Ministers ducking responsibility over pay cap

05 Jul 2017

Ministers are ducking responsibility over the public sector pay cap by repeatedly claiming they will listen to pay review bodies.

Responding to shadow chancellor John McDonnell in the House of Commons today, chief secretary to the Treasury Liz Truss continued to hide behind the review bodies.

But 55% of public sector workers are not covered by one, including hundreds of thousands of the government's own workforce.

Truss also claimed in the debate public sector workers were paid increments above the 1% cap, but in the civil service the cap applies to all elements of the paybill, including progression pay.

We have published information about how pay is determined in the civil service and its related areas, showing how closely it is controlled by the Treasury and the Cabinet Office.

Our general secretary Mark Serwotka said: “After three U turns, it is unclear where this weak and divided Tory government now stands on the public sector pay cap, but ministers insisting we wait for recommendations from pay review bodies are just ducking responsibility.

“The majority of public sector workers are not covered by a review body and, in the civil service as elsewhere, the Treasury holds the purse strings, sets the policy and has the power to change it.

“After the general election result the Tories have no mandate to continue with cuts to public services, and the pay cap must now be lifted for all public servants with proper pay rises for all of them.”

Background to civil service pay

Less than half of all public sector workers are covered by a pay review body. According to the government's Office for Manpower Economics, review bodies cover around 2.5 million (45%) public sector staff.

There is no review body for civil servants below the senior grades, and pay for central government departments, non-ministerial departments and agencies, non-departmental public bodies and arm’s length bodies is set each year by the Treasury through the “pay remit” and overseen by the Cabinet Office.

This covers almost 400,000 staff in key public service jobs, including those who collect and administer the taxes that fund all the public services we all rely on, jobcentre workers and those who administer social security and pensions, staff in courts, at our borders and working in immigration and asylum, civilians in the Ministry of Defence providing vital training, equipment and support to our Armed Services, and many others.

While the remit is called “guidance”, it is clearly more than that as it sets “a framework within which all departments will set pay for 2017-18”, with almost zero flexibility.

As in previous years the guidance for 2017/18 states that “public sector pay awards will be limited to an average of up to 1%” and proposals from all departments, agencies and NDPBs “must be approved by the relevant Secretary of State” and “must comply with this guidance”.

With the exception of employer National Insurance and pension contributions, it covers everything that adds to the overall paybill, including progression through the pay grades.

The process is that departments submit their proposals to the Secretary of State and “should not enter into formal negotiations with Trades Unions until their remit has been agreed” by them. Under normal circumstances, no additional approval is required but departments must submit data to the Treasury “to confirm [they] are abiding by the parameters set in the annual pay guidance”.

This system is known as delegated pay – a notional arrangement that departments and agencies are individual employers responsible for negotiating pay and conditions.

This was not always the case. National pay bargaining was first introduced in the civil service in 1919 and held for more than 70 years before the Conservative government, over a period between 1994 and 1996, broke it up and devolved responsibility.

The reality is that not only is it incredibly wasteful and time consuming to hold hundreds of sets of negotiations over an issue decided and controlled centrally, it also leads to inequalities where staff in similar grades across departments – and even across agencies within the same sponsor department – are paid vastly different salaries.

We have long called for a return to national pay bargaining to make the system fairer and more efficient.

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