I see the BBC and the Royal Mail are to be left out of Will Hutton's inquiry into public sector pay. (Guardian 17 June).

Apparently, Hutton is still arguing about the terms of reference but all will become clear in the next fortnight.

We are told: "the Treasury has ruled they cannot be reviewed since they both have independent revenue streams apart from the taxpayer".

Oh! I see.

Does that exclude Ofcom which gets money from the Government and the rest from the broadcasting and communications sector in which it operates?

And what about those parts of the public sector such as Ordnance Survey and the Met Office that operate on a commercial basis and get no money directly from taxpayers? Obviously, they will have to be excluded.

And what about the universities? Some Vice Chancellors are getting paid serious money. About 40% of university revenue comes from non-state sources. So are the universities excluded?

This got me thinking about where the boundaries of the public sector actually lie. These days it is by no means a straightforward exercise to demarcate the public and the private. There are a million shades of grey in between.

Why should the top person on premium bonds in National Savings and Investments come within the Hutton Review but top executives in the publicly listed but largely taxpayer owned Royal Bank of Scotland be excluded? (If this is indeed to be the case.)

In the last Parliament the Public Administration Select Committee looked at this thorny issue of defining what is public sector and what isn't. (HC 172-I )

Its report on Top Pay in the Public Sector asked: "Why should pay at British Waterways (a public corporation) be considered in a different framework from that at Network Rail (a company limited by guarantee, the debts of which are underwritten by the Government, and which is funded by the Government) or from that at Tube Lines (a private limited company carrying out work contracted entirely from the public sector)?" (HC 172-I , page 8)

Why indeed?

Over to Will Hutton.