’, oh dear, ya gonna make me cry!

        • Bazman
          Posted August 28, 2012 at 6:53 pm | Permalink

          Yeah! Them cleaners must be raking it in.

          • APL
            Posted August 28, 2012 at 8:19 pm | Permalink

            Bazman: “Them cleaners ”

            Bazman displays his cleaner fetish again.

            Listen Baz, anyone, absolutely anyone can be a cleaner, you just need to be able to weild a broom and a mop. Even I could do the job. The wife has me on my hands and knees in the kitchen frequently.

            But the big problem is, since everyone can do it, anyone does do it, therefor the price of being a cleaner is very low.

            That is not a reflection on the individual cleaner, I happen to be quite fond of a very pretty little cleaner that works along side me, but it is a reflection on the skills a cleaner can offer to differentiate him/her self in the jobs market, the unskilled nature of the work mitigates against high wages.

            That’s just the way it is.

          • Ludwig
            Posted August 28, 2012 at 8:51 pm | Permalink

            Bazman – are you suggesting cleaners should be paid the same as skilled workers?

          • Bazman
            Posted August 30, 2012 at 5:49 pm | Permalink

            The point being that not all state workers are having large pay and benefits. The fact that anyone can do a job such as cleaning is not a reason for exploitation by forcing them to compete with each other. Should a skilled worker be paid the same as an unskilled worker is a more real question as many companies due to the high number of unemployed are offering this ie minimum wage the answer that the minimum wage is to high and should be reduced to stop this is laughable.

        • Rebecca Hanson
          Posted August 29, 2012 at 10:07 pm | Permalink

          “well how does a 90% fall in take home pay grab you?”

          It’s not much fun. But my only complaint is that it would not be necessary if Ofsted were accountable to the same standards all other regulators have to adhere to. Good secondary heads of maths are in short supply. You could always become a maths teacher APL. There’s a very high turnover of maths teachers at the minute so it’s a good time to get into the profession. If you do you might get me supervising your training. 🙂

          • A different Simon
            Posted August 30, 2012 at 5:52 pm | Permalink

            If I had the necessary maths knowledge and qualifications Teaching would appeal to me but I am no good at continuous maths though better at discrete maths .

            I would hope that someone with my lower level of knowledge would be precluded from teaching kids .

            Do schools have to pay a premium for teachers of certain subjects like maths and physics ?

            Is this accepted in the staff room ?

          • APL
            Posted August 30, 2012 at 7:29 pm | Permalink

            Rebecca Hanson: “You could always become a maths teacher APL.”

            Ho ho, Rebecca. Some things are possible, some are even probable, others are in the realms of utter fantacy.

            I am afraid your scenario falls into the last of the three.

  3. norman
    Posted August 28, 2012 at 11:06 am | Permalink

    If you think about it logically (Osborne’s logic at least – etc etc) we should be paying public servants more. Isn’t this what we want? More governement stimulus, more demand, a perpetual machine of growth.

    Where does people think this so called stimulus is going? Most of government expenditure is wages, that’s where it’s going folks. See your neighbour next door setting off to work (well, chances are you won’t as he’ll be leaving an hour later than you) it’s his pockets that should be enriched so he can go out into the high street and stimulate growth back into the economy.

    What, did you think apparatchiks sitting at desks telling us all how wonderful things are was what was going to produce the growth? Or the road works that never happen due to regulations? LOLOL. Wakey wakey. Pay rises and bonuses for the stakonvitches of the state, that’s the only route to success comrades.

    Print more George, we must stimulate harder George, stimulate harder, just a little more little Georgie, you’ll get there I promise and when I have ever lied to my little Georgie Porgie.

    Now get printing!

    • Lindsay McDougall
      Posted August 28, 2012 at 3:04 pm | Permalink

      Except – whisper it not too loudly – we are not getting a perpetual machine of growth.

      In point of fact, ultra low interest rates and QE are actually discouraging me from spending money immediately on home improvements. I want to wait until my investments are actually yielding real returns. They are not in gilts (I’m not that dumb) but the ultra-low interest rates seem to be dragging everything else down. When you are a pensioner, you have to look at things this way.

