Civil Service Pay

Beth Winter Excerpts

Tuesday 7th March 2023 Westminster Hall

[Beth Winter (Cynon Valley) (Lab)]

I beg to move,

That this House has considered the civil service pay remit and the future of pay negotiations.

It is a pleasure to serve under your chairship, Mr Pritchard, in this extremely important debate. This is my second Westminster Hall debate on public sector pay and the threat of industrial action as a result of the Government’s decisions in recent months. As we approach Budget day, I want to use the debate to drill down into one area of public sector pay: the civil service.

The civil service employs around half a million people across the UK, ranging from Whitehall mandarins to work coaches in the Department for Work and Pensions and prison officers in the Ministry of Justice. Those people carry out absolutely vital services, and I believe that the long-term trajectory of pay settlements in the civil service exposes the Government’s intentions and the Conservative approach more generally. The civil service pay remit is a political imposition by the Government on the incomes of hundreds of thousands of employees, and the effect of the past 13 years of civil service pay remit decisions has been to create a crisis in civil service pay. What we are witnessing is clearly an intentional and systematic downgrading of the remuneration of work in the civil service. Without doubt, it is part of a Conservative agenda to shrink the state, shrink the share of the economy allocated to public spending, and shrink the share of the economy that rewards labour costs.

The UK civil service has had the lowest pay increases in the public sector since the election of the coalition Government. Analysis of the reduction in civil service pay suggests that salaries have fallen by between 12% and a staggering 23% in real terms at each grade of the civil service since 2010. The Public and Commercial Services Union has said that this year’s pay remit means that members are missing out on at least £2,800 this year, and research by the Prospect trade union has revealed that since 2010-11 a civil servant on a median wage has lost around £10,500, which is staggering.

[Margaret Ferrier (Rutherglen and Hamilton West) (Ind)]

I congratulate the hon. Lady on securing the debate. Some 49.7%, or nearly half, of civil servants earn less than £30,000. Many are struggling with the impact of rising inflation and living costs, and rising travel costs to reach work. Does she share my concern that the continued undervaluing of the civil service will lead to officials leaving and a worrying potential exodus of experience and expertise?

[Beth Winter]

I thank the hon. Member for her contribution, and I will come on to recruitment and retention later.

There have been pay freezes and pay caps over the last 13 years. The situation has worsened in the past 12 months because of high rates of inflation and the lower allowance in the civil service compared with other public sector settlements. Civil servants had a paltry 2% pay rise imposed on them in the past year, which is more than 10% below the retail price index at its peak and almost 10% below the consumer prices index.

Civil servants, teachers and nurses have all suffered under the Conservatives’ low-pay agenda, and have all received a completely unacceptable and avoidable real-terms pay cut. The extent of the Conservative Government’s low-pay agenda is laid bare by the high number of civil service staff in receipt of the minimum wage. It is an absolute travesty that over a quarter of DWP staff are paid so little that the national living wage floor increase this April will push their salaries up. It is worth noting that when many Departments contract work, they insist that people get paid at least the real living wage as determined by the Living Wage Foundation, yet the civil service itself point blank refuses to guarantee to pay civil servants at least the real living wage.

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

I thank the hon. Member for giving way and emphasising that point. Does she share my concern, and that of many others, that the statistics she has just quoted are the reason for an increasing number of civil servants using food banks in order to survive week by week?

[Beth Winter]

I thank the hon. Member for his contribution and I fully agree. I will come later to the stark figures on the use of food banks by civil service staff.

As I said, the past 13 years of pay freezes and pay caps have slashed the value of civil service pay. There is also the current civil service pay remit process, which is completely unacceptable. The FDA union describes the current system as “entirely flawed and incoherent” and as one that completely fails to allow for a strategic approach to pay, reward or meaningful negotiations.

