Leading article: Top jobs with tough responsibilities merit top salaries

Few calculations are based on such pseudo-science and false analogy as those which produce the salaries of "top people". In the private sector, remuneration committees sit around pretending to be objective when in fact they are working on hunches, the going rate and vague intuitions about individuals and returns. In the public sector, the work is farmed out to committees of the Great and Good who try, usually in vain, to find someone whose job really compares with that of an army general or the Cabinet Secretary. But lack of rigorous principle is not the same as the absence of a strong case for paying those in senior positions well. Like the Prime Minister. His is an incomparable job, for which pounds 140,000 a year by no means sounds too much but pounds 90,000 certainly sounds too little.

The pay system bequeathed to Labour by its Tory predecessors this week produced new numbers for the Prime Minister and Cabinet colleagues. The resulting salaries are reasonable. For the Home Secretary to receive pounds 120,000 or so a year is fitting. It is a demanding job, carries physical risks and may only last a matter of months. Those points apply even more strongly to the premiership. In an ideal world, we might wish there to be tighter definitions of ministers' jobs, making clear just where their responsibilities end and those of the managers they employ in the public services begin. But such fuzziness is no excuse for meanness.

Cabinet ministers deserve the money even when nurses and doctors and teachers are being kept to increases at or around the rate of inflation. Through a mixture of parliamentary pusillanimity and Conservative cowardice, ministerial pay is now depressed. There is a good case for a one-off upwards adjustment of Cabinet salaries which need not have any ramifications for those working in schools or hospitals or collecting refuse.

One of the best legacies of the Conservative era was the conviction that pay has to follow performance. If the phrase "pay policy" is to mean anything at all, it must no longer be the doctrine of the annual round where everyone gets some inflation plus increment plucked out of the air by trade union leaders; instead it must be based on schemes which seek to reward those who perform their jobs well and increase the public product as a result. Even nurses are not all star performers; their pay must also recognise individual merit as well as local circumstances of recruitment.

Frightened of confrontation with a branch of trade unionism which the industrial relations revolution of the Eighties seems to have passed by, governments in the past have usually chosen not to deliver this message to public employees directly, preferring to hide behind pay review bodies. These are merely a deception, for a reason graphically illustrated yesterday. The Government made it plain before the election that its spending plans for the next two years are those fixed by Kenneth Clarke last November. Those plans envisage an increase in aggregate public sector pay of little more than inflation.

Alistair Darling - a minister, incidentally, emerging as one of this administration's brighter lights - repeated this fiscal fact yesterday, directing his voice towards the pay review bodies. How dare he, stormed Sandy Macara, chairman of the British Medical Association - "The review body should do [its job] quite unfettered by affordability." That is the authentic voice of the Seventies, the decade which brought us discontented winters and the mentality which says public services are not for the benefit of the public but for those who provide them.

Tony Blair is wrong to have foregone a rise in prime ministerial salary, but sometimes political circumstances are too strong to resist - and this was such an occasion. Given Cherie Booth's professional success, it is hard to see the Blair household missing the odd pounds 10,000 (however unfair that observation, it would get made). Mr Blair's next move, to urge his Cabinet colleagues to take their rise, was correct. They now merely look like sheep.

Those mistakes made, the Government needs more than ever to reaffirm its public sector pay policy for 1997-98. It is this. Spending plans do allow some small rise in aggregate pay. That, however, must first be used to meet the Government's stated priority, which is the rescue and rehabilitation of the education service. A key instrument is differential reward, allowing, for example, good teachers to stay in the classroom, well paid and not sucked into administration and pastoral work which, however important, have to remain secondary to lively teaching. David Blunkett's authority to push that policy would in no way have been diminished by his accepting an amount nearer the proper pay for a minister of his standing.