COMMITTEE FOR FINANCE AND PERSONNEL
COMMITTEE MOTIONS
Senior Civil Service Pay and Bonuses
Further letter from Committee to Minister
Room 419
Parliament Buildings
Stormont
BELFAST
BT4 3XX
Tel No: 028 90521843
Fax No: 028 90520360
E-mail: committee.finance&personnel@niassembly.gov.uk
28 January 2009
Mr Nigel Dodds OBE MP MLA
Minister of Finance and Personnel
Craigantlet Buildings
Stoney Road
BELFAST
BT4 3SX
Dear
SENIOR CIVIL SERVICE (SCS) BONUSES
Thank you for your letter of 20 January 2009, which the Committee considered at its meeting on 28 January. In welcoming your preparedness to engage on this important issue, members agreed that I should write to follow up on a number of points.
Your response has focused on SCS pay and the Committee has identified a range of concerns in this area which will require closer consideration. These concerns have been heightened recently when the Committee learned that the senior officials in Land and Property Services were amongst those who received significant bonus payments in both the 2007 and the 2008 pay awards. The Committee believes that the case for a rethink of the current SCS pay system is underscored by the fact that the system has enabled the senior management of a public body, whose under performance has been so evident, to receive annual bonuses ranging from £5,000 to £10,500 in the case of the 2008 award.
The Committee notes from your response that a Whitehall review of SCS pay, led by Sir David Normington, Permanent Secretary of the Home Office, has been concluded recently and that your officials will be obtaining a copy of the report. You have indicated that you see merit in examining the outcome of the Normington review before considering whether any changes should be made to the NICS SCS pay arrangements. The Committee accepts that it makes sense to analyse the findings from this review and, as such, has agreed that your officials should be invited to provide members with a briefing on the analysis of the review report at the earliest opportunity. That said, the Committee does not believe the Normington review will provide a substitute for the local review which the Committee has proposed.
I should point out that the Committee has called for you to commission an external, independent review of both the existing NICS SCS pay system and the pay arrangements for the grades above SCS, including the Head of the Civil Service and the permanent secretaries. In this regard, the Committee has noted that the 13 officers in the grades above SCS received £123,250 in bonuses in 2008 and has sought further information on the breakdown of this amount. It would appear that the Normington review will be concerned with the SCS pay arrangements only and will not cover the grades above SCS (the review, in fact, is being led by a Permanent Secretary). Moreover, a further consideration is the extent to which the Whitehall approach, including the deliberations of the Senior Salaries Review Body, takes into account local evidence (including the specific needs of the public sector and the labour market conditions in NI) when determining annual pay and bonus awards which are then applied across the various regions.
On the issue of public-private sector pay differentials, you have correctly pointed out that care is needed in making pay comparisons and have referred to findings from DFP’s own analysis. In my letter of 10 December, I referred to the DFP figures for “Weekly Earning Comparisons (2007) by Grade”, which show that senior public servants in NI earn over 22% more than their private sector equivalents. I also contrasted this with the position in GB, where senior public servants’ pay is 7.6% below the equivalent managerial level in the private sector. From a further examination of the figures, it is worth noting that the public-private sector differential at this level is also more favourable to the NI public sector than it is to the public sector in each of the other comparator regions (i.e. Scotland, Wales and the North East of England). I have also pointed out that the more junior grades in the NICS, who make up the majority and whose pay awards are negotiated locally, “do not enjoy a significant pay premium compared to their private sector equivalents”. The Committee considers that pubic-private sector pay comparison has a particular relevance in the current economic downturn, in terms of ensuring that the pay arrangements for senior civil servants are efficient and do not stymie the growth of the private sector here. This would be an important issue upon which the proposed external review could offer an independent perspective.
Your response has also referred to the fact that various groups of public sector staff in NI are linked to UK pay arrangements. The Committee is fully aware of this and recognises that the impact of UK public sector pay arrangements can directly or indirectly feed through to pay rates of analogous staff groups in NI. However, the Committee is mindful of the conclusion of Sir David Varney, in his Review of the Competitiveness of NI, that the focus should be on resolving the wage differential at the senior civil service level. Therefore, the Committee wishes to reiterate its recommendation that you commission an external review of this policy area, which falls clearly within DFP’s remit (the Committee will also keep under review its own options for progressing the matter).
I look forward to further engagement on this issue to ensure that the concerns which the Committee has identified are addressed.
Yours sincerely