Civil service job-cuts target scrapped but 2% pay cap looms

Fast Stream recruitment to resume alongside U-turn on Johnson-era plans to axe 91,000 jobs
Both Rishi Sunak and Jeremy Hunt have warned of "difficult decisions" to come. Photo: PA Images/Alamy Stock Photo

Rishi Sunak has axed plans to cut 91,000 civil service jobs over the next three years, but public servants could see their pay rises capped at 2% next year, according to reports.

In a letter to all civil servants, which also confirmed that the Fast Stream will be reinstated "without missing a year”, the prime minister said he does not believe "top-down targets for civil service headcount reductions are the right way" to ensure “every taxpayer pound goes as far as it possibly can”.

Every department will be asked to "look for the most effective ways to secure value and maximise efficiency within budgets, so that we can use taxpayers’ money sustainably in the long term”.

"I have a responsibility to ensure you have the skills, tools and resources you need to be a modern civil service that reflects the people it serves," the letter, seen by CSW, said.

Sunak said he was "determined that this government will invest in your talent and help to develop future leaders", and that the Fast Stream is "one important part" of achieving this goal.

Reducing departmental headcount to 2016 levels would have required the loss of 91,000 jobs under the plans set out by then-prime minister Boris Johnson in May. Sunak's civil service-wide memo confirms he has now abandoned the target in favour of a new approach.

Relief in departments will be short-lived, however. Echoing comments he made in his first speech as prime minister, Sunak said: "As you know, we are facing a profound economic crisis. We will need to make difficult decisions to deliver economic stability and confidence."

Meanwhile, The Times reported that senior officials will this week be told to plan for a cross-public-sector 2% cap on pay rises in 2023-24 to help cover a £35bn gap in the public finances ahead of Hunt’s 17 November Autumn Statement.

At a time when the civil service’s biggest union, PCS, is balloting members on strike action over this year’s sub-inflationary 2-3% pay offer, proposals for continued pay restraint will be incendiary. Inflation as measured by the Consumer Prices Index is currently running at 10.1% and civil service unions were arguing that real-terms pay for officials had declined by 20% since 2010 even before the latest spike in the cost of living.

The Johnson government’s job-cutting proposals have long been viewed with scepticism, although departments have been forced to take them seriously. Over the summer, perm secs were told to model proposals to reduce headcount by up to 40% in anticipation that some departments would have needed to make bigger cuts than others.

Last month, HM Revenue and Customs permanent secretary Jim Harra told members of the Public Accounts Committee that his department was on course to meet the target of returning headcount to pre-Brexit levels by 2024-25. But based on data contained in the department’s annual report and accounts for 2021-22, a headcount reduction of just 5% would have full-time-equivalent staffing back to where it was in 2015-16.

New cuts will have 'major implications for jobs and resources'

PCS general secretary Mark Serwotka said the target of cutting 91,000 civil service jobs was “politically-motivated nonsense that had no basis in operational reality” and welcomed Sunak’s recognition of the flawed nature of the plan, which was agreed when he was chancellor.

Following reports yesterday that the PM was poised to drop the target, Serwotka said it was “scandalous” that ministers were even considering imposing another pay cap on hard-working civil servants.

“Ministers were quick to clap public servants during the pandemic, now they are quick to treat them with disdain,” he said.

“They should be careful what they wish for. In a recent survey, more than a third of our members told us they were looking to leave their jobs because of low pay. 

“This 2% cap – at a time when inflation has hit 10% – on top of civil service spending cuts will lead to serious damage to public services and the economy.”

He added: “It remains our expectation that the upcoming Autumn Statement will herald a new wave of cuts to public services which will have major implications for jobs and resources.

“So we shall continue with our national strike ballot, urging our members to vote ‘yes’ as we seek to secure for them a 10% pay rise, proper resources, pensions justice and decent redundancy terms.”

Dave Penman, general secretary of public-sector leaders’ union the FDA, said the headcount reduction proposals were “intellectually flawed” because they failed to take account of new pressures faced by departments. He listed increased responsibilities following Brexit, pandemic-related service backlogs, the cost of living crisis and the war in Ukraine as prime examples.

“It is welcome if the government has finally seen sense on this,” he said. “But ministers must also now take action to ensure that they match commitments with resources, and that our dedicated public servants receive pay awards that properly take account of cost-of-living pressures, and recognise the vital work they do.”

Mike Clancy, general secretary of professionals’ union Prospect, said Sunak’s decision to jettison the 91,000 job-cuts target underlined the extent to which it had been an “arbitrary number announced without a plan to achieve it”.

But he warned that attempts to slash departmental budgets in real terms would “bring disaster for vital services” despite the reversal of the job-cuts target.

“If the government wants to rebuild trust with civil servants and reward their brilliance they must also abandon their plans to slash redundancy terms and lift the current 3% cap on pay settlements,” he said.

“If reports of a 2% limit on pay rises for next year are true, then the PM’s thank-you today will ring hollow and reflect a return to austerity.”

Fast Stream recruitment ‘un-paused’

Sunak's confirmation that Fast Stream recruitment will continue reverses another controversial decision by Johnson.

Suspending intake on the civil service’s flagship graduate-recruitment programme was understood at the time to have faced strong opposition within the cabinet, and was subsequently attacked by senior Conservative figures, including former party leader William Hague.

Cabinet Office perm sec Alex Chisholm gave a tellingly vague response on the Fast Stream pause to MPs last month, before Liz Truss’s resignation. His words fell far short of confirming that there would be no 2023 intake.

“The Fast Stream is obviously operating this year,” he said. “It comes in in September and October; indeed, I have already met with the new intake and given them an initial welcome. That is operational.

“The government announced in June that they were going to pause the Fast Stream for next year, and there has been no subsequent announcement.”

Penman had called scrapping recruitment into the Fast Stream "an act of self-sabotage, which in one fell swoop cut one of the most cost-efficient sections of the civil service workforce, damaged morale of those already on the scheme and pushed away high-performing graduates from a career in public service".

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