Prime Minister David Cameron has announced that bonuses for the Senior Civil Service (SCS) and senior NHS managers will be cut.
The move follows a decision made by the first Cabinet of the new Government to cut 5% from the Prime Minister and Ministers’ pay packets.
The budget for performance related pay for senior civil servants for 2010/11 will be reduced by two thirds, delivering savings of around £15 million. Only the top 25% of performers will receive a bonus so that in future only those making an exceptional contribution will be rewarded.
The PM said:
The first task for us as a new government is to get on with the difficult job of tackling our country’s record budget deficit straight away. I believe that to do this we need to lead from the front. That’s why last week the Cabinet and I agreed to take a five per cent pay cut.
Now we need senior civil servants to join us in showing leadership as we reduce the deficit, while protecting the vital public services on which we all rely. We all need to take responsibility if we are to overcome the problems this country faces.
The PM is writing to all senior civil servants thanking them for their help in securing the smooth transition and setting out the need to accept the tighter restriction on the number of bonuses paid out.
Francis Maude, Minister for the Cabinet Office, said:
The Government highly values the professionalism and contribution that civil servants make to deliver excellent public services. But given the economic challenges this country faces it is right that the most highly paid civil servants play their part in reducing the public sector pay bill.
”Our next step is to ask the Cabinet Secretary, as head of the Home Civil Service, to review the overall performance and appraisal process. An effective system will reward the best performers and provide the right incentives for all to get the best for the taxpayer. We want to see a more consistent and streamlined system where bonuses are only awarded to those senior civil servants who have performed exceptionally well in achieving their department’s objectives. There is no place in the modern civil service for a presumption of good performance. Rewards must be earned through excellence assessed through a hard-headed and objective appraisal process.
Notes for editors
1. There are currently around 4,200 people employed in the Senior Civil Service and 1,100 NHS senior managers. Restricting performance related pay to the top 25% of these will mean around 1,700 SCS and 450 NHS senior managers - who are not in the highest performance categories - will not receive bonuses which will deliver savings of around £15m.
2. The SCS pay system includes a “pot”, currently 8.6% of the total amount spent on base pay, used to reward the strongest performers each year. These payments are not pensionable and the top performers in each department receive varying levels of award linked directly to their achievements against demanding personal objectives. In the last year, no more than the top 65% of SCS were eligible for such an award. This money has to be re-earned each year and so allows the Government to reward staff for their achievements without creating future pay or pension commitments. It also allows the effective rewarding of achievement and delivery rather than time served.
3. The average bonus payment for a Director General in the SCS was £12,700 in 2008/09, whilst NHS senior managers can receive up to 7% of their salary.
4. Last year 2,933 SCS and 850 NHS senior managers received bonuses at a total cost of £35m.
5. The total SCS wage bill was around £500m and £150m in 09-10 for senior NHS managers.
6. It has already been agreed that SCS and NHS senior managers will receive no headline pay increase in 2010/11. Now, the Government is reducing the total number eligible for bonuses in relation to 2010/11.
7. For details about the SCS contact the Cabinet Office press office and for NHS managers contact the Department of Health press office.
8. The PM announced on Thursday 13 May that the Cabinet and all Ministers would take a five per cent pay cut; a decision made at the first Cabinet meeting of the new Government.
A new politics: cutting Ministerial pay