Leading article: Genuine fairness means reform from top to bottom

Is there no longer such a thing as public sector ethos; if not, might it not be time to bring it back?

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Persuading poachers to turn gamekeepers has been one of the Prime Minister's signature tactics in selecting people to conduct independent policy reviews. The former Labour Cabinet minister John Hutton was invited to lead the Public Sector Pensions Review, while Will Hutton, chairman of The Work Foundation and a vociferous critic of the right, was assigned the Fair Pay Review. Such appointments made sense: how better to inspire credibility in the results than by entrusting the task to someone who is clearly not identified with Conservative, or even Coalition, thinking?

It is still early days, and the document published by the Fair Pay Review yesterday is only its interim report. Nonetheless, it comes as something of a disappointment. Its bottom line is that, as a rule, the best-paid individuals in the public sector should normally receive no more than 20 times more than the lowest paid employees. Anything more than that, and the organisation should have to justify its decision. Coincidence or not, the multiple of 20 is what David Cameron broached at the outset. So it is not unreasonable to ask whether a review was needed at all. Might a simple political decision have sufficed?

The Fair Pay Review, of course, has more to say for itself than this. Regrettably, though, it seems not to be as searching or radical as it might have been. If, say, the lowest-paid employees in a public-sector organisation were earning the minimum wage, the multiple of 20 would still allow the highest paid to receive an annual salary of £240,000 without additional explanations being required. That is, by any standards – except perhaps those of the finance sector – a great deal of money. And if the lowest paid earn more than the minimum wage, up to a modest £15,000 a year, for instance, that gives the green light to a top salary of £300,000. Even at this supposedly modest multiple, the differential from bottom to top remains vast.

One specific disappointment is the report's concentration on high, rather than low, pay. Setting a multiple of 20 as the future yardstick may be seen as a restraint on high pay, but it also offers a pretext for keeping low pay low, even though the effect may be to reduce the calibre of recruits and consign certain key public-sector jobs, such as hospital cleaners and care workers, to being the employment of last resort.

Another disappointment is how little difference the review's preliminary recommendations would make. Only very few public-sector executives are currently paid more than 20 times the lowest paid. To that extent the report seems to do little more than endorse the status quo. In his defence, Mr Hutton hinted that it should be seen as somehow pre-emptive, designed to prevent the "kind of arms race" in private-sector pay spreading to the public sector.

That is one way of looking at it. To a great extent, though, proliferation has already set in. Supposed competition with the private sector for outstanding individuals is routinely cited to justify these £200,000-plus salaries, even though such competition is by no means always evident. Nor should a further question be ducked, however unfashionable it might seem. Why, even when competition exists, is it taken for granted that top public-sector pay must approach, or match, levels in the private sector? Is there no longer such a thing as public-service ethos – and if not, might it not be time to bring it back?

There was a time when the mix of job security, conditions and pensions was deemed to offset generally lower pay in the public sector. That disparity in conditions largely remains – for all the likely job losses to come – while the pay gap has been all but eliminated. The Fair Pay Review, in its final version, needs to look beyond the pounds and the pence.

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