26 February 2009
PASC LAUNCHES INQUIRY INTO EXECUTIVE PAY IN THE PUBLIC SECTOR
The Public Administration Select Committee (PASC) today launches an inquiry into executive pay in the public sector. The inquiry will examine the arrangements for determining pay and other benefits at top levels in the public sector. Set out below are the key issues and questions that those wishing to submit evidence are invited to consider.
PASC’s inquiry will focus on civil service posts, and on public appointments made by Ministers and by the Crown, eg most regulators and other non-departmental public bodies or Quangos.
The inquiry will also take account of practice across the public and quasi-public sector more widely, eg local government, the NHS, universities, nationalised industries and public sector broadcasters. However, as most of these appointments do not fall directly within PASC’s areas of experience, they are more likely to provide a context for the Committee’s work than to be central to it.
PASC’s remit does not cover those public sector appointments which are the responsibility of the devolved administrations in Scotland, Wales and Northern Ireland.
Pay and other benefits at the top of the public sector are coming under ever more critical scrutiny, both from campaign groups, such as the TaxPayers’ Alliance (see footnote 1), and from within Parliament (see footnote 2). Where large amounts of public money are directed towards individuals, the public deserves to know what value it is getting for this money. It is also reasonable to expect that mechanisms should be in place across the public sector which are used to determine in a transparent and logical way how levels of pay are set at executive levels.
The Review Body on Senior Salaries (SSRB) makes independent recommendations to Ministers on the remuneration of holders of judicial office; senior civil servants; senior officers of the armed forces; and “other such public appointments as may from time to time be specified”, including at the moment very senior managers in the NHS in England. Ministers decide whether to accept their recommendations in full or in part or to implement different arrangements.
Pay for other senior public servants is set outside this framework. This includes positions in local authorities, the police, schools and universities, nationalised industries, public sector broadcasters, industry regulators and other non-departmental public bodies or Quangos.
For some but not necessarily all of these posts, competition for talent with the private sector is apparently a factor. A recent report from the Audit Commission suggests, however, that in some circumstances public bodies are competing with one another for top performers in a way which is driving up pay:
“Higher rates of recruitment of existing chief executives have led to increased turnover rates, additional recruitment costs and wage inflation.” (see footnote 3)
Wage inflation for executive posts also appears to be an issue in some other parts of the public sector (see footnote 4).
1. Are the right arrangements in place for setting and monitoring pay and other benefits for top posts in the public sector?
a. Are they fair?
b. Are they transparent?
c. Do they produce the right results?
d. Do they provide value for money?
e. Do they inspire public and political confidence?
2. Does there need to be consistency regarding these arrangements between different parts of the public sector?
3. Does there need to be comparability of pay between top posts in the public sector and equivalent posts in the private sector?
a. If so, how should equivalent posts in the private sector be identified?
4. Is there evidence of executive wage inflation caused by public sector organisations competing with one another for candidates?
5. What role should consultancies play in the determination of pay for top public sector posts?
6. Is the balance right between executive pay and other benefits? eg bonus, pension
7. Do the pay levels for top posts in the public sector have a direct impact on the performance or qualities of the people filling those posts?
a. What impact do the performance or qualities of the people filling top posts in the public sector have on the performance of the organisations for which they work?
8. Is there an appropriate benchmark or ceiling for top public sector salarieseg the salary of the Prime Minister, or a factor of average pay?
9. Can England and the United Kingdom learn from the experience of other countries or the devolved governments in this area?
How to respond to this paper
PASC would appreciate receiving responses to any or all of the questions in this paper. Although some of the questions could be answered by a simple yes or no, it would be valuable to have fuller responses in order for us to understand the points being made. Some respondents may wish to concentrate on those issues in which they have a special interest, rather than answering all of the questions. Respondents may also wish to suggest any proposed recommendations for action by the Government or others.
Written responses to this issues and questions paper will usually be treated as evidence to the Committee and may be published as part of a final report.
If you object to your response being made public in a volume of evidence, please make this clear when it is submitted.
Responses should be submitted by
Monday 20 April by email to
[email protected] If you do not have access to email, you may send a paper copy of your response to the Clerk of the Public Administration Select Committee, Committee Office, First Floor, 7 Millbank, London SW1P 3JA.
Each submission should:
be no more than 3,000 words in length;
begin with a short summary in bullet point form;
have numbered paragraphs; and
be in Word format or a rich text format with as little use of colour or logos as possible.
The Committee will hold oral evidence sessions during the first half of 2009.
1. See the Public Sector and Town Hall Rich Lists.
2. Eg. Pre-Appointment hearing by the Business and Enterprise and Culture, Media and Sport Committees with the Chaiman-elect of Ofcom on 13 January 2009; Debate on the floor of the House of Commons on 17 December 2008 on the appointment and renumeration of the Chair of the Electoral Commission.
3. Audit Commission, Tougher at the Top?, Local Government discussion document, July 2008
4. Eg. Incomes Data Services, NHS boardroom pay report 2008
Committee Membership: Tony Wright (Chairman) (Lab) (Cannock Chase), Mr David Burrowes (Con) (Enfield, Southgate), Paul Flynn (Lab) (Newport West), David Heyes (Lab) (Ashton under Lyne), Kelvin Hopkins (Lab) (Luton North), Mr Ian Liddell-Grainger (Con) (Bridgewater), Julie Morgan (Lab) (Cardiff North), Mr Gordon Prentice (Lab) (Pendle), Paul Rowen (Lib Dem) (Rochdale), Charles Walker (Con) (Broxbourne), Jenny Willott (Lib Dem) (Cardiff Central)
Media Enquiries: Jessica Bridges-Palmer, 020 7219 0724,
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[email protected] Tel: 020 7219 3284
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