  4. Neil Craig
    Posted August 28, 2012 at 11:50 am | Permalink

    I am told by a civil sevant that it is well known that people in the “climate change” civil service jobs are consistently about 3 grades higher than those doing work of equal difficulty in other areas. This is consistent with the idea that “catastrophic warming is simply a scam to pay more taxpayer’s money to government employees and their friends.

    • lifelogic
      Posted August 28, 2012 at 1:59 pm | Permalink

      “catastrophic warming is simply a scam to pay more taxpayer’s money to government employees and their friends.” and also to the companies that pay good “consultancy” fees too perhaps.

  5. Lindsay McDougall
    Posted August 28, 2012 at 12:12 pm | Permalink

    The immediate need is to get rid of seniority related enhancements. You could also ask how someone deserves a performance related enhancement without deserving a promotion. It’s not as if they make widgets or design things, is it?

    The civil service is very good at thwarting the will of the elected government, is it not? Not just on pay but on manning levels.

    If ‘frozen’ public sector pay rises are keeping pace with private sector pay rises, presumably the 8% gap in favour of the former is being maintained.

    • Caterpillar
      Posted August 28, 2012 at 8:27 pm | Permalink

      “You could also ask how someone deserves a performance related enhancement without deserving a promotion.”

      Presumably because they are performing better but within the same role. [E.g. producing more in the same time, requiring less inputs – material, management oversight, training etc. I’d hazard a guess that at a national level productivity had a link to wealth].

  6. MajorFrustration
    Posted August 28, 2012 at 12:13 pm | Permalink

    Do you really think this lot is re-electable?

    • lifelogic
      Posted August 28, 2012 at 2:00 pm | Permalink

      No not even against Unison’s man the hapless Miliband.

  7. matthu
    Posted August 28, 2012 at 12:25 pm | Permalink

    John – were you aware of this press release?

    I would be interested to hear your own view on the possible impact of this announcement. I quote:

    “In a nutshell, the UN is saying that if the EU wants to be in compliance with the said Convention, to which it is a party, it must have its 27 Member States properly reassess their National Renewable Energy Action Plans (NREAP), and submit them to popular consultation.”

    Pat Swords concludes: “the EU’s renewable energy programme has by-passed proper assessment and democratic accountability, and the EU has been found to be in breach of the Aahrus Convention. The National Renewable Energy Action Plans of the 27 Member States must be suspended and submitted to objective assessment. The public must be informed in a transparent manner, invited to participate in the elaboration of the NREAP’s, and their input must to be taken into account in the finalised decision. The Aarhus Convention protects the people’s democratic rights; this is why it is so important to uphold it.”

    Reply: Indeed, but I do not expect the EU to become democratic on this any time soon.

    • matthu
      Posted August 28, 2012 at 2:22 pm | Permalink

      No – but neither would I now expect our own government to be quite so ready to comply with said Renewable Energy directives which have been held to be undemocratic and in breach of the Aahrus Convention … is there anything we can do here?

  8. Acorn
    Posted August 28, 2012 at 12:44 pm | Permalink

    This one might be useful:- . Did you know that in the US, the pay gap between public and private sector pay is much worse. To be middle class in the US, you have to be in a government job at public sector trade union rates.

    • lifelogic
      Posted August 28, 2012 at 2:56 pm | Permalink

      This report seems to adjust by assuming that the state sector should be better paid (as it is more ” highly skilled”) not something I had noticed in general, though they may have had more time off to collect HR, Safety and other training/professional certificates I suppose.

      As far as I can at first scan it takes no account of pensions so adjusting for these it seems to agree with my nearly 50% better paid rather well.

      • Bazman
        Posted August 30, 2012 at 9:34 pm | Permalink

        Tradesmen in the public sector a 50% better paid and less skilled with a better pension? More silly, pointless, absurd propaganda that cannot go unchecked.

    • Credible
      Posted August 28, 2012 at 3:51 pm | Permalink

      Perhaps we should make public sector workers wear a badge so we can (be nasty to them -ed)

      • lifelogic
        Posted August 28, 2012 at 7:56 pm | Permalink

        They do not need badges you can always spot them in a minute or two by the interesting “non judgemental” and odd PC “BBC think” language they use.

