Labour Research (September 2017)


End the pay pinch, scrap the cap

Union campaigns against the government’s public sector pay cap have stepped up over the summer, with the latest pay awards for public sector workers meaning that they will fall even further behind increases in the cost of living.

For most public sector workers, pay was frozen in 2011 and 2012, and this was followed by the imposition of a two-year cap limiting pay increases to 1% a year. In 2015, the newly-elected Conservative government announced that the 1% cap would be extended for another four years to 2019-20. 

Apart from 2015 when RPI inflation hovered around 1%, the small pay increases afforded to public sector staff have lagged way behind increases in the cost of living. The increase in inflation over the last year, with RPI hitting 3.7% in May, has tightened the squeeze. 

The policy has been applied across the UK to varying degrees, although the Scottish government announced at the end of June that it will be lifting the 1% cap (currently applied in Scotland with an additional fixed pay uplift for the lowest-paid workers) from next year. 

According to the TUC report, Lift the cap, the average public sector wage is 7% less than what it would be if it had kept up with RPI inflation between 2010 and 2016. However, for many key workers the cut has been greater. 

Local government unions report real-terms cuts of up to 21% for some low-paid workers, while teaching unions say school teachers’ pay has been cut by 15% and NHS unions point to cuts averaging 12.3%. 

Real-terms pay cuts in public sector

Type of job Pay in 
2016-17 If pay had kept up with RPI inflation since 2010 Real-terms cut
Firefighter* £29,638 £33,018 10.2%
Prison officer* £29,219 £34,930 16.3%
Nurse (Band 5)* £28,462 £32,304 11.9%
Police Community Support Office** £21,618 £24,558 12.0%
Teaching Assistant** £17,547 £20,177 13.0%

Sources: TUC (* top of pay band), GMB (** typical rates); LRD calculations

Pay cuts have come hand in hand with massive cuts in funding and jobs in some parts of the public sector, notably in local government where 750,000 jobs have gone, leading to ever increasing workloads and with other workplace terms and conditions also being slashed. 

The TUC report referred to plummeting morale, as highlighted in union surveys of members, as well as the damaging impact on recruitment and retention with public sector pay awards being outstripped in recent years by private sector awards. 

The study highlighted increasing numbers of public servants “working at or marginally above the National Minimum Wage”, particularly in local government and health.

The inability to keep pace with the cost of living means that public sector workers are increasingly relying on increased borrowing or other forms of income, including agency work or employment outside of the sector, the TUC said. 

Following the Conservative’s poorer than expected performance in the June 2017 general election, it was reported that some government ministers were pressing for the cap be dropped. However, prime minister Theresa May confirmed that the pay cap policy was being maintained. 

Rehana Azam, GMB national secretary for public services, said: “May should realise the catastrophic damage her refusal to change course on her pay pinch has done to teaching assistants, local government workers and dedicated NHS staff.” 

Chancellor Phillip Hammond was subsequently slammed by unions after reports that he had told a cabinet meeting that public sector workers were “overpaid”. Christina McAnea, assistant general secretary of the UNISON public services union said Hammond was “completely out of touch”.

UNISON calculations show that the average public sector worker earns £3,875 a year less than if pay had kept up with RPI between 2011 and 2016. 

Over the same period, rents rose on average by 17%; the cost of electricity went up by 28%; and the cost of sending a child to nursery school went up by 21%, analysis of official data by the union shows.

In a survey of 21,000 UNISON health service members at the end of last year, nigh on three-quarters (73%) said they had asked for financial support from family and friends, one in five (20%) had used a debt advice service, around one in six (16%) had used a pay day loan company, and almost a quarter (23%) had moved to a less expensive home or remortgaged their house. 

The GMB has also highlighted the impact on children, releasing data in July showing that an estimated 2.4 million children live in the 1.4 million households where at least one adult works in the public sector as their main job. 

