The public sector must do much more to attract high-calibre leaders and consider paying hefty bonuses to the best-performing managers, according to the Cabinet Office's performance and innovation unit.

'The public services are not attracting or keeping the best leaders and do not have sufficiently robust strategies for recruiting to the posts that matter most; jobs and careers in the public services are undervalued, and top leadership jobs are, arguably, underpaid, ' it says in a report.

Current research indicates pay for senior jobs in the public sector is 25-30 per cent below comparable private-sector rates and the report recommends that thought be given to closing the gap.

Approaches suggested include paying 'substantial non-consolidated bonuses for successful top leaders or paying closer to market rates selectively when required to recruit or retain a leader for a specific purpose'.

The report puts the onus on the government to ensure careers in the NHS, local government and schools are more attractive and better rewarded.

But it argues that policy-makers must also allow managers in the public sector freedom to do their jobs.

'Public-service leaders are often unable to lead effectively because others fail to give them the freedom, the support systems or the challenges that will permit them to do so, ' the report says.

Although public-sector managers need to be held accountable they also have to be given freedom from political control to enable them to lead and innovate, it argues.

Recommendations include the development of 'explicit agreements' to define the respective roles of politicians and chief executives, as well as joint leadership development and training.

While the pressures and demands on leaders of complex public-sector organisations are growing, the report acknowledges that the calibre of applicants for key positions is a matter of increasing concern.

It states that there are 'small numbers of good candidates for some critical public-sector leadership posts - for secondary school headteachers in urban areas, for chief executive positions in the most complex NHS trusts and for directors of social services'.

Yet seeking more prospective candidates from the private sector is not an easy solution.

The report points to previous experience in the mid-1980s and early 1990s of bringing privatesector managers into NHS posts, which despite the skills and experience of the individuals brought 'major challenges'.

Good NHS leaders need to 'tune in to the distinctive culture and stakeholder dynamics of the NHS', as well as sustaining credibility with professional groups and being adept at conflict resolution.

Supported by Cabinet Office minister Estelle Morris and by the prime minister, the report has been given a cautious welcome by the NHS Confederation.

Policy director Nigel Edwards said: 'It is good to see people are seriously looking at the problem of how we encourage and develop high-quality leadership but a great deal more is required.

'Rather than dealing in rewards, until more is done to change attitudes to risk and learning for NHS managers, the debate is not being addressed as fully as it needs to be.'

Strengthening Leadership in the Public Sector.

www. cabinet-office. gov. uk/ innovation