Unfair and inadequate pay award imposed: 12,000 staff face fall to statutory minimum wage

06 Aug 2019
  • Imposed pay offer nowhere near PCS pay claim
  • No action taken to tackle years of decline in value of HMRC workers’ pay
  • PCS group executive committee formally rejects offer
  • PCS members to be consulted on pay, starting in September.

The Treasury Pay Remit Guidance issued by the government in June 2019, indicated that civil service employers would be funded for a 1% increase in pay bill costs, but could increase paybills by a further 1%, as long as this could be found from existing budgets.

Following this, HMRC has informed PCS that in September, it intends to impose its pay offer for 2019/20, with the overall value of the offer calculated at 2% of the current pay bill.                                            

The main features of the pay offer are:

  • Awards ranging from 1.84% to 2.08%
  • Awards ranging from £360 (AA National) to £1,279 (Grade 6 National); £423 (AA London) to £1,410 (Grade 6 London)
  • All awards are fully consolidated and will be paid on the 30 September, backdated to apply from the 1 June
  • Ex-gratia payments to compensate for additional pension contributions occurring as a result of backdated payments will be paid to those affected in October.

Pay award impact

With annual inflation rates currently running at between 2% (CPI) and 2.9% (RPI), members are yet again, faced with a pay rise that in effect is a real-terms pay cut. In addition, the severe restrictions on pay imposed by the government over the last decade continue to stymie any chance of moving through their pay range with more than 40,000 people (two-thirds of the HMRC workforce) currently on, or close to, the minimum for their grade. PCS asked HMRC to go back to the Treasury and make the case for more money to satisfy our pay claim. The employer refused this request.

HMRC policy on minimum pay

PCS has highlighted the current HMRC policy of tracking the statutory minimum allowable pay rates; the misnamed National Living Wage (NLW), for the lowest paid workers in the department.  PCS has pressed the employer to take action to confront the ongoing, embarrassing spectacle of the department charged with enforcing the NLW, having to uprate the pay of its own lowest paid staff when the statutory minimum increases every April. Once again HMRC has rejected our 

demand, preferring to proceed with widening the gap between the lowest paid and the highest paid.

The HMRC policy on this issue is not just morally bankrupt, it is storing up a major problem for April 2020, when the long-standing government commitment that the NLW should equate to 60% of UK median earnings will apply. Our calculations show that this will mean that more than 12,000 HMRC workers will be classed as earning on or close to statutory minimum pay rates by next April.

It is outrageous that a supposedly leading civil service employer can even contemplate tolerating a situation, where around one-fifth of its workforce will have to have their pay uprated only by the application of the law.

Much more needs to be done in respect of low pay in HMRC and the starting point for this should be a decision from the department’s executive committee (Excom) for HMRC to become a Living Wage employer; accredited by the Living Wage Foundation. This would oblige them to at least pay the real Living Wage/London Living Wage to its own workers, as well as ensuring that low paid contract workers providing services to HMRC benefitted from those pay rates as well. 

Pay disparities widen

A clue as to why HMRC’s bosses fail to comprehend the crisis on pay, is contained within the recently published HMRC annual report and statement of accounts. The ‘remuneration and staff report’ shows that the highest paid director earned between £235,000 - £240,000 in 2018-19, with the ratio between the average lowest paid worker and the average highest paid worker increasing from 8.47 in 2017-18 to 9.42 in 2018-19. When total remuneration packages are taken into account, one Excom member received £310,000 - £315,000 with six people getting total package payments in excess of that received by the department’s chief executive.

In 2018 the average basic salary rise for an Excom member, excluding bonuses, was £3,300. This was 4 times more than the largest pay award to grade 6 (London) staff and 19 times more than the smallest award to AA (National) staff.

In respect of bonus payments in 2018-19, 7 Excom members received at least £10,000 with the highest single payment being £50,000 - £55,000

Little wonder then, that HMRC senior officials fail to show empathy with their workforce; but their actions in sanctioning a general pay award that actually increases pay disparities is a clear indication of how out of touch they really are.

Alternative distribution of funds

Nearly every pay increase in recent years has focussed on flat percentile increases, which has meant that the cash value of the increase was much lower for the very lowest-paid; and the gap between the lowest paid and best paid has grown year-on-year.

However, even within the constraints of the pay remit guidance, a more equitable distribution of pay was possible. PCS had calculated that a flat-rate pay award of £500 for AA/AO; and £550 for all other grades, with an underpin of 2% at AA-O grades; and an underpin of 1% for all other grades, would have spread the available funds more evenly, and given more people a higher pay rise.This distribution would also have delivered real progress for the very lowest paid.

HMRC rejected this alternative or anything approaching it, preferring instead to enhance the pay disparities that have built up through the application of government pay restraint and strict percentile increases.

Group executive rejects pay offer - members’ meetings scheduled for September

It is clear that HMRC is currently unwilling to properly address the serious concerns that PCS members has regarding pay. The failure to consider alternatives, or to approach the Treasury for more funds, reinforces the view that the employer is working to an agenda that is not in the interests of our members.

PCS will be convening members’ meetings on pay in September, further details will be made available on this shortly. We are scheduled to meet Sir Jonathan Thompson for the final time before his departure on the 23 September, we will press him and his successor for a different approach on pay. An approach that must include securing more funds from the Treasury.

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