Civil Service Pay

Jim Shannon Excerpts

Monday 29th November 2021 Commons Chamber

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

In raising this important issue, I refer the House to my entry in the Register of Members’ Financial Interests, and to my position as chair of the PCS parliamentary group.

May I begin by saying a few words about a personal matter? Today would have been my grandfather’s 99th birthday. My grandfather was a keen supporter of the Scottish National party, and, indeed, voted for it every time it featured on the ballot paper. He was a great influence on me, in ensuring that politics was discussed and debated. I want to pay tribute to my grandpa, and to thank him for everything he did for me. I hope that he is proud of me. He was of course a public sector worker too, and I am sure he would approve of the fact that I am raising the issue of public sector pay this evening.

The covid-19 pandemic has presented the United Kingdom with its biggest national crisis in decades. Workers in the civil service and its related areas have risen to the challenge, and have rightly been lauded as heroes by the Government. Plaudits, however, are not enough. Those workers have faced over a decade of pay freezes and pay caps which have seen their living standards fall by about 20% in real terms.

I am sure we will hear the Minister say that austerity is necessary in order to manage public finances, so let me start by putting that myth to bed. Austerity has done enormous harm to the public finances through the strangulation of living standards, investment and economic growth. It is a policy widely recognised by every reputable economist as a complete and utter failure, and workers in the civil service have been hit particularly hard by that failure. A study by Dr Mark Williams of the University of Surrey in 2018 found that average annual growth in median pay in the civil service had been up to 1.9% below inflation since 2010; that the erosion of pay in the civil service had been greater than in the rest of the public sector and that it had fallen up to 11.4% behind the rest of the public sector since 2010; and that women had been particularly hard hit, with the gender pay gap standing at 12%.

Let us not attempt to explain this away with false comparisons with workers in other sectors, or with references to the national finances and the economy. In my view, Ministers constantly change their position on this issue when it suits them. If borrowing is up, they say that they cannot afford pay rises, and if inflation is going up, they say the same. Despite the squeeze on living standards, private sector wages are going up, but they simply ignore that comparator. The Government need to stop doing this, and start taking responsibility for the welfare of the staff.

I happen to believe that the Government’s approach has been a disaster, particularly for workers on low pay. They cannot claim to want a high-wage civil service while Departments scramble around on an annual basis to find the funding to raise pay levels to the minimum wage. During the pandemic, they laud civil servants as heroes, but their pay policy makes them paupers. There is little doubt that civil servants have become the poor relations when it comes to pay in the public sector, and it is frankly disgraceful that the Government should treat their own workforce in this manner.

[Jim Shannon (Strangford) (DUP)]

I congratulate the hon. Gentleman on bringing forward this debate. He has a substantial amount of time in which to put forward his case. Does he agree that middle-income families who receive no help from the Government in any shape or form need to have a pay rise to help with the substantial cost of living? Does he also agree that Ministers must be mindful, when rightly uplifting pay levels, that they should increase the cap for child benefit at the same time? If there is one thing they could do to help the middle-class, it would be to increase the cap for child benefit.

[Chris Stephens]

I thank the hon. Gentleman for his intervention. He will know the importance of the role that the civil service has played in Northern Ireland in developing the peace process and helping the Northern Ireland economy. I am sure that, like me, he will pay tribute to civil servants in Northern Ireland for that. I agree with his point, and he will hear later some examples of what the pay freeze has meant for civil servants and the real pressures that they are under. I hope he will intervene again when we come to that.

To add insult to injury, in November 2020 the Chancellor of the Exchequer announced a pay freeze for those workers for 2021. In my view, that was totally unacceptable, and it is high time that the Government properly recognised the contribution that their workforce make to society, particularly in an atmosphere of rising inflation and falling living standards. It was therefore welcome to hear the Chancellor’s recent autumn Budget announcement on the lifting of the pause on public sector pay. That announcement was accompanied by a statement that the normal process of independent reviews and recommendations would be resumed.

However, as the Chancellor should know—I am sure the Minister does—the civil service does not have a pay review body. The question therefore arises as to what mechanisms will be used to determine civil service pay, and I am now going to ask the Minister my first question. Assuming that the Chancellor is sincere about the pause being lifted, can he confirm that there will be no fetters on pay bargaining in the civil service this year, and that there will be no arbitrary cap on pay awards contained within any civil service pay remit guidance?

