Committee for Finance and Personnel

Senior Civil Service Pay Review

Committee response to the Review Report

Mr Sammy Wilson MP MLA
Minister of Finance and Personnel
Craigantlet Buildings
Stoney Road
BELFAST
BT4 3SX

20 October 2010

Dear Sammy

REVIEW OF SENIOR CIVIL SERVICE PAY ARRANGEMENTS

The Committee for Finance and Personnel considered the Review Body on Senior Salaries’ (SSRB) report on the Review of the NI Senior Civil Service (SCS) Pay 2010 at its meeting on 8 September 2010. You had agreed that the Committee would be provided with the opportunity to assess the Review report, and that the Committee’s views would be taken into consideration in advance of any final decisions being made with regard to the pay arrangements for NI SCS.

I wish to preface this response to the Review report by emphasising that the Committee recognises and values the vital role of SCS in leading the delivery of public services and the Executive’s policy priorities. Additionally, I have previously acknowledged that there are undoubtedly areas where our SCS excels and where individual performance is exceptional. Since initiating its investigations into the arrangements for SCS pay and bonuses in 2008, the focus of the Committee has been on ensuring that we have effective and efficient pay arrangements for our senior civil servants, which are tailored to our local circumstances. It was towards this end that the Committee recommended to your predecessor in December 2008 that an external and independent review be commissioned.

The Committee therefore welcomed your subsequent decision to proceed with the Review and I believe that this initiative continues to have the potential to demonstrate how the Executive can make a difference in tailoring our public sector to local circumstances. Members had the opportunity to discuss the Review report with senior departmental officials at the Committee meeting on 8 September. The Committee also received independent commentary from two local economists, John Simpson and Victor Hewitt (written submissions attached at Appendix A), which has helped to inform this response to the Review report.

The Committee welcomes a number of the conclusions and recommendations made in the Review report, which pick up on issues and concerns previously raised by the Committee. These include:

• the conclusion that the NI SCS pay “should be aligned to the local labour market and economic circumstances”;
• recommendation 9 – that the bonus scheme be discontinued;
• recommendation 10 – that NI SCS pay is subject to independent review; and
• recommendation 14 – that performance-related rewards for senior civil servants in under-performing organisations should be restricted or suspended.

There are, however, several aspects of the Review report which give rise to significant concern for members. In particular, the Committee is disappointed that the Review report, whilst highlighting the need for SCS pay to be aligned to the local labour market and economic circumstances, does not offer clear advice or a methodology for achieving this alignment going forward.

Moreover, the report alludes to the difficulties encountered in attempting to determine reliable figures on private sector pay at levels comparable to the NI SCS, and indeed states that “better evidence in this area is needed for future reviews of NI SCS Pay”. This issue was also raised by those who provided independent comment to the Committee, who considered that more detailed investigation could have been undertaken in this regard. The Committee is mindful of public perception that senior civil servants are already well remunerated with conditions and benefits not available to those employed in the private sector or, indeed, the wider public service. On this issue, the Committee notes that one of the independent commentators, John Simpson, concluded that, notwithstanding the caveats included in the report in terms of public-private sector comparators, “the wider evidence … does confirm that the current wage and salary differentials are potentially distorting against the private sector”. Indeed, Victor Hewitt remarked that the Review report “tends to fudge the central issue of whether the pay of the NI SCS is too high and if so what should be done about this”.

Whilst it found difficulty in drawing suitable public-private sector wage comparisons, the Review also concluded that there was no evidence of problems with recruitment and retention in SCS. The Committee is concerned, however, that despite these conclusions and the failure to establish robust evidence on appropriate pay levels for NI SCS, the Review report proposes new pay scales which are likely to result in incremental pay increases for a range of senior civil servants (Recommendations 1 and 2). The Committee believes that any new pay scales, including starting salaries, require to justified by evidence which is referenced to the local labour market.

Also in terms of the specific Review recommendations, concerns were expressed within the Committee regarding the proposal that staff promoted to or within the NI SCS should move to the lowest point of the scale to which they have been promoted that is above their current salary (Recommendation 4). The Committee is mindful that, under such a policy, individuals promoted/recruited to the same SCS grade at the same time could find themselves on different pay points. As such, the Committee would wish to be assured that this recommendation has been fully assessed in terms of the potential for it to give rise to legal challenges, including equality or equal pay issues. Additionally, the Committee noted the advice from Victor Hewitt, that “there is some research to show that the sort of people who are attracted to a career in the public service are in many respects different from those drawn to the private sector, and this includes their incentivisation through pay”. The Committee similarly considers that those who apply for promotion are not necessarily motivated to do so by pay alone, and this needs to be taken into consideration in the development of a policy in respect of pay on promotion.

The Committee also has serious concerns with recommendations 5 and 6. Under Recommendation 5 those who are paid above the maximum and whose performance is at least satisfactory would have their pay increased in line with the percentage revalorisation of the appropriate pay scale. The Committee is not convinced of the need for this provision, in view of the aforementioned points and the current public expenditure context. Under Recommendation 6, up to 25% of the best performers who are at or above the top of the pay scales would be eligible for non-consolidated awards of up to 5% of salary. The Committee considers this proposal is, in effect, an extension of the bonus scheme and risks the associated pitfalls in terms of being potentially divisive, demotivating and lacking transparency.

A particular issue not addressed by the Review report, but one which has been raised both by members and the independent commentators, is the size of the NI SCS cadre in comparison to the size of the population served. The Committee has been advised that, on this metric, NI SCS is approximately twice the size of its GB equivalent. Members would question whether there is a clear, evidence-based need for this number of senior civil servants, and whether some SCS positions could be filled by staff at less senior grades.

Finally, the Committee agrees with the general point in Recommendation 10 that the pay of the NI SCS should be reviewed annually by an independent body. It considers, however, that this should be led by a panel of independent local experts, established by the Executive, which, while having regard to the annual SSRB reports, would commission and develop its own research in order to make recommendations to the appropriate Executive Ministers which are fitting to local circumstances. This regional pay panel, which could also advise on the wider public sector, should be set the initial task of addressing some of the issues highlighted above which are outstanding; in particular, undertaking the necessary groundwork to permit the alignment of SCS pay and numbers with local circumstances.

The Committee trusts that you will take account of the aforementioned concerns and suggestions when making final proposals on the future arrangements for SCS pay, and members look forward to receiving your considered response in due course.

Yours sincerely

Jennifer McCann MLA
Chairperson
Committee for Finance and Personnel