Select Committee on Public Administration Fourth Report


Remuneration

153. The Cabinet Office is currently engaged upon a study of remuneration policies on public bodies, including the basis on which remuneration is determined; the costs of extending remuneration to more or all posts; and the likely impact upon diversity.

154. The weight of evidence that we have received convinces us that the existing arrangements for remunerating those who serve on public bodies are a significant barrier to wider participation, especially among people who are low paid or self-employed. Dame Rennie Fritchie told us: "Remuneration is a diversity issue. About 80 per cent of public appointments are unpaid and I am told by many people that the lack of remuneration and the inconsistent level of remuneration across different bodies are real barriers to enabling a broad cross section of people to participate on public bodies".[89] The Equal Opportunities Commission drew particular attention to the effect of lack of remuneration and different levels of pay across different bodies which "introduced a barrier for many women, who are more likely to be in lower-paid work".[90] Simon Woolley, of Operation Black Vote emphasised the deterrent effect of unpaid posts on ethnic minority candidates: "it does rule out a lot of ordinary people, but also a lot of high-flyers, simply because to take time off has an effect on what they can and cannot do".[91]

155. Our analysis of Public Bodies and other data revealed that the total number of chairs and members of all the NDPBs, executive and advisory, is 10,016, of whom 1,165 are chairs and 8,941 members.[92] It also shows that, of the chairs, 846 are remunerated and 319 are not. Of the members, 5,058 are remunerated and 3,883 are not. As Table 2 shows, there is a marked divergence between executive and advisory bodies. Only 5.4 per cent of executive chairs and 17.5 per cent of executive members are not remunerated, whereas 71.4 and 76.1 per cent respectively of chairs and members of advisory bodies are unpaid.

Table 2: Chairs and Members of Executive and Advisory Quangos (NDPBs) and their Remuneration, as at March 2002 (a)
Department Executive NDPBs Advisory NDPBs
Paid

Chairs

Unpaid

Chairs

Paid

Members

Unpaid

Members

Paid

Chairs

Unpaid

Chairs

Paid

Members

Unpaid

Members

Cabinet Office1 0150 4743 61
Duchy of Lancaster (b)- --- 0210 179
DCMS17 25142310 11210 179
Defence1 4151 61851 289
ODPM9 1918 0324 49
DfES8 316100 (c) 010 8
DEFRA29 114495 457178 120
Export Credits Guarantee Department --- -01 09
FCO15 0801 2715
Food Standards

Agency

---- 80105 1
Health10 01270 2013297 179
NHS Bodies (d)595 02,8400 --- -
Home Office6 116118 4429 70
DfID- --- 110 20
LCD (e)3 0170 4 15026 1,398
Northern Ireland Court Service (f) --- -011 074
Northern Ireland Office 60600 002 0
Oftel- --- 6040 0
OFWAT10 00131 100 9
Royal Mint- --- 010 7
Scotland Office- --- 012 1
DTI24 232979 52256 275
Transport10 01232 1112 19
HM Treasury- --- 1017 7
DWP50 4603 14740
Totals735 424112874 111277946 3009

Source: Public Bodies 2002, modified by information from Departmental returns

Notes:  (a)  This table excludes chairs and members of public corporations, who are invariably paid. Because of the differing reporting practices adopted by departments, it also excludes ex-officio members and vacancies on bodies.

(b)  Figures are for advisory committees on Justices of the Peace in Lancashire, Greater Manchester and Merseyside.

(c)  This figure does not include the 47 unpaid chairs of local Learning and Skills Councils.

(d)  Figures include health authorities, NHS trusts and primary care trusts, whose members make up 2,552 of the total 2,840 paid members on NHS bodies.

(e)  Figures for the LCD's advisory bodies include advisory committees on Justices of the Peace in England and Wales.

(f)  Figures include advisory committees on Justices of the Peace in Northern Ireland.

156. We believe that the assumptions that govern the levels of remuneration and the divisions between paid and unpaid service reflect the values of a pre-Nolan era. Moreover, the rates of pay and criteria for payment and non-payment are evidently inconsistent, as the data we received from departmental responses to our questionnaire showed, across departments and even across sponsoring divisions within departments.

