Uproar over chancellor’s public sector pay comments

Furious reaction over Philip Hammond's suggestion that staff enjoy “10% premium” over private sector counterparts

Philip Hammond Credit: PA

By Jim.Dunton

17 Jul 2017

Chancellor Philip Hammond's claims that public sector workers receive a 10% pay premium over counterparts in the private sector have been angrily disputed by Whitehall unions as wrangling over the future of the pay cap rolls on.

Over the weekend Hammond openly questioned the predicament of public-sector workers following reports that he had described them as “overpaid” during Cabinet sessions.

Speaking on BBC1’s The Andrew Marr Show, the chancellor insisted that the condition of public-sector workers was more favourable than private-sector counterparts when pensions were taken into account, in words signalling his continued resistance to ending the 1% cap on public-sector pay rises that has remained in place since 2012.

“It is a simple fact – independent figures show this – that public sector workers on average are paid on average about 10% more than private sector workers,” he said. “Relative to private sector workers they are paid a 10% premium.”


Naomi Cooke, assistant general secretary at the FDA union, said Hammond’s talk of a pay “premium” would come as a shock to union members.

“By the government’s own admission, [they] take home substantially less than they could be earning in the private sector,” she said.

“On base salary alone, deputy directors earn 31% less than their private-sector equivalents, a gap that widens to a staggering 62% for directors general.

“But it’s not just base pay – the government’s own analysis shows that total remuneration, including pensions, is lower than in the private sector at every single Senior Civil Service pay band.”

Cooke said that against the backdrop of Brexit the civil service was facing its biggest administrative challenge since the second world war with its smallest headcount in decades and no extra resources.

“Rather than touring the TV studios repeating tired claims about public sector perks, it’s time the government got serious about giving the civil service a pay system that is able to motivate, recruit and retain the talent Britain will need for the challenges ahead,” she said.

Garry Graham, deputy general secretary at the Prospect union, said Hammond’s comments flew in the face of data available in Whitehall that demonstrated public sector workers were far from enjoying a pay premium.

“Prospect knows that the Treasury and the Cabinet Office are sitting on evidence which demonstrates that pay and ‘total reward’ – which takes account of items such as pension costs – for the civil service and wider public sector is now lagging very significantly behind the private sector, with the gulf approaching 20% in a number of areas,” he said.

“The chancellor is not only out of touch with public opinion but also the facts. That is why Prospect has consistently argued for a truly independent review of pay for professionals and specialists working in the civil service.”

Mark Serwotka, general secretary of the PCS union, said public-sector workers had faced seven years of effective pay cuts and were in no mood to take lectures from a “millionaire chancellor”.

“We totally reject the idea that there are divides between the private and public sectors, and the so-called frontline and back office,” he said.

“The government workers we represent all need and deserve a pay rise, and this is true across the public sector and in private companies where millions of people are employed on poverty wages.”

Rehana Azam, national secretary at the GMB union, said Hammond had “displayed arrogant contempt” for public sector workers with “foolish and insulting comments”. 

"He should try and live on a public sector worker's wage for a week to understand the struggle to make ends meet so many are facing as the cost of living rises,” she said.

Last week, civil service chief executive John Manzoni said he did not believe the 1% pay cap could last forever, but suggested that sector-related deals and regional settlements would be part of  long-term solutions to reward within the service.

Speaking at the Civil Service Live conference, organised by the Cabinet Office and CSW’s parent company Dods, Manzoni said he believed the public sector would never be able to compete with the private sector in many areas, but could stress the value of its remuneration package. 

“There are very few places which offer defined-benefit packages like we do,” he said.

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