ONE in three quango chiefs is paid more than Alex Salmond’s £140,000 salary, according to new research which exposes the extent to which Scottish public life is dominated by publicly-funded bodies run by state appointees.
A survey of the pay of chief executives running 58 public bodies found the highest earner, Douglas Millican of Scottish Water, takes home almost £250,000.
The research by think-tank Reform Scotland also found the £205,000 salary of the second highest earning chief, Lena Wilson of Scottish Enterprise, was double that of finance secretary, John Swinney.
A break-down of public sector pay revealed that health minister Alex Neil, who as a Cabinet secretary takes home £100,748, earns less than every single health body chief executive with whom he deals.
Yesterday politicians expressed concern at the “fat-cat salaries” at a time when the less-advantaged have been struggling to cope with the financial crisis.
The Reform Scotland paper, published today, found that £12 billion of taxpayers’ money is to be paid to quangos in 2013-14, the equivalent of 34 per cent of the Scottish Government’s total budget of £34.7bn.
Using the government’s National Public Bodies Directory, Reform Scotland obtained the salary bands for the chief executives of 58 of Scotland’s 74 quangos. It found that a total of 19 chief executives earned more than the First Minister in 2011-12 – the most recent year for which figures were available.
The 19 highest paid quangocrats included ten NHS board chiefs, the head of VisitScotland Malcolm Roughead, who earns up to £145,000, and the chief executive of the Mental Welfare Commission for Scotland, a position with a salary of up to £160,000.
The First Minister’s pay was even outstripped by the chief executive of Scottish Canals, Steve Dunlop, who takes home between £155,000 and 160,000 a year, the paper shows.
The report concludes that while some of the sky-high salaries may be justified, they revealed a huge “accountability deficit” as the organisations paying them could not be held to account by the public.
It said ministers should either bring the arm’s-length bodies under full control of government departments, or cut them off into fully independent bodies.
Quangos – quasi autonomous non-governmental organisations – are outside the civil service but are funded by the government to perform a function, with senior appointees signed off by ministers. They include NHS boards, plus organisations such as the National Museums of Scotland, VisitScotland and Creative Scotland, the body responsible for the arts.
The report shows that the 58 chief executives took home £7 million in 2011-12 between them.
Thirty-eight chiefs matched or out-earned a Cabinet secretary’s £100,748 package, including the head of Creative Scotland and the chief executive of NHS Shetland.
Meanwhile 48 out of the 58 earned the same or more than a junior minister’s standard pay package of £84,598.
Reform Scotland’s research director Alison Payne said: “It may well be that the salary for a particular chief executive is justified, although, it is difficult to argue that any public-sector salary should be higher than that of the person running Scotland, the First Minister.
“However, the key problem is the use of quangos which are neither fully democratically accountable nor fully independent of government leading to a lack of transparency and accountability over their activities, including the level of salaries paid.”
The think-tank also said ministers had “failed” to reduce the number of quangos since devolution and needed to have a complete rethink of the democratic make-up of the country.
Payne said: “Scotland needs to end its love affair with quangos and build democratic accountability through transparency. This would introduce greater clarity and openness into the political process and make those who are spending taxpayers’ money more accountable to the people.”
Scottish Water has, in recent years, seen calls for it to be either privatised or turned into a mutual not-for-profit company.
Alternatively, Reform Scotland said that some quangos could be subsumed within local authorities, to ensure a clear democratic link to the people they serve.
The only exception, the think-tank added, were children’s panels which required the status of a quango.
Conservative finance spokesman Gavin Brown said: “The Scottish Government has promised to take action here. While they have cut the overall number of quangos. There is still an awful amount of public money being spent on all of them. I would like to see an audit conducted into the financing of these bodies and the findings made public.”
The Scottish Liberal Democrat leader, Willie Rennie, said: “It must not become the norm for quango bosses to be paid fat-cat salaries. We want the best people to run these agencies but at a time when everyone else is tightening their belt this report shows the Scottish Government has not got a grip. It should follow the lead of the coalition government – salaries higher than the Prime Minister can be vetoed, and have been vetoed, by the Treasury.”
Officials at the SNP-led government defended its record, saying reductions had been made in recent years. A spokesman said: “Since October 2007 the number of devolved public bodies has reduced from 199 to 113, exceeding the government’s original target to reduce the number by 25 per cent. Mergers alone have saved £78m, between 2007 and 2012-13, and further savings will be delivered on an annual recurring basis.
“Pay ranges are assigned in relation to the roles and responsibilities of the position and to support the recruitment and retention of staff. We expect all parts of the public sector to ensure their activities deliver maximum value for money and we are continuing to look for further opportunities to simplify and streamline the public sector landscape, to reduce costs and improve the quality and efficiency of public services.”