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Can it be right to pay someone in the public sector a huge salary? Could it be value for money for anyone else in the public sector to be paid more than the Prime Minister, who is on £142,500? Sometimes I think it is.

For example Stephen Hester (if we count him as a public sector employee) is the Chief Executive of the Royal Bank of Scotland. He is on £1.2 million a year. He has a dubious past in the Tory Reform Group. Yet I think it is at least possible that he is value for money. That were we to say that nobody holding that post could be paid more than £142,500 a year (before we even bring a bonus into the equation) that as taxpayers we would have a false economy. That it is worth paying someone a lot to turn that organisation around.

In my council of Hammersmith and Fulham we paid a consultant a lot of money to turn around our housing ALMO – he did a good job. He was expensive but he was value for money. Similarly we paid our Council Chief Executive a lot. But we have regarded the best way of achieving value for money to split the cost with the NHS Primary Care Trust (with our previous Chief Executive) or with a neighbouring borough (with the incumbent). We thought that was more effective than having someone paid less.

The snag is that frequently we have people in the public sector on these huge salaries that are not delivering value for money. For instance in the Evening Standard today we read about Tony Winterbottom who is an "executive adviser" on regeneration and development to Lutfur Rahman, the extremist mayor of Tower Hamlets on £1,000 a day. Winterbottom says he is "embarrassed to be charging so little." But where is the evidence that the Tower Hamlets Council Taxpayer is getting value for money?

The Evening Standard says:

Mr Winterbottom was previously a senior official at the defunct London Development Agency. He was criticised in 2008 after he left on a year's sabbatical, followed by a £75,000 pay-off and £160,000 top-up to his pension fund. An investigation into the LDA, ordered by Boris Johnson and headed by former financial journalist Baroness Wheatcroft, found a string of failings including "ineptitude" and "massive misspending".

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