Repeated pay cuts cannot simply be imposed without industrial disputes. Pay needs a negotiation between employers and employees. The current civil service pay remit process does not even offer the façade of employee involvement through the trade unions that even the increasingly discredited public sector pay review bodies are meant to offer. The end of national pay bargaining in the civil service by the Thatcher and Major Governments and the introduction of departmental and agency-delegated responsibility for setting pay continued the Tory ideological attack on the powers of the trade unions.

In the “Continuity and Change” White Paper, John Major’s Tory Government set out how, previously,

“centralised pay systems covered groups of staff whatever department they worked in, with settlements negotiated nationally between the Treasury and the unions.”

Even the claim that pay is delegated is a fallacy. Pay continues to be determined centrally. Ministers can, and do, still determine pay in these different bargaining units. That is evidenced by George Osborne’s imposition of a two-year pay freeze in the civil service, which he did without permission from the delegated bargaining areas. He was allowed to do that. That has been the approach for the past 30 years. It now applies to more than 200 bargaining units across the civil service, from the DWP to the National Museum of Wales. It is not logical, practical or cost-effective, and is certainly not fair. The fragmentation of the pay system has been described by the former Minister for the Cabinet Office, the Secretary of State for Levelling Up, Housing and Communities, the right hon. Member for Surrey Heath (Michael Gove), in his evidence to the Select Committee on Public Administration and Constitutional Affairs as the “balkanisation” of pay. I would like to hear whether the Minister agrees with that comment.

What is the cost to the Government, both in finance and efficiency, given the duplication of human resource process, of changes to payroll procedures across so many units? It is just not cost-effective. Although civil service Departments essentially follow the same grading structure, the salaries paid at different levels by different Departments mean increasing disparities, resulting in significant inequalities. There has been an entrenchment of inequalities that existed in the 1990s, and an opening up of new gaps that did not even exist then. The PCS union has argued that as a result there has been an entrenchment of historic gender and ethnicity pay caps, and the development of pay differentials across Departments for the same grades. That includes women being paid less than men, and the pay process has not allowed them to break out of that. Last year, Civil Service World reported how the civil service’s median gender pay gap had widened for the first time in six years, with a gender gap in average hourly earnings of 11.3%. In most cases, where large median pay gaps exist, it is because there is a higher proportion of men in senior and more highly paid roles, or of women in more junior roles. The PCS has argued that, as civil servants are increasingly being co-located into regional hubs organised by His Majesty’s Revenue and Customs and by the Government Property Agency, the difference in pay between staff at the same grades is becoming increasingly apparent—so much so that the PCS has said that it is preparing to begin large-scale equal pay challenges, bringing cases on behalf of women in one bargaining unit against men in another.

Ethnicity pay gaps are also a significant cause for concern. Black members of staff are disproportionately employed in lower paid areas of the civil service. Only this morning, we heard shocking evidence of racism in the Cabinet Office from trade unions giving evidence to the Public Administration and Constitutional Affairs Committee. Regional inequalities have also been identified. For example, a median civil servant at administration assistant or officer level at the Ministry of Defence earns just over £20,000, whereas their equivalent in the Welsh Government earns around £24,500, nearly as much as the median executive officer, a grade higher, at the Department for Digital, Culture, Media and Sport.

The evidence clearly shows that the pay structures across the civil service are unequal, dysfunctional, broken and in urgent need of reform. The situation hinders the delivery of an efficient service, so the transfer of staff between Departments is complicated in the absence of a uniform and fair pay system, while the unfair pay differentials create obstacles to achieving effective joint working within or between Departments. As others have mentioned, poor pay and terms and conditions within the civil service are also resulting in recruitment and retention problems, which, in turn, are also very costly for the Government.

Analysis by the Institute for Government reveals that turnover in the civil service is the highest it has been for a decade, and that the recruitment and retention of highly skilled staff is a particular cause for concern. It stated:

“The National Audit Office, the Public Accounts Committee, Ministers and civil servants have described how a lack of specialist skills in areas from digital to finance has contributed to delays, cost overruns or policy and operational failures.”

