'Economically illiterate': unions slam civil service pay freeze as guidance published

Treasury will refuse to hear departments' cases to increase pay unless they save money elsewhere
Unions have been urging Rishi Sunak to rethink since he announced the pay freeze last year. Photo: NPS/Katy Cain

Pay remit guidance confirming a pay freeze for most civil servants for the upcoming year is a “slap in the face” for officials who have worked to keep the country running during the coronavirus pandemic, unions have said.

Guidance published by the Cabinet Office this afternoon confirms the freeze announced by the chancellor, Rishi Sunak, in the Spending Review last year.

While performance pay, overtime, pay progression where it is still in place, and pay rises from promotion will continue, there will be a “temporary pause” on yearly pay rises for most public-sector workforces in 2021-22, the guidance states.

The only exceptions to the policy will be organisations that have negotiated legally-binding pay deals – including HM Revenue and Customs, which announced a three-year pay deal for its staff last month.

Staff who are paid less than £24,000 a year will get a £250 pay rise. The lowest-paid staff affected by the increase in the national living wage from £8.72 to £8.91 will see their wages rise by that statutory amount or £250, whichever is greater.

To prevent staff whose wages fall just below the £24,000 threshold from “leapfrogging” those who earn slightly more, departments are allowed to give tapered increases for those earning up to £24,249, up to the same cap of £2,250.

'A slap in the face'

Mark Serwotka, head of the PCS trade union, called the pay freeze an “outrage”.

“The prime minister praised civil servants at the despatch box in parliament but those words now ring hollow. The best way for this government to show it really does value its workers is to give them the pay rise they need and deserve,” he said.

Amy Leversidge, assistant general secretary of the FDA, which represents senior civil servants, said the confirmation of the pay pause was “deeply disappointing”.

“Civil servants have gone to extraordinary lengths to keep the country running over the last 12 months, whether it was building the furlough scheme or coping with unprecedented demand on the benefits system, and this announcement is a slap in the face following their incredible efforts,” she said.

“The guidance also fails to recognise the critical role our civil servants will play as we emerge from the pandemic and look to reopen society and rebuild the economy. The pay freeze will do nothing to build morale in the civil service and ensure it retains the knowledge and skills that will be required to deliver the government’s priorities in the years ahead.”

Prospect deputy general secretary Garry Graham said the pay rules were not only unfair to civil servants who had worked “tirelessly” through the pandemic, but also “economically illiterate, sucking demand from the economy and ignoring the fact that pay increases remain buoyant in parts of the economy where demand remains high – particularly in areas requiring specialist and professional skills”.

Pay flexibility only allowed with “associated efficiencies and reforms”

Departments can submit a business case to the Cabinet Office and Treasury for a degree of pay flexibility, but only under strict terms and only if it does not increase their overall paybill.

The government will take a “robust and thorough approach to assessing cases for pay flexibility during the pay pause in 2021-22”, the guidance says.

It will only consider cases where departments put forward ways to save money or increase productivity as part of the deal “early on within the business case lifecycle” by changing their terms and conditions of employment. This was the approach HMRC bosses took when negotiating Treasury approval for the department's three-year deal.

Departments can apply to use their pay flexibility in only three cases. They may use it to address specific problems with recruitment and retention in specific grades and professions, only if they can deliver “associated efficiencies and reforms to deliver sustainable savings going forward”.

They may also put forward a case to transfer up to half of the money out of their non-consolidated performance related pay pot – or 0.5% of the overall paybill, if this figure is smaller – to fund increases to address targeted recruitment or retention pressures, or to fix pay anomalies.

Finally, departments can – where approved by the Cabinet Office and the Treasury – look to introduce arrangements that enable movement through pay bands if they manage to make their workforces more productive.

“Departments will still be required to demonstrate and evidence the cashable and sustainable savings unlocked by the introduction of such systems,” the guidance says.

The guidance stresses that civil servants must not get automatic pay rises based on how long they spend in a department.

“Departments should have removed automatic progression pay based on time-served from their workforces and it should not be reintroduced,” it says.

“Any progression pay still in place in core departments or their [arm’s-length bodies] not agreed through business case approvals will be in breach of government policy and must be notified to the Cabinet Office and HM Treasury immediately. Going forward, departments should ensure that pay arrangements they put in place do not involve automatic time served-progression pay, or create an entitlement for employees to receive automatic increments,” it adds.

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