GOVERNMENT CHANGE IMPLEMENTATION OF PAY RECOMMENDATIONS ON SALARIES OF MINISTERS

The Government today (11th December 2007) decided that it would alter the implementation of the recommendations in respect of members of the Government and Ministers of State.

The first phase of the recommended increase will be 4% and will now come into effect on 1^st September 2008.

This is a year after the date originally announced for a 5% increase.

One half of the balance will be implemented 12 months later, on 1 September 2009 and the final element, the balance of any award recommended, will be implemented on 1 September 2010.

This implementation arrangement, which involves a freeze for 12 months and a full period of implementation of 3 years, with a full year cost arising in 2011, contrasts with the earlier phasing of 18 months in total.

When account is taken of the interim increase already paid, the annualised rate of increase for Ministers since the last Review Body Report in 2001 will be a little over 2%.

Since its decision to accept the recommendations of the Review Body, there have been a number of developments. In the first instance, the more challenging fiscal environment has been highlighted by the reduction in tax receipts against profile recorded in the key month of November. While Budget 2008 provides a sound basis on which to face into the challenges of the coming year, it will, nonetheless, be a more challenging environment economically. Secondly, public commentary has focused on the risk that the implementation of the Review Body’s recommendations in respect of the Government could negatively impact on the negotiation of a new Pay Agreement, negotiations on which are due to begin early in 2008. While such commentary has tended to misrepresent the position of trade union leaders – who have focused on underlying trends in the private sector as a cause for concern and not the operation of agreed pay review machinery – the Government believes that it would be wrong to allow this issue to distract from the matters which should be properly focused upon in those negotiations.

The Government, at its meeting today, reaffirmed its support for the system of periodic, independent review of the appropriate remuneration to be paid to senior figures in the public service. This system, which has operated since 1969, is a fair and reasonable way of ensuring that those carrying out senior duties in the public service, whose remuneration cannot reasonably be determined by normal industrial relations or market mechanisms, are reviewed by reference to objective criteria, including the nature and extent of their responsibilities and the rewards available at comparable levels in the private sector.

The Review Body in its most recent report made it clear that the remuneration policies in top plcs should not influence the determination of salaries in the public service and that the public service should not follow what were regarded as the excesses in certain cases in the private sector. The Review Body established as a benchmark for Secretaries General of Government Departments the lowest quartile of comparable private sector posts. That is, three-quarters of those employed at comparable levels of responsibility in the private sector are paid more than the Secretary General level. In addition, 15% was deducted to allow for the superior value of a public sector pension. It is the Secretary General level salary which provided the basis for the Review Body’s recommendation in respect of members of the Government.

11th December 2007