It seems that since the formation of the coalition government in May 2010, the issue of how public money is spent in these tough economic times has rarely been out of the news, whether it is the government legislating to make public bodies more accountable through a policy of greater government and public sector transparency or cash-strapped local authorities taking drastic measures to achieve budget cuts by dismissing and re-engaging staff who agree to take a salary cut, see Opinion, Issues for local authorities to consider when dismissing and re-engaging staff on revised terms.
The coalition agreement on 31 May 2010 set out the government’s commitment to greater government and public sector transparency. This was followed, in October 2010, by the government’s announcement as part of its spending review, of the steps that it would be taking to bring excessive senior pay in the public sector under control.
The transparency programme is driven by the need to demonstrate to the public that taxpayer money is spent appropriately and to ensure that politicians and public authorities are accountable for their expenditure so that the necessary savings to reduce the public deficit are achieved. These proposals include not only the publication of spending data (over £25,000 for central government, £500 for local authorities) but more controversially the publication of salary information for senior public sector officials. Guidance has been produced providing detail on what information will be caught by the transparency requirements, where the information should be published and the particular issues that have to be taken into account. Key local authority officers are no doubt already getting to grips with the organisational changes that a culture of transparency engenders given that local authorities, and other public sector organisations, are now more than ever accountable for the sensible and efficient use of their resources.
In addition to getting to grips with the new transparency regime, local authority officers in HR will already be busy addressing the pay policy requirements for transparency contained in the Localism Act 2011. Section 38 of the Localism Act introduced the requirement for local authorities to produce pay policy statements. These statements:
- Set out the relevant authority’s policy towards a range of issues in connection with the pay of its workforce, particularly in relation to its senior staff and its lowest paid employees.
- Have to be prepared every financial year, commencing 1 April 2012.
- Must be published on the authority’s website, following their approval by full council (or members in committee in the case of a fire and rescue authority).
Although the drive for transparency is being promoted as a means of preventing waste and duplication, shining a light on a publicly funded organisation inevitably is an uncomfortable process and is likely to make staff feel defensive, particularly if they are already beleaguered by budget-cutting measures such as pay freezes or salary cuts. It will be interesting to see whether all local authorities will publish the information that is required. A recent report in the Municipal Journal indicates that some councils have refused to identify those members of their staff earning more than £58,200 on safety grounds although Eric Pickles has described this refusal by a number of organisations as “trying to dodge the sunlight of transparency and cover up their expenditure”.
However, the government has not focused its attention solely on public sector authorities. In December 2011, Nick Clegg announced in an interview on the Andrew Marr show that the government was committed to cracking down on excessive executive pay and bonuses in the private sector and that austerity in the public sector had to be balanced by curbs on “irresponsible and unjustifiable” pay in the private sector. Since then the subject of bonus payments and whether these should be restricted to performance have hardly been out of the press. Although discussion of whether the government should draw a line between public and private sector pay could take up another blog, it is interesting to see that two private members bills have been presented to Parliament by Mr John Mann MP. These are the:
- Public Sector Bonuses Bill 2010-12, summarised as a bill to prohibit the payment of bonus payments to higher rate taxpayers working in the public sector.
- Public Sector Salaries Bill 2010-12, described as a bill to stipulate a maximum salary for public sector employees.
Both Bills had their first reading on the same day they were presented but it is debatable whether they will actually proceed. The House is not expected to sit on the day that has been nominated as the day for their second reading (27 April 2012). Since there is unlikely to be time for the Bills to be debated, it is possible that they have been introduced by the backbencher to force the issue to be debated in Parliament or for the government to change the law or its policy by creating publicity. For more information on private members’ bills and the legislative process, see our note on The Legislative process in the UK and how bills become law.
The transparency agenda is being driven on the back of a popularist agenda to attack public sector workers at a time when the private sector is in recession. In pre-recession days nobody gave two hoots about the salaries of public sector workers simply because private sector earnings and bonuses were flying high. There was very little interest in careers in the public sector as they had little to offer in terms of salary and bonus. Now the tide has turned we are suddenly the focus of a great deal of anger being led by the right wing press. unfortunately the coalition have picked up on this.
O.K. there are a small number of public sector workers earning large salaries. However the vast majority don’t. In the legal profession our salaries don’t compare with the private practice.