Public and Commercial Services Union

Annex 1 to MoD/BB/47/08

June 2008

Richard Hatfield
Personnel Director
Level 6 Zone D
Ministry of Defence
Main Building
Whitehall
London SW1A 2HB

Dear Richard,

Attached to this letter is our claim on Pay and related issues for 2008.

The Government’s policy on Public Sector pay has already resulted in disgraceful pay cuts for our members in MoD since 2006. The 2006 pay award of 0% on basic rates for all of our members and some progression, when actual inflation (RPI) was much higher, caused deep resentment. As you know our members were so angry they felt the need to take strike action in March 2007. This was the first such strike action, outside of national action, in MoD history. We believe this unfair and unsustainable policy must be changed. Further below inflation awards in 2008 and later years will be unacceptable and cannot be justified based on the contribution of our members to supporting the front line.

Our key requirements, which we explained clearly in 2006, continue as the main elements, and these are:-

· Pay and Conditions should be underpinned by common minimum standards for pay rates, pay progression and other aspects of pay.

· Common core conditions for hours, leave and family leave.

· A reduction in the number of separate Bargaining Units across the defence group.

· Annual guaranteed pay increases (revalorisation) which at least keep pace with the cost of living (as measured by the Retail Price Index), and which are fully consolidated.

· Opposition to any regional pay proposals, and to linking pay with unfair, divisive performance pay systems.

The attached claim acknowledges the work currently underway with the National Council of Civil Service Unions (CCSU) and the Cabinet Office.

We look forward to a positive response to our claim.

Yours sincerely

Paul Barnsley
National Officer

 

 

 

Annex 2 to MoD/BB/47/08

Ministry of Defence Pay Claim 2008

1. National Context
The PCS claim for MoD in 2008 seeks to take into account developments at the national level, where meetings between the unions and Cabinet Office are ongoing, in particular:

· The Permanent Secretaries Management Group in September 07 agreed the merit of having greater consistency across the civil service for certain aspects of pay and conditions.

· A Joint Group on Pay and Conditions has been set up by agreement between the Cabinet Office and Civil Service Unions, which is considering pay reform/coherence, standard conditions on hours, leave, maternity/adoption leave and maternity support leave. Also, the future structure of bargaining units across the civil service and linked bodies is being considered.

Therefore for this year we have not included demands on annual leave, maternity leave, maternity support leave, adoption leave or working hours within the claim below. We support the efforts being made nationally to establish agreed minimum standards.

A further potentially significant national development is the creation of a Joint Task Team, agreed by PCS and the Cabinet Office, which is seeking to identify and consider approaches to, and implications of adopting broad “job groups” for employees in administrative and executive roles at AA (E2), AO (E1) and EO (D) and equivalent levels across the Civil Service. The work will identify possible solutions, involving common pay levels and pay structures, including single pay rates and very short pay progression. This joint task team is due to report by 30 April 2008, and we expect any pay offer to facilitate this work; supportive of national civil service/non departmental public body wide minimum pay rates.

Linked to this, we are aware that Annex 4 of the 2008/09 Treasury Pay Remit is the amended Civil Service Reward Principles, and this has examples of potential pay reform, including Single (Spot) Pay rates for E2/E1 grades, two year progression for the D grade, three year progression for the C2/C1 grade, and four year progression for B2/B1 pay. Paragraph 2.3 of the guidance refers to the expectation that “departments will reform their individual reward system along the lines set out in the principles subject to individual business needs.” We therefore expect the pay offer to reflect this thinking, or at least show clear evidence that this is the path being proposed.

To provide assurance that this change is not detrimental it will be essential to fully protect the real value of the range maximum, which has always been regarded as the rate for the job.

2. Content of Claim.
Given the above, our claim is for:

(a) UK-wide common minimum pay rate of £8 an hour. In 2008 all PCS members in MoD should earn at least £8 per hour at the entry level (£17,539 per year, based on 42 hours gross working week). This policy was adopted at the PCS 2007 Conference to tackle low pay, which is particularly important at a time of rising living costs, and £8 an hour will significantly reduce the gender pay gap of 19%.

PCS is also pursuing common minimum standard pay rates at all other grade/payband levels. These will be features of the joint talks between PCS, Cabinet Office and Treasury, as referred to above. An Annex to this claim includes a table of these common (minimum) rates.