        • Bazman
          Posted August 30, 2012 at 9:37 pm | Permalink

          Which public sector workers use this language? Nurses, doctors, street cleaners, road workers? Does everyone in the private sector speak like Jeremy Clarkson and writers for The Sun?

  9. Christopher Ekstrom
    Posted August 28, 2012 at 2:13 pm | Permalink

    Dear Leader Cast Iron is not listening, Mr. Redwood…

  10. Atlas
    Posted August 28, 2012 at 2:17 pm | Permalink

    I think that many civil servants are in the position of being lions lead by donkeys. Sometimes the donkeys are in the Cabinet, sometimes it is their own civil service higher management who are the donkeys trying to grasp the carrots of their performance related pay. Nevertheless it all comes down to the quality of the leadership.

    Two years in charge has been long enough to assess the quality of the present political leadership. Personally I would be happier if Osborne went – or if Cameron is mouse enough no to sack him, then Cameron himself should be shown the door.

  11. Brian Tomkinson
    Posted August 28, 2012 at 3:34 pm | Permalink

    How can you continue to support such incompetence and mendacity?

    • APL
      Posted August 29, 2012 at 9:27 am | Permalink

      Brian Tomkinson: “How can you continue to support such incompetence and mendacity? ”

      Party, it’s more important than your own Country.

  12. Jon
    Posted August 28, 2012 at 6:14 pm | Permalink

    The ONS figures had shown that the public service area were receiving higher salaries on any measure compared to the private sector and they excluded the generous benefits in those.

    This is just more madness. I think it was wise for JR to suggest a common definition, pitty it was not taken up.

    I am annoyed as quite clearly we are not all in it together as in the civil service continues to be well overpaid these days compared to the private sector when the generous benefits of the civil service were meant to compensate them for being paid less when they are paid more.

    How does this happen? I remember a few years ago saying its impossible to cut the cost of the civil service. I thought he had to be wrong!

    We employ the civil service how can we not cut it?

    The essentials of life; food, water, shelter, work space, sanitation, power, electricity, light, heating, transport and so on are provided by the private sector. So how is it that 50% of our gross domestic product is paying for the civil service?

    With the competition from globalisation the private sector has had to compete with low overhead countries so many have not seen much in the way of pay rises for a long time. As they pay for the civil service so the civil service needs to get in line – Cut your cloth according to your means.

    • uanime5
      Posted August 28, 2012 at 8:25 pm | Permalink

      The public sector and Civil Service aren’t the same thing. Here’s a list of some of the things the public sector provides that the private sector doesn’t: free schooling, free healthcare, welfare, roads, police, army, fire fighters, and courts.

      • alan jutson
        Posted August 29, 2012 at 6:56 am | Permalink


        Its not free, we all pay for it.

        The government has no money, all it has is ours (taxpayer money).

        • Bazman
          Posted August 30, 2012 at 9:38 pm | Permalink

          We all pay for it. Do public sector workers pay too?

          • APL
            Posted September 1, 2012 at 9:19 am | Permalink

            Bazman: “Do public sector workers pay too?”

            That would be a No.

            Imagine, day zero; No government, no taxes, no public sector.

            Day one. A couple of folk get together and set up a government, they decide to raise tax to pay for all the good stuff they want.

            Now they have tax revenue taken from the private sector, so only on day one is there any tax revenue to employ anyone in the public sector.

            Now day one the government pays somebody in the public sector, but in order to make the public sector employee look just like any other body, he gets an entry on his tax return too, it’s called ‘tax’.

            However he couldn’t be employed and paid unless the government had raised tax from the productive (private) sector of the economy first, so his tax payment, is a sham. It is an administrative feint, to make the rest of us in the private sector think that public sector employees are just like us.

            Do public sector employees pay tax? no they are engaged in a gigantic circle jerk with the government intended to fool everyone else in the economy.

            There is very few things currently being done in the public sector that couldn’t be done just as efficiently, probably more so, in the private sector.

