Salary review says pay of 'top people' too low: While the public sector is forced to lead the way in wage restraint, the private sector fails to follow, report claims

SENIOR CIVIL servants, judges and high-ranking officers in the armed forces have been forced to give a lead on pay restraint that few in the private sector seem to have followed. That was the central complaint made by the Review Body on Top Salaries in its delayed report yesterday.

Analysing the movement of real-terms income since April 1985, the report said that while the pay of the 2,140 'top people' in the public sector had risen by 7 per cent in real terms, real average earnings in the economy as a whole had increased by three times as much, while the earnings of their high-level counterparts in the private sector had increased by more than 40 per cent.

The committee accepted the sensitivity of the pay of senior public servants, saying: 'It is often stated that one of the reasons for inflation has been excessive pay increases and that those at the top should set an example by pay restraint.'

Indeed, that principle had been so thoroughly applied to the public sector that in some cases pay had not even kept pace with inflation. But the report added: 'It is a lead that few seem to have followed.'

The review body complained: 'It must be wrong to use members of our remit groups indefinitely as a weapon in the battle against inflation, and also wrong to continue to trade on their sense of service and duty.'

The civil service

The recession has helped ease civil service recruitment and curbed the Whitehall resignation rate, the report said.

But it warned: 'As the recession ends and the labour market tightens, the difficulties which have continued to be felt can be expected to intensify, leading in such areas as fast-stream recruitment to a movement back towards the recruitment patterns of the last decade when often a considerable proportion of vacancies were unfilled.'

Nevertheless, the Government and Civil Service Commissioners reported that fast-stream graduate recruitment had been 'buoyant', with 95 per cent of vacancies filled in 1990-91.

'The evidence recognised that recruitment through those sources . . . has been helped by the present weak employment market.'

Similarly, there had been fewer resignations and more direct recruitment to the higher echelons of Whitehall. 'Although the proportion of all existing staff in the senior open structure who have been recruited direct remains small, evidence received for the period from September 1989 to December 1991 shows that 24 out of 39 appointments at Grade 3 (under secretary) and above, made following open competition, were filled from outside the civil service.'

But the report pointed out that 12 of those 24 external appointments 'were at salaries higher than the standard rates, or were at standard salaries but with bonuses of up to 15 per cent'.

The judiciary

Relatively few recruitment problems were reported for the 60 posts and 1,290 individual jobs covered, ranging through seven main salary levels from the Lord Chief Justice of England through to district judges and stipendiary magistrates.

But the report said that the majority of people appointed to the bench had had their incomes cut. 'Median pre-appointment earnings of those appointed to the High Court in recent years were about twice the judicial salary.'

That pay discount was accepted 'in the light of the status and security of judicial office, with its prospect of continuing paid, rewarding and pensionable employment to a later age than is possible in most walks of life'.

Nevertheless, the review body said the discount had become too great. 'We were told that some candidates for the High Court Bench had asked for a deferment because of their current financial commitments.' But it added: 'As yet there have been no refusals of a formal offer of appointment.

'However, we view the inmprovement in recruitment in the context of the current economic recession, and our concern in this review is to consider the long-term salary levels which are required to attract sufficient candidates of the right quality over time.'

Armed forces

Some one-star officers - senior naval captains, brigadiers, and air commodores - could suffer a pay cut if they are promoted.

Between a fifth and 15 per cent of all officers fall into the one-star category, and the report expressed concern about the differential between them and the 139 two-star officers - rear admirals, major generals and air-vice marshals.

It was noted that where one- star officers received additional pay, such as flying pay, they could receive increments worth as much as 5 per cent of basic salary.

But the report added that while the one and two-star differential was 6 per cent last April, it had since fallen back to less than 1 per cent. The report then went on to recommend a differential between the two ranks of 19 per cent.

'We believe that an adequate differential is essential to retain the best personnel and to encourage those officers who are required to remain for a full career in the services, even at a time of severe manpower reductions.'

However, by reducing the increase in top people's pay to 4 per cent, the Prime Minister had in some cases wiped out the differential completely.

Fifteenth Report on Top Salaries. Report No. 33, Review Body on Top Salaries. Cm 2015. HMSO; pounds 10.35

----------------------------------------------------------------- COMPARISON OF TOTAL PAY AND TOTAL REMUNERATION: CIVIL SERVICE AND ARMED FORCES AND PRIVATE SECTOR COUNTERPARTS ----------------------------------------------------------------- Total pay Total remuneration ----------------------------------------------------------------- Grade/rank Public Private Public Private pounds 000 pounds 000 pounds 000 pounds 000 ----------------------------------------------------------------- Cab Secretary (Five star) 105 255 140 401 CIVIL SERVICE P Secretary Treasury 98 222 126 369 Grade 1 84 175 107 268 Grade 1 A 78 128 98 193 Grade 2 62 92 81 134 Grade 3 52 69 65 98 ARMED FORCES Officers: Four star 84 150 115 226 Three star 61 91 90 115 Two star 53 60 69 85 ----------------------------------------------------------------- Based on data collected by Price Waterhouse's survey for April 1991 -----------------------------------------------------------------

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