Tory leadership candidate Liz Truss has U-turned on plans for regional public sector pay cuts that she said only yesterday would save £8.8bn – but has kept reforms including cutting holiday entitlements on the table.
The foreign secretary, who is up against Rishi Sunak to become the next leader of the country, pledged last night to wage a “war on Whitehall waste” if she becomes prime minister.
The main plank of the proposal, outlined at a hustings in Exeter, was to link civil servants' pay to the living standards of the place where they work. This could have led to similar jobs being paid differently across the country, with people living outside London and the southeast losing out.
But she has now scrapped the pledge after fierce criticism.
A Truss campaign spokesperson said there had been a "wilful misrepresentation" and that "current levels of public sector pay will absolutely be maintained.”
"Anything to suggest otherwise is simply wrong. Our hard-working frontline staff are the bedrock of society and there will be no proposal taken forward on regional pay boards for civil servants or public sector workers,” they said.
The proposal to set up regional pay boards was part of a plan Truss had outlined to raise £11bn through civil service and public sector reforms.
The leadership candidate also said she wanted to get rid of diversity and inclusion roles in the civil service – which she said would save £12m a year – and reduce officials’ annual leave entitlement from 27 days to 25.
Truss also yesterday declared her intention to stop public sector workers from being allowed to take paid time off for trade union activities, including organising strikes. She estimated this would save £137m a year.
So far, Truss has only said she is abandoning the regional pay boards plan.
The cuts to regional pay would have initially affected only civil servants, and only new recruits. The plan was to then roll the arrangement out to doctors, nurses, teachers and all other public sector roles if it was successful, Truss’s campaign team said yesterday.
The £8.8bn figure would have been raised if the policy was rolled out to all public sector workers outside the southeast, they said.
A Truss campaign press release said yesterday that introducing regional pay boards would stop the public sector crowding out the private sector. The threat to reduce civil service pay around the country came soon after it was confirmed most civil servants will only receive a 2% pay rise this year, while inflation has risen to more than 9%.
The foreign secretary also said she would move more civil servants out of the capital and, in an interview with the Mail, committed to implement existing government policy to slash 91,000 jobs and reduce working from home.
The government is aiming to move 22,000 civil service roles out of London by 2030 and announced plans to reduce the total headcount by 20% in May. Ministers have also repeatedly rallied against officials working from home since Covid restrictions ended earlier this year.
FDA union general secretary Dave Penman said Truss’s proposed “war” on civil service waste showed her priorities are “completely divorced from reality”.
In comments made before the U-turn, he called her pledge to move more jobs out of London while cutting regional pay for the same jobs “astounding” and said it invoked “recycled failed policies and tired rhetoric from the 1980s”.
Plans to regionalise civil service pay were most recently proposed by George Osborne in 2012 but never became policy. The Institute for Government's Alex Thomas told BBC Radio 4’s Today this morning that the idea "comes around every few years" and is normally abandoned as the savings and benefits to the economy are “pretty marginal” and the idea is "really complicated and controversial".
Prospect general secretary Mike Clancy accused Truss of “economically illiterate and insulting ideological nonsense”.
“The civil service is already struggling to recruit and retain employees in the face of crippling pay cuts, threats of redundancy and continuous attacks from ministers,” he said.
“Making working for the civil service even less attractive by reducing leave, cutting pay for people outside of London, and removing roles dedicated to reducing inequality will only make recruitment harder and leave us unable to provide vital services.”
Removing paid time off for trade union activities would be a “direct attack on the workforce”, he added.
Labour said Truss’s plan was "a fantasy recipe for levelling down", which would “worsen the divide that already exists”, while Conservative Tees Valley metro mayor Ben Houchen said he was “speechless” at the proposals.
“There is simply no way you can do this without a massive pay cut for 5.5 million people including nurses, police officers and our armed forces outside London,” he said. “So much that we’ve worked for in places like Teesside, would be undone.”
Levelling up, which aims to reduce inequalities across the country, is outgoing PM Boris Johnson’s flagship policy and includes the aim of increasing pay, employment and productivity in every part of the UK.
During yesterday’s hustings, Truss also took aim at the Treasury. Asked if she would break up the department, she said: “I wouldn’t want to give them too much warning.”
Truss has eyed up the civil service for intense focus since she made the final two in the Tory leadership race, also promising to "clamp down" on arm’s-length bodies and “woke jobs” By contrast, her rival Rishi Sunak has stayed fairly quiet on civil service reform.