157. The Committee asked some of the larger government departments to describe their policy on payment for public appointments. We found that the main principle was 'the rule of thumb'. Officials set or agreed rates of pay that reflected the status of bodies, the level of grant and staffing provided, the weight of responsibilities that appointees took on, and their relevant experience. The FCO response was fairly typical. The FCO has 'no fixed policy on the remuneration of outside appointees… Each case is treated on its own merits. The main criteria are the relevant experience of the appointee and how demanding the task is'.[93]

158. We have been able to discern several main strands in remuneration policies. First, there is the straightforward attempt to gauge what a market rate for chairs and members of executive NDPBs and public corporations might be. This is a delicate and difficult task, as is vividly illustrated by the controversy about alleged excessive executive salaries in the private sector. Our survey of departments may, on further analysis, throw more light on any discrepancies.

159. Secondly, there is the question of prestige. A previous study of advisory NDPBs found that specialist members were relatively low paid because service on such committees was regarded as a mark of distinction within their professions. As one expert informed the researchers, 'it is an honour to serve'.[94] Thirdly, there is sometimes an old-fashioned assumption that service on many public bodies is largely to be undertaken by men of experience near or at retirement age, or (less commonly now) the wives of managerial and professional men, neither of whom really require adequate remuneration. People of experience, such as those newly retired, clearly have much to offer and we do not believe that there should be arbitrary (and often inconsistent) age barriers for public appointments, but nor should the pool of potential appointees be implicitly narrowed. Bert Massie, chair of the Disability Rights Commission (DRC), said: 'I really got the impression, when I came to the DRC, that what they were looking for was somebody who already had a decent pension, that this was a job for somebody, "You've made your money, old boy, and, you know, it's a nice little bit of pin money to keep going"'.[95] None of the departments we surveyed seemed to consider the fairly obvious point that suitable payment could help attract a more diverse, perhaps less prosperous, range of candidates for public office, while retaining the sense of public service. There is some evidence that paying members does increase interest in service on public bodies. For example, the Rail Passengers Council's annual report for 2001-02 notes that the first year of payment had a 'dramatic' impact upon the network of rail passengers' committees. Applications for membership grew fourfold and diversity improved as a result.[96]

160. Many witnesses[97] suggested that the number of paid public appointments should be expanded and remuneration generally made more generous. We summarise below the arguments for and against such an expansion:

Against:

  • Common Purpose argued that more frequent payment could encourage the growth of the semi-professional committee person, who makes a portfolio job out of public bodies. This could risk the replacement of the ideal of public service with career calculation;[98]
  • Voluntary service frees public appointees completely from any suggestion of obligation to the government, or anyone else. A concerted move away from that principle could lead to pressure from government paymasters, and a tendency to make safe decisions at times when re-appointment was in prospect;
  • It could be expensive to provide appropriate remuneration, especially for heavily-loaded or expert posts;

In favour:

  • An increase in the number of paid posts would assist the Government's goal of increasing diversity. The Transport and General Workers Union argued that 'Whilst such increased remuneration would require a significant increase in resources allocated to public appointments, this would seem a price worth paying for a more representative and therefore more effective system of public bodies'.[99] We heard evidence from Operation Black Vote that suggested that payment for service on public bodies would make it more attractive for people from ethnic minorities to apply for posts on such bodies;[100]
  • A more generous system could produce more consistency and fairness between bodies and posts, allowing the same pay to be provided for the same work;
  • There are increasing demands to make the members of public bodies more professional, and professionals should be paid;
  • Councillors are paid through a comprehensive and developed allowance scheme. There is no reason why members of public bodies, which may carry out similar functions, should not be paid in a similar way.

161. We agree that the ethic of voluntary public service is an ideal that government should be reluctant to cast aside; and there is no doubt that the absence of financial obligation could encourage independence of mind and avoid any suggestion of a conflict of interest. However, we are convinced by the arguments that payment can be an important tool in securing diversity on public bodies; and that the ideal of voluntary service, almost by definition, is in present circumstances normally fulfilled by those who can afford it.

