Cameron’s favourite think tank wants performance related pay for all public sector workers – even the army

While the whole country is distracted by the government reshuffle this morning, those right-wingers at Policy Exchange have changed tack having seen their campaign for regional public sector pay stall in the face of well organised and wide-ranging opposition. Rachel Reeves has highlighted how it would undermine regional economic recovery, Northern Conservative MPs think regional pay would make it harder for to win a general election majority and Liberal Democrats are now warning of ministerial resignations if it is introduced. Meanwhile trade unions have been raising awareness in communities potentially affected and building broad alliances to pass motions in councils ranging from Cornwall to Northumberland.

The voting public think the policy is unfair and harmful for key public services such as schools. However perhaps it is little wonder Policy Exchange couldn’t convince the North of England regional pay cuts were a good idea. This was, after all, the same organisation that previously urged the ending of regeneration funding in the North saying it was ‘beyond revival’ forcing David Cameron to call his once favourite think tank’s ideas as “insane”. And he was right.

In their new report on ‘Reforming Pay in the Public Sector’ – launched today – Policy Exchange admit regional pay is all but dead. Instead they use the report to argue for a new approach. Not only do they want every individual public sector workplace to negotiate pay levels creating huge amounts of time-consuming bureaucracy, they want them to be assessing local labour market conditions and incorporating a performance related pay for every public sector worker in the country at the same time:

‘The government must make it clear that local managers must take into account both local labour market conditions and individual performance when setting pay. In essence, this would require that pay setting would be mandated to be localist by default.’ 

The report insists there should be no exceptions – even for the armed forces, although they may be exempted from having their wages determined by ‘pay per kill’:

“For example, jobs with less easily definable targets and where intrinsic motivation may play a significant role such as the judiciary or military, may need qualitative rather than quantitative performance systems to be most effective.”

Sadly Policy Exchange don’t use any of their 111 page report to explain how these performance related pay could be developed and introduced for the UK’s 5 million public sector workers at a time when most are experiencing record job cuts. No doubt troops fighting in Afghanistan, midwives in maternity wards up and down the country and school dinner ladies in kitchen canteens experiencing pay freezes will look forward to hearing the detail. They shouldn’t hold their breath.The authors concede:

“A full costing of the budgetary implications of removing pay differentials between the public and private sectors would require a significant benchmarking exercise across the whole public sector. This would be both costly and time consuming.”

So that’s that then. Another non starter from Policy Exchange to be filed away with the time they told everyone to close Liverpool and move everyone to Oxford…