            The idea that a thing can only be done in the public sector is wrong 90% of the time.

            The idea that public sector employees pay tax is wrong 100% of the time.

          • Bazman
            Posted September 1, 2012 at 1:41 pm | Permalink

            The story continues. More prisons built and people employed to pay for the crumbling state as anarchy breaks out in the population who refuse to see the fantastically wealthy and a few elite who live like Tsars serviced by the workers. The next part of the plan. Year Zero, Known a Big Zed, using the Chav units specialising in Council Houses And Violence and the criminals to correct the middle classes of which many believe in a fair and just society with rights such as health and minimum living standards. Will include though anyone who is considered literate or speaks with some articulation. Males only, especially the ones with minimum education who laugh. The parasitic state will finally be dealt with and the country will emerge as a super being with a smaller and stronger population. Etc

      • APL
        Posted August 29, 2012 at 9:44 am | Permalink

        uanime5: “Here’s a list of some of the things the public sector provides that the private sector doesn’t: ”

        That doesn’t mean the private sector couldn’t provide those services, just that it can’t while the public sector can demand any price for a service it wishes on pain of imprisonment, and in return give any crappy service it chooses.

        • uanime5
          Posted August 29, 2012 at 7:07 pm | Permalink

          The private sector cannot and will not ever provide free schooling, free healthcare, welfare, roads, police, army, fire fighters, social workers, or courts because they can’t make a profit from these services.

          • APL
            Posted August 29, 2012 at 10:30 pm | Permalink

            uanime5: “The private sector cannot and will not ever provide free schooling, free healthcare, ”

            And of course as Alan pointed out the fallacy in your argument, the Public sector doesn’t provide any of those things for free either.

            But aside from that, the private sector has in the past provided free schooling and free hospitals they were called charity schools and hospitals.

            You really don’t know anything about your own country do you? Perhaps that is the result of your State education.

          • Bazman
            Posted August 30, 2012 at 9:39 pm | Permalink

            A country run on charity? Charity motorways?

          • APL
            Posted September 1, 2012 at 6:58 am | Permalink

            Bazman: “Charity motorways?”

            Doh, poor old lefties, narrow one track minds. Your fellow adherent, uanime5 asserts “the private sector cannot and will not ever provide … ”

            I gave him/her an example where healthcare and education have both in fact been provided in the past by the private sector, neatly refuting his incorrect assertion.

            Now another leftie comes along and distorts what I say in an unsuccessful attempt to rubbish the truth.

            We are talking about the private sector, not specifically ‘charity’. Schools and hospitals have been provided under charitable status in the past, because when the State is a reasonable size and its intent is the good of the country, the State isn’t obsessed by conformity to it’s ideological ‘norm’, rather it concentrates on what it might be able to do well.

            NOW, private sector motorways, could they exist? Well, clearly they could and even in this barren Socialist economic monoculture we have one or two successful private sector motorways, that are in the private sector, but not necessarily in the charitable sector.

            Would the next leftie that wishes to have one or other ideological shibboleth demolished, please step forward?

          • APL
            Posted September 1, 2012 at 7:07 am | Permalink

            Bazman: “A country run on charity?”

            And while I am at it, I will translate the leftie statement quoted.

            A country run with the willing cooperation of it’s population, some working for free in their free time under their own volition to achieve an end that is good?

            My retort: What better way to run a country?

          • Bazman
            Posted September 1, 2012 at 1:54 pm | Permalink

            You’re right! We need to crack on with the new roads. I’m sure I can provide a few bags of sand and my own tools for the work, wife/weather permitting. I was driving my lorry the other day and saw two feckless individuals coming out of the ‘offy’ pushing a buggy. The lorry happened to hit a massive puddle at the time nearly washing both of them away. All that money and time spent on single mothers need to be spent on something useful. Like better road surfaces…

          • APL
            Posted September 1, 2012 at 5:06 pm | Permalink

            Bazman: “All that money and time spent on single mothers need to be spent on something useful.”

            I’m all for spending money on single mothers. Again there is no need for the State to be involved, it should be a private endeavor.

