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Taxation, work and welfare
Public Sector Pay
Review of the tax arrangements of public sector appointees
On 23 May 2012 the Government published a Review of off -payroll engagement in government departments and their arm’s length bodies.
Public sector pay and local labour markets: Budget 2012
At the Autumn Statement 2011, it was announced that the independent Pay Review Bodies (PRBs) would be asked to consider how public sector pay can be made more responsive to local labour markets. The Government has now provided evidence to the Review Bodies on the economic case for local pay reform – and this will be available on the Office of Manpower Economics website (external, opens in a new window). The Review Bodies will report from July 2012.
Civil Service Pay Guidance 2012-13
The 2012-13 issue of the Civil Service Pay Guidance sets out the process to be followed by all bodies covered by the pay-remit process (main and non-ministerial departments, executive agencies and NDPBs) that entered the pay freeze in 2010-11, when planning annual pay awards to their staff and preparing their pay remits for 2012-13. The attached spreadsheet also summarises the information that departments must provide to the Treasury, as set out in Annex C of the guidance.
The attached spreadsheet also summarises the information that ALL departments must provide to the Treasury in 2012, regardless of the year in which they entered the freeze, as set out in Annex C of the guidance.
Civil Service Pay Guidance 2011-12
The 2011-12 issue of the Civil Service Pay Guidance sets out the process to be followed by all bodies covered by the pay-remit process (main and non-ministerial departments, executive agencies and NDPBs) that entered the pay freeze in 2011-12, when planning annual pay awards to their staff and preparing their pay remits for 2012-13.
Public sector pay and local labour markets
Public and private sector organisations compete for employees in different markets across the UK. However, while private sector pay is set in accordance with local labour markets, public sector pay is usually set on a national basis. As a result, in many areas, public sector pay does not reflect local labour market conditions. For example, the Institute for Fiscal Studies have found that public sector workers are paid similar wages to private sector workers in some parts of the country, but over 10% more in other locations.
Such differences between public and private sector pay can adversely affect private sector businesses which have to compete with higher public sector wages. It also leads to unfair variations in public sector service quality and limits the number of jobs that the public sector can support. Some public sector organisations, such as the Her Majesty’s Courts and Tribunals Service, have already successfully taken action to ensure that their pay is in line with local labour markets – but there is the potential for others to take a similar approach.
At the Autumn Statement the Chancellor therefore announced that the Government would ask independent Pay Review Bodies to consider how public sector pay can be made more responsive to local labour markets, to report by July 2012. The Chancellor has now also written to the Pay Review Bodies, to set out the overarching remit for this work.
- Letter from Chancellor of the Exchequer, George Osborne, to Professor Alasdair Smith, Chair of the Armed Forces Pay Review Body
- Letter from Chancellor of the Exchequer, George Osborne, to Ron Amy OBE, Chair of the Doctors and Dentists Pay Review Body
- Letter from Chancellor of the Exchequer, George Osborne, to Jerry Cope, Chair of the NHS Pay Review Body
- Letter from Chancellor of the Exchequer, George Osborne, to members of the School Teachers Pay Review Body
- Letter from Chancellor of the Exchequer, George Osborne, to Bill Cockburn CBE TD, Chair of the Senior Salaries Review Body
- Letter from Chancellor of the Exchequer, George Osborne, to Dr Peter Knight, Chair of the Prison Officers Pay Review Body
In addition, the Minister for the Cabinet Office will coordinate and assist Secretaries of State in exploring how local, market-facing pay can be introduced in civil service departments.
Pay restraint
The Autumn Statement announced that public sector pay awards will average one per cent for each of the two years following the end of the current pay freeze, and that departmental budgets will be adjusted in line with this policy.
Written Ministerial Statement
- On 8 December HM Treasury published these adjustments in a Written Ministerial Statement (PDF 205KB)
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