19 May 2006
Pay ceiling of 2% 'lacks logic'
Chancellor Gordon Brown's tough new public sector pay remit has sparked an angry response from senior civil servants, who accuse the government of failing to understand the complexities of Whitehall's skills market.
Treasury letters sent to all major Whitehall departments last week have imposed a strict 2% ceiling on public sector pay deals until 2009, 'to lock in pay discipline and low inflation'.
But speaking to Public Finance at the senior civil servants' annual conference, FDA general secretary Jonathan Baume said there was 'no rhyme, reason or logic' to the Treasury plan, revealed in letters sent by the new Chief Secretary to the Treasury, Stephen Timms.
Baume accused ministers of hiding behind unproven economic justifications for the ceiling to avoid making 'critical' decisions about 'the increasingly complex situation across the civil service that has left those with specialist skills already employed in Whitehall underpaid compared with their private sector peers'.
The FDA has long called for improved pay deals for Whitehall specialists, such as internal finance and IT managers, who are paid substantially less than those appointed from outside. Baume said the situation was now encouraging high-quality staff to leave Whitehall posts.
The FDA has revealed it is looking at using employment tribunals to make equal pay claims against the government – but Baume said he was 'keen to avoid that route, if possible'.
Baume said Cabinet secretary Sir Gus O'Donnell was well aware that senior staff were underpaid compared with external recruits, but added: 'There is no consensus between departments and the government on the way forward. [The new pay remit] does not take account of the complexities of the civil service sector. There are all sorts of specialisms that are being held back because the Treasury uses crude levers to control inflation.'
A Treasury source told PF that the strict restraint on public sector pay deals reflected Brown's need to control inflationary pressures 'ahead of what is going to be a tight next Comprehensive Spending Review [2007/08]'. Senior civil servants had average pay rises of 3.25% this year, the source added.
DWP scraps mandatory retirement at 65
Whitehall's largest department has scrapped its default retirement age – a move that is likely to allow most civil servants to work beyond the age of 65.
However, the Department for Work and Pension's decision, which could be replicated by other Whitehall departments this summer, does not cover senior civil servants.
SCS staff will be subject to their current retirement age of 65 until the Cabinet Office, which co-ordinates key employment decisions for senior staff, makes a formal decision on future employment practices.
The DWP's decision was announced to staff in an e-mail from permanent secretary Leigh Lewis on May 11. Lewis explained that 'as from October this year, there will no longer be a mandatory retirement age in DWP for staff in grades below the SCS'. It means that 'provided your performance remains satisfactory, you will be able to go on working past 65 if that is what you want to do', the circular states.
The new policy does not change the DWP's current pension arrangements. Staff will be able to draw their pensions at 60 or 65.
In making the change, the DWP becomes the first Whitehall body to fulfil its commitment to review retirement age policy before the introduction of European age discrimination legislation in October. The EU laws will prohibit age discrimination in employment and vocational training.
A Cabinet Office spokeswoman said that the decision on the SCS would 'likely be made in the next few months'.
Speaking at the FDA conference on May 11, general secretary Jonathan Baume told Public Finance: 'We would welcome the DWP's move. It's perfectly reasonable to offer staff the option of working beyond 65 and it will mean the civil service does not lose hard earned expertise.'
Call for extension of diversity initiative
Senior civil servants have called on the Cabinet Office to extend its diversity plan to arm's-length bodies, claiming that 'insidious' regulations outside Whitehall expose staff to sexism and homophobia.
FDA delegates passed a motion calling on the Cabinet Office to implement its ten-point plan to improve diversity and tackle discrimination across all civil service organisations.
Sue Jarvis, FDA executive committee member, who works at the Home Office, said many members do not have the employment protection enjoyed by civil servants at central departments.
About 6,000 Home Office employees carry out their tasks at non-departmental public bodies.
When staff move from Whitehall, Jarvis said, they often assume their previous terms and conditions are on offer at their new office. Instead, they find much worse conditions, including 'negative and insidious discrimination'.
They also encounter problems in having their complaints heard, delegates said. 'NDPBs are as entitled as [core] civil servants to fair and diverse equality practices,' Jarvis added.
PFmay2006
