15 January 2018

The BBC is not the Civil Service – and politicians shouldn’t set its pay

By Len Shackleton

Matt Hancock is Minister for Digital, Culture, Media and Sport. It is a non-job, but one which offers fine opportunities for pontificating about everything from football to robots to museums. At the weekend he popped up to add fuel to the BBC’s row about pay. This was originally about whether women were unfairly treated at the Beeb; now this is widened to say that no BBC employee should earn more than the Prime Minister. John Humphrys’ salary – presumably ignoring contractual obligations – should be slashed by three-quarters.

The BBC is a nationalised entity. In many people’s view it should not be. But as a part of the public sector, Mr Hancock is saying, it should be subject to similar restraints to those faced by the civil service and local authorities.

People may have forgotten that unease about pay in the public sector led the coalition government to set up an enquiry under Will Hutton, a long-standing critic of high salaries. It was expected to lead to a cap on the ratio of top pay to low pay; a maximum for public sector chief executives of 20 times the pay of the lowest-paid was touted, and the PM’s salary was seen as the sound barrier through which nobody was permitted to jet.

However, Hutton’s report turned out to be an unexpectedly sensible recognition of the dangers of populist thinking. He pointed out that there would be many indirect consequences of rigid limits.  More fundamentally, Hutton argued that the country needed to avoid making the public sector an unattractive place for those with talent and drive.

If strict regulations were avoided by Hutton’s conclusions, the climate of opinion has made it very difficult to increase public sector pay across the board, and certainly at the top end. This is a good thing in some ways, for instance in helping to rein in the fiscal deficit. However there remains a danger that public sector jobs – many of which are highly challenging, and require candidates with vision and the ability to push change through against powerful unions and intellectually lazy politicians – may become the preserve of the less ambitious and less competent.

Or, worse, the domain of fanatics and professional hair-shirt wearers. Taking the PM’s salary as a marker is certainly not sensible. It has not gone up since the privately wealthy David Cameron (who can now make much more money as a speaker and author than he ever did as a Parliamentarian) refused an increase. It will be politically impossible to raise this in the foreseeable future. Given inflation, this will mean that top public sector pay will fall in real terms year on year.

One rarely considered problem with pay ceilings is their impact on differentials below the ceiling. I am not alone, surely, in thinking that John Humphrys’ experience, range of competence and popularity make him objectively more valuable to the BBC – or, importantly, other broadcasters – than Carrie Gracie, who most people will not have heard of until this latest row. Mr Humphrys is continually employed, usually at unsocial hours. Ms Gracie pops up only when China is in the news. If £150k is the most that can be paid to top broadcasters, the implication is that the pay of people like Ms Gracie would also have to fall to maintain some sort of differential – as would that of people reporting on Uzbekistan, or on local radio stations, or hosting cookery programmes.

Many of those losing out in such pay compression would be women, a bizarre consequence which would do nothing much for the aggregate gender pay gap for the UK economy. It is on a par with the ill-advised bullying of universities, which has recently seen the best-paid vice-chancellor – a woman – forced out and VC pay now having to be at the whim of the superannuated politician who will be running the Office for Students. Universities are not in the public sector, but this does not seem to bother our rulers. Sure, much of their income comes indirectly from the state – but less so than most defence contractors or outsourcers such as Capita and the late unlamented Carillion, where top executives can earn more than a Davos-full of Prime Ministers.

BBC presenters and creatives are not civil servants or local authority employees with permanent contracts, early retirement and generous pensions. Many have suffered from financial insecurity while building their careers, often in dangerous places or in difficult circumstances. Their main income can disappear as programmes are axed, and they can drop out of favour – Adrian Chiles, anyone? – quite quickly. They should be on tightly-monitored, relatively short contracts. But the idea that politicians should determine the terms of these contracts is just wrong and it is a pity Conservative ministers can’t say this clearly and unequivocally. If they don’t like it, they should perhaps have the courage to privatise the BBC and let an unconstrained market decide these things. And scrap Mr Hancock’s job at the same time.

Len Shackleton is Professor of Economics at the University of Buckingham