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Public Sector Senior Remuneration

Volume 508: debated on Wednesday 24 March 2010

The Review Body on Senior Salaries’ “Initial Report on Public Sector Senior Remuneration 2010” (Cm 7848) is being published today. I commissioned this report in December alongside the publication of “Putting the Frontline First: Smarter Government” (Cm 7753). The report includes a set of principles for senior pay embedded in a code of practice on top-level reward. It is recommended that this code is adopted across the public sector after a period of consultation.

Copies of the report have been laid in the Vote Office and the Library of the House. I am grateful to the chairman and those involved in the review for their work.

The Government welcome the initial report, which builds on the other measures which I have announced to ensure value for money from senior pay in the public sector, including:

the decision not to increase base pay for the senior civil service, the judiciary, the senior military, very senior NHS managers, hospital consultants, independent contractor general medical and dental practitioners and Government Ministers in 2010-11, 10 March 2010, Official Report, columns 16WS;

the new arrangements for scrutiny, transparency and accountability set out in the 2009 pre-Budget report (Cm 7747), in particular the requirement for approval by the Chief Secretary to the Treasury or public justification of salaries in excess of £150,000 and bonuses greater than £50,000, and publication of the names of those earning more than £150,000 and the numbers of those earning more than £50,000; and

tough decisions to deliver savings of £100 million annually within three years from reducing unnecessary civil service bureaucracy and the cost of the senior civil service, and to seek a 1 per cent. cap on basic pay uplifts across the public sector for 2011-12 and 2012-13, generating savings of £3.4 billion a year by 2012-13.

The Government agree with the report’s findings that a clearer framework is needed for those that make decisions on senior pay. Pay decisions in all public sector organisations should wherever possible be determined by independent remuneration committees and there should be clear escalation mechanism in each sector for any proposals to pay above agreed norms.

In line with the terms of reference of the review, I will now commission the review body to develop sector-specific benchmark ranges for senior pay. I will ask the review body to begin with local authority chief executives and senior managers in the health sector, reporting by the end of 2010. They will then consider the position in further and higher education by March 2011.

The Government will work with the review body to determine how the code should be implemented in each sector, and to determine what legislative and non-statutory means are most appropriate to enforce compliance. The Government believe that the key organisations and representative bodies in each sector should be involved in the process of implementation, and that all public sector organisations should set out publicly how they intend to comply with the code by the end of year.