Senior civil service pay guidance flags ‘affordability’ fears

Cabinet Office minister says fair pay for public-sector workers must be balanced with protecting frontline services
Lord Theodore Agnew. Photo: Crown Copyright/Open Government Licence v3.0

By Jim Dunton

23 Dec 2021

Two months after chancellor Rishi Sunak declared the public-sector pay freeze was over, the Cabinet Office has cautioned the review body which advises on pay in the senior civil service that fairness for officials must be balanced with other considerations.

Cabinet Office minister Lord Theodore Agnew’s just-published remit letter to the Senior Salaries Review Body says the government aims to “primarily focus” its pay-round evidence on firming up proposals for capability-based pay and reviewing SCS pay ranges again.

Ahead of October’s Spending Review, Sunak pledged pay review bodies would be asked for their recommendations on pay rises and public-sector pay growth over the next three years “should retain broad parity with the private sector and continue to be affordable".

However in his remit letter to SSRB chair Martin Read on senior civil service pay, dated 21 December – but only published yesterday – Agnew made no reference to retaining parity with growth in the private sector.

Instead he suggested that firming up plans for capability-based pay in the senior civil service and “considering the appropriate level of pay for SCS at each grade” were ministers’ main considerations.

“Recent times have been challenging,” he said. “The government must balance the need to ensure fair pay for public-sector workers with protecting funding for frontline services and ensuring affordability for taxpayers.

“We must ensure that the affordability of a pay award is taken into consideration. Delivering on our reform agenda will be key to developing the leadership capability in the civil service that gives the public trust and confidence in the operation of government at all levels.”

Earlier this year, the SSRB said it was concerned that ministers’ failure to implement a “simple and clear” pay-progression system in the senior civil service was fuelling churn and creating inefficiencies.

Last month, an Institute for Government report commissioned by the government’s Office of Manpower Economics said attempting to reform SCS pay without properly funding the changes would be “worse for civil service morale and skills retention than doing nothing at all”.

Proposals to introduce capability-based pay for the SCS were set out in June’s Declaration on Government Reform. A Cabinet Office estimate from earlier in the year suggested that introducing the new system would cost just under £45m for SCS1 and SCS2 officials, around 7% of the paybill.

The IfG said the government would need to commit to spending that amount every year, rising with inflation and adjusted to need, if capability-based pay was to stand a chance of being better than the do-nothing option.

Agnew's letter said the SSRB was due to deliver its reccomendations on senior civil service pay in May.

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