162. Nor have we found any evidence that paid public appointees are any less independent or courageous than those who are unpaid. On the other hand, we have received convincing evidence that more generous but still modest payments could help to encourage a more diverse range of people to apply for public appointments.

163. We therefore recommend that the Government should develop a more consistent approach towards paid and voluntary service on public bodies with an emphasis on developing competence-based lay representation and diversity in appointments.

Pay-related issues

164. There are other pay-related issues which need to be addressed if the new civic tradition is to be securely established. Bert Massie pointed out the financial difficulties that face those who take paid public appointments while still of working age. He suggested that the Civil Service Pension Scheme could be adapted to provide appropriate security for those who take on paid public appointments which demand a substantial commitment of time.[101] The broader question of how people in full-time work can be encouraged to apply for such demanding posts also needs to be addressed. It is important to take account of the conflicting pressures that are brought to bear on those who have to balance their commitments in this way.

165. This means looking freshly at provisions for time off from work for public duties. There are existing arrangements for councillors, and for trade unionists, but no general provisions for time off from work for public service. Such service should be encouraged and valued by employers in both the public and private sectors, and a genuine opening up of the public appointments system to a wider range of people will require attention to this issue. We therefore recommend that the Government should put in hand a review of this area, with a view to establishing a coherent set of arrangements for workers to have time off for public duties.

166. Several witnesses said that the appointments process needed to recognise the need for child and other caring obligations to be met if more women in particular were to be recruited. As Sir William Wells observed, 'it is very important that we do not preclude people with children because they are important to us to have on the board'.[102] Sir William also emphasised the need to adopt convenient meeting times and to shape working practices to make service on public bodies family and employer friendly.

167. We are persuaded that improved and consistent arrangements for child-care and similar costs, along with family and employer-friendly meeting patterns, should be a Government priority.

168. We recommend that the Cabinet Office should consult the Commissioner for Public Appointments over guidance to departments, aimed at improving facilities and payments for the care of dependants and meeting other reasonable costs; and making meeting times and frequency of meetings more family and employer friendly.

Benefit losses among people with disabilities

169. Social security rules can penalise people who take on appointments, especially people on incapacity and other income-related disability benefits. People with disabilities can lose their benefit if they receive remuneration for public service, and with it their 'passport' to other benefits and facilities. The Engage Network[103] gave us general evidence on this issue and Bert Massie cited the case of a man who has multiple sclerosis. He serves on the Chester hospital board, but as a result of changes in social security legislation would, said Mr Massie, lose his higher-rate benefit entitlement and might never regain it if he remained on the board. Here was a 'very able man' who would have to surrender his place on the board because of the hostile benefits system.[104]

170. We recommend that the Government undertake an urgent review of the rules on incapacity and income-related disability benefits to ensure that they do not discourage people with disabilities from applying for public appointments.

Selection by lot—talent hunting

171. One possible way of strengthening diversity on public bodies would be to adopt the process of selection by lot pioneered by the National Lottery Community Fund.[105] The Fund's nine regional awards committees in England select two of their 10 members by way of an initially random process. People are first chosen at random to receive a letter inviting them to apply for membership of a committee. Those who show an interest then go through a rigorous selection process, described to us by Andy Freeney, the Fund's regional manager for the north-west, and the successful candidate is chosen on merit in accordance with the committee's needs and balance at the time.[106] In this way, both diversity and merit are combined. Other members are appointed after public advertisement and interview in the conventional way.

172. So far 26 people have been chosen by lot, aged between 18 and 55, and include an electrician, swimming instructor, police officer, and housewife. Janet Paraskeva, who developed the scheme while she was at the Fund, described the process as "head-hunting" in the community at large. Such rigour should overcome objections that it is a fundamental departure from the merit principle. Ms Paraskeva said that it drew from a "wide range right across the community, whether you are looking for diversity in age, intellectual capacity, ethnicity, gender from which you can select":

"Having run a small quango and having myself been on a health trust, I know that on both those occasions I got there partly on merit, but also, in terms of the trust, because somebody knew whose shoulder to tap on… We [at the Fund] were tapping the shoulders of lots of folk and saying, 'Have you thought of this?'".[107]