            Bazman: ” Like better road surfaces…”

            In the Socialist nirvana we inhabit after thirteen years of Labour rule, we need better road surfaces? Surely you jest.

            ‘spose it’s just as well, the nasty Blu Labour Tories have been sending out nocturnal road gangs to dig up all the good labour work under cover of darknes.

            Yep, THAT would explain all the pot holes.

  13. Jon
    Posted August 28, 2012 at 6:16 pm | Permalink

    … 4th parr missed out the name Michael Portillo.

  14. Jon
    Posted August 28, 2012 at 6:31 pm | Permalink

    Its not that the original Coalition/Conservative plan for the Treasury was wrong, it was right! Mr Osborne was originally not wrong.

    The implementation however, calls for a hard nosed “B” to stick to their guns. I am assuming thats were the issue is, don’t fully know really, could be far more complicated.

    I still don’t see any sufficient growth on the horizon to think that could cope with our problems. We needed Number 11 to stick to the plan, not waiver, not slip, to be hard as nails and follow through the plan.

  15. REPay
    Posted August 28, 2012 at 8:01 pm | Permalink

    It seems as though there isn’t really a pay freeze…could we not break the link to inflation that most public sector pensions enjoy. I can only imagine how the promotions inflation must be impacting.

    When Labour is re-elected in 2015 they will no doubt reward their public sector backers with an inflation linked pay rise to make up for this period of hardship! Balls loves inflation – only really hurts private sector people and savers, not those living on benefits or state salaries and pensions and reduces those pesky debts to which he is champing to add!

  16. uanime5
    Posted August 28, 2012 at 8:29 pm | Permalink

    I blame poor leadership for this problem.

    Also it seems that the number of jobs is about to decrease because the Government is going to force young people to work for 3 months for free. Expect all minimum wage jobs to cease to exist because the Government is going to provide these companies free labour, at a huge cost to the taxpayer.

    Not sure how stacking shelves is going to help people get a job when all the shelf stackers are forced to work for free. Perhaps you could ask the Government about this John.

    I wonder how long to will be before the Conservatives make it illegal to pay anyone who is below management level.

  17. David Langley
    Posted August 29, 2012 at 2:51 pm | Permalink

    Regarding pensions, as an ex trustee director myself I learned that my pension which was contributory by company and myself was dependant on the various asset classes we bought and invested in. The MFR (Minimum funding requirement) was estimated by our actuaries and the returns from our investments that would be needed to fund current pensions and liabilities. Our investment bankers were responsible to try and outperform the existing markets to maximise these returns. We were therefore 100% fully funded or not, dependant on investment performance. If we fell short then we looked to our Company Directors to make up the shortfall. Today many black holes have appeared in pension funds because Companies took payment holidays when the MFR was achieved. Needless to say when the bad times came the MFR was short. MFR plus 20% should have been our goal at all times. When companies go bust the pensioners get less because the funds are transferred to Insurance companies to run, with their profit margin in the costs. Workers who contributed but not yet retired used to get nothing and had to try and get all their contributions back etc.
    The remuneration of civil servants at all levels needs inspection against the retirement benefits they would expect to receive. We had to achieve a fund of say over £300M to fund pensions of a fair size company, perhaps the size of Andrew Mitchells Foreign Aid national disaster company, as evidenced by Johns recent management figures. Extrapolating this to the total employed by the government would indicate many billions of pound would have to be dedicated to civil servants pensions alone. If there are no hypothecated funds to finance these as there are not for all our old age pensions then one can see at a glance why the prospect of billy public always liable for their inflation proofed pensions is considered one of the perks of the job.

    Reply Companies had to take pension holidays, as contributions to a pension fund are tax privileged, and therefore subject to a cap related to full funding.

  • About John Redwood

    John Redwood won a free place at Kent College, Canterbury, and graduated from Magdalen College Oxford. He is a Distinguished fellow of All Souls, Oxford. A businessman by background, he has set up an investment management business, was both executive and non executive chairman of a quoted industrial PLC, and chaired a manufacturing company with factories in Birmingham, Chicago, India and China. He is the MP for Wokingham, first elected in 1987.

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