The Huttons on pay and pensions

It was canny of ministers to hire the two left-of-centre Huttons to deliver the obvious but highly sensitive conclusions over the future of public sector pay and pensions. The fact they attracted criticisms from both unions and employers, and from left and right, showed they must be doing something right.
Lord Hutton’s report on pensions last week was well trailed and drew predictable criticisms from unions even though there are those who would argue that a retirement age of 68 ‘over time’ is still unaffordable.
Will Hutton’s hefty inquiry into top pay that followed this week was duly slated by unions for not going far enough to curtail senior packages, a verdict supported by sources close to Eric Pickles who insisted that as regards ‘fatcat-bashing’ it will be business as usual. A more ludicrous comment came from the CBI which would have us believe that shareholders in private firms actually have influence over the setting of eye-watering pay at the top of plcs – and that the equivalent in the public sector, the government, should therefore have the final say.
Will Hutton’s report, while recognising that top public sector salaries have indeed soared in recent years, also laid a few old chestnuts to rest, like linking top pay to the notional salary of the Prime Minister, or believing that if only public sector top jobs could be scrapped then frontline services would be safe. Of the country’s top 1% of earners only £1 in every £100 is earned by public sector employees.
But aside from insisting on more performance-related pay Hutton was light on detailed solutions partly because there are no simple answers to what is a complex issue. Top salaries increased for a variety of reasons, not least to do with the late CPA inspection regime, the dwindling pool of talent, and the reluctance of ‘upper tier’ councillors to take risks with candidates not already proven as heads of similar authorities.
While the pay of new entrants is heading downwards, a wave of retirements and reluctance of chief officers to take on the hotseat at the top will again drive up packages. It is after all the law of the market.