That brings me to the importance of pay coherence and coherent pay policy. Ever since the financial crash in 2008, and more recently during the pandemic, the Government have insisted that we are all in it together and we must be united in our efforts to overcome the difficulties we face. However, they continue to foster a divisive approach to pay arrangements for their own workforce through the delegated pay system. This needs to change if the Government’s words are not to ring hollow.

Against that backdrop, I highlight PCS’s long-standing objective of securing a return to national bargaining on pay and terms and conditions covering all workers in the civil service and related areas. The delegated bargaining system has created a wholly unacceptable situation where workers doing broadly the same job at broadly the same grade suffer huge disparities in pay. Similar inequities exist in relation to annual leave and working hours arrangements. The delegated system is also unnecessarily costly, time-consuming and inefficient as a result of the replication of the same process across every bargaining unit, where one set of negotiations would suffice.

On this issue, again, the Government always change their position. They claim they cannot direct Departments that have delegated authority on pay, yet they persist in centrally mandating things that Departments must do. For example, they instructed all Departments last year to pay £250 to staff earning below £24,000 a year. It is therefore demonstrably the case that the Government are the single source from which all civil service pay arrangements emanate.

Another example is that, under freedom of information, we know the departmental permanent secretaries got together in February 2018 to agree the joint position across all Departments that there would be a pay rise of 1% to 1.5% for public sector workers. I find it extraordinary that there are 200 separate pay negotiations across UK Government Departments but one pay policy.

In recent years PCS has entered a number of pay reform agreements within Departments that have put right some of the structural discrimination and inequities that exist. In the Home Office, the Department for Transport, Her Majesty’s Revenue and Customs and the Ministry of Justice, agreements have been reached on pay reform that have secured good negotiated outcomes for all concerned. PCS will rightly be continuing to press for an expansion of this approach, and it should be encouraged by the Government.

Last year, alongside its national pay claim to the then Chancellor of the Duchy of Lancaster, PCS submitted single sectoral pay claims to chief operating officers of parent Departments at delegated level. As a step change towards national bargaining, PCS indicated that it stood ready to engage and to start discussions on how sectoral claims may bring a greater degree of coherence to current pay arrangements.

These proposals sought to reduce the number of bargaining units at sectoral level from 55 to just 13, with scope for further rationalisation over time. Indeed, PCS indicated it was prepared to discuss business cases in respect of workforce reform that may enable funding to be provided to address the structural inequities. Astoundingly, given the Government’s rhetoric on their commitment to efficiency in the public sector, there has been almost no progress on that concrete proposal that would deliver the efficiency they claim to desire.

PCS rightly intends to repeat this approach in 2022, and I seek an assurance that the Government will grasp the opportunity to improve efficiency in pay bargaining across the civil service. Will the Minister confirm that he agrees with the former Chancellor of the Duchy of Lancaster, now the Secretary of State for Levelling Up, Housing and Communities, when he told the Select Committee on Public Administration and Constitutional Affairs on Thursday 10 December 2020 that

“trying to tackle some of the balkanisation of the process of pay, reward, recruitment and so on—creating what has been called in a vogue phrase “one civil service”—is a very good thing”?

Will the Minister also confirm that he will turn those words into action by engaging in a proper way with the civil service trade unions to achieve greater coherence on pay across the civil service, including a full exploration in all delegated areas of the business case processes for pay reform? In addition, will the Cabinet Office proactively assist delegated areas in developing successful business cases? Will steps be taken to involve the trade unions properly in the task and finish group on pay delegation and related matters, which has been established in Whitehall, but about which the unions have so far neither been informed, nor consulted?

That brings me to the impact of the civil service pay policy. At Prime Minister’s questions on Wednesday 17 November, the Prime Minister said:

“I think that actually the Department for Work and Pensions, under the Secretary of State for Work and Pensions, my right hon. Friend the Member for Suffolk Coastal (Dr Coffey), has performed outstanding service. It has performed miracles. Among the things that it has achieved is helping to get millions of people effectively back into employment, in spite of all the difficulties that we have faced. We now have unemployment running at virtually record lows, in spite of all the difficulties we have faced in this pandemic and as we come out of furlough. That is largely thanks to the work of the DWP.”—[Official Report, 17 November 2021; Vol. 703, c. 579.]

