Local government HR leaders have voiced broad support for this morning’s Hutton review, which recommended a stronger link between pay and performance for top public servants.

“The general principle of pay by results is right in terms of the public sector,” Dean Shoesmith, president of the Public Sector People Managers’ Association, told PM.

“Certainly in local government and parts of the civil service there has been a rather anachronistic emphasis on time-served progression, and the time is now right to reward good performance and the right behaviours in how we provide services to our residents.”

In his report, Will Hutton abandoned the prospect of capping senior salaries based on a maximum 20 to 1 top to bottom pay multiple – which he had supported in his interim report last year – saying that this methodology would impact as few as 70 senior managers across public services.

“The 20 to 1 pay ratio did seem high – it is more like 10 to 1 in local government”, continued Shoesmith. “Hutton added that this would not be workable in large, complex public-sector organisations, and it is too rigid a system to be flexible and responsive to business needs.”

Instead Hutton has advocated an “earn back” scheme for top executives, where 10 to 15 per cent of basic pay would be “put at risk” until the end of year, when performance targets could be evaluated.

Shoesmith, who is also HR director at the London boroughs of Sutton and Merton, explained that his councils already used a similar system where incremental pay and progression was linked to performance, which was assessed through 360 degree appraisals and a balance scorecard measurement of leadership behaviours.

But he cautioned that public-sector organisations that did not use such elements, “may have to review their senior pay and grading structures and their reward mechanisms”, and faced the issues of possible contract re-negotiation and establishing appropriate performance evaluations.

“Having a framework for the solid measurement of results will be the challenge I suspect, and you will need some variation,” said Shoesmith. “The public sector is a diverse area providing such diverse services that one system may not fit all.”

Steven Moir, the corporate director of strategy and democracy at Cambridgeshire County Council agreed, saying: “The devil, as always, will be in the detail.”

“The notion of ‘earn back’ or ‘pay at risk’ subject to performance provides a sound footing upon which to move the debate forward on senior remuneration significantly,” he explained. “But it will be incumbent upon public-sector employers to ensure that robust and objective arrangements underpin the introduction of these proposals.”

Moir also welcomed Hutton’s plans to increase pay transparency and his dismissal of “arbitrary” pay comparisons with the prime minister’s salary.

“More appropriate benchmarks for senior public-sector pay than the prime minister’s allowances, and the need to set pay transparency properly in context, should be applauded,” he added.