Today’s report on CEO pay

But even more frustrating than this theoretical misunderstanding is that the LPIT method has proved so popular because it has encouraged more long-term thinking, not less.

The committee has managed to grasp the wrong end of the pay package stick here. Their recommendations would set us back several decades to a pay model that we abandoned precisely because the new one was better at the MPs’ stated goals. Perhaps it is MPs’ pay that needs changing. If we offered the market rate, we might get some who knew what they were talking about.

22 comments on “Today’s report on CEO pay

  1. “If we offered the market rate, we might get some who knew what they were talking about.” Market rate for what? Some duffer who’s spent his career in a trade union or some dismal government employment, perhaps.

  2. Being in public office should not be seen as a career. No one should be able to hold any combination of public offices for longer than the length of two terms as MP. It’s meant top be a public duty. You should be coming to the Commons with something to offer from your experience in the wider world.

    You should have saved enough from a successful career to be able to take the pay cut for 8 -10 years. If you were never wealthy anyway then an MPs salary looks good, plus all the future work opportunities post public office such as advising hedge funds etc has to count for something.

    I would also chuck in rent free accommodation in London (2 bed flat) and in constituency (four bed semi) which is owned by the government. If you don’t want to use it you can’t rent it out though so no noses in the trough or capital gains at our expense.

    Time barring MPs might put some fire in their bellys, stop them sucking up to the party machine. Get in, make your mark, pass it on, get out. If your ideas are any good the next generation will pick some of them up.

  3. MP pay is simple. Link it to the SCS3 ( or old grade 5, deputy director) rate in the civil service. Matches about what they do and gives a scale you can apply to ministers (SCS2) and secretaries of state (SCS1).

    Expenses policy follows civil service ones
    Apply a basic principle that you shouldn’t make a profit and you’re not far from done.

    Give them a budget to run a small office. All employees come through open competition run independently.

    All done.

  4. “If we offered the market rate, we might get some who knew what they were talking about.”

    Simply paying the market rate isn’t sufficient. First, you demand a specific level of qualifications and knowledge before offering people the job. Then you pay whatever is needed to get the requisite number of such to apply. It’s the qualifications bar that matters – market rate pay is then just a necessary concomitant.

    It tends to be a popular theory with the people they previously managed to recruit paying peanuts that if you pay them more they’ll thereby become more motivated and skilled enough to deserve it, instead of the pay rise being associated with sacking the entire current contingent and recruiting the sort of people who wouldn’t work for less in their place. Possibly the former explains why they believe the latter.

    However, the principle of representative democracy requires that stupid people are represented in Parliament too, in proportion to their numbers in the general population. People should get the government they deserve.

  5. ISI3s, I think we can take it as read that the warm fuzzy feeling of public service isn’t enough to attract the right people. And smart people will treat it as a career move, because that’s sensible.

    Doesn’t make it a money problem, necessarily. If the infrastructure of government is half as broken as it’s usually portrayed, and it’s impossible to get anything done sensibly, sensible people won’t touch it for any salary.

  6. @Tim W

    …Perhaps it is MPs’ pay that needs changing. If we offered the market rate, we might get some who knew what they were talking about

    Having heard them speak, it would mean a pay-cut for most of them.

  7. If you recruit people for a job, it’s rather different to lots of people competing for a few positions. Being an MP is more like being a top footballer or popstar, in that many people try and only a few succeed. Viewed in that light, MP pay isn’t just low, it’s ridiculously low.

  8. “Dave

    If you recruit people for a job, it’s rather different to lots of people competing for a few positions. Being an MP is more like being a top footballer…”

    Sorry but that analogy is absurd. In most constituencies it’s the colour of the rosette that gets you elected not the ability of the candidate. In the right constituency a dog turd or a cardboard box could get elected if it was wearing the right rosette.

    Your analogy only works if a Premier league football team owner could picked their lard-arse nephew and a few middle-aged mates to play for the first team and supporters still turned up to cheer them on and they still had half a chance of beating the opposition because it too was stuffed full of cronies.

  9. My real problem is that an obviously incapable politician such as Balls or Osborne, whatever their academic credentials they were useless at their governmental jobs, is able to enjoy a lucrative career outside parliament simply because they are perceived to be in the know. The Hoc should recoup the excess of speaker fees over their salaries while they were in office. Without those appointments, they would not be earning those fees.

  10. Dave

    Being an MP is more like being a top footballer or popstar, in that many people try and only a few succeed. Viewed in that light, MP pay isn’t just low, it’s ridiculously low.

    Supply and demand and all that? And, as others have said, the pay isn’t half of it.

  11. “No one should be able to hold any combination of public offices for longer than the length of two terms as MP.”