173. This is an imaginative and innovative approach to extending the range of people involved in public appointments, which we would like to see taken up more widely. We are in favour of a modest pilot scheme using 'lot' to attract candidates for lay positions on public bodies, and which would in turn enhance public perception of these bodies as more open and inclusive. This approach can be combined with a final decision based on the principle of merit. We are aware that there is a possible tension between using this technique and the case for making more effective use of existing networks to access already active talent from under-represented groups.[108] But we believe that these different approaches can be reinforcing. We are also aware of the objection that selection by lot might seem to lack the dignity deemed necessary for appointments to major national bodies. We are not deterred by that argument either. Jury service, based on random selection, is a jealously-guarded cornerstone of the constitution and is less rigorously conducted than the Fund's processes. We see no reason why a system of selection based on the same principle should not be used to offer to a wide range of people the chance to take part in public life.

174. We therefore recommend that the Government should organise and publicise a pilot scheme for public appointments involving an element of random selection by lot, with the final selection still made on the basis of merit.

An extension of voting

175. The ballot confers democratic legitimacy; and extending voting, directly or indirectly, to public bodies at all levels would allow citizens to share in a wider range of political decision-making. As English Heritage acknowledged in evidence to us, elections would help "alleviate the criticism of appointed board members and the perceived misuse of ministerial patronage".[109] But while the idea may seem immediately attractive, it is fraught with practical difficulties and strong counter-arguments.

176. We are wary in general of laying down rules to fit all cases. In the case of national and regional bodies, we take the view that ministerial responsibility must remain the democratic anchor for an almost wholly appointed set of bodies, although with the role of Parliament strengthened as we have suggested.[110] We appreciate that some bodies will in effect have nomination rights in particular cases, and that partial electorates may be involved in certain others. However appointment will usually offer the best prospect of achieving gender balance and due representation of minorities on such bodies. We repeat our view that there should be a national plan to spread lay representation on all national and regional public bodies.

National and regional bodies

177. For most public bodies at national and regional level, the first major difficulty lies in determining the electorate. Is it really conceivable, or even desirable, that there should be nationwide elections to vote for board members across the spectrum of public bodies from the Access Task Force at the Department of Health to the Zoos Forum? Would the electorate even turn out to vote in elections to, say, significant bodies like the Environment Agency or Housing Corporation or Health and Safety Commission? Would partisan party politics dominate in elections, or would factional special interest groups vie for control, as they already do for example in elections to the National Trust?

178. Moreover, would elections provide national or regional public bodies with the blend of knowledge, skills and expertise that they require? The Environment Agency, for example, said that in the case of national bodies "appointment rather than election is the appropriate model to ensure that membership of the bodies concerned comprises a cross-section of suitably qualified and experienced people".[111] Would elections provide the diversity, gender balance and fuller representation of minorities that is properly the major aim of government policy? As NESTA pointed out, elections are unlikely to do so and may indeed simply confirm the imbalance between the 'usual suspects' of public life and the rest.[112]

179. We acknowledge that there are special circumstances in some cases that may justify an elective element in the workings of some national public bodies. Already some specialist bodies have partial and indirect election: for example, 25 of the 64 board members of the General Teaching Council, established under the 1998 Teaching and Higher Education Act, are elected[113] and the Home Grown Cereals Authority has a minority of members elected via their respective trade organisations.[114] The Horticultural Development Council offers another example of partial election. The Council is funded through a compulsory levy on horticultural growers above a certain size. It is an appointed body, but growers within specified groups may elect members to panels, or sub-groups, of the board and it has become the practice, in deference to grower demands, for the minister to appoint elected panel chairs to the Council's board. There may well be a case for a fully elected Council in this case, given that there is a defined 'electorate' of subscribing growers, under the principle of 'no taxation without representation'. There may well be other public bodies that could benefit from strengthening their representative nature and legitimacy through an element of election.

180. We recommend that sponsoring departments should be required to assess the scope for introducing elections to the boards of public bodies to leaven the appointed membership with appropriate representation. These assessments should be made every five years, beginning in 2004.

