Pay in the civil service: challenges and opportunities November 2016

Contents Pay – what’s happened Pay – what’s next Prospect’s response

Pay – what’s happened We are now six years into a near-decade of planned pay restraint Average award limit Other issues & interventions 2011-12 0% Still some progression (HO, DfT, BIS, CLG, MOJ, CO) 2012-13 PCSPS contributions up; performance management 2013-14 1% 2014-15 Paybill control pilots in DEFRA + IPO (to 2016-17) 2015-16 All progression ended 2016-17 National Living Wage introduced; NIC rebate ended 2017-18 2018-19 2019-20

Pay – what’s happened Data presented here: Grade maxima for key Prospect grades: G6, G7, SEO, HEO National rates (not London) Comparison of 2009-10 with July 2016 Note: excludes the significant negative impact on “take home pay” of increases in pension contributions introduced over recent years comparison of grade maxima does not capture changes to progression policy, making it harder or impossible for staff to reach maximum rates in many areas

Pay – what’s happened Maximum salaries for each grade Grade maxima – core departments (unweighted average)

Grade maxima – core departments (unweighted average) Pay – what’s happened Maximum salaries for each grade have seen very little movement Grade maxima – core departments (unweighted average)

Pay – what’s happened Total increases over the period have been less than 5 per cent… Cumulative change, 2009-10 to 2016

Pay – what’s happened …a significant cut when the rising cost of living is taken into account… Cumulative change, 2009-10 to 2016

Pay – what’s happened …equating to substantial significant real terms losses in annual gross income Real loss (RPI)

Pay – what’s happened Nominal increases have varied significantly across departments… Cumulative nominal increase, unweighted average across G6, G7, SEO, HEO grades

Pay – what’s happened …and across grades within departments

Pay – what’s happened Salary maxima for the same grade across departments have become more dispersed, and relative positions have changed. For example: Grade 6 maximum salaries, 2009-10 and 2016

Pay – what’s happened Some departments and bodies heavily dependent on off-payroll staff Total off-payroll staff as share of total workforce (FTE); most recent figs at 10/2016

Pay – what’s happened …especially “specialist contractors” Specialist contractors as share of total workforce (FTE) ; most recent figs at 10/2016

Pay – what’s happened …and “interim managers” Interim managers as share of total workforce (FTE) ; most recent figs at 10/2016

Pay – what’s happened The “Pay Bill Control” pilots have added limited flexibility DEFRA some transfer from non-consolidated pay pot for bonuses and Box 1 performers into additional non-consolidated payments for ‘good’ performers specialist pay pot (“Specialist Pay Lead”) open to bids from directorates to deal with specific recruitment and retention issues Intellectual Property Office additional monies and flexibilities have enabled increases above 1% as well as targeted restructuring of pay spans

Pay – what’s next Challenges 1% limit on average awards continuing to at least 2019-20 (probably) National Living Wage + faster inflation could add to pressure fiscal impact of any economic slowdown Opportunities? conclusion of Pay Bill Control Pilots in DEFRA & IPO reforms to Performance Management? (pilots evaluated 2017-18) GSE Profession pay and reward review (next 6-12 months) agreement of principles for post-2020 reward framework (March 2017) Clear that any additional resources and flexibilities dependent on Treasury seeing strong business case with evidence base

Prospect response Build pressure for more flexible and forward-looking pay policy: map and assess changing civil service pay structures, including emerging responses to ban on progression and NLW continue to highlight loss of competitiveness with private sector, risks of skills gaps and knowledge loss, and costs of off-payroll staff canvas options for more strategic and systematic approach to civil service pay

Prospect response Promote our positive vision: the future role of government and public services: Brexit, global shifts, technological disruptions, rising public expectations the importance of skilled and professional staff, including managers and specialists, in the civil service and wider public services challenges: uncompetitive pay, staff and skill shortages, lack of workforce planning, insufficient focus on training and career development how Prospect is addressing the challenges: strengthening professional networks and pathways challenging restrictive pay policies championing our members and the services they deliver

Questions and feedback welcome martin.mcivor@prospect.org.uk