PM's pay advisers say senior pay should sometimes be cut

In its report for the prime minister today the senior salaries review body proposes a new code of practice for setting senior pay which includes the principle that pay should sometimes be cut.

Remuneration can decrease under the right contractual circumstances

The body says a “substantial proportion” of the 5,600 earning more than £150,000 are medics, with an estimated 4,900 consultant medical staff earning more than £150,000 a year (a total of £735m).

The report says there are at least a further 700 public sector employees, including 200 members of the judiciary and 120 local authority chief executives, earning over £150,000.

The body stresses that “in general” such employees are carrying out “highly responsible jobs”. But it goes on to state: “Given the level of individual earnings and the total sum of money involved, the public is entitled to reassurance that pay at this level is fully justified and that it is being used to drive high levels of performance.”

The report sets out a draft code of practice for public sector organisations to follow when setting senior pay levels.

The draft code includes the principle that “remuneration can decrease under the right contractual circumstances, such as where an exceptional temporary contract is made permanent or an exceptional role returns to normal”.

It also states that pay for a post should be considered “afresh at each appointment”. The report says: “The salary of a previous incumbent is not an automatic benchmark as individual circumstances will be different and recruitment markets evolve.”

It further argues there should not be an automatic assumption that a new recruit to a post should be paid more than in their previous post, as some roles may be more “inherently attractive”.

The report is in response to letter to the body from prime minister Gordon Brown in December which described the government as having “serious concerns about the high levels of senior pay in some parts of the public sector”.