Norman Bettison: We can't afford the nonsense of huge public sector salaries (including mine)

If, in private industry, employees are paid at a rate that cannot be sustained by current sales, something will give. If that industry has enjoyed a period of sustained growth and prosperity and then the market changes, no one expects the sympathies of the liquidator. Remuneration is linked to what the market will stand.

The hard truth of free market economics is denied at the start of any downturn. People judge their remuneration levels against the happy context of the recent past, rather than the harsh realities of the present. In the private sector, this self-deception does not last very long. Job losses, or corrections to pay, are fairly predictable.

If that is the lot of workers in commerce and industry during bad times, what of the public sector? Those 6.1 million employees (or 21.1 per cent of all workers) produce nothing but give a valuable service to the wider society.

This question has never been seriously asked in the last 60 years. The public sector has traditionally made adjustments in hard times by not recruiting as many people as leave on healthy pensions.

In 2010, the situation is much more stark, and much less sustainable. Since the war, the country saw steady economic growth, even when the steel and coal industries were in terminal decline. And so the public sector grew to meet the needs of a wealthier society.

Something else happened in the 1980s. The idea grew that public sector organisations had to compete in the market place for senior managers.

NHS chief executives were the first "growth" industry that I remember. This "arms race" for leadership spread quickly to the civil service, local authorities, chief constables and fire chiefs. There was a bizarre notion that, if we didn't create comparable remuneration packages, talented leaders would become bankers or captains of industry.

This was exacerbated by successive governments initiating reviews of public services and bringing in "the best" commercial brains to undertake them.

Patrick Sheehy, chairman of British American Tobacco, was chosen in 1992 to review policing. His recommendations included paying senior leaders more money to attract people from the private sector, putting them on to short-term contracts and awarding performance-related bonuses.

Governments bought Sheehy's line across the public sector. Payment by results with remuneration mimicking (though rarely emulating) private sector scales became the norm.

What nonsense! Furthermore, it now looks like costly and irresponsible nonsense. People join, and remain in, the public sector because of a sense of vocation – to make a difference to society or to the quality of people's lives.

The best leaders are those who can secure long-term public value and a vision for their staff. Not some mercenary performance manager peddling a short-term fix.

Here is the irony. Public sector leaders would have continued

to give that leadership for a lot less pay.

After 20 years in a profession, they were never going to leave in search of riches. Similarly, those private sector gurus who would revolutionise our traditional public services have hardly beaten a path to that door.

All that has been created are short-term engagements of senior leaders who feel pressured to deliver the latest central diktat, and who get a remuneration package never dreamed of, for their few years in post.

The saddest irony is that public sector leaders have traditionally craved the loyalty and respect of the people they serve. The senior civil servant; headteacher; medical professional; local government director; the police and fire chief – they were never captivated by financial reward. Now, one by one, those at the top of those services are being castigated over their pay.

The tide of plenty washing these shores for a quarter of a century has gone out to reveal some uncomfortable facts. My personal situation illustrates the point. Last year, my base salary was 163,000 and, with all other emoluments, I cost the taxpayer around 213,000.

Let's be really frank. When you see a public sector salary, you invariably have to add a significant percentage for the employer's pension contribution which is met by the taxpayer. In the police, it is 24 per cent of base salary, and is not massively different in other sectors. So 213,000 in pay, pension contributions and other costs. And that is before bonus payments! I chose to step aside from any bonus consideration last year as the tide of plenty was, in my view, already receding quickly.

Can that pay level be, any longer, justified, even though I run a 427m operation with more than 10,000 staff?

My old dad, made redundant in the steel industry upheaval of the 1980s, wouldn't have been able to comprehend it.

The only secure ground for any senior public servant in this angry debate is the argument of relative values. The whole public sector is caught by this dilemma.

Secondly, if you took me out and shot me in a revolutionary uprising, it would still cost the taxpayer 163,000, plus 24 per cent pension contribution, to replace me – the official, relative, rate.

So what are we going to do about this untenable situation? The public sector's debt burden is 56 per cent of GDP and, if unchecked, could rise to 75 per cent in three years.

That's what makes this uncharted territory. Delaying action, or trimming staff numbers, just won't sort it. We need a more fundamental wage bill correction. None of the political parties is presenting a solution – yet. There are 6.1 million voters employed in the public sector. Should we be surprised at the current silence?

What should we do? Here's my Micawber Plan.

Introduce a plan to freeze public sector pay and pension entitlement, incrementally – the whole sector mind, no exclusions or special pleading. And if that freeze started with the highest paid 25 per cent first, it could be followed, in succeeding years, by the second, and then the third, quartile of earners.

Then, in three years' time, we would have smaller differentials in public sector pay and have made a huge dent in the debt burden to support it.

This, coupled with the recent removal of all tax allowances and the imposition of a 50p tax rate for higher earners, might do the trick and sustain public services. I look forward to the debate.

Norman Bettison is Chief Constable of West Yorkshire Police