The game's up, local councils: reduce bureaucracy and pass the savings on to local taxpayers

In the long run public sector pay has to be fair and sustainable for taxpayers. It's time for town halls to reduce the number of middle managers they employ so they can pass those savings to local taxpayers

Low-paid public sector workers are losing out while the higher earners benefit
Robert Oxley
On 18 January 2012 14:48

One of the few announcements in last year’s Autumn Statement that caught some by surprise was the extension of the public sector pay freeze up to 2015 which was due to end in 2013. At the time there were shouts of class war from the usual agitators as the Chancellor capped the wage increases of public sector workers to one percent.

Skip forward to this week and trade union bosses, who appear totally divorced from economic reality, are now lambasting Labour leader Ed Miliband and shadow Chancellor Ed Balls for supporting the freeze. With incredible pressures on the nation’s finances, nearly all political leaders realise this policy is the only game in town.

The Government spends more money than it brings in. A pay freeze is therefore not only justified, but necessary. An IFS report pointed out during the November strikes that staff in the public sector already enjoy higher wages and better perks than their private sector counterparts, even when you account for factors like the nature of the work, skills required and other contributory factors.

If a business you work for is losing money you don’t expect a pay rise and the same applies for the nation’s finances. For years staff in the public sector have enjoyed inflation-busting pay increases; it's only fair to taxpayers that the public sector should share the burden of tackling the hole in our finances.

Yet despite all the rhetoric and political posturing from both sides, are public sector wages really frozen? Is the pain being shared equally among the public sector work force?

The TaxPayers’ Alliance have uncovered evidence which shows that, despite the pay freeze and widespread redundancies of lower paid staff, the most well paid council employees aren’t feeling the pinch. Our latest research, published today, shows the number of council middle managers earning £50,000 or more has actually gone up in the last two years. 

In fact, taking a sample of local authorities in the Midlands region we found that the number of staff taking home £50,000 or more a year has gone up by 12 percent and that the cost to taxpayers is up 14 percent in the same period. These figures are taken straight from council accounts; they will include the cost of making some staff redundant but even in that case, councils must strive for value for taxpayers' money. The overall picture remains an increase in staff earning more than £50,000. This information is now automatically published thanks to work by the TPA on publications such as our Townhall Rich list.

Many councils have pleaded poverty, opting to shut libraries and services rather than tackle their inherent bureaucracy and top heavy structure. It’s clear that there’s a flabby middle section at lots of local authorities that needs to be trimmed. It’s simply unacceptable for the bloated bureaucracies to continue at town halls up and down the country, especially when so many are either proposing to or considering raising Council Tax in the coming years.

Our research also revealed a striking difference between local authorities covering similar areas. When we compared those covering similar sized populations we found that some councils shed five times as many middle managers as their counterparts. Why is it that some local authorities in the same region feel the need to use taxpayers’ money to employ so many well paid local bureaucrats but others make do with much less?

Council Tax now takes up much more of our income that it did a decade ago. For many, their bills have almost doubled. But you would be hard pressed to find a resident anywhere in the country who thinks they have seen the same increase in services.

What’s clear is that far too much of those tax rises have gone on increasing the wages of already very well paid council staff. Rather than contemplating further tax rises for residents who are already struggling council leaders should look to cut the number of middle managers so they can deliver long term savings.

The public sector pay freeze is here to stay for at least the duration of this parliament. But that must mean a genuine freeze for all staff. It's not right that most highly paid public sector employees are enjoying pay rises when the lowest paid are losing their jobs.

In the long run public sector pay has to be fair and sustainable for taxpayers. Yet, a simple freeze on pay will only paper over the problem. It's time for many town halls to reduce the number of middle managers they employ so they can pass those savings to local taxpayers.

Robert Oxley is the Campaign Manager for the Taxpayers' Alliance. He tweets at @roxley

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