Dave Penman: All in it together? Not if you're a public servant

Written by Dave Penman on 13 July 2015 in Opinion

George Osborne says Britain deserves a pay rise. Unless you work in the public sector, of course

Every year at both Budget and Autumn Statement time, my office, which has the only television in our HQ, fills up. As a result, two of the people I watched this year’s Budget with were tax inspectors. They chuntered to every announcement on taxing of dividends etc with various grunts of approval or shakes of the head – but it wouldn’t do much for my readership figures if I recounted blow-by-blow their views on taxation policy.

There are two aspects of the Budget, though, which directly affect my revenue-raising colleagues that I want to highlight.

I am sure it will come as no surprise that I take issue with the chancellor’s announcement of another four years of pay restraint, with increases held at 1%. He clearly feels it’s a winning formula: hold back public sector pay, run the old chestnut that it’s a choice between jobs and pay and, bingo jingo, there’s around £5bn in savings with little or no consequence, or so he believes. Indeed, he is so blasé about this announcement that he couldn’t see the irony of finishing his speech with the term “Britain needs a pay rise and Britain is getting a pay rise” when it came to his announcement on a living wage. A gift for the FDA’s press release, but a slap in the face to millions of public servants (and those tax inspectors).

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By the time of the next election, public servants will have experienced a decade – an entire decade – of either no pay rises or pay held back at a maximum of 1%. Taken together with increases in pension contributions, many civil servants are already taking home less actual cash than they did five years ago, never mind the real value of pay, which has fallen by about a quarter over the same period.

In its Budget report, the government states that it hopes inflation will return to the target rate of around 2% soon. So, as a matter of policy, it wants to cut the living standards of its public servants year on year. As it slaps itself on the back for steering the economy to growth, it locks out millions of public sector workers from the benefits of the recovery.
That same Budget report predicts that average earnings will continue to rise over the next parliament at around 4% for most of the period. So while the rest of Britain will feel the benefit, public servants certainly won’t. 

Not only do I believe that the government has a moral obligation to ensure its public servants benefit from the recovery in the same way it has ensured it shared the pain of the recession, I also think this unfair treatment of the public sector is counterproductive.

Back to those tax inspectors. The chancellor announced that he will reinvest £0.75m in HMRC to further tackle tax evasion and avoidance, hoping to recoup that many times over in yield. We have long argued this case: HMRC has ably demonstrated that it is a wise investment and we welcomed the announcement in the Budget statement.

Our tax professionals routinely deliver millions of pounds in tax revenue, outwitting complex avoidance schemes dreamt up by accountants and lawyers earning many times what they do. The best tax minds are in the public sector: that’s why they are routinely offered eye-watering salaries to jump ship. The government’s own evidence demonstrates that, for comparable jobs to the civil service, the private sector delivers a total remuneration package which is 50% more at Grade 6&7 level. The proportions continue to rise with every grade from around SEO equivalent and, at the most senior levels of the SCS, are around double what the civil service pays. Remember, this is the government’s own data that it asks the Hay Group to collate, which includes the value of pensions.

Therefore, it’s no wonder that departments such as HMRC are having to resort to offering higher starting pay or Labour Market Supplements to recruit appropriately experienced staff. In areas such as the Ministry of Defence, organisations have been created with the specific purpose of being excluded from civil service pay policy. 

The Institute for Fiscal Studies estimates that a further four years of pay restraint “will take public sector pay levels well below their long-term average relative to pay in the private sector, and indeed well below anything seen since we can readily make comparisons back to the early 1990s”. Yet the government seems oblivious to the impact this will have over the longer term.  

My tax inspector colleagues chose to work in the public sector. They are passionate about the vital role they perform for our country in a way that is truly inspiring. They do interesting, valuable work – but what are they to make of how they are being treated by their employer? What are they to make of a decade of pay restraint, of watching the rest of Britain benefit from recovery, of seeing new recruits being paid more than existing staff and feeling undervalued? 

In the summer Budget the chancellor once again used his favourite phrase, “we’re all in it together”. Not, it would seem, when it comes to reaping the benefits of recovery.


About the author

Dave Penman is the general secretary of the FDA union


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Lesley Hunter-Clark (not verified)

Submitted on 13 July, 2015 - 12:38
I totally agree with your comments but it's not just about the pay rise we also need to take into account that we have had no pay progression within those years either. I've been an SEO for 6 years now and I'm still sitting on the bottom of the pay scale despite having been given a performance marking of a 1 or a 2 every year in that 6 year period. I should have been adding to my civil service pension but with non consolidated bonus payments and no pay progression my pension is also standing still!

Susan (not verified)

Submitted on 14 July, 2015 - 11:09
An even bigger insult is the fact that not all areas of civil service employees lost their pay progression. Which makes those of us who did feel even less 'in it together'.

