Whitehall Focus - 28 October 2005

27 Oct 05
Most of the Revenue & Customs department's 100,000 staff are to receive pay rises of 3%-4% each year until 2008 under a new deal that will eradicate large wage disparities.

28 October 2005

Tax staff pay harmonised with rises

Most of the Revenue & Customs department's 100,000 staff are to receive pay rises of 3%-4% each year until 2008 under a new deal that will eradicate large wage disparities.

After months of protracted negotiations, former Inland Revenue and Customs & Excise staff will be merged into a single pay system that will put an end to large salary differentials between civil servants from the two organisations.

Currently, even low-paid former Customs & Excise staff can earn up to £2,500 more for doing the same job as their new colleagues – a legacy of Whitehall's fragmented pay negotiation structures.

But many former Revenue staff will receive sizeable increases under a 'harmonisation' agreement that will place all staff into one of seven civil service grades.

The final pay offer was put to the new department's staff by R&C management last week and has received the backing of senior trade union negotiators, who had sought improvements on previous proposals, alongside commitments to harmonise grades.

If accepted, all staff will receive a three-year deal covering June 2005 to May 2008.

Departmental staff would receive 'stated average earnings growth of 3.86% per year', the offer states.

Increases would comprise a basic 2% of existing pay scale maximums, plus a progression increase equivalent to 3% of existing pay scale minimums.

In a memo sent to its members on October 21, the Public and Commercial Services union, which represents 84,000 R&C staff, said it anticipated that 'the majority of members [are] to receive average pay increases of 3% to 4% or more in each year of the deal'.

In order to bring the union on board, the R&C revised its original offer which would have frozen wage increases for staff at the maximum of their current pay scale. Those staff have now been offered increases of 2.25% consolidated per year.

The PCS's general executive committee backed the deal at a meeting on October 12 and is expected to ballot members quickly, so that the new pay structure can be implemented by December.

An R&C spokesman said: 'We're hopeful that we'll have agreement on a settlement shortly.'

Profits at 'big six' businesses rise by £162m

Whitehall's 'big six' businesses increased in value by around £1.7bn last year, according to a new study.

The annual report of the Shareholder Executive, the body charged with improving the commercial performance of government-owned or part-owned businesses, also indicates that taxpayers are getting higher dividends on Whitehall's largest commercial operations.

The six largest businesses – Royal Mail, National Air Traffic Services, the defence firm Qinetiq, Royal Mint, British Nuclear Fuels Ltd and CDC (the international development capital provider) – increased profits by £162m.

Dividend payments to shareholders by seven organisations overseen by the SE reached £38m.

The figures are revealed in the SE's annual health check, published on October 25.

The improved performance of the big six can largely be attributed to Royal Mail's resurgence. It represents, by the SE's calculations, a £1.7bn increase in value. Technically, that means the SE is set to meet its target to increase the value of the six organisations by £1bn by March 2007.

However, SE chief executive Richard Gillingwater this week warned that it is 'too early to be confident that the £1bn target has been delivered on a sustainable basis'. He also described the dividend returns to taxpayers as 'not yet satisfactory'.

Central government bodies have around 100 businesses on their balance sheets, although the SE is responsible for oversight only of the largest 26 organisations.

The SE itself has also proved value for money. One target the organisation set itself was to reduce Whitehall's reliance on external advisers to its business portfolio. The annual report suggests the SE saved £5m in running costs.

Budget outlines 15% cut in Northern Irish civil service

Northern Ireland Secretary Peter Hain could be forced to slash civil service numbers by more than 15% to meet strict efficiency requirements outlined in the province's draft budget this week.

Hain is already committed to reducing the civil service head count in Northern Ireland by 4,800 - 15% of the current 32,000 employees - under the province's ongoing Review of Public Administration, which will also cut the number of district councils and quangos.

Hain outlined plans to invest heavily in Northern Ireland's health and education systems over the next three years.

However, he also used his budget speech on October 24 to warn that further savings of between 3% and 4% would be necessary across Northern Irish public bodies by 2008.

'I will stick by the [RPA] efficiency targets set for the public sector last year and the associated reductions in civil service numbers.

'The size of these reductions could increase as a consequence of the reductions of 3% and 4% in lower priority programmes,' Hain said.



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