Hutton calls for 'earn-back' scheme

Jan 25 2012

Introducing an "earn-back" scheme for top public-sector workers' salaries would ensure that "penalties for cock-ups" are embedded in the system, a leading economist has told MSPs.

Will Hutton has proposed that public-sector executives should place an element of their pay, around 10%, "at risk", to be earned back each year if they achieved pre-arranged objectives.

They would not be eligible for a bonus unless they received the part of their pay which had been held back.

The proposal is one of a range of measures outlined by Mr Hutton in his UK Government-commissioned review on fairness in public-sector pay published in March 2011.

Appearing before Holyrood's Finance Committee to answer questions on his findings, Mr Hutton told members that the so-called "earn-back" scheme could have been used to effect in the Edinburgh trams project.

"Everyone knows about the fiasco over Edinburgh trams," he said.

"If the people involved in that put part of their pay at risk, one immediate consequence would not be the loss of their jobs - because there might be mitigating circumstances to the whole fiasco - but certainly they wouldn't have earnt that part of their money back which they put at risk."

Mr Hutton said the scheme would be "an immediate way of ensuring Edinburgh and Scottish citizens would have penalties for cock-ups embedded in the system".

Asked by members of the committee about the difficulties of defining the measures of good performance, Mr Hutton said: "If no-one has any idea whether someone who is receiving taxpayers' pounds is doing a good job or not, it is a powerless situation. And there jolly well should be someone in that position.

"If there is no-one able to do this, that is close to crisis in the Scottish public sector because there should be, and there must be, to give citizens some assurance that taxpayers' pounds are being spent well."