    Which means nobody would ever get into office. You get elected in 1979, slog away trying to kick Thatch out, still slogging away but in 1987 Term Limits say FUCK OFF! Even if you doubled it to four terms, you slog away until you kick the Evul Toreezz out in 1997 and at the same time you yourself are told FUCK OFF, TERM LIMITS!!!!

  12. Obviously, swap things around to match your favoured political position. Should Nigel Farage have been told in 2007 FUCK OFF TERM LIMITS!!!! when he was only halfway through his long slog to Brexit?

  13. Do away with MPs.
    And ‘democracy as well’ – look what has happened as a result of recent ‘democracy’!
    If there must be votes let people put a good price on them.
    Basically run the country as a business. No monopolies a la BBC or NHS.

  14. Being an MP is more like being a top footballer or popstar, in that many people try and only a few succeed. Viewed in that light, MP pay isn’t just low, it’s ridiculously low.

    There are two ways to look at this sort of thing. 1 is to compare with footballers where only the most skilled get the actual job playing for a top tier club. Lots of people try, and lots would be willing to take their place but they would not be able to match the ability, hence can’t.

    MPs are not like that. We could remove just about any MP and replace with random person from the populace and the difference in performance would be negligible. Even the MPs that do a great job are at risk of losing their position every 4 years, and the person we get to replace them is not chosen based on qualifications or skill but by public acclaim.

    There is no qualification required to be an MP other than to be popular, and we would still get lots of people applying if the pay were lower, so supply/demand suggests that we lower the pay (supply greatly exceeds demand).

  15. @john malpas
    Have you read The Moon is a Harsh Mistress by Robert Heinlein? He suggests several alternative ways to run a democracy, some of which make a lot of sense to me.

    For example the UK has a population of around 65m and 650 seats in the Commons. Why not just set up a system so that people can assign their vote (only changeable once per month?) and every 100,000 votes that you have collected gives you one vote in the Commons. If 10m people decide to back the same person, then they’d get 100 votes in the Commons. Each MP would then directly represent their constituents, and have the threat of the vote being withdrawn to keep them in line.

  16. Andrew>

    And what gets you selected as a candidate?

    RA>

    If it’s random rather than a meritocracy, that doesn’t alter anything: you have to ‘buy’ your lottery ticket by putting in thousands of hours of arse-licking, and so the payoff for those who then win the jackpot has to be huge – if we’re not going to only get those who don’t mind arse-licking and for whom the entry fee isn’t a big cost.

  17. If aspiring pols don’t think kicking out the opposition is sufficient reward, plus 8-10 years on a top 10% salary then I’d rather they don’t bother. Keeps the egotists away.

    Sports people and many other types of jobs don’t have people climb to to top and stay their for the rest of their working lives. Being politician should be part of a wider life. They can still train and influence in political party’s and think tanks etc. it shouldn’t be a job for life.

  18. Principles like that are all very well, but in practice we can all see the mess that results. We have a system that couldn’t be any worse if it had been deliberately designed to encourage troughing nonentities, rather than merely doing it inadvertently.

  19. MPs are not like that. We could remove just about any MP and replace with random person from the populace and the difference in performance would be negligible.

    This it bullshit. You don’t have to like politicians, but they aren’t random people. Any one replaced wouldn’t be noticed, but replace the lot and it would be chaos.

    They’re harder working and more dedicated, for a start. They’re generally much smarter than average and/or better educated. Imagine how long an average person would last in a TV interview even without hostile interviewer. There was much fun poked at Thornberry when she didn’t know the name of the French foreign minister, but most people couldn’t tell which party is running France.

    Every now and again an “ordinary” person makes it into the NZ parliament. The result is that they are exposed ruthlessly and rejected immediately. (Alamein Kopu was introduced with much fan-far by the Alliance in NZ and was a spectacular flop.)

    Not only do MPs have to be above average to even cope, they have to have some experience. When a populist wave puts a wodge of people new to politics into power the lack of experience is very obvious. Trump is finding that, and his appointees are very much not average in skills or intelligence. Pauline Hansen led a wave of new-to-politics “ordinary people” into Queensland, and their incompetence was spectacular.

    That you might not appreciate the skills and demands of the job doesn’t mean that they don’t exist. I can’t stand basketball, and think the money the NBA pays is outrageous, but I don’t confuse that with thinking that they have no skill.

  20. I don’t think anyone suggests the troughers have no skills. They just don’t have the skills that we’d like them to have; they have the skills we don’t want them to have, like being plausible liars, clever at fiddling their expenses, good at identifying opportunities for personal profit, and so-on.

    I don’t know about you, but I don’t want elections to be won by those who are best at winning elections, but by those who will do the best job having won.

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