General Secretary of Prospect Mike Clancy responding to news that
the public sector pay freeze is to be lifted, said:
“Lifting the public sector pay cap does not mean public sector
workers are definitely going to get a pay rise. They need more
than catchy headlines, they need proper recognition of the work
they have been putting in holding the country together during the
pandemic.
"Ending the pay freeze will mean little if the Chancellor does
not provide public sector organisations with the finances to
actually fund real pay rises. And with CPI running at 3% and RPI
at 4.9% public servants will need a substantial award just to
avoid falling further behind the rising cost of living.
“Public sector pay is once again lagging significantly behind the
private sector and that’s after a decade of pay austerity which
has put a huge burden on family budgets. This is creating
recruitment and retention problems in some areas with the public
sector unable to compete with the pay offered for comparable
private sector jobs.
“If the government is serious about a high wage/ high skill
economy it needs to start at home and pay its employees properly
instead of wasting money on expensive consultants.”
Ends
Contact: graham.moonie@prospect.org.uk, 07889337719
Notes to editors
What do departments need from the Spending Review to
recruit and retain the expertise and skills they
need?
Advance briefings have suggested that the Treasury will end the
“pause” on public sector pay awards that was imposed at last
year’s Spending Review.[1]
While the end of formal pay restrictions will be welcome, giving
departments and public bodies the freedom to improve pay will
make little difference to their ability to do so if they are not
allocated budgets that render them affordable.
Whether a budget allocation is adequate for a Department or
public body to improve pay for its existing workforce will depend
on whether they need to recruit additional or more highly skilled
staff to deliver on their responsibilities, and on other cost
pressures they may face such as procurement requirements. Budget
allocations announced in a Spending Review will typically build
in an assumption about paybill costs, though these are not
usually published.
Other things being equal, the minimum requirement for a
Department or public body to be able to improve pay will be a
real terms increase in its Resource Departmental
Expenditure Limit (RDEL).
Real terms changes to RDEL may be published in Spending Review
documentation, or may need to be calculated by comparing “cash”
increases with the GDP deflator. In March the
OBR forecast the GDP deflator to be -0.1% in 2022-23, 2% in
2023-24, and 2.1% in 2024-25.[2] These
forecasts are likely to change, and may well increase, in the
forecasts published alongside the Spending Review, which may show
the effects of recent price increases and wage pressures – though
the Chancellor’s decision to ask the OBR to disregard the most
recent economic data in its official forecasting[3] may
mean this is not fully captured.
On the basis of the “spending envelope” already published by the
Treasury, which provides for total real terms RDEL to rise at
less than 3% a year, combined with commitments made in so-called
“protected” areas (notably the NHS), it is likely that many
departments will not see substantial or sustained real terms
increases in their budgets over the Spending Review period.
Analysis by the Resolution Foundation has concluded that this
“implies spending cuts for unprotected departments in 2022-23. By
2024-25, unprotected departments are set to still have budgets
that are, on average, one-fifth lower than in 2009-10 when
measured in real terms per capita”.[4] The Institute
for Fiscal Studies also concluded that current Treasury plans
entail “cuts to unprotected budgets” in 2022-23 and warns that
these areas face “a difficult two years”, and probably
three.[5]
[1] https://www.bbc.co.uk/news/uk-politics-59044770
2 https://obr.uk/download/march-2021-economic-and-fiscal-outlook-supplementary-economy-tables/
3 https://www.ft.com/content/0c160b29-02f7-4b14-9f72-11df6b5e68fa
4 https://www.resolutionfoundation.org/app/uploads/2021/10/The-Uncertainty-Principle.pdf
5 https://ifs.org.uk/publications/15694
