Public sector pay: Chief Executive framework review

Comparisons of Annual Uplifts

20. Annual uplifts from 2018 to 2023 were considered for CEs covered by the CE framework in the public sector pay policy, senior staff covered by the public sector pay policy for staff, and Senior Civil Service reserved to UK and covered by the Senior Salaries Review Body. The table below details the comparison of both monetary and percentage increases from 2018 to 2023 for CEs and staff under pay policy, and SCS. Those earning under £80,000 will have received slightly less than this.

21. A threshold in both staff and CE PSPP maintained a steady differential between these cohorts until April 2022. However, since then a divergence in awards has occurred with the higher earning threshold removed for staff in response to TU feedback, but restrictive annual uplifts maintained for CEs.

22. This divergence in awards led to a severe shortening of the differential between these grades, and in some cases the senior staff pay is now overtaking the CE pay.

23. As earlier pay policies have shown that while any threshold or cap will eventually lead to pay grades either side of the threshold or cap becoming too close to one another, treating all employees above a certain salary, regardless of title, does maintain the pay differentials between senior staff and CEs.

24. The UK Government have a Senior Civil Service (SCS) pay framework that is broadly similar in range values to the CE Framework. Over the last five years the minimum of each of the ranges has increased on average around 10.4% or £9,000. The maximums of the ranges have not changed.

25. Members of the SCS in the UK are able to receive bonuses in certain circumstances. Scottish Government policy is that SCS do not receive bonuses. To make comparisons solely on the changes to the framework does not take into consideration the impact of additional payments to individuals take home pay. Without comprehensive personal salary and bonus information we cannot make a more accurate comparison.

26. Where the UK pay procedure differs from Scotland, is the level of approval needed is increased with set salary or job title thresholds. As Scotland has a much more transparent and defined policy, approval is determined by adherence to the policy, rather than salary or job title thresholds.

27. Stakeholders highlighted that the impact of CEO pay being targeted rather than all senior pay has resulted in perverse outcomes, with significant compression of salaries at most senior levels and some instances of leapfrogging. They fed back that targeting of pay restraint solely on CEs under the CE Framework seemed arbitrary, unfair and too narrowly focused.

28. In the last two years, pay differentials between CEs and their senior staff have significantly reduced due to the application of different pay metrics in line with Public Sector Pay Policy. Increases within SCS pay ranges have further highlighted a disparity in annual uplifts for CEs. To address differential issues and to be cognisant of issues of fairness and parity, it is recommended that future public sector pay policies should look to maintain a closer relationship between senior staff pay and CE pay annual uplifts.

29. The Remuneration Group has seen an increase in submissions for CE salary reviews, seeking higher uplifts to address diminishing pay differentials or with an equity and fairness argument. The Remuneration Group are unable to approve these corrective uplifts as they go beyond annual pay policy limits. Ministers have approved some submissions relating to the erosion of the differential where the Remuneration Group could not.

30. This issue could be addressed with the delegation of authority to the Remuneration Group to consider and approve corrective measures beyond annual pay limits in the narrow circumstance of clearly evidenced significant erosion of pay differentials.

Recommendation 1a: To preserve and maintain current pay differentials it is recommended that there is a closer relationship between CE pay and senior staff pay for annual uplifts in future public sector pay policies. Examples of how this could be achieved include reintroducing a threshold for all staff, including CEs, above a set salary level, or alternatively to have CE pay increases match staff pay increases.

Recommendation 1b: Recommend that longer term comparisons and trends between previous years SCS, senior staff and CE uplifts be a factor in determining the uplift for 2024-25 and beyond.

Recommendation 1c: To delegate authority to the Remuneration Group to consider and approve corrective measures beyond annual pay limits in the narrow circumstance of clearly evidenced significant erosion of pay differentials.