In response to those words of praise, the PCS trade union received more than 50 emails from individual DWP workers about the toll that more than a decade of real-terms pay cuts have taken on them. Some commented that they felt embarrassed to be a government worker, and that they have had to ask friends and family for handouts, and have even turned to food banks. Many are seriously considering leaving the DWP, not because they do not like the job, but because they cannot afford to stay. The following are just some examples of comments received by these government workers for whom the Prime Minister had such high praise. These describe in devastating terms the impact that continued pay restraint is having on civil servants and their families, and what a real pay increase would mean for them.

[Jim Shannon]

One issue I recognise in my constituency, from my weekly or even daily dealings with some workers, is that workers in the DWP do an extremely stressful job. They are looking after the financial affairs of others, and are trying to guide people through the system and help them. Does the hon. Gentleman agree that the hard work they do in the DWP must be reflected in the wages they receive?

[Chris Stephens]

Yes, I agree with the hon. Gentleman on that. I am sure he will be fully supportive of, and will recognise, some of the statements from DWP workers who responded to the Prime Minister’s words earlier this month. As one DWP worker put it,

“I have been coming into the office during the whole of the pandemic and I am now totally disheartened and angry that DWP put so little value on the work that the staff do. Now there is a great improvement in the jobs market staff are leaving all over the place... The powers that be have to do the right thing and award us a decent wage rise otherwise there will be very little experienced staff left.

I never thought when I took up this position that I would ever have to send an e-mail like this one letting people know how hard it is to make ends meet in 2021.”

Another said:

“I have worked for DWP for nearly 17 years, those years of which I felt proud to work for my government. Now I feel embarrassed. I work hard, as I always have. I have two children to bring up and can honestly say I’m on the breadline. My family suffer financially, with the rise in cost of fuel bills, food...everything has gone up but our pay....absolutely disgusting. Our government doesn’t look after its own workers but expect us to be loyal and perform an outstanding job...which we always do.”

Another DWP worker, a single parent of two, said:

“My son works as an apprenticeship who receives more wages than me. I have considered using the food bank but not keen in letting them know where I work as ashamed my employers can’t seem to look after their own staff. I have used a food hub before as no details were given. When I receive my wages at the end of the month there is nothing left by the 1st of every month. I am unable to save so no holidays. I am unable to save for Christmas so everything goes on credit card which I ran up nearly £2,000 of debt.

I have worked for your company since 2008 and have never felt the struggle that I do now. Food prices have rocketed and gas and electric have also gone up, how do you expect families working for a government organisation to cope when you don’t give them the wages to reflect the price rises now. I am ashamed to be working for the DWP.”

A DWP worker for almost 20 years said:

“Having a pay freeze has meant that I have to choose between having my heating on or feeding my family. Yes these struggles are real even for the Hard Working Civil Servant!...As a mum I have concerns for my children’s wellbeing when I have to tell them that they cannot go to the after school clubs or go out with their friends because I can’t afford it. They are suffering mentally taking on my worries as well when I tell them that I can’t get them a birthday or Christmas present that they deserve. I have had to take on a 2nd job in the evenings so that I can afford these for my children leaving me less time to be with them. A Civil Servant should not HAVE to work two jobs to pay bills and live…Having a pay rise would alleviate a lot of my worries. It won’t make me rich but my family would be able to live without the worry of deciding to put the heating on, have a substantial healthy meal or afford to put clothes on our backs. We shouldn’t be made to beg for help from various charities.”

A Department for Work and Pensions administrative officer said:

“I’m not quite at the stage of having to choose between heating and eating but I fear that I may be in that position in the near future. Add to that the state of our pensions and I fear that I may never be able to retire. I really don’t know how I am supposed to save towards my retirement on what I am paid…Boris Johnson said a little while ago that employers must pay better wages so when is he going to follow his own advice and pay us a wage that we can actually live on and save for our future?”

