The chancellor has drawn up plans to find fresh savings from the public sector payroll by ending the historic system of “pay progression” enjoyed by millions of workers.
Teachers, NHS workers, police and civil servants in six departments currently enjoy regular pay rises along a sliding scale for their pay grade, so long as they meet career appraisals.
That explains why public sector pay has continued to rise despite a headline “freeze” to salaries since 2010.
But the Treasury has just set out new plans for departments to propose an end to “automatic time-served progression” as a way to save costs in the 2015-16 spending review, scheduled for June. Those changes would apply to the six departments which still have pay increments; the Home Office, parts of the Ministry of Justice and the departments of transport, international development, business and communities.
Michael Gove, education secretary, said in January that performance-related pay for teachers would begin in the autumn after a recommendation from the School Teachers’ Review Body – ending automatic progression. Likewise the NHS Employers organisation said recently that it wanted closer links between performance and progression.
A Treasury spokesman explained that public sector pay had outstripped its private sector equivalent before 2010, creating a “disparity”. “The public sector was insulated from the worst of that,” he said. “This is (now) about trying to achieve pay restraint.”
The spokesman said the government had not “torn up the rulebook on progression pay” but wanted to set out a clear “direction of travel”.
Ministers will dress up the changes as a positive chance to reward public sector workers for their performance. But unions believe that the looming changes are a new assault on pay and conditions through the back door.
“People will see this as adding insult to injury”, said a spokeswoman for Unison, the public sector union. The PCS said Mr Osborne was seeking to “keep wages low for many years to come.”
Meanwhile the Treasury has advised departments that any progression pay in 2013-14 must be included in the 1 per cent pay rise cap for that year – and has asked them to limit bonuses to staff.