(b) A fully consolidated and pensionable across the board pay increase of at least 6%, additional to progression/annual revalorisation costs. Since 2006 many members received below inflation increases (particularly those on the maximum), and thus a pay cut in real terms, so this claim includes an element of catch up. In 2008 increases need to be meaningful and consolidated, to count for pension and to build upon in the future.

(c) £4,500 London pay premium, or a substantial increase at least 6% towards achieving this level. London living costs continue to rise in relation to national areas, particularly housing costs. This needs to be addressed, and payments at a flat rate rather than as percentages, to be fair to the lower paid.

(d) Substantial improvements to pay progression. These to include single (spot) pay rates for E2, E1 grades and equivalents, progression of two years for staff at Band D and equivalents; three years for C2 and C1 staff and four years for our members at B2/B1. This is in line with the updated Civil Service Reward Principles, issued by the Cabinet Office, and is a more credible timescale to achieve the rate for the job.

(e) Prioritisation of basic pay over performance pay. All of the available evidence indicates that performance pay is still fraught with issues concerning discrimination. Furthermore, there is a marked lack of evidence to show it to be effective in motivating core public sector workers. Basic pay increases are necessary and the fairest way of rewarding staff for their hard work.

(f) Better family friendly/ childcare provisions. In particular practical support, accessible to members in all grades such as nurseries/holiday play schemes, leave for carers, and other provisions.

(g) Annual equal pay audits of pay and human resource systems. We urge MoD to work with us to address unequal pay. As you will be aware PCS has a large number of cases at the Employment Tribunal due to discriminatory pay practises in Band D and C2 and the impact that this has had on women working in those grades. Reviews must be undertaken and actions followed through on audits. Funding must be available to eliminate inequalities. Fairness and transparency of Pay Systems are crucial and pay systems need to reflect this.

3. Conclusion
There cannot be further imposed pay settlements, below inflation offers on basic pay rates, maximums frozen or a continued lack of fairness.

We believe that these pay demands are affordable, fair and efficient. They would help to form the basis of a new National Pay Framework for the UK Civil Service and linked bodies.

 

 

 

 

Annex 3 to MoD/BB/47/08

ANNEX TO PCS MoD Pay Claim 2008

Common Minimum Standards for MoD Pay.
In 2008 there should be increases to maximum and minimum rates to move PCS members to the Minimum Standard pay rates shown below, which incorporate PCS Conference policy of £8 per hour (£17,539).

GRADE BAND (OR EQUIVALENT) MINIMUM STANDARD RATES(NATIONAL)
AA (E2) One single rate £17,539
AO (E1) One single rate £22,000
Minimum Maximum
£19,500 £22,000
D (EO) £23,500 £28,500
C2 (HEO) £29,000 £35,250
C1 (SEO) £37,200 £43,500
B2 (GRADE 7) £50,000 £61,500
B1 (GRADE 6) £61,500 £72, 250

The use of “single pay rates” in part of the above table, reflects the current dialogue between PCS and the Cabinet Office, about single (Spot) pay which replaces minimum and maximum pay rates with a single rate (i.e. there is no pay progression). Single pay rates and much faster pay progression of 2 to 4 years aim to recognise that all members should be paid the full rate for the job, as soon as they are effective in their job.

Most figures above are rounded but they relate to actual minimum and maximum pay, as established in a number of Civil Service organisations (see examples below). They are the going rate (including a 2008 increase) and should be seen as realistic objectives; given the need to address large and unfair pay gaps which exist between staff across the civil service (and in many cases within a single Department), who are doing work of essentially equal value. The figures in the table above also avoid any overlaps between Grades/Bands. The existing variety of different pay rates and systems in the civil service is a recipe for unfairness and equal pay problems, as demonstrated recently in the transfer of MoD staff in DESO to DBERR. Moving all civil service and linked bodies towards the above rates will achieve considerable pay convergence.

Information about higher pay rates (National) actually applying in some civil service organisations, are shown below:

· AA (E2 )Maximum pay around £16,500.
· AO (E1) mins over £18,000, and AO Maxs over £20,000.
· EO (D) Mins over £22,000, and EO Maxs over £26,000.
· HEO (C2) Mins around £27,000, and HEO Maxs near £32,000.
· SEO (C1) Mins around £35,000, and SEO Maxs over £40,000.
· Grade 7 (B2) Mins over £47,000, and Grade 7 Maxs around £58,000.
· Grade 6 (B1) Mins over £57,000, and Grade 6 Maxs around £66,000.