Michael Atkinson (not verified)

Submitted on 13 July, 2015 - 12:42
It's worth recalling that the one percent pay restraint also applies to pensions which are in payment. As a result, retired civil servants have only had pension rises limited to that amount since this policy was introduced and will do so for the next four years too. That's on top of the change from using RPI to the lower CPI to calculate increases.

Graham Dougan (not verified)

Submitted on 13 July, 2015 - 12:43
I cannot express the disgust that i feel in the way my pay has not risen for years. And my bosses still think i should work even harder each year for them, what a joke. I cant even write what i really want to say as im pretty sure i'd be sacked if i did. I'd just like to thank my government for kicking me in the stomach when i'm already pretty much on the ground.

Anonymous (not verified)

Submitted on 13 July, 2015 - 12:47
I couldn't agree more with the contents of this article, I'm sick and tired of hearing various individuals in various media, stating that salaries are rising across the board in the UK, never mentioning that local and central government staff are and have not received a payrise to at least maintain living standards. As a result morale is, yet again on the slide, and for those collegues who decided to vote conservative (though I cannot say with any conviction that a Labour or Coalition administration would have offerred any better pay conditions) thanks. Reward for the experience and expertise would be appreciated, and by this I mean the re-introduction of pay progression towards payscale maximums.

Dave (not verified)

Submitted on 13 July, 2015 - 13:22
I couldn't agree more with this article! The Chancellor seems to think he can treat public sector workers differently, yet still expects them to deliver huge efficiency savings. I don't think he realises how detrimental this will be in terms of engagement. I'm pretty certain he has just lost a huge amount of discretionary effort, which will ultimately be much more costly than saving a few billion.

Another tax ins... (not verified)

Submitted on 13 July, 2015 - 18:15
It's £0.75billion isn't it? £750 million additional money for HMRC to pursue various aspects of compliance. Though not to pay the staff, obviously.

Cassandra (not verified)

Submitted on 14 July, 2015 - 09:31
The Government seems to believe, like much of the general population, that Civil Servants are idle, thick, unqualified beaurocrats who are incapable of operating like their infinitely more valuable private sector counterparts. This is why it feels no discomfort in treating them this way, and no sense of risk that the service it gets from them can be impaired (it's just box ticking and bean counting, right?). This is why it keeps on bringing in people from the private sector to try to get it through their thick skulls how things ought to be done, and this is why it ends up with policies which cost the country an arm and a leg (because the jolly old JFDI ethic has no place for the nuance, knowledge and objective-balancing which the experienced Civil Servant should bring to policy dialogue) - although that doesn't matter because if it's costing too much you just take money away from the people it's easiest to take it away from - public sector workers and low paid families (oh, hang on, they're often the same people aren't they?). What saddens me most is that years of pay restraint, erosion of terms and conditions and questionable HR policies inevitably will turn the Service into the second-rate organisation it is wrongly believed to be.

Bob (not verified)

Submitted on 16 July, 2015 - 08:14
Spot on.

Gus Smith (not verified)

Submitted on 14 July, 2015 - 11:56
I have attended the Civil Service Live events for the last couple of years, at which the PM has spoken and said how well the Civil Service has taken the lead in tackling the countries problems, and how he values the contribution we make to society. Like many Civil Servants I have not had a pay increase for the last 5 Years. This shows how much he values us, if we are valued he needs to give us a fair reward.

Steve Clarke (not verified)

Submitted on 15 July, 2015 - 09:18
Agreed, in comparison to the private market comparison, Tax Inspectors are underpaid and this is evident by the average quality of many of them. However, this works two ways. How many tax inspectors would be willing to work 60+ hours per week with no overtime pay as this is what many of their private sector counterparts are doing. The Civil Service provides a work/life balance that the private sector usually does not so there has to be a value on that. The writer also omits to mention annual increments in the public sector and the remuneration value of their employer pension contributions etc.

Disbelieving (not verified)

Submitted on 17 July, 2015 - 14:38
"The writer also omits to mention annual increments in the public sector and the remuneration value of their employer pension contributions etc." - have you read the terms of the Alpha pension scheme? And as for 'annual increments' they stopped years ago.

Mad dog (not verified)

Submitted on 15 July, 2015 - 14:01
The new motto for the Civil Service should read: We are the willing, lead by the unknowing, doing the impossible for the ungrateful. We have done so much with so little for so long we can do the impossible! MPs are in fact Civil Servants and they are getting a 10% pay increase - they are taking the ****(remember Cameron's quote back 2010, we are all in it together. Some of us more than others and I'm up to my neck in it!), I want to join their trade association / body, if they can get a 10% pay increase.

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