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Employers reject Hutton proposal for performance-related contracts

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Council employers have rejected calls for performance-related contracts for chief executives to be embedded in senior salary policy statements.

Unveiling the final report of his government-commissioned review of fair pay in public services, economist and journalist Will Hutton called for a new performance regime for council chiefs in which a tenth of their salaries would be dependent on good performance.

He said councils should apply such a regime in the senior pay policy statements that are to be made a requirement in the Localism Bill.

But Jan Parkinson, managing director of Local Government Employers, said democratically elected local authorities were best placed to decide pay policies.

“We would want to avoid the introduction of a blanket approach to pay and incentives across the entire public sector,” she said. “There is no one-size-fits-all solution.”

Mr Hutton published his final report on Tuesday and called for a proportion of pay to be dependent on meeting objectives set by a remuneration committee that was free from political and managerial influence and included workforce representatives.

Lincolnshire CC chief executive Tony McArdle questioned whether the “earn-back” proposal would ease the controversy over senior public sector pay. “The problem is that people don’t understand what council chief executives do and whether we get 10% less or not will not help solve that.”

However, Mr Hutton said his earn-back proposal would allow chief executives to argue they were performing well.

Quoting LGC research that showed a quarter of chief executives had taken a pay cut, Mr Hutton said: “Wouldn’t it have been better to do earn-back? It demands a culture change but it’d put the public sector on the front foot.”

Mr Hutton’s review rejected any cap on pay, such as the previously mooted 20:1 multiplier, but said all public and private bodies should publish the ratio between their top and median workers as well as their chief executive’s salary.

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