Defra drops bid for higher pay rises, blaming 'escalating inflation'

Economic pressure has made it "extremely unlikely" Cabinet Office and Treasury will sign off on pay-flexibility case, remuneration committee says

The Department for Environment, Food and Rural Affairs has abandoned an attempt to negotiate a higher-than-average pay rise for its staff.

The department’s remunerations committee wrote to staff yesterday to say it had, “after careful consideration, and with regret”, halted work on a pay-flexibility case it had been working on for the last year.

Cabinet Office pay remit guidance published in March said departments could offer staff below senior civil service level a maximum average pay rise of 3% for 2022-23 – 2% as standard, topped up by 1% funded from existing budgets where they can successfully argue it will help with staff retention, productivity or other priorities.

But departments can submit a case for awarding a higher pay rise, which must be made cost neutral by combining it with measures to save money or increase productivity over one or several years.

The case Defra’s remunerations committee was preparing to submit to the Treasury “would look at how we address pay issues, and could involve harmonising and changing terms and conditions” across the department and three of its executive agencies: the Veterinary Medicines Directorate, Animal and Plant Health Agency and the Rural Payments Agency.

It could also involve transferring money from the non-consolidated performance pay “pot”, the memo said.

The memo – sent a day after the chief executive of the Environment Agency branded the 3% cap on pay rises “unjust, unwise, and unfair” – said economic pressures have made it “unlikely” that the case will be approved.

“In recent months, escalating inflation has put public-sector finances under enormous pressure and great scrutiny,” they said.

“This context has changed rapidly as we’ve developed the case since the middle of 2021. It is now extremely unlikely that we would be able to gain approval from Cabinet Office and HM Treasury for a pay flexibility case this year.”

They also said drawn-out negotiations could cause longer delays in a pay rise reaching staff’s bank accounts, as pay rises are paid retrospectively once they have been agreed with the Cabinet Office and Treasury.

“Given the cost-of-living challenges and strong feedback from staff, the remuneration committee feel strongly that we must prioritise making payments without unnecessary delay,” the email said.

The committee will now instead propose a pay review to secure approval to offer the 3% maximum under the current guidance.

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