Top Pay in the Public Sector - Public Administration Committee Contents

7  Conclusion

180. This has been one of our more difficult inquiries. Highly paid public servants are an easy target for politicians and the media, and also a timely target, because this is an area in which feelings are running high. We have wanted to maintain a balanced perspective, and not simply to assume that top public servants' salaries can be painlessly cut.

181. It is almost certain that some top public service posts could be performed adequately, or better than adequately, for less money than now. It may well also be the case that other posts would provide better value for taxpayers' money if their incumbents were paid closer to the market rate (meaning, more)—although the suggestion goes against both the popular grain and the financial imperative.

182. We have identified a number of reasons why executive-level public sector pay has risen over the last ten years. These include "contagion" from much larger increases in the private sector, increasing competition for a small number of suitable candidates, tensions between devolved and centralised pay setting arrangements and an increased reluctance on the part of candidates to come forward. Whilst some of these factors cannot be addressed without a major change in the nature of our economy, we also heard evidence of ways in which the public sector could be more rigorous in setting executive pay.

183. All of our witnesses accepted that some public servants need to be paid substantial salaries that are comparable with—although not equal to—those at the top of the private sector. However the public will not accept such salaries unless there is:

  • Better performance management, to ensure that failure is not rewarded;
  • Greater transparency, so that taxpayers know who is being paid how much for doing what; and
  • More coherence in the way in which public sector pay is set, backed up by an independent source of advice to strengthen the hand of pay setters and "name and shame" the outliers.

184. We have recommended the creation of a Top Pay Commission to oversee executive remuneration in the public sector. Its role would be to:

  • Act as an independent source of data and information to pay setters across the public sector, including by publishing reports and findings where appropriate;
  • Produce pay principles, guidelines for private sector comparisons and workable benchmarks for pay setters in the public sector;
  • Investigate cases where these principles appear not to have been followed or where benchmarks have been substantially exceeded;
  • 'Name and shame' organisations that are unable to justify their executive pay policies adequately; and
  • Ensure necessary levels of transparency and accountability in public sector pay setting are being maintained.

185. We believe that our proposals in this report will go a long way to achieving the goals set out above and will, as a result, be more effective at restraining top public sector pay than an arbitrary cap or limit on salary levels. However, rising executive pay in the public sector is itself a symptom of a wider problem—that of escalating executive salaries across the whole economy, nationally and internationally. Action to restrain public sector top pay will ultimately be effective only if similar restraint is shown in the private sector.

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