Pay frozen for senior public sector figures

The Prime Minister today announced a pay freeze for thousands of senior civil servants, NHS managers, judiciary and military top brass under moves aimed at saving £3 billion over the next three years.

Gordon Brown said in a speech in London that GPs and dentists will also have their pay frozen after a recommendation from the independent salary review body.

Senior Whitehall civil servants, NHS managers and consultants, judges, senior military staff as well as GPs and dentists are among those covered by the Senior Salaries Review Body (SSRB) report released today.

The SSRB has already been told by Chancellor Alistair Darling there should be no pay rise for those groups of employees because of the recession and the state of the public finances.

A Cabinet Office spokesman said: "Given the economic challenges we face, civil servants have important roles to play in ensuring there is financial stability and excellent public services.

"In the last year, civil servants have been working harder than ever, continuing to deliver vital frontline services and ensuring that Britain emerges from the recession stronger, and all this has been done against the backdrop of major efficiency savings that have already put into place in the Civil Service.

"While the contribution of the Civil Service is highly valued, against the backdrop of the challenges facing all sectors of the economy it is right that senior staff should show leadership in pay restraint."

The review body recommended no general pay increase for a range of senior jobs for the financial year from April, including Permanent Secretaries.

But despite the call for a pay freeze, the review body said: "The fact remains that the public sector needs to pay sufficient to recruit, retain and motivate people of high calibre to lead and manage public services and serve in the judiciary and uniformed services.

"Otherwise it will become harder over time to fill senior posts with people of sufficient quality. Our concern is that in recent years our remit groups are increasingly gaining the impression that the Government takes their loyalty and goodwill for granted.

"As an example of this attitude, the Government has decided not to honour the third year of a pay agreement for the Senior Civil Service (SCS) which it had itself originally requested.

"Under that agreement, the SCS were promised a total increase of 7% over three years from 2007, including an increase in the amount set aside for variable, performance-related payments to 10% of the pay bill."

The review group said the Government had argued that senior staff should demonstrate leadership on pay restraint and had proposed no increases for senior staff covered by the body.

But the report said: "We are not persuaded by this signalling argument since we have seen no evidence, in this or previous years, that the level of settlements for our small remit groups has any impact on behaviour in the wider economy.

"Indeed, it is hard to see how freezing pay for senior staff demonstrates leadership when more junior staff are receiving significant increases.

"The stark reality of the economic background is that the nation has suffered a drop of some 6% in GDP. Earnings growth in the private sector fell below that in the public sector in mid-2008 and was negative in the first quarter of 2009.

"Many people in the private sector have seen cuts in their real income, an inevitable consequence of the recession, and some have lost their jobs altogether.

"The public sector tends to become a haven of relative job and earnings security in these circumstances, and this is borne out by the healthy recruitment and retention data for our remit groups, but it cannot be immune from the consequences of the drop in economic output.

"Moreover, public finances are showing an unprecedented deficit and substantial reductions in public spending will be necessary in the coming years to redress the balance. We therefore conclude that there is no justification for general pay increases for our remit groups this year."

Union leaders representing senior civil servants said the pay freeze was an "insult" to hard-working staff.

The FDA also criticised the Government for rejecting "modest" structural changes to the pay arrangements of senior civil servants (SCS).

General secretary Jonathan Baume said: "We recognise the grave fiscal crisis facing the country as public expenditure has spiralled out of control. However, the SCS comprises dedicated senior public servants whose professionalism and dedication will be essential to lifting Britain out of the economic quagmire over the coming years. It is simply untenable for the Government to continue freezing the pay of senior civil servants as a political device year after year.

"The Government has insulted hard-working public servants today by rejecting proposals from the independent review body to raise the minimum pay for senior civil servants to address long-standing anomalies.

"These anomalies have resulted in almost half of all women senior civil servants, and two-thirds of senior civil servants from ethnic minority backgrounds, being at the bottom of the SCS pay league and often paid less than staff they are managing.

"This is a mean-spirited gesture. Yet again a chance to address structural discrimination has been missed. Despite numerous opportunities, the Government has failed to address these long-standing equal pay concerns and leaves us no option but to seek alternative means of addressing these."

The announcement followed news last week that MPs' pay is to increase by 1.5%.

Civil servants have been on strike for two days this week in a dispute over cuts to their redundancy pay, with more industrial action planned.

The Prime Minister said in a statement that the Government had decided to accept some, but not all, of the review body's recommendations.

"It is important in the present economic climate that senior staff in the public sector show leadership in the exercise of pay restraint," he said.

Gordon Brown revealed that the Government had not accepted a recommendation that the minimum pay for senior civil servants should increase to £61,500.

He went on: "These tough decisions complement existing measures to reduce the cost of the Civil Service and protect frontline services, including savings of £500 million over three years from reforms to the Civil Service Compensation Scheme, savings of £100 million annually within three years from reducing unnecessary civil service bureaucracy and the cost of the SCS, and Ian Smith's new review into the scope for further Civil Service relocations, building on the relocation of more than 20,000 posts since the 2004 Lyons Review."

The Government also rejected a recommendation to increase the pay for NHS managers earning less than £80,000 by 2.25%.

Mr Brown said there would be no increase in the pay of Government ministers in the next financial year, while they would also waive rises in their salary as an MP.

Defence Secretary Bob Ainsworth announced that, in line with recommendations made by the review body, the basic pay of officers up to Brigadier and equivalent ranks in other services would increase by 2%.

A so-called Unpleasant Living Allowance will be extended to cover service personnel at patrol bases in Afghanistan.

Justice Minister Maria Eagle said recommendations covering the pay of prison governors, prison officers and other support grades in England and Wales had been accepted, including a 1% increase and an additional 0.5% for senior officers.

Health Secretary Andy Burnham said consultants would have their pay frozen, but registrar grades, speciality doctors, general practitioners and dentists would receive a 1% pay rise.

Graeme Leach, director of policy at the Institute of Directors, said: "With public finances in such a poor state we welcome steps to restrain wage costs in the public sector. However, if the Government is serious about tackling the deficit, it needs to freeze pay across the whole of the public sector, not just the wages of senior Whitehall officials and various public appointees.

"We calculate a one-year freeze would generate annual savings of at least £6 billion. This is the kind of measure the Government needs to introduce if it wants to show it has a credible plan to tackle the deficit. Trimming the pay of senior officials is not enough."

Susie Sanderson of the British Dental Association said: "Dentists appreciate the challenging financial climate the nation finds itself in and accept that restraint in public spending is inevitable.

"But what we also know is that the cost of providing dental care has soared in recent years. This award fails to take the increasing expenses facing dentistry into account.

"At a time of transition and uncertainty in dentistry, this award is a missed opportunity to give a much-needed injection of confidence.

"High street dentists will be particularly disappointed that the Government has chosen to disregard the review body's advice that efficiency savings should only be considered retrospectively, allowing the scale of these savings to become apparent in earnings and expenses data.

"Failure to accept it ignores what we know about increasing expenses in dentistry and the real cost of providing care to patients."