Hutton public sector report drags private companies into pay debate
By Ian Dunt
Will Hutton has shocked Downing Street with a report into public sector pay which reached out and called for action against salaries in the private sector.
The liberal commentator used his pivotal report into pay levels to demand that public limited companies (PLCs) should be required to track pay and publish pay multiples – revealing to customers the difference in pay between the chief executive and the average worker.
The government should also consider setting up an annual fair pay report on PLCs as well as the public sector, Mr Hutton recommended.
Unions jumped to support the move, despite tough action on public sector transparency elsewhere in the report.
“To really tackle income inequality and boost fairness, the government must take the blinkers off, and look closely at the private sector,” urged Dave Prentis, Unison general secretary.
“For this to be really effective, private equity firms must also be included. These amount to about a fifth of our economy – and are huge players in the privatisation market.”
Mr Hutton recommended that senior public servants’ pay be linked to performance through an ‘earn back’ pay system where a certain amount of executive pay is put “at risk”.
The pay would then be earned back through meeting pre-arranged yearly objectives.
There were also demands that all executive pay should be fully disclosed with an explanation of how it relates to the responsibilities of the job.
The multiple of chief executive pay to the workforce average should also be published, the report said, in the same way that Mr Hutton recommended for PLCs.
But the report stepped back from insisting on limiting pay multiples to 20:1.
It also demanded that the government stop benchmarking pay against that of the prime minister, in order to provide “a more informed and rational public debate” on senior pay in the public sector.
“How we pay our public service leaders will have a crucial influence on the sort of public services this country will get,” Mr Hutton said.
“It is essential that senior public servants are adequately rewarded for their contributions, and that the public service ethos – that sense of mission and public duty that motivates many to work in public services – is preserved and respected.
“But public trust in public services can only be maintained if senior public servants’ pay is fair and seen to be fair.”
The government is under no obligation to accept any of the recommendations.