Local public bodies

181. There is a stronger case for elections to local public bodies. The electorates for such elections would be more clearly defined and they could thus become more representative bodies, accountable downwards and not simply upwards. However, there are also arguments against elections at local level. Paula Ridley, chair of the Victoria and Albert Museum and of the Liverpool Housing Action Trust, told us that:

'there is a huge resistance to standing for election amongst many people who currently staff the majority of our public boards. Indeed, these very people have chosen non-political public service as they do not wish to be involved in the cut and thrust of political life. Many, like myself, regard impartiality and independence from political connections to be a critical safeguard'.

182. She also pointed out that 'there is considerable doubt about whether the electorate wants to turn out endlessly'.[115]

183. Ms Ridley's preference for a model of public service, other than that deriving from elections, and thus prone to party politics, has force. However, there are also strong arguments for elections to local public bodies. Elections could

  • confer greater legitimacy on such bodies
  • secure a local accountability that is currently missing, since local authorities do not have the means or resources fully to make the local quango state accountable
  • introduce more direct popular and user influence over policies and actions
  • raise public awareness and interest in their work. We noted while in Bristol that local people were able to elect a majority of residents onto the boards of four community regeneration partnerships for their areas, with turnouts initially higher than in City Council elections in the same wards.
  • widen popular participation in public life by offering further local opportunities for election, especially in a context where there is growing evidence of a shift away from traditional party political patterns at local level.

184. One possible way of reconciling public service considerations locally—fitness for purpose and independence from party politics with electoral legitimacy and accountability—may be to develop the trend towards hybrid bodies which combine appointed and elected elements. For example, Housing Action Trusts have members elected from resident groups. Many social landlords have tenant representatives on their boards. Local regeneration bodies around the country have locally-elected members on their boards. The proposed foundation hospitals will have at least partly elected boards. As Sir William Wells reminded us, the appointed NHS patient forums will be able to elect one of their number to be a non-executive director of the relevant trust.[116] Elected councillors often serve on public bodies as representatives of their authorities or in a personal capacity, another widespread form of indirect election.

185. In summary, a modest shift towards an element of election seems to be in tune with the 'new localism' proclaimed by the Government. At local level we believe that the opportunities for election should be further explored, whether direct or indirect. Not only can election breathe new life into an institution, but it can also introduce local accountability into a significant area of public life, involving major public services, that is now almost entirely missing.[117] However we are anxious that any new moves towards directly-elected bodies or service boards should not dismember the service base of local authorities and thus erode still further the democratic integrating role that they play in local community life. Indeed, we would like to see a strengthening of the scrutiny role of local authorities in relation to the local appointed state, building on the scrutiny of local health bodies that has recently been established The most obvious candidates for new elective status would probably be the police authorities, on which local authorities are represented, and the Primary Care Trusts in the NHS in England, which are the commissioning bodies for healthcare. But, as we discuss below, a hybrid body with a significant element of election might well be the most promising way forward.

186. The current debate over new forms of part-elected governance—as envisaged for foundation hospitals and public interest companies for example—suggests that this is an issue that needs careful consideration and regular review. The public appointments system needs to be ready to respond robustly to changes as they occur.

187. We recommend that the Government should examine the scope for extending elections, both direct and indirect, for local bodies, giving special attention to the development of hybrid bodies (part-elected, part-appointed); and should report to Parliament on its findings.

Positive action

188. There is concern that the emphasis on diversity in public appointments may take precedence over the primacy of merit. As the Equal Opportunities Commission explained to us, positive action is frequently confused with positive discrimination. 'Positive discrimination,' their evidence said, 'which means appointing someone because they come from an under-represented group, regardless of whether they have the relevant skills and qualifications, is unlawful. However, lawful positive action allows an organisation to encourage applications from men or women where they have been under-represented in the past'.[118]

