THE BILL for senior British civil servants’ pay is to be cut by one-fifth over the next three years, British prime minister Gordon Brown said yesterday as he launched plans to cut £12 billion (€13.3 billion) of spending by 2013.
The move came just days before the chancellor of the exchequer, Alistair Darling, outlines a pre-budget report to the House of Commons that is expected to show the budget deficit will exceed the £175 billion limit set earlier this year.
All top state officials earning more than £150,000 (€166,200) a year will have their salaries examined, and future pay deals above that amount will have to be approved by the treasury.
“Of course, public service is admirable and important and it deserves fair reward, but we must never forget that our priority is excellence at the front line,” Mr Brown told the Royal Society.
“In the wider public sector, some senior pay and perks packages have lost sight of this goal and lost touch with the reality of people’s lives. Money which should be spent on health, on schools, on policing and on social services is in some cases going on excessive salaries and unjustified bonuses far beyond the expectations of the majority of workers. This culture of excess must change and will change.”
Three hundred local authority officials in the UK earn between £150,000 and £200,000 (€222,000) a year, while 300 earn more than £200,000. More than 800 people employed in government and state bodies earn more than £150,000.
Mr Brown said consultancy and marketing budgets would be cut by a quarter, saving more than £650 million (€720 million) a year, while the abolition of 120 quangos will save a further £500 million (€554 million) a year.
Businesses and employers will be required to complete VAT and tax returns online by 2011 to cut costs, while paper files will also no longer be used for student loans, jobseekers’ allowance, working tax credits and child benefit.
Evidence from local authorities indicates that on average carrying out a telephone transaction online can save £3.30 and doing a paper and mail transaction online can save £12 each time.
“What’s more: using text messages to remind people of GP appointments can help save on the £600 million annual cost to the NHS of missed appointments – that is the equivalent of 24 new secondary schools, or over 13,000 nurses,” said Mr Brown.
Nearly all dealings between the state and the public will transfer online within five years, he promised. “This has the potential to save as a first step £400 million but as transaction after transaction goes online, billions more.”
Mr Darling is expected to indicate tomorrow that bankers’ bonuses will be taxed at a higher rate, while banks themselves may face a tax on profits.
Senior City of London figures have warned such moves could threaten London’s dominance of financial services and see some top executives emigrate.
Separately, Mr Darling moved to ensure that Royal Bank of Scotland staff working on toxic assets covered by the government’s asset protection scheme are not discriminated against compared to staff working in other, profitable divisions of the troubled bank.
Mr Darling has already insisted he will not back away from plans to impose a 50 per cent tax rate on salaries above £150,000 a year, but he has rejected demands to bring the higher threshold down to £100,000.
Health secretary Andy Burnham confirmed that a £12 billion IT project in the National Health Service, which has overrun its budget and is considerably behind time, is to be pared back.
Defending the money spent to date, Mr Burnham said the NHS could not function without improved IT systems, but he said some elements of the programme could be cancelled to save £600 million.