Hutton Review of Fair Pay

March 15, 2011

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HUTTON REVIEW OF FAIR PAY IN THE PUBLIC SECTOR

“High quality public services require high calibre leaders to deliver them, especially in difficult fiscal conditions. A key challenge for Government is to maintain and improve the standard of public service leadership as the structures of public service delivery are reformed. Vital to this will be to ensure that public service leaders are adequately and fairly rewarded for their contributions, and that the public service ethos – that sense of mission and public duty that motivates many to work delivering public services – is maintained. This requires that a delicate balance be struck. If senior public servants are inadequately rewarded, it will be ever more difficult to attract and retain individuals of the calibre required. At the same time taxpayers are right to demand value for money from public resources, and an assurance that their money is not being wasted on excessive executive salaries. Without that assurance, trust in public services cannot be maintained.

Yet public understanding of both senior public service roles, and senior public service pay, is often very poor. A quarter of the public believe that public sector executives are currently paid more than their counterparts in private businesses, while in fact executive pay in large listed companies far outstrips that in even the largest and most complex of public bodies. The public also often have limited knowledge of what senior public servants actually do, so are not in a position to judge what level of reward is fair for these roles. Meanwhile the absence of a consistent framework of senior pay principles denies citizens reassurance that rewards are fairly matched to responsibilities and performance, and leaves a gap in which mistrust of public servants can grow.

The UK therefore needs a framework for fairness in senior public service pay. This framework should be based on the principle of fairness as due desert: reward should be proportional to the weight of each role and each individual’s performance; should be set according to a fair process; and should recognise that organisations’ success derives from the collective efforts of the whole workforce. This fairness framework will ensure that senior pay in public services is fair and seen to be fair, and will preserve the ability of public services to recruit talented individuals while reassuring the public that their tax money is not being unfairly creamed off by ‘fat cat’ public sector executives. This report presents the Fair Pay Review’s conclusions, and sets out twelve recommendations to the Government that together form the framework for fairness.”

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