Bill Carmichael: Public sector pay goes off the scale

I assumed this must be a typographical error and a slip of the keyboard had added a zero on the end of the figure. No. It turns out that Paul Hemsley, the 50-year-old finance director of the Ordnance Survey does indeed rake in almost 80,000 a year more than the Prime Minister.

He is not alone. This week, the Government released the names of 172 civil servants earning 150,000 or more.

They included John Fingleton, the chief executive of the Office of Fair Trading who trousers more than 275,000, Joe Harley, IT director-general in the Department for Work and Pensions (245,000), Jeremy Beeton, director-general of the Government Olympic Executive (225,000) and Clare Chapman, director-general of workforce at the Department of Health (220,000).

And this is only the tip of the iceberg. Research indicates that at least 1,000 public sector workers earn over 150,000 including about 200 council officers.

How on earth did we reach this situation? No one doubts that these people do important and demanding jobs requiring a degree of competence (although in truth that has proved to be in short supply in the civil service in recent years). In the past, such pen pushers and bureaucrats who oil the machinery of government could command a decent salary.

Their rewards, though well above the pay of the average working man, would never have matched the salaries of entrepreneurs and chief executives in the risk-taking, wealth-producing private sector. Public sector workers could at least console themselves with their gold-plated pensions and job security. But, in recent times, their pay has rocketed.

For the last 13 years under the previous government, public sector executives have enriched themselves from the public purse with a ruinous impact on the nation's finances. For example, figures show that executive salaries in NHS Primary Care Trusts increased by 25 per cent between 2007 and the last financial year.

The pay of university vice chancellors has reached an average of more than 200,000 a year – an annual increase of more than 10 per cent. Even bosses at housing associations – providing housing for the poor – have increased by more than 60 per cent since 2001. John Belcher, the now retired chief executive of the Anchor Trust housing association, earned 391,000 annually.

Compare that to the comparatively modest 305,000 salary of Mervyn

King, governor of the Bank of England.

You know the world has gone crazy when the boss of a non-profit organisation providing housing for the vulnerable earns almost 100,000 more than the custodian of the nation's finances.

Clearly this can't go on. The coalition Government has made a good start in lifting the cloak of secrecy surrounding such insane pay levels by publishing details of the top earners. And Business Secretary Vince Cable was absolutely right this week to call for "more discipline" over public sector pay.

At a time when painful cuts are inevitable in public services, it's only fair that these hugely disproportionate pay levels be severely pruned.

Worth every penny

There is, however, one public servant who has proved to be a model of restraint in terms of finances – the Queen.

The Civil List, used to pay for staff costs and running expenses of the Queen's household, is reviewed every 10 years. The Queen last had a pay rise 20 years ago when John Major's government increased the Civil List to 7.9m a year. But the figure was frozen in 2000 – supposedly to compensate for years of over-generous payments.

Now the surplus is running out and, according to reports this week, Buckingham Palace has asked for an increase. In terms of value for money the Queen is the best head of state on the planet. Give her the money – she's worth every penny.