Finance Committee, 04 Dec 2007

Meeting date: Tuesday, December 4, 2007

Official Report 299KB pdf

---

Public Sector Pay

Item 3 is consideration of pay policy as it relates to senior public appointments in Scotland. At our meeting on 30 October, we considered a paper that set out the operation of pay policy for senior staff in the public sector, and we agreed that we wanted to consider the issue further by way of a one-off evidence session. We therefore asked the clerks to produce another paper giving more detail on the mechanisms for approving pay, and to suggest some approaches for the one-off session.

Members have received a paper with suggestions for evidence, a paper on approval mechanisms for staff other than chief executives, and the paper that we considered on 30 October, which has been reissued. Members have also received hard copies of the relevant Scottish Government policies.

As I think we agreed before, it would be useful to invite both the cabinet secretary and the officials to our evidence session. Before the session, it would also be useful to ask the Scottish Parliament information centre to do a bit of research into the facts, figures and trends of public sector pay, relating the research to the previous Scottish Executive and the present Scottish Government. It would be useful to know what percentage of total costs is represented by pay in certain key areas.

It would also be interesting to know the trends in the pay of senior people. There is quite a lot of concern—Derek Brownlee was quoted in the weekend press—about some aspects of the pay of senior people. We should know whether bonuses—and all the rest of it—are caught within the policies. A briefing from SPICe would be helpful.

I have said before that the emphasis must be on the year-on-year uplift in the pay bill as opposed to the mechanisms for deciding awards. There is a world of difference between the two and most of it is encompassed in what Alex Neil has just said. People move through pay increments and promotions are made in year. Once all that has happened and we take a backward look at the upward lift in the overall pay bill, the figure will bear no resemblance to the negotiated figure that is published. That often happens.

On public sector pay, we also need to remember that when local authorities were reorganised in 1995, a range of chief executive salaries was established with a pyramid below them, particularly for senior officers. That pyramid was then set. Whether it was set at the right level is a different question, but the fact that it was set means that, if it is wrong, the error is compounded year on year.

The subject is much more complex than considering the outcomes of the negotiations or the mechanisms behind them each year.

Those points are well made and will help us in our consideration. The clerks have a note of the suggestions. Do members agree for research to be sought on those matters?

Members indicated agreement.

We must decide from whom to take evidence: officials only, the cabinet secretary only, or officials and the cabinet secretary. What is the committee's preference? Would members prefer to have an overview instead of separate evidence-taking sessions, especially given the extra information that we are seeking?

I am not entirely sure that we want to take evidence from either. I do not mean any disrespect to the cabinet secretary, because he is in a difficult position in that job. Officials from the various organisations will not vote for an early Christmas if we have them sitting like turkeys before us. We need to try to get a more objective view of the situation from economists or academics. They can look at it from the outside and give us a colder judgment of the economic impact of salary movements in the public sector.

That is a good idea.

The idea is to take evidence from officials from the finance pay policy team. Does that address your objection, Tom?

They would still be turkeys voting for Christmas.

I do not detect a great incentive for those officials. The evidence must come from somebody who is more outside the system.

That is a good idea.

Who do you have in mind?

Economists, for example.

For some aspects of the matter, it might be appropriate to take evidence from the Low Pay Commission. It has a Scottish member. Also, the Labour Research Department—not the Labour Party research department—which is headquartered in London, has done a lot of work on public sector pay and might be able to give us some comparisons between Scotland and other jurisdictions. There are also people in academia who have done a fair bit of research on the matter.

I agree with Tom McCabe. A cross-section of those people would be helpful.

From what Alex Neil and Tom McCabe said, it would be unrealistic to get officials to suggest that they all ought to offer up a pound of flesh. However, it may be unfair not to hear from officials after we have taken evidence from others, so perhaps we should break the witnesses into a couple of separate evidence-taking sessions.

That is useful. I suggest that the clerks come back to us with suggestions that are based on this discussion. We can then reconsider our approach.

Is there a high pay unit? It would know more about the matter. [Laughter.]

I would not know. We will await the appropriate paper.