Health Service managers have had a big pay rise, but should they and others like them follow the example of self-sacrificing Vauxhall boss Nick Reilly? Jim Greenhalf reports.

A few years ago the phrase "fat cats" became common currency in this country.

It was a derogatory description of certain chairmen and chief executives of privatised public utilities on big salaries creaming off even more money by cashing in their share options.

What really got up the nose of Joe Public was that simultaneously Government Ministers warned of the dangerously inflationary effect on the economy at large of public sector pay awards of a few per cent.

Although paying thousands of workers thousands of pounds extra each would obviously be more costly than paying a top dog thousands more, current affairs programmes frequently agonised over whether this way of doing things set a good example to the public.

Public and private sector salaries can never be equitable. Bed-pan carrying nurses may resent the £98,000 paid to David Jackson, chief executive of the Bradford Hospitals NHS Trust, the man responsible for the BRI and St Lukes. His salary, however, doesn't begin to match the £515,000 paid to Mike Blackburn, chief executive of The Halifax plc.

Mr Blackburn's pay, made up of salary, bonuses and benefits, has to be seen against the bank's record-breaking profits for 1997 of £1.65 billion. The Halifax operates in the market place where things are bought and sold. The concept of the market forces-driven internal market imposed on the NHS by the previous Government is being dismantled by the present one.

Health Secretary Frank Dobson has decreed that future pay increases for NHS managers should not exceed the 2.7 per cent recommended by the Pay Review Body for nursing staff and professions allied to medicine. The actual figure is slightly higher than that, but the full-year effect is 2.7 per cent, said John Murgatroyd, director of human resources for Bradford Hospitals NHS Trust.

This applies to David Jackson too, even though his salary is determined by the chairman and non-executive directors of the Trust's board.

Clearly Frank Dobson believes there is a correlation between low morale on the hospital ward and high salaries in executive offices. While he doesn't have the necessary hundreds of millions to give all staff another £2,000 each, which Mr Jackson reportedly got last year, he seems determined to keep the per-centage increase the same for top and bottom.

Ah yes, but will the Trust's board heed the Secretary of State's warning?

"If the Secretary of State asks us to do something I think we have a duty to follow that guideline," Mr Murgatroyd told the T&A.

The Halifax has no such obligation, nor does Morrisons. The Bradford-based supermarket chain is able to share £7.76m of its profits for 1997 among its 17,383 staff (2,031 of whom work in Bradford). Each will get the equivalent of a fortnight's pay, tax free.

Ken Morrison has been sharing his profits for 20 years. Though he has in that time paid out many millions in thank you bonuses to his workers he has had the pleasure of seeing his own personal fortune escalate to the £400m mark. This surely demonstrates the validity of the general truth that people work better for employers who treat them fairly. Discriminatory pay rises only cause resentment.

Was that the reasoning behind Vauxhall car boss Nick Reilly's decision to give up his £160,000 salary for a year? If it was, it got short shrift by sections of the media and by both sides of industry in Bradford.

The Daily Mail pointed out that as corporate vice-president of Vauxhall's US parent company General Motors Mr Reilly's full salary package was understood to be in excess of £300,000. Company accounts disclosed that in 1996 he received a fistful of dollars short of £250,000 for only ten months' work.

What's a 12-month cut of £160,000 when you are still on more than £2,200 a week - more than seven times the average weekly wage for full time employment in Bradford of £304.50p?

Judith Donovan, boss of Bradford-based direct marketing company JDA, told the T&A she earned less than half of Mr Reilly's £160,000 sacrifice. Asked if she would be prepared to follow his example, she said:

"No I wouldn't be prepared to do it. This is not how you turn around ailing companies. Vauxhall is in trouble, but they need to identify the root of the trouble. What he's doing is cosmetic, trying to stop a haemorrhage with a plaster. It's treating your workforce and your market like idiots."

Peter Booth, the Bradford-based national secretary of the Transport & General Workers' Union's textile trade group, said the Vauxhall workers were in the middle of pay negotiations so Mr Reilly's gesture was a bit of a cynical ploy.

"You've got to see it in the context of General Motors' investment decisions about its European operation because sterling is so high," he added. In other words the possibility of the American company moving at least part of its British operation to another country with better export incentives.

Mr Booth, who believes Britain's textile industry has been in recession since last November, is inclined to the view that Mr Reilly's willingness to forgo so much money for a year must mean that "he's got a hell of a lot of fat to fall back on".

British workers, he added, work the longest hours, do the most shifts including weekend work, and yet remain among the lowest paid in the European Union.

David Miller, of West Yorkshire's independent Low Pay Unit, said the average gross earnings for full time work in Bradford of £304.50 was a Government estimate. The Job Centre average for Bradford was a lot less at £166.90.

Thousands of people in textiles, catering and the hotel trade earned between £3 and £4 and hour. Low paying employers were in effect subsidised by the State by means of Family Credit payments to low paid workers with families.

But, as Peter Booth warned, it is the low paid manufacturing sector which is heading for recession, unable to sell its goods abroad because of financial institutions' insistence on a high pound to counter inflation, and the state of the so-called Tiger economies of South East Asia.

Paying people better wages would not necessarily bring about economic regeneration, according to Judith Donovan. "You can only pay big salaries if the marketplace is prepared to pay more for what you produce."

In which case does it make economic sense to load a handful of people with more cash than they need while millions have to make up their pay with State benefits?

Converted for the new archive on 30 June 2000. Some images and formatting may have been lost in the conversion.