£8 an Hour and a 6% Pay Rise – Tackling Low Pay
The claim for £8 an hour, and for a 6% increase in basic pay rates will both address widespread low pay, and allow a catch-up in pay for the losses of at least 2% in most pay outcomes for 2006. Inflation (RPI) averaged more than 4% throughout 2007, and continues at 4.1% (Jan 2008) whereas the MoD basic rise was 0% with some progression.

The Retail Price Index (RPI) is used to determine increases in state benefits; pension increases in many occupational pension schemes; repayment rates on student loans; and is almost universally used in unionised pay bargaining. Industrial Relations Services (IRS) report that detailed analysis of the relationship between inflation and settlement levels over the past 20 years suggests that pay awards are heavily influenced by movements in the headline (RPI) rate of inflation.

The Government’s preferred Consumer Price Index (CPI) does not include most housing cost changes and is widely believed to be a less valid measure of actual cost of living changes as experienced by our members.

The Civil Service is in many instances a low pay employer, and for example one quarter earn £16,000 or less. There is a much higher proportion of lower paid staff in the Civil Service than in the UK non-manual workforce as a whole. Civil service statistics 2006 (published 2007) show that:

· 71,530 (18.2%) earn up to £15,000
· 182,830 (47%) earn up to £20,000
· 214,240 (69%) earn up to £25,000

Low pay affects morale. We face significant job cuts and major business change, and also public services being under increasing pressure. The national average salary in the UK is just over £23,000. Yet three-quarters of civil servants earn £26,000 or less. For many this means low pay at the poverty line.

Poverty pay can have a negative impact on individuals and family life including health. Public servants need to feel valued, that they are supported in doing what is often a difficult job. A decent pay increase in 2008 would send that message.

Also, because a high proportion of low wage earners are women [62%] there is potential to significantly reduce the gender pay gap

Performance pay
Our members have accepted the new performance pay arrangements for 2008 and we look forward to engagement with the Working party that you have committed to set up in 2008 to look at further improvements to the system.

However in terms of pay the priority should be a general across the board increase; the revalorisation of minima/maxima and scale points and improved pay progression. It is the experience of the unions that performance pay is unproven, divisive and discriminatory, and delivers negative outcomes.

A number of studies have found that performance pay schemes are not beneficial. Research from OECD countries found massive problems with performance pay in public services. A parallel study in Australia showed performance pay demotivated staff, was divisive, led to the erosion of co-operation and team-working and feedback was stifled within the workplace. The administrative burden and costs combined with low inflationary settlements erodes any business reason to continue with such inequitable systems.

PCS believe that performance pay should be transparent and free of discrimination and bias (and only used for training and development purposes). PCS is opposed to linking performance to pay.

Equal Pay
PCS are disappointed about the lack of emphasis on equal pay audits in recent years and would like to highlight the importance of such exercises in ensuring fair and transparent pay systems for our members. Cabinet Office has issued guidance on carrying out pay reviews and the EHRC has produced a comprehensive ‘kit’. These reviews are a condition of delegation and a practical focus on equality issues. As you will be aware we currently have a number of claims to Employment Tribunal in respect of what we believe are discriminatory pay practise in respect of women in pay bands D and C2.

Family Friendly Issues
PCS recognise the importance of family friendly policy and practices in enabling our members to achieve a balance between home and work responsibilities. PCS would welcome improvements to other parts of the pay and conditions package such as flexi-time arrangements, special leave for eldercare, provision of holiday play schemes and workplace nurseries, particularly as these offer practical help to staff, thus improving recruitment and retention.

 

 

 

Annex 4 to MoD/BB/47/08

Pay claim 2008 - Key issues for discussion

As part of this consultation, it would be helpful if branches and members could in particular think about answers to the following questions:

Questions

1. Is your priority for the next pay round achieving an inflation proofed increase, faster progression or something else?
2. What balance should our negotiators attempt to strike between scale shortening and protecting pay band maxima?
3. Should we seek to achieve spot pay within the pay system and for what grades?
4. Should we accept the proposal to replace higher starting pay with Market Skills Supplements?
5. Is low pay causing problems of recruitment and retention in your area?
6. Do you have a view on the optimum length of any pay deal?
7. How do we take forward the widest possible consultation with members on the pay claim and the key issues on pay?
8. What action would you be prepared to take to force the department to take seriously our pay claim?