Research commissioned by Prospect and the FDA this year concluded that in order to ensure that the civil service can recruit and retain the high numbers of staff required, it is essential that the Government urgently address the poor levels of civil service pay. That is all having a significant detrimental impact on staff.

In PACAC this morning, we discussed the civil service people’s survey and we heard shocking evidence of harassment, bullying, discrimination and racism in the civil service. I will just quote some startling figures from a recent PCS survey of its members: 85% said that the cost of living crisis has impacted their mental and physical health; over half fear losing their home; 40% say that they have used credit to pay for essential shopping; and almost a fifth say that they have missed work because of their inability to afford transport or fuel. As the hon. Member for Glasgow South West (Chris Stephens) has said, 40,000 are using food banks, and 47,000 people are claiming universal credit because pay is so low. That is totally unacceptable and that is why civil service staff have been driven—forced—to take industrial action.

Nobody makes the decision to take industrial action lightly; it is very much a last resort. It is not a choice but a necessity that has been forced on civil service staff. Since December, PCS has been engaged in a series of targeted industrial action across many Departments, including the Department for Environment, Food and Rural Affairs, the Driver and Vehicle Licensing Agency, the DWP and Border Force. That is why we will see over 130,000 civil servants take strike action on Budget day next week in an attempt to make this Government listen and improve their offer. PCS is not alone. The poor pay outcomes have also led the Prospect union to ballot its members and they have also overwhelmingly voted for industrial action. Even the fast-streamers organised by the FDA have voted for industrial action.

I am very conscious that some Government Members have sought many a time to assert that rising wages cause inflation by creating a wage spiral. I am confident that the Minister is aware that that does not stand up to scrutiny. Research by James Meadway for the General Federation of Trade Unions, cited in a recent pamphlet, said:

“Whatever it is that is driving inflation in the UK, it is not high wages. Wages have been low for a long time and are now falling very fast.”

Independent analysis commissioned from Incomes Data Research by Prospect and the FDA argues that,

“public sector pay rises might only lead to an increase in inflation if they at least matched or were higher than current rates of inflation, and then only if private sector employers followed suit, and then only if these employers then decided to deliberately pass on this aspect of increasing costs directly to consumers in the form of price rises.”

If the Government truly believe that they do not have the resources to fund the pay rise, they need to make it clear they will end some of the tax inequalities that continue to let the wealthiest off the hook and will introduce a new measure of wealth taxation.

Previously, I have highlighted what such measures might include, including the equalisation of the rate of capital gains tax with income tax, which, in a single measure, would raise up to £14 billion. The money is there; it is a political choice not to use it. The Government can afford to pay civil servants, all public sector workers and everybody who has been forced to strike a decent wage.

I will move to a conclusion. There are a number of issues that need addressing and I would welcome the Minister’s response to them. We need an audit of pay differentials impacting gender and ethnicity across Departments, an audit of pay differentials at the same employment grades across Departments, a grouping of agencies around their main Government Departments to harmonise pay arrangements and an acceptance of the need for pay remits that move the civil service towards national pay rates, which will establish moving floors at different grades and the safeguarding of differentials between grades. That should be a step on the way to the re-establishment of a national pay bargaining process that ends the refusal to negotiate with trade unions.

Indeed, Labour’s deputy leader, my right hon. Friend the Member for Ashton-under-Lyne (Angela Rayner), and her predecessor on the employment rights brief, my hon. Friend the Member for Middlesbrough (Andy McDonald), have set out that fair pay agreements will be negotiated through sectoral collective bargaining, reversing the decades-long decline in collective bargaining coverage. I am not asserting that that is a manifesto commitment to national pay bargaining for the civil service, but it is clear evidence of the direction in which the party intends to move. I refer people to the Labour party’s excellent “ A New Deal for Working People” employment rights Green Paper for more information.