189. Of all those who gave evidence on the need to increase diversity, including specialists in equal opportunities, only two advocated positive discrimination or fixed quotas in any form. Representatives of the CRE and EOC rejected any dilution of merit tests to achieve diversity objectives.[119] Professor Rees, pressed to choose between a general duty to promote equality and a specific duty in relation to gender balance on public bodies, chose the general duty, but added, "Statutory legislation about gender balance… is well worth considering… those countries that have gone down this road[120] are well worth studying, not simply to look at the effects but to look at what bunking up exercises have been introduced to make it work". Bert Massie, of the DRC, said that discrimination could be valuable in special cases. He said that people with learning difficulties, who would not have passed the usual test on merit, had contributed "a great deal" to two public bodies on which he had served, "they actually have an insight which many of us miss".[121]

190. We agree that there should be no general conflict between merit and diversity, but we believe that study of quotas for gender balance in other European nations may enable us to learn from their experience, and we also accept that it could be appropriate in some circumstances to dilute merit tests in the cause of a wider range of experience and background on certain boards.

Dilution of standards

191. Is a dilution of standards creeping through under the guise of diversity? Perhaps the most pertinent evidence we heard on this came from Hamish Davidson and Alison Cawley, of the recruitment consultants Veredus. They rejected the idea of any such dilution. Hamish Davidson said, "Certainly, in those sectors faced with a choice of two candidates who are absolutely equal the woman will have the advantage… and in the public sector it is undoubtedly a dramatic advantage to be a black woman currently". But there was no compromise of the merit test.[122] Ms Cawley confirmed that the advantage was not "about being a woman, it is about being a woman with those talents".[123] And though they identified the advantage women gain from being in demand, they also both agreed that women could face prejudice, or preconceptions, about whether they could be tough enough; "there will often be a prejudice", said Mr Davidson, "that men can be tough and women less so". Alison Cawley told us:

"I think it is still the case unfortunately that women need to prove themselves more than men do. If a man has got to a certain level in a job… it will be assumed that he has qualities A, B, C and D, including toughness; a woman will still be interrogated more and required to prove that she has done these things even if she has a parallel career record".

192. Further, a woman who has, for example, lost five years of a career through child-care could also encounter the unthinking preconception, "Oh, if that is the level she has got to at that age, it is not as good as the chap who is at a higher level".[124]


89   Q 02 Back

90   Q 755 Back

91   Ibid. Back

92   See Public Bodies 2002 Back

93   Letter from FCO, 12 March 2003 Back

94   Behind Closed Doors: Advisory Quangos in the Corridors of Power, Weir, S, ands Hall, W, Channel 4/Human Rights Centre, University of Essex, 1995 Back

95   Q 792 Back

96   Rail Passengers Council Annual Report, 2001-2002, page 7 (Chairman's foreword) Back

97   for example, Sir William Wells, Q 856, Operation Black Vote, Q 754, and Mark Thomas, Q 288.  Back

98   Q 659 Back

99   PAP 03 Back

100   Q 755 Back

101   Q 791 Back

102   Q 856 Back

103   PAP 57 Back

104   Q 782 Back

105   PAP 52 Back

106   Q 1134-5 Back

107   Q 1143 Back

108   Q 1227 & 1235 Back

109   PAP 17 Back

110   Though once an elected regional authority is up-and-running in any region, then clearly responsibility should shift to the authority. Back

111   PAP 36 Back

112   PAP 53 Back

113   PAP 37 Appendix Back

114   PAP 16 Back

115   PAP 45 Back

116   Q 866 Back

117   This was one of the themes of our previous report, Mapping the Quango State, Fifth Report, Session 2000-01, HC 367: I and II, March 2001 Back

118   PAP 40 Back

119   Q 766 Back

120   Q 949, Italy, Finland, Sweden and now France, as she informed us earlier in her evidence. Back

121   Q 771, There is growing recognition of the importance of this issue. In one landmark case, the European Court of Justice upheld a German state law which, where there is gender imbalance in a certain grade, requires that a woman should be given priority over an equally-qualified man. Marschall v Land Nordheim-Westfalen, court of Justice of the European communities, 11 November 1997, Case No. C-409/95, http://europa.eu.int/ju Back

122   Q 1308-09 Back

123   Ibid. Back

124   Q 1292-93 Back


 
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