Key questions
1. Faster progression or revalorisation of pay scales

The 2006 MoD pay award would have been 0% everywhere else in the public sector, where progression is not counted against the value of the award, as the pay scales were not revalorised. The value of the award was therefore eroded each year by the effects of inflation.

With limited money available from the Treasury, members are asked to consider whether this should be prioritised towards inflation proofing or accelerated progression through the pay scales.

2. Scale shortening

The department wishes to make further progress on reducing the length of pay scales. They are likely to be persuadable to move to 3 year pay bands for non mobile grades and 5 years for the others over a period of time, which has been a key element of our pay campaign within MoD for years.

However, to achieve this it is certain that MoD would propose to reduce the pay band maxima across the board (with pay protection for those above the max).

Members are asked to give a view on the balance between scale shortening and protecting pay band maxima. Whilst we know that the pay band maxima are largely an illusion for most members, with many clustered around the bottom few scale points, there are some staff at the top of their respective pay band. However, this could be balanced by the fact that three and five year pay bands will mean all staff can get to the rate for the job in a reasonable period of time.

3. Introduction of spot pay

Linked to scale shortening is the notion of spot pay – or a single rate for the job. The department are likely to be persuadable to move to spot pay for E1 and E2 staff, which would mean one rate for the job for all staff in the pay band (possibly also with an entry or development point).

This would effectively abolish progression in these pay bands and would mean that in future almost all of the new money could be paid in revalorising the rate for the job on an annual and guaranteed basis.

The key issue, of course, is at what level the rate for the job is set. In addition what would happen to those whose pay currently falls above the rate for the job and how their pay would be protected?

Members are asked to give a view on the desirability of moving to spot rates for particular grades and what grades this should cover.

4. Market skills supplements replacing higher starting pay

Certain jobs within MoD attract higher salaries outside. Currently the department deals with this by paying higher starting pay to new recruits and locational recruitment and retention allowances to existing staff.

It proposes to replace these with a Market Skills Supplement (MSS), paid to all staff, which would create a rate for the job for staff performing that task. MSS would be reviewable and renewable and unlike HSP attached to the job and not to the individual.

Members are asked to give a view on Market Skills Supplements.

5. Recruitment and retention problems

We believe that the Department has serious and intrinsic recruitment and retention problems caused by low pay. MoD has accepted this and wants to work with us to identify the nature and scope of the problem. This work is of a mutual benefit as evidence of serious recruitment and retention issues is likely to release additional money from Treasury.

We need to provide evidence that this problem is not limited to parts of the country, particular jobs/specialism or to certain TLBs.

We have agreed with the department that we will seek to provide evidence of these problems and the extent to which the problem is masked through the use of RRA/HSP/Overtime/LTTP/T&G promotion and the MoDs ‘can do’ attitude. We already have some very good evidence in respect of IOs, Commercial officers, MSF and also IT staff. We also have good data from the South West in terms of recruitment and retention problems at all pay bands. However, we want to assemble a sizeable annex to the departmental business case.

Members are asked to supply any further examples from their experience.

6. Length of 2008 Pay Award

Members are asked to consider what would be a desirable length for the next pay award taking into account the issues that we have discussed above.

7. Consulting members and securing the widest participation

a. Regional Forums
The national union is arranging a series of Regional Forums, in the main to explain the new agreement on jobs and privatisation. However these will also explain our thinking on pay going forwards and on the 2008 claim.

We need to ensure the widest possible attendance from MoD branches at these important meetings.

b. All members meetings
All branches are being asked to organise meetings in June to discuss the draft claim. To find out where your meeting is being held, or to organise a meeting in your workplace, contact: Dougie Brownlie on: 0141 224 2421 or e-mail: tupcssec.civsec@apc.army.mod.uk.

c. Indicative ballot
Our final pay claim and campaign objectives will be the subject of an indicative ballot of all members when concluded.

8. Possible action to support our pay claim

Members are at this stage asked to give a general indication of what action might be possible in support of our 2008 pay objectives. Action could include overtime bans, work to rule and other innovative protest action or industrial action on a targeted, selective or MoD wide basis.