SOARING salaries for top civil servants and bosses of state companies have created a new breed of public sector “fat cat”, new research has indicated.

Pay for the most senior directors working for the state rose last year by 7.4%, twice the national rate of wage increase, according to research by Incomes Data Services (IDS), a pay consultancy.

The highest-paid employee in the study is John Armitt, chief executive of Network Rail, which runs Britain’s railway infrastructure. Armitt’s salary and bonus of £878,000 — rising to more than £1m when pension contributions are included — means that he has overtaken Adam Crozier, chief executive of Royal Mail, at the top of the league.

While Armitt and Crozier run organisations that have to compete with private sector businesses, the pay packets collected by some top civil servants have led to accusations that they are receiving “rewards for failure”.

The highest-paid civil servant in Britain is believed to be Richard Granger, responsible for the NHS’s new computer system, which has gone billions of pounds over budget. He is paid at least £280,000 a year, about £100,000 more than Tony Blair.

Steve Tatton, editor of the IDS study, said the size of pay cheques being handed to top officials, many of them brought in from the private sector, was now causing problems.

“The top people in the public sector are definitely catching up with the private sector now,” said Tatton. “The people who come in from outside do not want to take pay cuts and this is creating tension with the existing officials whose pay is being held in check.”

Tatton’s research analysed the pay, including bonuses, for the best-paid executives in the 48 Whitehall agencies and 28 other public bodies. The study did not include civil servants in the main Whitehall departments, whose salaries are far more tightly controlled than in the agencies.

The study covers quangocrats — such as Ed Richards, who was appointed earlier this month to head Ofcom, the broadcasting regulator. He is expected to be paid a similar amount to Stephen Carter, his predecessor, who earned £369,417 plus benefits giving him a total package of £440,000.

The study also covers heads of organisations such as the BBC, Royal Mail and Network Rail — which maintains it is not a state body at all. Executives running these organisations are the most highly paid group, with large parts of their packages tied to performance because they claim they have to compete with the private sector.

The most controversial payments are those to officials seen as running failing organisations. Granger, 41, was brought in from the consultancy Deloitte in 2002 to run Connecting for Health, which is designed to provide hospitals, trusts and GPs with a single computer system for managing patients’ treatment. The project has so far cost double its initial projection of £6 billion and is more than two years behind schedule.

Following a request under the Freedom of Information Act by the website silicon.com, the Department of Health has now disclosed that Granger is paid between £280,000 and £285,000. A health department spokesman denied Granger was overpaid, adding: “The IT programme is one of the biggest projects in the world and his salary reflects this. He would earn a lot more in the private sector.”

Others paid high amounts for running failing organisations include Stephen Geraghty, chief executive of the Child Support Agency, who is paid £177,000, 20% more than his predecessor. In July, Alan Johnson, then work and pensions secretary, announced the agency was to be abolished. It has been repeatedly criticised for its failure to channel support payments from absent fathers to single mothers.

Tony Collins, editor of Computer Weekly, said he believed too much was expected of private sector executives moving into the government. He said slow decision-making meant they had far less opportunity to make far-reaching changes than when working for companies.

“They are very different types of job,” Collins added. “In the private sector, if you screw up, the chances are you will get sacked. In the public sector, the chances are ministers will try to cover up what happened.”

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