Another DWP worker said:

“Personally I am struggling on my pay to make ends meet and really dreading the next Gas/Electric bill. My water rates have also gone up and food prices are just getting ridiculous even though I shop as cheaply as I can using certain low-price supermarkets. I am single and my son lives with me just so I can afford my rent and even that is a struggle…It would be really helpful to receive a decent pay rise given that inflation is certainly rising and before long I will not be able to meet my cost of living. Staff in DWP deserve to be recognised properly for all our hard work during 2020 making sure the people of our nation who urgently needed help with money received it. All staff worked tirelessly to ensure the nation’s needs were met so not are we only helping them back into employment we were there when they weren’t and needed us the most.”

Another administrative officer, who works in the Child Maintenance Service, said:

“I cannot name any colleague who is not feeling that we have been demoralised by the government’s total insensitive behaviour following the Government announcement of a Public Sector pay freeze in November 2020. Did not every DWP employee rise to the challenge during covid ensuring payments for children still were upheld and our colleagues in the benefit office maintaining benefit payments to the people whose lives were thrown into turmoil?...At 61 years of age I am now financially worse off than I have ever been. This morning my gas and electric supplier…sent me a letter stating last year my annual bill for gas and electric was £900.00 and they are increasing my direct debit now because with the rise in energy prices they are estimating it to be £1900.00 this year. Please tell me, ministers who voted for the pay freeze for your loyal civil servant of over 20 years, how am I going to pay this bill?”

[Jim Shannon]

The hon. Gentleman referred to the Child Maintenance Service, with which my staff and I have regular contact. One problem that we have when we take child maintenance complaints through the system is changes of staff. Why are there changes of staff? Because the remuneration that the civil servants in that department need is not there. Does the hon. Gentleman feel, like me, that a civil servant wage is necessary for staff in that department we are to retain staff and have continuity of staff in respect of complaints—in other words, if we are to ensure that when people make contact, they can speak to the same person they spoke to the first time?

[Chris Stephens]

I could not have put that better myself. The hon. Gentleman, representing his constituents in Northern Ireland, will certainly be aware of the importance of Child Maintenance Service payments, and of payments for those who are not in work and who rely on universal credit. He is right that civil servants have performed miracles, given the huge numbers of people who were on universal credit during the pandemic, and I know he agrees that they should be properly remunerated and given a decent wage rise for their wonderful efforts.

A civil servant of 39 years has said:

“I currently work for the DWP. The Prime Minister and other politicians always give us credit for the work that we do and for how we have coped through the pandemic, delivering our services. We have been called miracle workers. It would be great to see that reflected in a decent pay rise. I am lucky if I get an extra £5 a month every year when we get our pay rise. With the costs of electricity, gas, food, and travel all going up, my family are really struggling to make ends meet.”

A civil servant of 42 years told me:

“I have been in the civil service for 42 years and have never found it so difficult to manage financially. I am still working from home and have to sit in a room with thick clothes and one small electric heater as I cannot afford the heating bills. I am disabled and I cannot see the future at all. After giving my whole working life to the service of others, making a difference to our DWP claimants’ lives, I would appreciate a wage that enables me to keep up with rising living costs. My wage has reduced in real terms for decades now, and with rising costs it will reduce again. I’m 62 with many health conditions and cannot consider taking a second job. I feel really abused and forgotten by my employer who I have shown only loyalty and commitment particularly during the pandemic.”

Another DWP worker has said:

“I have always been proud to work for the Department of Work and Pensions and consider it to be a great place to work. Family and friends expect it to be a well-paid job as we are ‘working for the Government’, so I always feel disloyal when asking to borrow money or not being able to afford a day out or having to buy small presents for birthdays and Christmas. I want my children to know that you reap what you sow, and that if you work hard you see the rewards. Sadly, at this time, I do not feel that this is the case for me.”

A DWP worker who was forced back into the workplace has said:

“With increasing fuel and food prices, I am finding it incredibly hard to survive financially. I am widowed, I live alone and am unable to make ends meet. Furthermore, I have to find £200 a month to travel to work, as face-to-face appointments are now being forced and we are no longer allowed to work from home. It would appear I have to resource my own ‘miracles every month’, whilst being in a very demanding role. Moreover, my health and wellbeing are currently suffering. I am by no means alone, and have many colleagues in the same position.”

