Dec 2007 14

During the research for a project I’m working on I found myself looking through GlaxoSmithKline’s accounts.  Remembering the debate over the Public Sector Rich List I got curious and wondered just how much JP Garnier – the reputedly well-paid boss at a big private company like GSK – gets paid.  The figure is $5,413,000.  That’s a lot of money, not bad if you can get it.  However, GSK are really massive and, after you’ve converted it to pounds, wondered how much more it was than the £1,256,000 that Crozier takes home in total remuneration.

I’ve done those calculations.  They are entirely reliable with the proviso that the exchange rate is today’s rather than last year’s.  Royal Mail revenue and operating profit figures are from their accounts:

(click to enlarge)

What that shows is that Royal Mail pay Crozier more compared to their profit and revenue than GSK pay Garnier.  Adam Crozier is, at least compared to JP Garnier, well paid even relative to the scale of the company he is running.  Even at the very top end the public sector now pays really well.

Given that public sector organisations don’t depend on success in the market to attract customers or strong financial results to attract shareholders there is no reason to assume these salaries are likely to be justified.

Dec 2007 14

Two new videos from the Centre for Freedom and Prosperity in the US make a compelling case for tax competition and reductions in corporation tax rates. Exactly the sort of thing we all need to do more of.

Dec 2007 14

DonotfeedthetaxmanBarbara Lockwood is an experienced campaigner for lower taxes, and runs the campaign Folk Against Council Tax (F.A.C.T) as well as being a supporter and active member of the TaxPayers’ Alliance.  She has a well-known reputation in Norwich battling against greedy government and the unfair council tax, with a host of supporters joining her to fight against high taxes. 

Over the past months, she has sent out over 200 TPA leaflets, drawing in an impressive response from local residents angry at such high rates of tax.

Here she gives us some information about herself and what she wants to achieve in her campaigns:

Barbara_lockwood “I’m not sure if anybody is interested in my past and hectic lifestyle, but I thought I would forward a report on my movements since the Thatcher years when she introduced the Poll Tax to cover the hierarchy and force the middle and low paid and students to cover all in 1991/2.

I won’t go into the full story (it would be a book) however, as then a retiring Nan and Granddad, with two teenagers at home looking for employment, I exploded when told my husband would have to pay the tax for the four of us.  On mobilising annoyed students we joined the Trafalgar and Downing Street protests that absolutely appalled me when confronted with riot police on horseback determined to aggravate all – even me.

This continued here in Norwich with a despicable four-month Crown Court case of 15 students and families from Colchester, who I helped as a Mackenzie friend.  Believe me, the whole case was a waste of taxes and a complete farce.  I lost complete faith in my own country and it still continues – even more.

We now have a government creeping along wasting every penny of this country’s taxes: spending madness with a population following suit.  Where will it end?

My long standing campaign over the yet again unfair Council Tax Banding will continue until it is reviewed and accorded within ability to pay, or maybe replaced with a local tax. 

Greedy governments must be made to relieve, all citizens allowed to achieve and stealth taxing must be outlawed.

I would appreciate to know how many others would agree; come on, let’s have some replies.”

If you’d like to join the campaign in Norwich you can get in touch with Barbara by emailing her or me at our London office.  If you’re campaigning for lower taxes, please do as Barbara has done and let us know what you’ve been doing to help the campaign.  You never know, maybe your example could inspire other taxpayers to join our campaign and crusade for lower taxes…

Dec 2007 14
Is this what you want?

So just let me make sure I’ve got this right. We’re paying our policemen better than they’ve ever been paid, yet they’re going on strike (or at least, intending to come down en masse with Blue Flu).

Having perused the stats, we can confirm they’re certainly well paid. According to the Office for National Statistics, your typical copper at sergeant and below now earns £36,700 pa (ASHE April 2007; T 14.7a, full-time median). That compares with economy-wide median pay of £24,000 (ft median). So the cops get a premium of 50%.

Back in 1997, the same typical copper got about £24,000, so his pay has gone up by over 53%. Since prices have only increased by 17% (CPI), that means a 30% increase in real pay. And in 1997, the economy-wide median pay was £16,700, so the police premium was "only" 44% (ASHE 1997).

With police pay up by 53% and average pay only up 44%, the relative position of the police has improved significantly. Here’s the picture:

And on top of their cash in the hand pay, there’s that gold plated pension. Whereas for most employees final salary pensions are now a distant pre-Labour dream, the police still enjoy index-linked final salary pensions and retirement at 50. These days that’s worth at least 30% on top of declared salary (eg see this blog).

So we’d say Labour has done pretty well by the police (and see here for Reform analysis).

