Darling has fat cats in sights

Chancellor Alistair Darling signalled yesterday that generous pay and bonus packages for top public sector posts would have to be reduced to preserve jobs.

Speaking to The Sunday Times, Mr Darling acknowledged that some people in the public sector were earning "very large salaries" for jobs which were much more modestly rewarded a decade ago.

And he highlighted the example of private sector firms, two-thirds of which are planning wage freezes or cuts this year to avoid redundancies.

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Mr Darling has already announced a 1 per cent cap on public sector pay rises.

But a wider study by the Senior Salaries Review Body, due to report to him before the Budget, is also expected to look at the issue of performance-related bonuses and the practice of linking the pay of top public executives with their equivalents in the private sector.

Mr Darling told the paper: "What is being paid has sometimes lost the relationship it ought to have with what someone actually does. Once that happens, it's not only unfair, it's actually grossly inefficient."