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Katja Hall, CBI Chief Policy Director, said:

“The Government was right to ask Will Hutton about senior public sector pay. His central suggestion that more senior public servants’ pay should be performance-related is welcome.

“But we must be careful about judging pay fairness by a single number, like the ratio of executive to median pay. While Hutton is right that there should be more transparency and understanding about how pay is set in the public sector, a single ratio can be misleading. Differences in the sizes and make-up of workforces lead to a variety of pay differentials based on very valid grounds.

“It is right that shareholders decide how pay is set. In the public sector this means it is for government to decide what the standards are.

“In the private sector, however, remuneration committees are responsible to shareholders. Shareholders not the Government should decide how to split the pay budget in a way that gets the best results, and this includes firms delivering services on behalf of government.”

Notes to Editors: