Independent reviews
Hutton Review of Fair Pay in the Public Sector: Terms of Reference
The Government has asked Will Hutton to make recommendations to the Chancellor and Prime Minister by March 2011 on promoting pay fairness in the public sector by tackling disparities between the lowest and the highest paid in public sector organisations. The review will produce an interim report by late autumn 2010.
This review, which will also help to shape broader social norms in relation to pay fairness, should comprise:
- Robust, evidence based analysis of the scale of the problem;
- Recommendations on how to introduce a public sector pay multiple that would mean that no public sector manager can earn over 20 times more than the lowest paid person in their organisation.
As part of this the review will need to consider:
- Over what timescale a cap could be applied;
- How a cap would operate in areas outside direct Ministerial control.
The review should have regard to:
- The Government’s wider fiscal and public sector pay policies, in particular the need for senior staff to show leadership in pay restraint, and to deliver value for money from the public sector pay-bill. Recommendations from the Review should not increase the total pay bill;
- The level of remuneration necessary to attract, retain and motivate staff of the quality required – and the opportunity cost of working in the public sector for some staff;
- The fact that organisations may need flexibility to exceed multiples to match the market rate in exceptional cases where there is a clear justification to do so;
- The Government’s stringent requirements for transparency and Ministerial approval in senior pay decisions.
- The benchmarking work currently being taken forward by the Senior Salaries Pay Review Body;
- The degree to which distortions and market failures in private sector pay create pressure for unfair pay multiples in the public sector.
- The importance of rewarding productive entrepreneurship by frontline public sector staff.
The review will examine all aspects of the public sector pay package, including base pay, variable pay, bonus and other elements, to the extent to which all can contribute to fairness across the pay range. The review will take into account any recommendations or findings from John Hutton’s review of public sector pensions and will not make independent recommendations on areas covered by the scope of that review.
The scope of the review should include staff covered by the Senior Salaries Review Body (senior civil servants, very senior managers in NHS commissioning bodies, senior military), senior staff in non-departmental public bodies, managers in local government and the NHS, regulators which receive public funding, and senior staff in further and higher education.
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