Sound principles for public sector performance. Sound principles for public sector pay.

1. A temporary freeze on public sector pay. Recent increases have addressed pay concerns for key groups of workers.

2. With their manager, every public sector employee will set and review individual objectives at least every six months. This process will not consider pay and will be independent of existing pay review mechanisms. The aim is to propagate a performance culture. The scope for performance related pay is a separate question**.

3. Outside of key roles and departments, public sector recruitment will be frozen so that employment levels fall through the normal process of staff turnover.

4. National public sector pay bargaining, but using a regionalised formula (NB not regional or local bargaining). The regional formula will reflect variances in housing and living costs. To establish regional allowances, public sector pay will be allowed to increase first in those regions with the highest cost of living.

5. In the medium and long term, key worker* basic pay increases will be linked to the growth of average earnings. In addition, generous bonus bonds will be paid reflecting individual and organisation performance. These will mature at key service milestones (1 yr, 3 yrs..) in order to reward long service within the public services.

6. In addition, training costs will be re-paid through a credit system also based on length of service - for example, a doctor or nurse leaving the NHS after one year of service would be required to repay most of his or her medical school costs.

7. Personal Bonus Funds will be a repository for cash prizes, awarded nationally, regionally and locally across the public sector. Independent auditors and judges will assess the performance of individuals, teams and departments. The auditors will adjust their criteria each year within a broad set of performance measures. The broad areas for assessment will be published, but the detailed weighting of criteria will not. The judges will also choose how to weight absolute performance compared to performance improvement. This will ensure that institutions and individuals have an incentive to improve performance across a range of important service areas. [Click here for NHS examples]

*Key workers – defined to reflect national priorities and regional levels of supply and demand. In many regions, it is likely to include doctors, nurses, teachers and police officers.

** The scope for individual performance-related pay is dictated by the existence of mechanisms to accurately and fairly measure individual performance – it is easier to implement for teachers than for doctors, for example. Although extreme levels of performance can never be ignored, performance-related-pay will not always be the best route to improved motivation and performance. But setting and reviewing objectives, as proposed here, will always be beneficial in every part of the public services.