Cabinet Office preparing ‘capability based’ pay progression plan for senior civil servants

Letter to Senior Salaries Review Body also confirms impact of tax on pension contributions by top officials is under review

Photo: PA

By Richard Johnstone

01 Nov 2019

The Cabinet Office is to make proposals for a “credible” pay progression model for senior civil servants as part of the 2020 pay round as long-pledged plans for pay reform move closer to fruition.

A letter from Cabinet Office minister Simon Hart to Senior Salaries Review Body chair Martin Read to kick off the 2020 pay round reveals that the government will next month popose a new salary progression model, which would form one of its three priorities for senior officials’ pay.

Under the pay process for senior civil servants, the government provides a series of submissions to the SSRB on its plans for Whitehall pay. The SSRB makes recommendations on increases based on these submissions and on departments' recruitment and retention needs.


For the 2019 pay round, the SSRB recommended that high-level officials receive a 2.2% award, made up of a number of elements of the civil service paybill: a 0.9% increase for pay progression and anomalies; 0.2% for increases at the minimum levels of the SCS; a 1% increase for all SCS not benefiting from the minima increases (with anyone benefiting by less than 1% from the minima increases ‘topped up’ to 1%); and 0.2% set aside to implement specialist pay proposals.

However, the government rejected the specialist pay element, meaning the overall SCS paybill increase matched the 2% allowed for departments under the Treasury’s delegated guidance.

In its submission last year, the government acknowledged feedback from senior civil servants that the lack of substantial pay rises was a "source of irritation, unfairness and low morale", and that improved pay progression could help keep top officials in their jobs for longer.

Hart today confirmed that the government’s evidence, likely to be submitted in December, would focus on “exploring options and making proposals for a credible capability-based salary progression model, which supports productivity".

This is the latest step in the government's drive for SCS pay reform. It has previously set out ambitions for pay to be based on "professional groupings" and for higher specialist pay rates.

Based on the 2018 submission, the progression plan is likely to look at rewarding both general and leadership skills as well as, over time, specialist skills identified by Whitehall professions as important. It will also likely seek to introduce higher specialist pay rates for senior civil servants in finance and digital professions in the first part of an overhaul to set salaries based on specific skills and roles across government.

Hart has also confirmed two other priorities for the pay round: reviewing the SCS pay ranges following increases in the minimum pay rates in 2019, and continuing to review the SCS performance management system. This is intended to lead to a new performance management system for 2021/22.

This is the first year since 2010 that the SSRB’s recommendations will not be informed by a pan-public sector pay policy. The Treasury guidance that froze pay then capped increases at 1% and then 2% over the last decade was not replaced with a new policy in the 2019 Spending Round, which increased departmental budgets for 2020-21.

However, Hart stressed that the SSRB must make recommendations that ensure “public services remain affordable and sustainable in the long term”.

He added: “I expect affordability to be a critical part of your consideration when determining final awards and ask that you ensure that recommendations for pay awards are affordable for all departments.

“I also request that you describe in your final report what steps you have taken to ensure affordability has been given due consideration when reaching your recommendations.”

Hart also said that the government would “continue to keep under review the impact of the interaction between civil service pensions and the current tax rules on recruitment and retention” after calls for reform.

Trade unions have called on the government to extend proposed freedoms over pension contributions for hospital consultants to senior civil servants, to end a pension tax trap faced by some top officials. A series of cuts to the amount that individuals can save tax-free led officials to pay an extra £6m in tax in 2017-18, according to figures from the Prospect trade union.

Responding to Hart’s letter, Prospect deputy general secretary Garry Graham said there is “a long-term structural problem with regards to the lack of pay progression in the civil service”.

He added: “It is a problem that is endemic to both the SCS pay system and pay systems for delegated grades. The review body and successive governments have recognised it as a key issue but have singularly failed to address it. Urgent action needs to be taken.

“The SCS performance management is a mess. It has been for years and it is scandalous that it has not been addressed. The forced ranking relative performance system was widely hated and regarded as toxic by those subject to the system as it was by those who had to operate it. How much more time and evidence is needed?”

Government needs to invest in its people, he said. “The civil service has been the poor relation of the private sector and wider public service for too long.

 “No peacetime government has ever been so reliant on its civil service. Investing in it properly would be a wise approach, as opposed to the electoral gimmickry we are likely to see over next number of weeks.”

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