Such an approach is essential in order to tackle the problems of insecurity, inequality, discrimination, enforcement, low pay and the raft of other issues that I outlined in my speech. Urgent action is also required, with the Government’s commitment to hold constructive talks with PCS to resolve the current dispute. In next week’s Budget announcement, we need a revision of the 2022-23 civil service pay remit that reflects an understanding that a 10% rise and a living wage of at least £15 an hour are wholly affordable—wholly in this Government’s grasp—and do not require a reduction in service provision. We need a reformed pay bargaining process for the civil service and across the public sector, and an end to the Tory low-pay agenda of holding down public sector pay. Diolch yn fawr, Mr Pritchard.

[Mark Pritchard (in the Chair)]

I remind Members to bob if they wish to speak, just to help the Chair—I think you all are, thank you. I call Chris Stephens.

--- Later in debate ---

[Beth Winter]

I am wondering if the Members on this side of this room are living in a parallel universe to the Minister, given that he did not address any of the points we raised in any substantive way. I will follow up my questions and comments and those of others in writing to the Minister; I hope I can get a more comprehensive response.

We have heard today about what the hon. Member for Glasgow South West (Chris Stephens) called the heroes of the pandemic: our public servants. And yet, they have had the lowest pay increase in the public sector since the advent of the coalition Government back in 2010. The civil service staff are demoralised, angry, frustrated and desperate. They are suffering extreme hardship, using food banks and unable to afford to go to work.

You have not addressed any of the real hardships that they are facing, which have been caused directly by your policies and your low pay agenda. A civil service member of staff contacted me yesterday and described themselves as, “The poor relations who feel totally overlooked by society.” You have it in your gift to redress this—to address the problems that these workers face. On behalf of the PCS parliamentary group, we formally invite you to join PCS members on the picket line next week to listen to the real-life experiences of PCS members. If you are not going it for the staff who are suffering, do it for yourself. It is not efficient—

[Mark Pritchard (in the Chair)]

Order. I remind the hon. Lady to address her remarks through the Chair, rather than using “you”. The Minister is responding on behalf of the Government.

[Mark Pritchard (in the Chair)]

I am neutral. I remind the hon. Member to address her remarks through the Chair. The Minister is here representing the Government rather than as an individual.

[Beth Winter]

I just wish that people could tell how passionate I and others feel about this.

[Mark Pritchard (in the Chair)]

Indeed, there are a lot of passionate feelings on both sides of this debate.

--- Later in debate ---

[Mark Pritchard (in the Chair)]

Order. The Minister is entitled to put his point of order—although it is not a point of order. However, it has been put on the record by our excellent Hansard colleagues here. We go back to Beth Winter for the last three minutes of the debate.

[Beth Winter]

May I ask, through the Chair, whether the Minister will agree to attend the picket line to listen to the real-life experiences of so many thousands of civil service staff? As I began to say, if the Government are not going to address these issues for the people who are suffering, surely they will do so, because it is in their own interests. The overwhelming evidence shows that the current system is not efficient. It is not cost-effective and it will not address the cost of living crisis—

[John McDonnell]

Could my hon. Friend give way to the Minister so that he can respond and confirm whether he is coming to meet the PCS members next week?

[Beth Winter]

I certainly would like to give way.

[Mark Pritchard (in the Chair)]

The Minister can choose to respond or not, because he has concluded his remarks. If he wants to intervene, he can, but it is entirely down to him. The hon. Member who moved the motion can continue for the last minute and then allow me to put the Question, or can talk out her own time, which will mean the Question is not put. She can make that decision. [Interruption.] Order. The right hon. Gentleman should know, as he has been here for a very, very long time. I have been very patient with him.

[Mark Pritchard (in the Chair)]

Whether or not the right hon. Gentleman thinks he has been here too long is entirely a matter for him. He will come to order, thank you.

[Beth Winter]

It is my strongly held opinion that it is in everybody’s interest that people across the public sector are given an inflation-proof pay rise. I urge the Government to follow the lead of the Welsh and Scottish Governments and enter into proper negotiations with the civil service to address the horrendous situation that people are experiencing.

Question put and agreed to.

Resolved,

That this House has considered the civil service pay remit and the future of pay negotiations.