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Appendix D
12th February 2015
Private & Confidential
James Dalgleish
Director of Operational Resilience
London Fire Brigade
169 Union Street,
London,
SE1 0LL,
United Kingdom
Hay Group
33 Grosvenor Place
London SW1X 7HG
United Kingdom
tel +44 (0) 20 7856 7000
fax +44 (0) 20 7856 7100
www.haygroup.co.uk
Dear James
Possible Pay Arrangements for the role of Commissioner
We spoke a week or so ago about starting some work on suitable pay arrangements for the role of
Commissioner and that the current incumbent is on a special arrangement that takes into account his
formal retirement and receipt of a Fire Service pension. I thought that I would start the ball rolling
by discussing some possible role and pay comparisons for the Commissioner and then making some
initial suggestions that could be worked on to develop a formal recommendation.
The role of Commissioner and possible comparisons
The Commissioner of the London Fire Brigade is clearly the largest Chief Fire Officer role in the
UK with responsibility for the safety of a very large urban area and a population approximately 8.5
million, an annual budget of c £430 million and 5,900 employees Hay Group has evaluated
Commissioner’s job size. We see the job to be a just noticeable step difference larger than Chief
Executives of London Boroughs, and at a similar job size to the Chief Executive of a County
Council. The job would compare to the Chief Constable of a large police service such as Greater
Manchester and the West Midlands or West Yorkshire, however we have seen the role as a bit
smaller than the Assistant Commissioners in the Metropolitan Police Service
We would also see the role at a similar size to a range of large NHS Foundation Hospital Trusts in
London such as UCLH and Imperial. These organisations have about 10,000 staff and annual
budgets of about £750 million. Other comparators in the public service at a similar job size might be
Director General roles in the Senior Civil Service.
Pay Comparisons
There are a number of pay comparisons we can make based on both Hay Group salary data for roles
of a similar size in the general market and then the pay for other similar roles in the public Service.
Hay Group Salary Data
The table below shows pay comparisons from the Hay Group database for roles in London. The first
lines of data are from the Industrial and Service (I & S) organisations analysis. This is a broad range
of roles excluding only the “city” type finance roles. It does include retail banking and insurance
and 70% of the participants are from the private sector. Public sector roles are represented but they
Registered in England and in Wales: The Hay Group Management Limited: No. 763575
Registered office: 33 Grosvenor Place, London SW1X 7HG
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make up only 30% of the data. We have presented two different pay types: firstly, Base Salary
which covers all contractual pay including any regional allowances; and secondly, Total Cash which
is the sum of Base Salary and any bonus or performance related payments in addition to base salary.
The last two lines in the table show figures for Public Sector and not for Profit (PNFP) organisations
in London
Data Source
London I & S
London I & S
London PNFP
London PNFP
Data type
Base Salary
Total Cash
Base Salary
Total Cash
Upper Quartile
£275,000
£452,000
£200,000
£205,000
Median
£222,000
£367,000
£175,000
£176,000
Lower Quartile
£164,000
£265,000
£152,000
£164,000
We have shown both sets of data for completeness sake but would normally recommend that you
start by using the Public Sector and not for Profit information as a comparison
Other Comparisons
Fire
A recent LGA survey which you provided us for a previous project, shows that largest of the Chief
Fire Officer roles (Band 4) are paid a median Base Salary of £148,345 and a median Total Cash of
£152,687. So any arrangements for the Commissioner would need to reflect the large difference in
responsibility.
Local Government
A recent London Council survey (2013) shows a median base pay of £179,000 with the Upper
Quartile of £186,000 and the lower quartile of £176,000. Salaries range from about £165,000 to
£215,000. An analysis of the Hay Group reward data shows that Chief Officer pay in London has
fallen significantly since 2008 post the recession. Local Government has faced large savings
requirements and median pay has dropped by about 15% in the intervening years. No individuals
have had pay cuts imposed (although a few Chief Executives have taken voluntary reductions),
however as councils have reorganised and restructured new post have been created at lower salaries
than the ones they replaced even though, in some cases, responsibilities have increased.
Police
The published Chief Constable salary for Greater Manchester, the West Midlands and the four
Assistant Commissioner posts in London is £181,455
Health
Hay Group experience of working with major teaching hospitals in London is that pay levels are
between £240,000 and £280,000.
The Senior Civil Service
Director General roles in the SCS are all allocated to a very broad salary range that starts at
£104,000 but which extends to £208,000. The median according to the SSRB report of 2014 is
£132,000 and many job incumbents are affected by the convention that all roles paid more than
£142,000 – Prime Minister’s pay, are referred to the Cabinet Office and Treasury for Ministerial
approval. The SCS does have a non-consolidated performance related pay (NCPRP) scheme where
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those assessed to be in the top 255 of performers can receive up to a payment each year of up to a
maximum of £15,000.
Pension Arrangements.
All of the comparator roles we have discussed also receive the benefit of public sector pension
schemes. These schemes are all slight different but broadly give a similar value to the individual
with the police and fire schemes being seen as slightly ahead of the others.
Discussion
There is a published salary range for the Commissioner of between £153,257 and £216,678. All of
the salaries we have discussed are covered by this broad band except for the Chief Executives of
large teaching hospital trusts. The range also covers the Hay Group PNFP data between the lower
and upper quartiles. Our experience is that health organisations and NHS Foundation Trusts
generally lead very senior level pay in the public sector and as such we suggest excluding it from the
considerations. We therefore conclude that the current salary range is a good place to look for
looking at any arrangements for the future.
Initial Recommendations.
Our starting point is that there should be a real differential between bottom of the range for the
Commissioner and the top of the range of the highest paid direct report which is currently £169,622
but is proposed to be £159,000 in the revised top management structure currently out for
consultation. Taking this, and ensuring that there is a significant “step-up” over the pay for other
Chief Officer in Band 4 we would recommend a pay band starting at around £175,000 to £180,000..
This would also make the starting rate comparable to the largest Chief Constable roles including the
Assistant Commissioners in London. Hay Group are uncomfortable with automatic progression
through a salary range but believe that the role should enable a really high performing and
outstanding individual to reach a top level of between £215,000 and £220,000. We believe that good
pay practice would be to have an element of the Commissioner’s salary linked to the delivery of
performance objectives through an element of non-consolidated performance related pay. This is
clearly not the norm in the public service but we believe that a performance linked element of up to
10% of base salary would provide a real demonstration of the value for money for the role, A 10%
payment at this level is very modest; roles at a similar level in the private sector would typically
have a performance related element each year of, at least, a maximum of 50% of base salary.
Yours Sincerely
David Pyper
t 020 7856 7344
e [email protected]
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