Finance Committee calls for review of public sector executive bonuses

22/06/2009

The Scottish Government should review its policy of awarding bonuses to senior executives, according to a Finance Committee report published today.

The recommendation follows a committee inquiry scrutinising the pay for staff working in the public sector, including an examination of the salary and bonus arrangements for senior public sector executives. The committee took evidence on the existing public sector pay policy, the processes for approving pay remits and the negotiating structures across the public sector.

In addition to the calls for a review of bonus payments, the Public Sector Pay report also recommended:

  • that the Scottish Government explores ways to reduce the number of pay bargaining areas in the public sector
  • that the Scottish Government brings forward suggestions to address the length of time it currently takes to process pay proposals
  • that the Scottish Government demonstrate how it is dealing with low pay in policy and practice
  • that consideration be given to holding three-way discussions between COSLA, the Scottish Government and trade unions on the local government pay settlement.

Committee Convener Andrew Welsh said: “The evidence provided during this inquiry has left the committee in no doubt that there are areas of the existing public sector pay policy in Scotland which could be improved.

"The committee firmly believes that the number of pay bargaining areas could be reduced; and, while recognising that some progress has been made, it is calling for the Scottish Government to ensure that the length of time taken to process pay proposals is shortened.

"In terms of the policy for senior appointments, the committee makes clear to the Scottish Government that the policy of paying bonuses to senior staff should be reviewed.”

Further information
The Public Sector Pay Policy for staff sets the parameters for public sector pay increases for those public bodies whose pay requires the approval of Scottish Ministers – the Scottish Government and its associated departments, agencies, NDPBs, public corporations and NHS executive and senior managers. In total, the policy covers 48 bodies that employ 30,000 staff, accounting for around 6% of public sector employees in Scotland, with an aggregate pay bill of around £1 billion.

The policy does not include the remainder of the NHS or local government staff including teachers, police and fire services, or civil servants who work for UK departments, for example the Department for Work and Pensions.

The Public Sector Pay Policy for Senior Appointments sets the parameters for the remuneration of senior appointments as well as proposals for new appointments or reviews/changes to existing appointments. The policy covers the remuneration of chief executives and, in exceptional circumstances, directors as well as the chairs and members of Scottish public bodies. It also covers the non-executive directors of the Scottish Government and its agencies; chairs and board members of NHS bodies; the fees paid to judicial appointments and appointments to tribunals, appeals boards, royal commission and advisory committees and inquiries etc.

The policy currently covers 38 senior employees, with a total pay bill of £3.6 million (2008-09). The policy does not include the senior civil service as that is reserved to Westminster.

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