Wednesday, 1 December 2010

Fun With Numbers

Today's maths lesson is a from a lecture by Will Hutton:

"As you're no doubt all aware, I managed to wangle myself a job on the Lib-Cons' High Pay Commission, despite having been a Labour luvvie for the previous few years. My first idea was to set an absolute upper limit for civil service pay in £-s-d, so I chatted to a few people in Whitehall and some of my old mates running local councils or Primary Care Trusts and Trevor Phillips, who's on about £160,000*, and they explained to me that a) they weren't going to take a pay cut, b) if I did set a limit at slightly above what they were currently getting it would give the game away, and c) they reminded me how much I was getting paid and that a) and b) apply to me as well.

So back to the drawing board!

Now, of course, I see myself as a public servant first and foremost, I don't do it for the money. In fact, I'm not even sure how much I paid myself for my services to The Work Foundation last year. I tried checking on the Charities Commission website, but that just reminded me that we hadn't actually submitted any accounts for the year to 30 June 2009 yet. Ah well, there were some financial irregularities and so on, nothing the accountants can't sort out, although I'm surprised that those accounts are already 215 days overdue.

So I checked the accounts for the year before that, which have a handy little table on page 27 which shows that the highest paid employee paid him- or herself between £170,000 and £180,000. I'm not sure if that was me, but I'd assume it was. It can't have been Jean in the payroll department or Tony who fixes the computers. It's not Fumi, the nice Nigerian lady who comes in to empty the paper baskets and collect the coffee cups either, she's on something called 'The National Minimum Wage' (note to self - is it worth trying to wangle a job on Low Pay Commission? Doesn't sound very lucrative if that's all they get!) and she earns around £9,000 a year, or at least that's what Jean told me before she popped out for a cigarette (filthy habit).

Or maybe she's called Joan? I just can't remember...

Then little ol' Will had a brainwave! It came to me in a flash - thanks to decades of dumbing down, most people don't understand multiplication, but it happens that I am a dab hand with the old calculator. I idly tapped in £180,000 and £9,000 and a couple of other buttons - more or less at random - and it came up with the number twenty. Two-zero. 20. I got Tony to run it through the computer, just to check, and he confirmed that if somebody who is paid £180,000 is being paid twenty times a much as Fumi. Apparently £180,000 would make me a 'fat cat' or something, so I did a dry run and told a few people that I get twenty times as much as Fumi, and they just stared blankly.

Result! Twenty. What a beautiful, lovely round figure....

I tell you, he's a clever chap that Tony from the computer room. He told me that he's only paid £25,000 (I suppose he has a private income and does this for a hobby or something), so in theory, if I sacked Fumi and Jean (or Joan), he'd be the lowest paid person in the office, and then I'd be allowed to pay myself half a million squid without breaking the "twenty" limit. For that sort of money, I'll tidy up the coffee cups and run the payroll myself! I might give him a bonus for that insight... oh, great!

... so that's the story behind the number!

I hope you all enjoyed today's lecture, I'll be back next week with a quick run down of the practical application of differentiation and calculus, if anybody's interested."

* He's a cunning cove, my mate Trev. He's persuaded people that he only pays himself £112,000, but that's for a three-and-a-half day week. I checked with Tony in IT again, who confirmed that that's the equivalent of £160,000 for a five day week. My calculator must be broken or something, because it kept coming up with £6,400, maybe a key is sticking or something.


Bayard said...

Twenty times is obscene. In what way is the chief executive's job twenty times as difficult, twenty times as arduous, or adds twenty times as much value to the lives of the poor souls administered by the grasping sod as that of his cleaner. These fat cats witter on about "attracting talent from the private sector" when a) the majority of them go from one well-paid public sector job to another and b) the private sector is no better, except in this case they are stealing from the owners of the business, not the general public. For a sane look at bosses' pay, read "Up the Organisation" by Robert Townsend.

Mark Wadsworth said...

B, "the private sector is no better, except in this case they are stealing from the owners of the business, not the general public"

Exactly! That is the big difference here and as a non-shareholder, why I don't give a toss about directors' pay (and why I don't own shares).

And the fact is that Will H has pulled it off. You or I might find twenty obscene, but all the MSM just report it as a fair and reasonable.

Anonymous said...

Do I look like I'm bovvered?

I don't give a toss what they pay themselves as long as they deliver good value for the money overall. All too often, they don't. Many of them really ought to be sacked, not paid less.

Mark Wadsworth said...

AC: "Many of them really ought to be sacked."

Make that 'all of them - and then we'll reinstate the ones we need (being none of them)'.

Bayard said...

"MSM just report it as a fair and reasonable"

although the bloke on the Beeb who was interviewing a token fatcat did question its reasonableness when she glibly trotted out the "twenty times" figure.

"... so that's the story behind the number!"

Alternatively someone said "twunty" to WH and he misheard.

The Stigler said...


the private sector is no better, except in this case they are stealing from the owners of the business, not the general public.

I only buy shares in companies where the people in charge have a strong association with the company, either coming up through the ranks, founding the company, or because they bought it.

Someone should do a study on parachuted-in CEOs, because my guess is that very few of them deliver more than steady growth, which probably means that the company would have done just as well without them.