Especially considering we taxpayers have done much less well. Despite all that extra cash, police efficiency levels have plumbed new depth (see this blog). According to the latest report into police funding from the Home Affairs Select Committee, since Labour took over, total police funding has increased by 40% in real terms. And although some crimes have fallen, the serious crimes we really worry about haven’t. Moreover, much of the overall fall has had nothing to do with the police. As the Committee notes:

"In the case of both vehicle crime and burglary, improvements in security—far more than any government action—have probably been a significant contributor to overall falls… Excluding successes on burglary and vehicle theft, there has been a more mixed picture in tackling overall crime, particularly given the increase in resources available to the police. For example, between 2002–03 and 2005–06 violent crime as measured by the police recorded crime statistics showed a 21% increase…"

So if you were a cop, your best bet would be to think "thank you very much" and shut your gob. You certainly shouldn’t be drawing attention to yourself by going down with a dose of Blue Flu. Because as the firefighters discovered, the public often have no idea what public employees get paid these days, and when they find out they can turn nasty.

But that aside, how is it possible for the police to have been paid all this money and still be so hacked off? How on earth have we ended up the worst of both worlds?

No prizes for guessing the answer I’m afraid: this government has been unspeakably incompetent in managing public sector pay. Right across the public sector they’ve given us the classic boom-bust cycle: years of huge uplift, followed by a sudden halt.

From the nurses to the police, they ladled out great dollops of cash during the fat years, getting virtually nothing in return. And, who could possibly have guessed, the recipients got habitualised to it.

So now the cash has run out there’s a real problem. Just like there was the last time we came to the fag end of a grand socialist feeding binge. That particular fag end came to be known as the 1970s, which not only gave us the three day week and Red Robbo, but also- less forgivably- the kipper tie, tank tops, and the Rollers. Is that what you want to see again?

When your correspondent was involved in the nightmare of setting pay and bonuses for his co-workers, he soon discovered a Golden Rule: never give anyone so much in one year, that you may need to slash it again the following. Remember there are fat and lean years, and try to think longer-term. You ignore that at your peril: you can so easily end up with staff who are both highly paid and extremely hacked off at the same time.

So why hasn’t the public sector discovered that?

And while you’re at it, why can’t those expensive pigs fly?

PS FYI, the median pay of senior police officers (inspector level and above) is now £52,925 pa (plus pension and, er, expenses). Back in 1997 it was £34,880, an increase of 52%. The latest salaries of the very top cops are listed here. EG: Met Commisioner – £234,939; Met Deputy Commissioner – £193,959; Chief Constable of Greater Manchester – £163,908. And none of them are accountable to us taxpayers.

Dec 2007 14

An interesting piece by Arthur Laffer (of the famous "Laffer curve") and Stephen Moore in the Wall Street Journal shows how US states with higher taxes and regulations have lost people and businesses to states with lower taxes and regulations. The authors write:

"The American Legislative Exchange Council has just released a study we’ve done that presents a 2007 Economic Competitiveness Rating of the 50 states, based on 16 economic policy variables, including taxes, regulation, right to work, the legal system, educational freedom and government debt. Over the past decade, the 10 states with the highest taxes and spending, and the most intrusive regulations, have half the population and job growth, and one-third slower growth in incomes, than the 10 most economically free states. In 2006 alone 1,500 people each day moved to the states with the highest economic competitiveness from the states with the lowest competitiveness."

The two most important factors are tax rates and trade union legislation:

"Of all the policy variables we examined, two stand out as perhaps the most important in attracting jobs and capital. The first is the income tax rate. States with the highest income tax rates — California and New York, for example — are significantly outperformed by the nine states with no income tax, such as Texas and Florida. As a study from the Atlanta Federal Reserve Board put it: "Relative marginal tax rates have a statistically significant negative relationship with relative state growth."

"The other factor for attracting jobs and capital is right-to-work laws. States that permit workers to be compelled to join unions have much lower rates of employment growth than states that don’t. Many companies say they will not even consider locating a factory in a state that does not have a right-to-work law."

The authors conclude:

"The states losing population are in effect suffering from a slow-motion version of the economic sclerosis that paralyzed much of Europe in the 1980s and ’90s, particularly France and Germany with their massive welfare systems. At least the European socialist nations are finally starting to change their taxing and spending ways to win back jobs.

"No such luck in this country. Five of the states near the bottom of our competitiveness ratings — Illinois, Maryland, Michigan, New Jersey and Wisconsin — have enacted major tax increases in the last two years. Maryland and Michigan just raised business and income taxes on upper-income earners, while arguing that raising the cost of doing business will attract more businesses. More likely it will induce companies to stay away, and people to move out."

Gordon Brown take note – businesses and jobs will leave these shores if taxes and regulations continue their upward trends.   

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