A full-time work coach, a mother, has said:

“I am relying on my child benefit to cover electricity and gas for my family next week, until I receive my next pay in almost two weeks’ time. This is due to rocketing energy prices, rocketing fuel costs and childcare costs that I need to cover. My wages are simply not enough to cover all of these costs and I am left struggling every month. I have been with the Department since 2006 and have never known it to be this bad.”

Another employee in the Child Maintenance Service has said:

“My wage has dropped to just above the minimum wage and my workload complexity has increased. I’m worried sick about the basics: affording heating; paying travelling-to-work costs; and trying to pay the overdraft. In the meantime, as a frontline worker, I have to stay positive and professional whilst dealing with the emotional and financial issues of the public. I don’t treat the public with platitudes the way that I am by successive Governments.”

As the hon. Member for Strangford made clear, it is an emotional job. These staff have to deal with many of the public’s emotional and financial issues. That, to me, says it all when it comes to the question of why a pay rise is necessary.

An administrative officer in DWP has told me:

“I joined DWP last year during the first wave of the covid-19 pandemic and received a salary of £21,262. My monthly salary is £1,442.65. My monthly expenses including rent and bills is £1,265, leaving me with less than £180 to cover my work travel and food expenses.”

Another child maintenance officer—for over 23 years—said:

“I am stuck on an income that doesn’t even cover my bills which are rising every year. Is anyone going to help the staff who have been loyal to the Child Maintenance Service for years? I actually love my job, but am so disappointed with the pay. We deserve more.”

A civil servant who joined DWP in 2016, who said that they were paid significantly higher in their previous Department, has said:

“I am stuck on an income that doesn’t even cover my bills which are rising every year. Is anyone going to help the staff who have been loyal…for years? I…love my job but am so disappointed with the pay, we deserve more.”

A DWP worker who is nearing retirement age says:

“I am retiring in May 2022 so the pay freeze has seriously affected my pension. I will be on a lower pension for ever and ever and there’s no compensation. I really have lost out as have a lot of my colleagues in the same situation.”

Another DWP worker says:

“I am struggling to keep a roof over my head, feed and clothe my daughter and have not bought clothes/shoes for myself in over a year. Without support of family would honestly be in real state. My 75 year old father supports me from his pension which is not great either.”

A work coach says:

“As a Work Coach we have put ourselves and our loved ones at risk throughout the entire pandemic by interacting with many customers to ensuring they received the upmost support…Myself and my colleagues have helped countless people transition from the national lockdown and from losing their jobs into finding new light in a brand new sector of work. The DWP have worked long hours to ensure our customers are getting the support they need. We ourselves sacrificed time with our loved ones to ensure our Nation got back to its once thriving self and all we have received was a thank you and a pat on the back! Actions speak louder than words and never more so in our current climate…Needless to say the world around us is increasing in price dramatically. A pay rise would reflect the rise in living costs and allow us to keep up with the rapidly increasing inflation.”

Those are just some examples from one Government Department, but civil and public servants are experiencing the same difficulties right across Government services. Employers are experiencing recruitment and retention problems because of this, and staff continue to face very real hardship. There is also a clear economic case to end pay restraints and give a real-terms increase to civil servants. The benefits of a real-terms increase would outweigh the costs. Before the pandemic, about 70p in every £1 of public money ended up in the private sector economy, whether in grants, contracts or, crucially, the wages of public sector workers. The pandemic can only have increased that 70p figure.

In my experience, workers and civil servants do not have Cayman Islands accounts to put their wages in, and neither do they place their wages in a shoe box and hide it under their beds. No, they spend their money in the private sector economy—in the high street and the hospitality sector, buying additional presents for their family or spending more putting their clothes in for dry cleaning. Not only do they keep the economic wheels of the country going in their work; they do so with their hard-earned wages.

The realities of the examples provided by those who work in the civil service, the compelling moral case and the undeniable economic case can only begin to be rectified by funding for real-terms pay increases across the civil service and related areas for this coming year. I therefore look forward to hearing the Minister’s response.