Are they us or are they them?

How much should public servants earn? Even during the boom years, public sector salaries and work conditions were under immense scrutiny and that has increased in the current economic circumstances. A recent survey showed that 9000 people in the public sector now earn more than the Prime Minister. The Coalition's cuts will mean a huge number of jobs being lost across the public and private sector, whilst public sector entitlements like pensions are under threat. So it was with some interest that I watched Local Government 'fat cats' come under the microscope on Newsnight.

Given his £300,000 salary (including pension) - I thought it was very brave of John Ransford, Chief Executive of the Local Government Association, to step into the debate. How often do we find that Government ministers are not available under similar circumstances? But, at a time when councils were being forced to make thousands redundant, could he justify his salary?

Grant Shapps, Housing Minister, argued that he would expect the Chief Execs to "lead by example", he pointed out that MPs had accepted a pay freeze. The fact that our 'Austerity' Cabinet has 18 millionaires means they are probably in a position to get through these hard times. However, his general point seemed a good one. Phillip Blond from the think-tank Res Publica suggested there was no evidence that "higher pay will lead to higher performance. " He continued, "What public services need is ethos led, mission statement driven  leadership." He also concluded that, "The role of the state is to lead by example."

So on one hand the public sector has to accept market conditions but on the other it must somehow set itself higher standards? Ransford's argument that the market rate for getting people with the right skills and experience had increased with the rigors of public scrutiny and improving performance is plausible. However, for Chief Executives not to be taking some of the pain themselves seems, at the very least, politically naive and lacking in leadership qualities. At first glance it does seem strange that Chief Executives earn twice as much as the Prime Minister. However, the Prime Minister will have a place in history. Westminster Council is is a £800 million organisation that provides services that people depend upon. It's a big job but no Chief Executive will be remembered for long. It's a market. Aren't we all in thrall to the market these days?

Well no. On 1st Nov, BBC reported that FTSE-100 directors saw total earnings increase by 55%  on average over the year, while the average increment for the FTSE 350 as a whole was 45%? 2010 city bonuses are predicted to hit £7 billion. At the same time the Institute of Directors survey showed the majority of directors across the private sector received a pay cut in 2010: 46% of directors either had a pay freeze or pay reduction in cash terms in 2010; the 54% who had a pay rise received 2.5% in 2010, which is equivalent to a cut when inflation is taken into account. 

Why is the debate always framed as the private sector versus public sector? Most of us should be on the same side. Big business and the City are playing on the fears of small businesses and its employees off against the interests of the public sector and reaping the benefits in huge payouts, whilst everyone else does the paying. Isn't it time to taget the real 'fat cats'.