§ Lord Boyd-Carpenterasked Her Majesty's Government:
What action is being taken to introduce performance-related pay in the Civil Service.
The Chancellor of the Duchy of Lancaster and Minister for the Arts (The Earl of Gowrie)The programme of action I announced in July last year was directed at the improvement of the general quality of personnel management in the Civil Service as part of 1437WA the Government's overall policy for improved management efficiency, and the achievement of better value for money by all civil servants. The introduction of performance-related pay was an important task under this programme.
The Government believe it right to provide additional incentives to good performance. This becomes more important in a contracting organisation where there are reduced opportunities for promotion, which hitherto has been the main means of giving recognition to good performance. Performance-related pay is widely recognised as a valuable management tool and has been recommended to the Civil Service on a number of occasions.
At the same time, the successful introduction of this kind of arrangement into an organisation as large and complex as the Civil Service would be a major operation, carrying with it significant changes in the functions of managers and their relationships with their staff. There are choices to be made about the form of a performance-related pay scheme, as well as about its administration and the systems and procedures needed for that purpose. Cost is also an important factor.
For all these reasons, performance-related pay cannot be introduced immediately across the whole of the Civil Service. But the Government consider it important that some steps should be taken. They therefore think it right to introduce with effect from April 1985 an experimental scheme under which staff at the grading levels of Grade 3 (Under Secretary) down to Principal and equivalent grades will have the opportunity to earn a bonus for particularly good performance. The experiment will last for three years and its operation will be carefully monitored. A total of £4 million is being made available to fund this initial experimental scheme in each of the three years. This will not come from existing provision for Civil Sevice pay and related expenditure. It will be additional to existing departmental allocations but will be met from within planned public expenditure totals.
The Government will enter into immediate consultations with the Civil Service unions. It is also prepared to enter into discussions with the unions about the possibility of conducting further experiments at other grading levels. The method, timing and finance for such further experiments would all be for decision. But any such schemes identified and approved would be introduced as soon as practicable.
The steps now announced will provide a basis on which the value and operation of performance-related pay arrangements in the Civil Service can be tested, and enable decisions to be taken in the light of the experience gained as to any long-term arrangements.