Opinion: A window of opportunity

As cracks widen in the government's public sector pay policy, FDA General Secretary Dave Penman warns against missing the chance to reform civil service pay for the longer-term.

One of the less expected outcomes from the general election has been the government's inconsistent messages about the public sector pay cap. In the immediate aftermath, we saw a clutch of ministers breaking ranks and making sympathetic noises. Whether it was genuine concern or just part of the civil war that inevitably follows a bad election, those noises have continued. Now we have an announcement on prison officers' and police pay, and an unusual pre-Budget promise of "flexibility" next year for the rest of the public sector.

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The timing and manner of the announcement owed more to opposition tactics in parliament than strategic decision making. It also came on the day when RPI, still for me the real measure of inflation, rose to 3.9%, with the Government's preferred measure, CPI, rising to 2.9%. Even the beneficiaries complained it was too little, never mind too late. Not so much a removal of the cap, more a doffing.

What will this announcement mean for FDA members? It's frustrating that there is precious little engagement with those representing public sector workers, but it's clear we won't see a wholesale scrapping of pay restraint, however justified such a move might be.

The public sector has a myriad of different pay arrangements and problems, with review bodies covering many areas, including the Senior Civil Service. Some areas have retained guaranteed progression, so newer recruits are still moving up a pay spine. Many areas have recruitment and retention problems and there is a widespread need for workforce reform, which often needs to be properly supported by changes to reward structures.

In the civil service, there has been little opportunity to genuinely reform pay structures for either the SCS or delegated grades for over a decade. The Treasury remit process has not been seriously looked at since the mid-90s. A policy that was meant to allow departments to shape their pay structures to support their objectives has turned into a mechanism for Treasury control - and that was before the current period of restraint.

An opportunity was missed in 2009 to meaningfully reform SCS pay following the Normington review. As a result, most of the problems he highlighted remain unsolved a decade later.

So, what of the future? We will, of course, continue to argue for a more meaningful lifting of the cap, reflecting the genuine hardship members feel - pay has fallen by around 20% in real terms since 2010. But whatever flexibility is coming our way next year, it's in the interest of members, the government and taxpayers for reward systems to be reformed over the longer term.

That means ministers, Treasury and the Cabinet Office need to develop a framework that gives the civil service some certainty over reward for the medium to longer term. It also means engaging with the unions, which have a wealth of knowledge and experience on reward, not simply imposing changes from on high. There's a lot of frustration and anger about pay stagnation; if that is not to erupt into discontent and, crucially, if reform is to have any chance of buy-in from the workforce, then it has to involve genuine dialogue and shared solutions.

That's not going to be easy for either side, and may partly depend how far the purse strings are loosened. But it is an opportunity to move on from the longest period of pay restraint in living memory. Let's hope it's not an opportunity lost.

This article first appeared in Public Service Magazine. You can read and download the latest issue here.