Civil Service Pay

Geraint Davies Excerpts

Tuesday 7th March 2023 Westminster Hall

[Geraint Davies (Swansea West) (Lab/Co-op)]

I disclose an interest: my father was a civil servant. He was in charge of economic development at the Welsh Office and was instrumental in getting the DVLA to come to Swansea, which I represent.

The Government have treated the DVLA appallingly, particularly during the pandemic, when something like 500 people caught covid at the Swansea centre. Even though the unions and the management agreed a policy to mitigate risk that allowed more people to stay at home, the then Transport Secretary, the right hon. Member for Welwyn Hatfield (Grant Shapps), intervened and pulled it off the table, forcing a strike. That was a taste of things to come: the Government have provoked unnecessary strikes across the board and failed to negotiate in order to create a political atmosphere in which they can say to the electorate, “It’s the strikers versus the people. Who are you going to vote for?” It is completely cynical and counterproductive.

In Swansea and many parts of the country that have very poor communities—Swansea was a recipient of EU structural funding—people have not had proper pay increases. We know about inflation. According to the Environment, Food and Rural Affairs Committee, food inflation is at something like 17%. People have been given an offer of 2%, so it is no surprise that they have been provoked. Those public servants are one of Britain’s greatest achievements. They provide neutral support and advice to Ministers, and public services to the people.

Of course, the inflation was to a certain extent provoked by the Ukraine war, but it is interesting that energy inflation in Britain is much higher than it is in the rest of Europe, which is much more exposed to Russian gas. We have seen the fuel companies’ massive profiteering; those windfall profits should be properly taxed.

In addition, food price inflation has been pushed by retailers’ and food producers’ profiteering. During the pandemic, because farmers could not sell their products to the hospitality sector, which was closed, the retail sector took advantage by pumping up prices while costs were going down, doubling their profits. Again, in theory, they should face a windfall tax. Profiteering, the Ukraine war and Brexit, which of course added 6% to inflation, have pumped up costs for people who have faced 13 years of pay freezes. It is no surprise, therefore, that something like 40,000 of them are relying on food banks.

We want a proper negotiation. People know that there is not an unlimited amount of money, but treating them like dirt and pushing them on to their knees is a recipe for making them rise up and strike. That is completely unnecessary; we want to move forward.

People in the civil service accept that they earn a little less because they are public servants and their heart is in the right place, but they are being driven to take action. We have a tight labour market because there is not freedom of movement. We have had reckless covid management, so tens of thousands of people have long covid and are not as productive. The Government resist allowing civil servants to work from home, as we saw in the DVLA. We should support people in work, invest in them, allow them to work from home and provide wi-fi clouds to make them more productive.

I look forward to a growing economy in which we invest in a growing future, rather than a hobbled economy in which we kick people who are already down. We need a strategic approach to this problem, and I very much look forward to a Labour Government, as we have in Wales, who talk to the unions and people in work in partnership, so we can grow together in the knowledge that we all face constraints. We need to do that in an adult way, rather than with a bullying approach that provokes strikes and poverty.

--- Later in debate ---

[Alex Burghart]

I know the right hon. Gentleman is new to this House, and I am delighted to be able to tell him that the minutes of this debate will indeed be recorded for posterity. He will understand that the sooner the speed of inflation comes down to a manageable level, the sooner we can return to growth in the economy. The sooner the whole economy benefits, the sooner public services will benefit. He proposed an inflation-matching pay rise, but that would certainly not help bring down inflation, and he knows that. It is very easy to propose things from the Labour Back Benches that sound good, but that are impractical and damaging. The Government have to take fiscally responsible decisions.

The Chancellor of the Duchy of Lancaster and Secretary of State, my right hon. Friend the Member for Hertsmere (Oliver Dowden), said in a recent PACAC evidence session that considerations for the pay settlement this year will, of course, be done in the context of higher inflation, but that

“we have to be cognisant of wider pressures on the public finances, which ultimately can be paid for only by higher taxes, by increased borrowing or by savings elsewhere in the Government…Ministers have to take difficult decisions.”

[Geraint Davies]

The Minister is making the case for a balanced approach. The Chancellor’s objective is to halve inflation this year, from 10% to 5%, so prices will have risen 15% over two years. Given that, what would be a reasonable and balanced pay award to civil servants over those two years, in the Minister’s view?

[Alex Burghart]

Those conversations are ongoing, as the hon. Gentleman will be aware. It is not within my remit to speculate on that.

[Geraint Davies]

But not 2%.

[Alex Burghart]

I will come back to the hon. Gentleman’s point.

Salaries for junior grades in the civil service remain comparable with private or public sector equivalents. Many civil servants also benefit from defined benefit schemes, where employers contribute around 27% of earnings. In contrast, most private sector employees receive defined contribution pensions, which are dependent on investment performance, and where employer contributions are typically around half those in the public sector.

As I mentioned at the beginning of my speech, pay arrangements for civil servants below the senior civil service are delegated to Departments as separate employers. That has been the case since 1996, and was not a position overturned by the previous Labour Government. The annual pay remit guidance sets out the financial parameters within which civil service Departments can determine pay awards for their staff. Negotiations take place between organisations and trade unions. The Cabinet Office does not negotiate or consult on pay or changes to terms and conditions outside the civil service management code. Ultimately, it is for Departments to decide on their pay awards and how they are structured, in the light of their own budgets and priorities, and to negotiate with their trade unions.

There are many merits to the delegated model, as the last Labour Government recognised. Civil service Departments deal with many different, complex issues. That means it is really important that Departments continue to have the flexibility to tailor their own pay and grading arrangements to enable them to recruit, retain and reward the hard-working civil servants who deliver for them.

Pay remit guidance also allows Departments to seek further flexibility for a pay award above the headline range for pay awards. That has enabled some Departments to make higher awards to their staff in return for productivity and efficiency gains, or to reform terms and conditions of employment, in order to deliver transformational reform. That has been demonstrated in pay deals at His Majesty’s Revenue and Customs and the Ministry of Justice in recent years.

We continue to explore opportunities for greater coherence for reward in future years in support of civil service challenges and priorities, which is where the work of cross-Government professions and functions have a particularly valuable role to play. The Minister for the Cabinet Office met with some of the main civil service unions on 12 January to listen to their representations on pay, as part of an exchange of information to inform pay for 2023-24. That is supported by continuing dialogue at official level.

The Government remain committed to holding discussions about pay for 2023-24. We want to work constructively with the civil service trade unions as the Government consider the pay remit guidance, the delegated grades and the evidence to the Senior Salaries Review Body on senior civil service pay. I am confident that when we announce the 2023-24 civil service pay remit guidance, we will continue to strike the balance between appropriate reward and the need to live within our means as a nation.