The equal pay anti-climax
by Max Wind-Cowie
Has Will Hutton overestimated the caution of the Coalition? It certainly seems so. Back in May the Government commissioned him to bring his considerable, albeit lefty, skills to bear on the question of pay equality. His starting point was a promise from the new Prime Minister – a promise informed by the Progressive Conservatism Project’s Everyday Equality report – that pay ratios would be explored as a solution to runaway pay at the top of public services. The Government had recognised the profound unfairness, negative effects and expense of the salaries arms race that had hiked management pay in the public sector ever upwards whilst leaving staff lower down the ladder on incomes that were often shrinking in real terms. Their commitment to resolving these knotty problems appeared steely – thus Will Hutton, left-wing intellectual and bastion of social democracy.
Except that what he has today produced is a disappointingly timid set of recommendations that appear to have been watered down to an extent usually only seen in homeopathy. Instead of pay-ratios to keep public service chiefs in the same universe as their staff, we have ‘transparency league tables’. Instead of an acknowledgement that the public/private race to the top on salaries is unaffordable and undesirable, we have public sector ‘bonuses’ which will be paid for by salary reductions for those who are underperforming. Leaving aside the political difficulties of introducing bonus schemes for some public servants at a time when Theresa May is battling to wrestle them from the police, don’t these recommendations seem a little uninspired?
Instead of looking to the private sector for new ways of incentivising top public servants, Hutton could have looked to the best performing public services. He would have observed that money is not always the driving force behind highly motivated leaders in the taxpayers’ employ. The pay gap in the army, for example, stands at 6-1, meaning that senior military figures earn around 6 times that paid to their most lowly soldier, sailor or pilot. In the NHS this pay ratio is 15 to 1. It is these discrepancies that the Prime Minister asked Hutton to look into – they will be solved neither by greater transparency nor by hiding salaries in bonus pots. Fixed pay ratios, to keep public services cohesive, fair and equitable workplaces, were what the Prime Minister asked for – they are not what Hutton has delivered.
Edward Harkins
I have to agree with Ben. There is something rotten and amiss in some parts of the public sector in the matter of pay inequalities. The private sector, however, has virtually nothing to offer us by way of solutions.
Nurses and social workers deal with the most unpleasant things in life, soldiers go off and put their lives in mortal danger; this has little to do with the financial rewards that they are (grudginlgy) given by the state on our behalf.
Has not the private sector and ‘incentivising’, after all, given us the.... err... sorry for the cheap shot, but... given us the undefifying, economically dysfunctional and socially divisive bankers' bonus culture?
(Or maybe the super gagging order from Sir 'he-is-not-a-banker' Fred Goodwin prevents us from commenting on that kind of thing?)
http://uk.linkedin.com/pub/edward-harkins/15/40/635
David Vinter
Before I retired, working in private industry, my maximum bonus was 15%.
Ben Toombs
I have to disagree with you here, Max. Will Hutton has produced what seems to me a realistic set of proposals which are far from timid.
You say fixed pay ratios were what the PM asked for, but Hutton has not delivered them. That's true. But since when was it the job of an independent review to deliver the recommendation the government asked for?
The top ratio being considered by the government was 20:1 - greater than your NHS example - so that was never going to do much to tackle pay inequality in itself. And Hutton has good arguments for rejecting the idea of fixed pay ratios altogether. The comparison between the army and the NHS is a case in point. In the army, staff at all levels are highly trained, so the bottom pay band is not too low, and at the top levels staff have a long military career behind them, and are extremely experienced and committed to the army, so of course money is not the only motivator. In the NHS, staff are much more diverse in terms of their training, abilities, roles and experience, with the result that pay is lower at the bottom level and at the top levels staff do not necessarily have a life-long commitment to the NHS and have access to a wide variety of leadership roles in all three sectors. It is surely unrealistic to apply the army's pay ratio to the NHS, simply in the name of eliminating discrepancies between services; the two services are just too different.
I suspect the PM wanted a recommendation for a fixed pay ratio because the concept would be politically expedient and in line with current government rhetoric, and it would have added weight if suggested by someone like Hutton. But Hutton's arguments against the idea seem sound, and if you ask me his refusal to endorse the government's desired option is not timid - it's his job. And since Hutton is, as you say, a lefty, I'd say his decision to reject the lefty option carries all the more weight.