Top Pay Commission for public sector must remain independent

A public sector pay commission set up to “name and shame” bodies that pay excessive salaries to their top officials could become too influenced by politics and damage the organisation’s ability to recruit and retain talent, the Institute for Employment Studies (IES) has warned.

A report by the Public Administration Select Committee (PASC), published earlier this week, called for a Top Pay Commission to benchmark across the public sector and introduce good practice.

PASC claimed there were too many weaknesses with current arrangements for setting pay, including variable levels of transparency, tensions between devolved and centralised systems, and a tendency for some authorities to compete against others for a small number of experienced candidates, rather than growing talent internally.

The committee also recommended that top public sector pay be disclosed to improve accountability to the public.

But a statement issued by the employment group IES, responding to the report, said: “There is a clear risk that the recommended Top Pay Commission just becomes an arm for politicians to hold down pay, which could damage ability to recruit and retain talent, rather than co-ordinating and supporting good practice.”

Duncan Brown, director of HR business development at IES, stressed The Top Pay Commission was, however, a “sensible proposal to support the strengthening of rigour and capability in senior pay setting in the sector.”

He added: “Extending private sector-style pay disclosure right across the public sector, and going further in recommending disclosure for all those executives earning over £100k, makes sense.”

But, he warned: “There is a risk that this commission could become a political enforcement device iteslf, rather than an agent for co-ordinating and supporting good practice in senior pay setting and management.”

He urged that the commission be made up of capable and strong individuals capable of resisting political control.

Tony Wright, chair of the committee, said: “Our Top Pay Commission would ensure that public sector pay setters would have to justify top pay deals and set them in the context of pay at lower levels and the state of the public finances.”

Other PASC recommendations

  • Better HR management across the public sector, to ensure talent is promoted from within and failure is not rewarded

  • Publication of salaries and bonuses across the public sector, more in line with the requirements placed on listed companies

  • Independent bodies or remuneration committees with a majority of independent members draw up all public sector executive reward packages.

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