Taxpayers to fund massive City bonuses

CITY EXECUTIVES are to be paid large salaries and bonuses at the taxpayer's expense to persuade companies to invest in schools and hospitals.

Alan Milburn, Chief Secretary to the Treasury, will this week announce plans to privatise the Government unit responsible for getting private money into the cash-strapped public sector.

City high-flyers will be given performance-related pay packages, which could total millions of pounds, to act as brokers for deals under the controversial Private Finance Initiative.

The move will infuriate Labour left-wingers and trades union leaders who are already angry about the Government's willingness to "sell off" parts of the National Health Service, education system and prisons infrastructure. There are also concerns that there could be a conflict between the public interest and the financial incentive. "The city slickers are cashing in," one MP said.

However, ministers are determined to recruit the best executives from the City to sit on the board of the management company, in which the Government will have a large but minority stake.

Ministers hope that the establishment of a professional organisation, which will give legal and financial advice to the public sector, will help to avoid recent problems such as the Passport Agency computer fiasco. Salaries will be met from commissions charged to the Whitehall department or local authority which will benefit. Treasury insiders said the pay levels would similar to those in the City, where individual bonuses can be worth hundreds of thousands of pounds.

The company will be based on the existing 12-strong PFI taskforce headed by Adrian Montague, who is paid a basic salary of pounds 160,000.

"We will pay whatever is necessary to attract the best people," a senior Treasury source said. "This is not a fat cat bonanza for the sake of it but we have got to get some guys working for us who are up to negotiating with the private sector on their terms."

The plan comes as ministers move to clamp down on excessive boardroom pay in the private sector. Stephen Byers, the Secretary of State for Trade and Industry, will unveil proposals to allow shareholders to veto company directors' remuneration packages if they believe they are too generous.

The Government is determined to improve the link between pay and performance in the City, following a DTI survey which found that only 7 per cent of companies demonstrate a short-term numerical link and only 5 per cent relate performance measures to long- term company objectives.

A consultation paper will be produced shortly, urging companies to hold annual votes on remuneration packages and proposing that it should be made easier for shareholders to put forward a motion on pay at the annual general meeting.

Mr Milburn will also announce the establishment of a government agency responsible for buying equipment across Whitehall departments. The Office for Government Commerce, which will have a staff of 1,000 and a pounds 13bn budget, will be charged with saving pounds 1bn on purchases in the next three years.

The Treasury intends to recruit a heavyweight figure from business to run the agency, who will also be eligible for performance-related bonuses.

Suggested Topics
News
peopleFrankie Boyle responds to referendum result in characteristically offensive style
Arts and Entertainment
Highs and lows of the cast's careers since 2004
News
news
New Articles
i100... with this review
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
News
ebooksAn unforgettable anthology of contemporary reportage
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Cover Supervisor

£75 - £90 per day + negotiable: Randstad Education Group: Are you a cover supe...

Marketing Manager - Leicestershire - £35,000

£30000 - £35000 per annum: Ashdown Group: Marketing Manager (CIM, B2B, MS Offi...

Marketing Executive (B2B and B2C) - Rugby, Warwickshire

£22000 - £25000 per annum: Ashdown Group: A highly successful organisation wit...

SEN Coordinator + Teacher (SENCO)

£1 per day: Randstad Education Leeds: Job Purpose To work closely with the he...

Day In a Page

Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

Despite the result, this is the end of the status quo

Boyd Tonkin on the fall-out from the Scottish referendum
Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

Manolo Blahnik: Flats, Englishness, and Mary Beard

The shoe designer who has been dubbed 'the patron saint of the stiletto'
The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

Scrambled eggs and LSD

Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

'Normcore': Blending in is the new standing out

Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

New leading ladies of dance fight back

How female vocalists are now writing their own hits
Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments
These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

Widespread fear of Isis is producing strange bedfellows

Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
Topshop goes part Athena poster, part last spring Prada

Topshop goes part Athena poster, part last spring Prada

Shoppers don't come to Topshop for the unique
How to make a Lego masterpiece

How to make a Lego masterpiece

Toy breaks out of the nursery and heads for the gallery
Meet the ‘Endies’ – city dwellers who are too poor to have fun

Meet the ‘Endies’ – city dwellers who are too poor to have fun

Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

Ian Paisley’s decision to make peace with his IRA enemies

His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam