The coalition government asked Will Hutton, head of the Work Foundation, to examine public sector pay principles – a so called “Fair Pay Review”. He reported on 15 March, but attracted far less attention than his namesake’s report into pensions. Public sector workers were underwhelmed with this report, and have little hope that there will be any positive outcome.
Hutton praised the critical role played by public services in ensuring the quality of life for all British citizens and said it supports economic growth rather than being a burden. His views may not appeal to the prime minister, who declared a few days beforehand that civil servants were “enemies of enterprise”. Unfounded perceptions
Hutton found that much public perception on pay levels is unfounded. He said that public sector executives are not paid more than those in private organisation for comparable work. The government meanwhile continues to characterise the public sector as overpaid. It uses false comparisons and ignores how most of the very high salaries are paid to people recruited from the private sector.
The government also ignores the low pay levels for many public jobs. Hutton concluded that there was no point in setting a ratio to govern the highest and lowest pay. In fact the current ratio of 12 to 1 is lower than the ratio of 20 to 1 suggested by Cameron last year, and far lower than in many large private companies.
Hutton believes that “transparency” is a good thing – a view shared with Frances Maude, Cabinet Office minister. Maude has already done that for senior civil servants. His aim was to apply public opinion to keep down senior pay levels and not much to do with any ideals about good citizenship.
The one idea the government may take from Hutton is to penalise senior staff for not hitting targets, which are set by ministers. This is described as “earn back” – where up to 10 per cent of basic pay must be earned afresh each year by meeting previously agreed objectives. The First Division Association, which represents senior staff, said this will be demotivating; “Setting targets and measures at the beginning of the year that will stand the test of time until the end of the year and can be measured in a fair way is very difficult to achieve in practice.” And the history of pay systems is that bad ideas soon find their way to more junior levels.