Hutton proposes 20:1 public sector pay limit
Will Hutton’s interim report on fair pay has suggested a cap on the highest public sector salaries of twenty times those at the bottom end.
This limit could be flexible, but only “in exceptional cases”.
The interim report also called for an end to public sector organisations importing an “arms race” of top salaries from the private sphere.
Mr Hutton said: “There is a strong case for public sector organisations having to comply with, or explain why they do not comply with, a maximum pay multiple, such as 20:1.
“This would demonstrate fairness by reassuring public opinion, address a problem of collective action across remuneration committees, and benefit organisations’ productivity.”
But the report cautioned against imposing over-strict regulation which would creating a “second class sector” of the economy.
Mr Hutton added: “There is also a broader case for private sector organisations to follow the public sector example and at the very least track and report on pay dispersion from year to year in a fully transparent manner.”
Unions welcomed the suggestion of a maximum pay multiple, but said the report missed the wider problems of pay-freezes in the public sector as part of the government’s spending review.
TUC general secretary Brendan Barber said: “As Will Hutton points out, the same openness and transparency he wants to see in pay setting across the public sector must also apply to the private sector.
“At a time when average earnings are failing to keep pace with inflation and many workers are facing pay freezes, FTSE 100 directors saw their total earnings boosted by a massive 45% last year. It is hard to talk about ‘fair pay’ when there is such a gulf between shop-floor and boardroom rewards.”
Unite’s assistant general secretary for public services, Gail Cartmail added: “This interim report is just the tip of the iceberg when it comes to looking at pay inequalities in Britain today, which will widen and become worse because of the coalition’s ‘cuts at any cost’ austerity programme.”
Mr Hutton is one of a number of figures brought on as ‘tsars’ to advise the government. He will release his full recommendations in March next year.
