'A political Trojan horse': Report flags pitfalls of public sector pay-review bodies

Civil service's biggest union says collective bargaining is best solution for securing fairness for staff

By Jim Dunton

19 Sep 2024

Public-sector pay review bodies have become a "political Trojan horse" for neo-liberal governments to squeeze pay and conditions for staff, according to a report from the Institute of Employment Rights.

The paper from the union-sponsored think tank says that while there is good reason for some public sector workers – such as senior civil servants – to have their pay increases overseen by panels, other categories of worker have been subjected to PRBs for "ideologically driven" reasons.

It argues that PRBs, which were first introduced in the late 1950s, have been "deployed inappropriately" for decades "to supplant and undermine collective bargaining and facilitate public sector pay restraint".

The report, written by University of Liverpool researcher Andrew Moretta, says that since 2010 and the ascent to power of the Conservative-Liberal Democrat coalition government, "considerable inroads have been made into PRB independence". It says that advice and recommendations issued in recent years "have increasingly been treated merely as options for the government to consider, rather than given the status of quasi collective-bargaining awards".

Moretta says that around half of public servants are now "reliant upon flawed review-body arrangements" and that the result has been "a very considerable real-terms loss of pay" – even though effective collective negotiation would be an option for many.

Although members of the senior civil service have a dedicated PRB – the Senior Salaries Review Body – rank-and-file civil servants are not covered by one. Instead, the Cabinet Office and Treasury issue annual pay-remit guidance to departments setting out a percentage figure for how much paybills can increase, which is then translated into departmental deals for staff.

In recent years, civil servants have seen their percentage-terms annual pay rises lagging behind other parts of the public sector that are covered by a PRB.

Civil service unions Prospect and the FDA recently confirmed they are planning to work up proposals for a PRB that would cover the entire 500,000-strong civil service, not just the small portion of SCS members. PCS, the civil service's biggest union, opposes the move.

Moretta's report says that while some governments in the past had pleaded  "exceptional economic circumstances" when they briefed PRBs tasked with setting pay policy, the coalition government had ushered in a new era of political interference.

"After 2010, the review bodies were explicitly and routinely required via ‘remit letters’ to abide by pay freezes and pay caps," the report says. "Nor were these measures temporary – they were intended to cut pay, with the addressing of real-terms losses currently seen by most, if not all, of the PRBs as outside of their terms of reference."

Moretta notes that strike action since the onset of the cost-of-living crisis in 2022 had forced the last government to sidestep PRBs and engage in collective negotiation. He describes the situation as "something of a paradox" on the grounds that review bodies were originally created to remove the need for collective bargaining in sectors where public sector workers could not take industrial action.

"Without exception, all sectors embraced by a review body are calling for radical change," Moretta says. "Some wish to see their PRB abolished and replaced by collective-bargaining arrangements, while others, principally the medical professionals and senior civil servants, argue for a restoration of independence and of respect for the recommendations and advice their review body issues."

Among its recommendations, the report is calling for reform of the PRB regime with the introduction of new bargaining mechanisms and rights for some sectors currently overseen by pay-review bodies to opt out "rapidly and easily".

It also seeks changes to the SSRB to ensure its membership is "independent and impartial" and wants its remit to expand to all matters that would otherwise be the subject of collective negotiation.

PCS general secretary Fran Heathcote said stronger trade unions with collective bargaining rights will be key to tackling problems of insecurity, inequality, discrimination, and low pay.

"As this report shows, too often pay-review bodies are subject to government interference and far from independent," she said.

"The real experts on pay are the ones receiving it: our members. We don’t need an independent pay review body to tell us what fair pay is – our members know and we are their voice. We welcome the new government's commitment to sectoral collective bargaining and look forward to that being implemented in the civil service."

Gawain Little, general secretary of the General Federation of Trade Unions, said the IER report has come at a "crucial time".

"Pay-review bodies have been used by successive governments to hold down workers' pay," he said. "Too often, they lack independence and are a poor substitute for real collective bargaining.

"The newly elected Labour government has an opportunity to reset this pattern and to lead a massive expansion of collective bargaining across our economy, bringing us in line with international expectations and introducing a genuine new deal for workers."

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