Employee Pay (DWP)

Alex Salmond Excerpts

Wednesday 18th November 2015 Commons Chamber

[Chris Stephens (Glasgow South West) (SNP)]

I wish to raise the important issue of the pay of employees in the Department for Work and Pensions—or, perhaps more accurately, the low pay of those employees.

As we know, pay throughout the public sector has been subject to restraint for a number of years, and the pay in the DWP is no exception. A TUC report published in 2014 showed that public sector workers were, on average, £2,245 worse off in real terms than they had been before the previous Government took office. However, the issue of low pay is felt particularly acutely in the DWP, as it is one of the lowest paid civil service Departments, and staff now struggle to make ends meet.

Some 87% of DWP staff—74,701 employees—now earn less than the UK mean average wage of £27,200 a year, and 47% of staff—39,526 employees—earn less than £20,000. The Public and Commercial Services Union estimates that thousands who are at the bottom of the DWP pay scale will not even earn the national living wage that was announced by the Chancellor in the Budget if their pay rises by only 1% a year until 2020. DWP pay increases have been heavily capped for the last six years, and in 2010 and 2011 there was a 0% increase for staff earning over £21,000.

[Alex Salmond (Gordon) (SNP)]

As my hon. Friend knows, in 2011, when we were in the very depths of the recession, the Scottish Government were able to introduce a living wage for all civil service staff in Scotland, along with a non-redundancy clause agreement. Why was such a move not possible for either the Labour Government or the coalition Government—or, for that matter, the present Conservative Government?

[Chris Stephens]

I do not know the reasons for that, but I think that it should have been possible. As my right hon. Friend will know, in Scotland those earning less than £21,000 a year have received a £250 pay rise over the last couple of years.

Between 2012 and 2015, all DWP staff received a 1% increase, and the Chancellor has announced his intention to limit civil service pay increases to 1% for the next four years.

--- Later in debate ---

[The Parliamentary Under-Secretary of State for Disabled People (Justin Tomlinson)]

I congratulate the hon. Member for Glasgow South West (Chris Stephens) on securing this important Adjournment debate and all the other Members who have contributed in it. My office took particular interest in this one. I also congratulate him on his 25 years of work in public service, his role as vice-chair of the PCS parliamentary group, and his interest in DWP and its valuable work.

DWP is the largest Government Department, with a pay bill of £2.5 billion in 2015-16. The Department employs more than 84,000 staff, who work in various locations across the country and serve more than 22 million claimants and customers, some of whom are the most vulnerable in society. When I have spoken about that before, many of my colleagues have been surprised, because a lot of MPs are not aware of just how vast the organisation is and the diversity of work we do in job centre networks, benefit centres and the corporate services. For example, we support people to find work, develop policy, pay pensions and investigate fraud. The Department is delivering substantial welfare reform changes, including the roll-out of universal credit, the introduction of personal independent payment and pension reforms, while meeting our efficiency challenges.

We appreciate the professionalism and contribution of DWP employees in continuing to deliver those changes. The results of their efforts have included a new record high UK employment rate of 73.7%; unemployment at a seven-year low of 5.3%; an employment rate for young people who have left full-time education up at 74.3%, the highest in more than a decade; and a reduction in operating cost of £1.9 billion since 2009-10. I have made many trips around the country to meet those front-line DWP staff and to see the great work that they do, with great professionalism. Tomorrow I am off to Blackpool as part of my visits, when I am going to see the work being done on PIP. I am sure that hon. Members from all parts of the House will join me in acknowledging the hard work and contribution of the dedicated DWP staff.

In 2010, the country was facing tough economic challenges, and the Government had to make some difficult decisions in order to address the country’s huge budget deficit. As was the case across Europe, public sector pay restraint was part of the overall approach taken to reducing the deficit. That was not unique to the public sector; not only did many workers in the private sector also face pay freezes, but some faced pay cuts. As a Government Department, DWP has to comply with the Government public sector pay policy to set pay awards in line with Her Majesty’s Treasury and Cabinet Office guidelines.

Let me now deal specifically with our Department’s approach. Since 2010, DWP has focused on increasing the pay of its lowest paid. In the emergency Budget of 2010 the Chancellor of the Exchequer announced a two-year pay freeze for those in the civil service earning more than £21,000. But, crucially, for those earning under £21,000, DWP took advantage of the flexibility and opted to pay more than the minimum £250 flat-rate increase proposed in HMT guidance. DWP actually provided awards ranging from £400 to £540. In 2010, it also increased the base salary of the lowest grade by £890. The pay freeze was followed by an annual pay remit of 1% on consolidated pay increases for the remainder of the last Parliament. During that time, DWP pay negotiations included discussions on how best to distribute the available funding. DWP opted to pay the majority of its staff a 1% increase each year, but continued to focus on increasing the pay of its lowest paid through higher base salary increases—for example, 3% in 2014 and 2.5% in 2015.

In addition, Departments have flexibility over how they allocate their non-consolidated performance payments. DWP is the only large Department that pays this to the majority of its employees, distributing on the basis of grade and performance marking. This year, DWP allocated performance awards of between £450 to £750 to junior staff.

[Alex Salmond]

I am listening carefully to the Minister, but the reality is that the Government have been rumbled on tax credits. They have been rumbled on payments to junior doctors, and now they are going to be rumbled on the treatment of DWP staff. When will the Minister address the very specific questions that my hon. Friend asked him in this Adjournment debate?

[Justin Tomlinson]

I thank the right hon. Gentleman for his intervention, but all good things come to those who wait patiently. I am only part way through my contribution, and I have already addressed some of the points, but more is to come.

Pay and allowances are part of the total reward package. Employees also benefit from a package including a staff discount scheme, generous annual leave entitlement and a defined benefit pension scheme.

On the point about equality, DWP has one of the lowest gender pay gaps in Whitehall. It currently stands at 3.4%. Typically, it is rated at 5%. If an organisation or body is below 5%, they are making progress. The Department is committed to improve that further through the introduction of a range of measures including name-blind recruitment and female representation on senior recruitment panels. This is something that we take very seriously, and we are proud to be leading as a Department in that area.

Let me turn now to the future. The Chancellor of the Exchequer announced in this year’s Budget that the Government will fund the public sector workforce for a pay award of 1% for the length of this Parliament. Each year, DWP negotiates with PCS and other unions on their pay awards and that will continue for future pay deals.