There's a crack in the pay cap – but no signs of looser Treasury purse-strings

Green-lighting pay rises without increasing budgets is not an end to austerity, says Civil Service World editor 

Civil Service World has been reporting on the challenges created by pay restraint for many years. Credit: Yui Mok/PA?

By Suzannah.Brecknell

12 Sep 2017

Ending the public sector pay cap has become totemic of a wider campaign to reverse the government’s seven year policy of austerity. It’s probably the aspect of deficit reduction that has affected the largest group of people – some five million workers across the public sector have seen their take-home pay wither since 2010. The PCS union last month suggested that civil servants have been among the worst affected, with average pay falling by up to £3,500 in real terms from 2010 to 2016. Prospect, the trade union representing civil service specialists including engineers and scientists, says the take home pay for its public sector members has dropped by more than 15% since 2010.

CSW has been reporting on the personal and organisational challenges created by pay restraint for many years. So, we welcome the first concrete signs of a crack in the cap.

Today’s reports of pay rises for police and prison officers follow briefings from “senior Whitehall sources” to The Sun which suggested public sector pay review bodies will be given the green light to recommend rises for other groups such as nurses and senior civil servants, to be phased in over a few years.

If the briefings prove to be true – and so far we have a mixed picture, with the police and prison officers given a below-inflation rise rather than one in-line with inflation as the source suggested – it would be good news for many civil servants, who have found themselves working increasingly long hours and delivering against an historic set of challenges for, in many cases, less money. 

However, only the top grades of the civil service are covered by such a review – without an accompanying look at pay in general, there will continue to be recruitment problems in many key areas, with basic pay in some specialisms remaining well below that of equivalent private sector posts.

Then there is the question of whether the loosening of pay rules is accompanied by any slackening of the Treasury’s purse-strings. Will there be an increase in departmental budgets – or at least a slowing of their planned reduction? The signs do not look good: the Home Office has said that police forces must fund the pay rises for their offices from within existing budgets.

If other pay rises follow this model then departments will be asked to make operational efficiencies to fund the pay boost. But earlier this year, the Institute for Government sounded the alarm on previous attempts to save money through reforms. Its first Performance Tracker, evaluating a number of public services, found many services were under strain and attributed this not to public spending cuts in themselves, but to a failure to make sustainable, long-term efficiencies.

Writing in CSW as the report was published, IfG researcher Emily Andrews noted that wage controls had been one example of short-term “belt tightening measures” put in place after the 2010 spending review at the expense of undertaking more “politically and organisationally challenging reforms” such as managing demand, properly integrating services or making better use of IT.

In the Autumn Budget, we will get a clearer sense of whether government is taking a new approach to meeting its fiscal goals. CSW has long argued for a fresh look pay across government. But to scrap the cap without a wider reconsideration of how staff are rewarded, services are funded, and meaningful, long-term reforms are achieved could soon undermine any goodwill that comes the government's way.

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