Crackdown on fatcats that isn’t as tough as it seems

Outlook

The Government has issued a crowdpleasing declaration to win over the haters of public sector “fatcats”.

Amid righteous tabloid anger about NHS and Whitehall bosses getting paid squillions by the taxpayer for slouching around being ugly, the Treasury is cracking down on those who get payoffs when they lose their jobs, only to quickly be employed elsewhere in the public sector.

Or, to quote the press release: “Government calls time on public sector parachute payments for boomerang bosses.”

A “boomerang boss” is one earning £80,000 or more who gets rehired within a year. Under the new rule they will have to return their exit payments from the first job.

It all sounds predictable enough until you look at the small print. There, it emerges that there is an exclusion for employees at the Bank of England and the Financial Conduct Authority – two public-sector organisations where £80,000 a year isn’t particularly uncommon. At the Bank, for example, there are 708 employees at or above that pay grade, according to its annual report. Why should they be avoiding the boomerang bullet? The Bank of England may be arms-length from the Government, but its employees are still public sector – just look at their generous pensions.

Likewise, the FCA where if, for example, the former chief Martin Wheatley somehow landed a state job in the course of 2016, he would still keep his £610,000 payoff.

I don’t wish to sound as if I’m calling for curbs on City regulators’ pay and perks. Far from it – they need all the help they can get to retain good people. It’s just that this internal lack of logic betrays a wider, more fundamental irrationality behind the “boomerang bosses” clampdown. A more significant problem for us taxpayers is that the best public sector managers keep quitting to work for banks and consultancy firms. When we attack those willing to stay in the public sector with rules like this – accompanied by insulting Treasury rhetoric – we’re just driving them towards that revolving door.