Public sector pay: Senior civil servants and judges get below-inflation one per cent rise
SENIOR civil servants and military personnel, judges and health quango chiefs will get below-inflation one per cent pay rises this year in line with the Government's cap on public sector pay, it was announced today.
Ministers accepted a recommendation from the independent Senior Salaries Review body – although there is also to be a review of senior Whitehall officials' pay.
The Government has accepted the panel's call to consider "innovative" ways to target more cash to boost recruitment in hard-to-fill jobs while keeping within the overall pay limit, in order to attract "people of the right calibre", said First Secretary of State Damian Green.
It came as Chancellor Philip Hammond, who faces cross-party pressure to ease the restraint which has frozen then limited public sector pay since 2010, insisted in the Commons that the Government must not abandon efforts to eliminate the national deficit and thus cut the country's sky-high debt interest bills.
The rise announced for "senior salaries" workers is in line with that already set for groups including teachers and nurses and came as official figures showed inflation in June was 2.6 per cent.
The one per cent public sector pay cap is currently due to last until 2019-20 although unconfirmed reports suggest Mr Hammond is considering letting pay review bodies shape future recommendations so that the lowest-paid get more each year than higher earners, without increasing overall staff budgets.
Mr Green told Parliament in a written statement: "The Government greatly values the important work that public servants do in delivering essential public services.
"We understand the need to ensure that we are able to recruit, retain and motivate staff with the right skills and experience.
"However, there is a trade-off between pay and jobs in many public services, and pay restraint is one of the many difficult choices the Government has had to make to help put the UK's public finances back on track.
"Senior public sector workers, like everyone else, will have to continue to play their part to ensure we deliver job security for working people across the country.
"This will help us to strike the right balance between protecting people's jobs, being fair to public sector workers and being fair to those who pay for it."
The Senior Salaries Review Body report also warned ministers that the one per cent cap was causing "frustration and demotivation ... and fragile morale" among public servants and hampering necessary workplace reforms.
There was no evidence of widespread recruitment and retention problems among senior public servants but that position could "deteriorate rapidly", it warned, adding that changes in the taxation of pensions were already having an adverse impact.
The cap also made it "difficult" for the review body effectively to do its own job of recommending pay structures to motivate staff and help improve public services, because it was working in a way that failed to link pay to workforce outcomes.
"If the Government continues to see value in having an independent body to advise on senior salaries, we believe that some serious reflection is required about how to make better use of it," the report added.
The FDA union, representing senior mandarins, called for the 1 per cent "straitjacket" to be ditched, claiming most senior civil servants were nearly £14,000 a year poorer than there were in 2010 in real terms and earned at least 46 per cent less than private sector counterparts.
At Treasury question time in the Commons, Mr Hammond sidestepped Labour demands to apologise after reports the millionaire Chancellor told a private Cabinet meeting that public sector workers were "overpaid" once pensions were counted.
It was left to Chief Secretary to the Treasury Liz Truss to defend public sector pay limits.
Apparently taking into account career progression rises and deals for the lower-paid, she told MPs that teachers' pay rose last year by 3.3 per cent and more than half of nurses and other NHS workers got over 3 per cent.
State employees were paid in line with the private sector: "In addition, public sector workers have a 10 per cent premium on their wages in pension contributions."
Labour Shadow Chancellor John McDonnell hit back: "These supposedly generous pensions across several professions pay on average the princely sum of just £5,000 a year, and low pay has forced many public sector workers to opt out of their pension scheme.
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"Eleven per cent of NHS staff have opted-out of their pension scheme, a figure that, if it continues to rise, potentially will undermine the whole scheme."
Answering further questions, Mr Hammond said the country must cut its debt to be in a position to deal with future shocks: "And the only way to get debt down is to get the deficit down.
"That means responsible fiscal policy, not the kind of rubbish we hear from Labour frontbenchers."
He added: "If markets lose confidence in UK fiscal policy, they will re-price lending to the UK.
"We already spend more every year on servicing our debt than on our armed forces and police services together.
"It would do a huge disservice to taxpayers in this country if we created conditions that would cause the cost of that debt to rise."