Higher pension contributions since 2010 have also hit pay packets. Teachers’ unions say these increased by an average of 3.2% for teachers between 2010 and 2014. 

The PCS civil service union says that increased pension contributions since 2010 have reduced take home pay for civil servants by around £1,000 a year.

The union has accused the government of hiding behind its pay review bodies (PRBs) to duck responsibility for its own policies. 

These notionally independent bodies are tasked by the government with making recommendations on pay for certain groups of public sector workers, including the armed forces, doctors and dentists, NHS staff, the prison service, school teachers and the police. However, they have been stymied in making recommendations as they are obliged to work within the restraints of the 1% cap. 


Recent PRB reports have, nevertheless, indicated an increasing unease at working within these constraints. The NHS PRB report in March said: “We are approaching the point when the current pay policy will require some modification, and greater flexibility, within the NHS.”

Its recommendation of a 1% rise (or a real-terms cut) for all NHS staff appears to have been the final straw: the RCN nursing union is now moving towards taking industrial action for the first time in its history. 

The RCN points to an estimated 40,000 nursing vacancies in England alone and data from the Nursing and Midwifery Council that show that more people are leaving the profession than joining and says that nurses “have put up with too much for too long”. 


The report of the school teachers review body (STRB) in July highlighted recruitment and retention pressures in the teaching profession, with the pay of teachers falling further behind other comparable graduate professions. It said that these pressures were “too significant to defer taking any action for another year” and recommended an increase of 2% to the maximum and minimum points of the main pay range for classroom teachers (the minimum and maximums for teachers on higher pay scales would increase by 1%).

Education secretary Justine Greening said the award was consistent with the government’s pay policy, as only teachers at the bottom of the main pay scale will receive an automatic 2% increase, and this is a “small proportion of teachers”.

This would fit with government recommendations on targeted pay awards. In 2015, Greg Hands, the then chief secretary to the Treasury, suggested in a letter to the pay review bodies that pay awards could be varied with uplifts targeted “to address recruitment and retention pressures”, but with no expectation that every worker would receive a 1% award.

Changes since 2013 means that pay progression is now dependent on performance objectives, and schools in England and Wales can set pay flexibly for teachers as long as they keep within the recommended pay ranges. So, while some classroom teachers might get a 2% rise this year, some will get 1% or less and some may get no pay rise at all.

NUT general secretary Kevin Courtney said that the union would be pressing the government to ensure that all teachers on the main pay scale get the 2% rise. 

Senior staff not ‘overpaid’

Unions representing senior civil servants and managers in the public sector have seized on the report of the Senior Salaries Review Board (SSRB) in July to rebut suggestions that public sector staff are overpaid compared to their counterparts in the private sector.

Prospect, the union for professionals, managers and specialists across the public sector, referred to data in the report showing that about one in five of new senior civil servants in the last year came from the private sector and almost all took a pay cut. 

Despite this, the median pay of external hires was 29% higher than those promoted internally. 

This “pours scorn on the chancellor’s assertion that public sector workers are overpaid”, Prospect deputy general secretary Garry Graham said. 

Naomi Cooke, assistant general secretary of the FDA senior civil servants’ union, stressed that the bulk of senior staff are almost £14,000 a year worse off in real terms than seven years ago “and now earn 46% less than their private sector counterparts, even when pensions are taken into account”.

Workers who are not covered by Pay Review Bodies

The PRBs cover around 45% of public sector workers. The majority, including local authority and most government department employees, are not covered. 

Firefighters reject offer 

Following consultation with members, the FBU firefighters’ union has rejected an offer of an immediate 2% pay rise combined with a possible additional increase next year, 

FBU general secretary Matt Wrack said the offer demonstrated “that the 1% cap is dead in the water, but it lacked detail and credibility. 

In addition to the 2% increase in July 2017, the offer involved an additional 3% rise next April as a second stage of the 2017 settlement. But this is dependent on an agreement around new working practices currently being trialled whereby firefighters work with ambulance services on emergency medical response. The second stage payment would also be subject to funding being provided by governments across the UK. 

