The Senior Salaries Review Body has limited its annual pay-rise advice to 1% for senior civil servants in spite of recognising officials are “frustrated and demotivated”, with changes to pension tax a particular area of concern.
Its just-published annual report said there was “no evidence” of recruitment and retention problems among the top tiers of public servants, but accepted there was a risk the situation could “deteriorate rapidly”.
The SSRB said concerns within the SCS included pay of staff being “effectively frozen” at a particular point on the scale, regardless of skills, experience or performance; “significant pay overlaps” between the bottom grades of the SCS and the non-SCS grades immediately below; and a lack of confidence in the performance management system.
Regarding changes to pension tax, it said Cabinet Office data indicated members in the Alpha scheme who earned more than £108,000 from April 2016 could see their total remuneration impacted by 7 to 10%, while those earning £160,000 would incur an annual pension charge in excess of £20,000, which they would not have faced a few years ago.
The body proposed a “fundamental review of the SCS pay system” that would result in proposals being made in time for it to “comment meaningfully on them” in its next annual report – arguing that it could add more value through advising on a full overhaul of the current system rather than “tinkering with the annual distribution of a largely delegated 1% of paybill”.
Cabinet Office minister Damian Green today agreed to a review of the SCS pay framework, with the intention that its outcome would “underpin fully considered proposals for a more strategic approach to Senior Civil Service pay in the government’s evidence to the SSRB”.
In a written statement to parliament, Green said there would be “potential” for some recommendations to be implemented from April next year.
Civil service unions the FDA and Prospect questioned the value of any review if the 1% cap on pay was to remain in place.
FDA assistant general secretary Naomi Cooke said the current constraints on public-sector pay were a “straitjacket” and that reform of SCS pay needed to be fully funded.
“Despite recent talk of a public sector pay ‘premium’ when compared with the private sector, the SSRB’s report shows that the pay of our members – who do some of the most complex and vital jobs in public service – ‘lags significantly behind the private sector’, causing recruitment and retention problems in a number of areas,” she said.
“The government's figures show that the bulk of the Senior Civil Service – deputy directors – are almost £14,000 a year worse off than they were in 2010, and now earn 46% less than their private sector counterparts, even when pensions are taken into account.”
Cooke said it was “little wonder” that more than half of those leaving the SCS last year had blamed pay, while one in four recruitment exercises was unsuccessful.
Prospect deputy general secretary Garry Graham said the review was long overdue but would be effectively at odds with the cap remaining in place. He said evidence showed 18% of the SCS’s intake for the past year had come from the private sector and almost all had taken a pay cut.
“Despite this, the difference in median pay between internal people who are promoted and external hires was 29%,” he said.
“In brief, private sector workers are taking a pay cut to join the public sector – but still earning 29% more than their SCS counterparts.
“It is no wonder that, in the context of the arbitrary 1% cap on public sector pay, the review body concluded that: ‘it is difficult for the SSRB to operate effectively’.”
Elsewhere in its report, the SSRB said it had become “increasingly conscious” of tensions between the government having central oversight of the pay system and the delegation of responsibility to departments.
“We can see that giving greater freedom to departments to make awards, within an overall envelope, has some merits,” it said.
“However, we believe that it restricts the centre’s capacity to resolve some of the acknowledged flaws in SCS pay arrangements.
“Moreover, such decentralisation makes it harder for the SSRB to play an effective role when its advice is sought from, and provided to, a single central point in government.”
It said the government needed to reflect on the value of having an independent body to advise on salaries if better use was not made of it, and observed that important pay and workforce decisions related to the judiciary and SCS has been made without its advice being sought.