Senior pay should be ‘transparent and linked to performance’

Pay for senior social services managers should be linked to performance and be more transparent, a government-commissioned report has said.

Economist Will Hutton said public sector bosses should face losing at least 10% of their full salary if objectives are missed.

But he ruled out a cap on executive pay across public services, having initially considered an idea that no manager could earn more than 20 times the lowest-paid worker in the organisation. The review of public sector pay found that this would be “inoperable”.

Hutton also made the following recommendations:

• Public sector bodies should disclose “in precise numbers” the full remuneration of all executives, with explanations how pay reflects responsibilities and individual performance, from 2011-12.
• Executive pay multiples – for example, whether a manager earns 20 times or more the pay of the lowest-paid employee – should be tracked and published from 2011-12.
• Public sector bodies should implement a fair pay code, ensuring that all pay is determined in a fair and transparent process.
• Managers should be supported to move across public services and to and from the private sector, to increase the supply of candidates for top positions.

Speaking on the Breakfast programme on BBC One, Hutton said it had become more difficult to recruit a director of children’s services at Haringey than to recruit a Prime Minister.

“There’s no shortage of people coming forward to be Prime Minister…if you’re trying to hire someone to do child protection services in Haringey, there’s almost no one on earth who wanted to do it,” he said.

The recommendations follow proposals by ministers to limit pay in local government, by allowing councillors to gain a veto on officers’ salaries of more than £100,000, and requiring all council officers earning more than £58,200 to be named by authorities.

Hutton said in the report that fair pay was essential to “high quality, well managed public services” but there was a perception that the public sector was “no less awash with ‘fat cats’” than the private sector.

“The public has the right to know that pay is deserved, fair, under control and designed to drive improving public sector performance – and that there are no rewards for failure,” he added.

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