The union also wants pay increases for 2018, 2019 and 2020 to be settled this year. 

Referring to firefighters’ bravery in responding to recent terrorist incidents and the Grenfell Tower tragedy, employers’ side spokesperson Nick Chard said that the 2% offer was double that originally planned and that employers shared the view of firefighters that “they deserve to be paid more”.

There is no review body for civil servants below the senior grades (see box above), and pay for central government departments, non-ministerial departments and agencies, non-departmental public bodies and arm’s length bodies is set each year by the Treasury through the “pay remit”, overseen by the Cabinet Office.

As in previous years, the pay remit for 2017-18 states that “pay awards will be limited to an average of up to 1%”. Unlike pay rises in some other parts of the public sector, the 1% total also has to cover any additional pay increase related to progression through the pay grades (although incremental progression has largely been halted in most government departments). 

Research commissioned by PCS shows that between 2010 and 2016, median weekly earnings for civil servants had fallen by 8% to 9% (calculated against the government’s preferred and usually lower CPI inflation measure), compared to 3% to 4% in the rest of the public sector and 7% to 8% in the economy as a whole. 

If the pay cap continues until 2020, median civil service pay will have fallen by 12% using the CPI inflation measure or 20.4% using RPI, the research shows. 

Many of the lowest paid public sector workers are employed by local authorities and covered by collective bargaining under the National Joint Council (NJC) for Local Government Services (applying in England, Wales and Northern Ireland). This also covers school support staff, including teaching assistants. 

Local government staff have endured real-terms pay cuts for longer than other public sector workers, as they did not receive a pay rise in 2010-11, the year before the pay freeze for other public sector workers was implemented. 

The lowest NJC paypoint is £7.78 an hour, just above the National Living Wage (NLW) rate of £7.50, but well below the Living Wage Foundation’s (LWF) recommended living wage of £8.45 (£9.75 in London). 

The joint pay claim by the NJC unions — UNISON, GMB and Unite — for 2018-19, has called for the lowest paid staff to move onto the LWF rate, as well as an across-the-board pay rise of at least 5%.

NJC workers on the bottom paypoint will require a 15.7% increase in pay to reach the projected NLW rate of £9 an hour by 2020, the union claim points out. 

A similar pay claim for 2017 has been submitted by the three unions on behalf of police staff, covering Police Community Support Officers, 999 call operators and other police support staff. They are similarly low paid, and have endured a 13.5% pay cut since 2010.

GMB research and policy officer Laurence Turner told Labour Research that the union was concerned that that while the government may eventually take heed of the warnings of the PRBs to fund increases for front line roles, lower-paid staff in support roles not covered by the PRBs, such as Police Community Support Officers and teaching assistants may continue to be ignored.

Teaching assistants, predominantly women, have a typical annual salary of £17,772 (2017-18), but often earn even less, as many work part-time or are on term-time contracts. 

Women, who make up over three-quarters (78%) of the workforce in local government, still largely occupy the lower pay rates, and have been disproportionately hit by the pay squeeze. 

The local government claim notes that pay differentials are being squashed as pay points at the bottom are deleted or pay settlements are “bottom-loaded” to the lowest rate, marginally above the legal minimum. The unions warn that this has undermined pay and grading structures based on transparent job evaluations, meaning a rise in equal pay claims could also be on the cards. 

The GMB report, End the public sector pay pinch, published in March, highlighted the equalities impact of the pay cap. Overall, two-thirds of public sector workers are women with a concentration in lower paid roles: nine out of 10 teaching assistants are women, as are eight out of 10 NHS staff. Official earnings data shows that the gender pay gap in the public sector has widened. 

“In reality, the pay cap has had the effect of ossifying an unfair pay structure at the same time that progress is being made towards closing the gender pay gap in the wider economy,” the report said.




End the public sector pay pinch








Pay Review Bodies


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