Public sector pay 2007/08
The government's determination to keep pay settlements within its 2% inflation target has prompted a stormy round of negotiations in the public sector this year.
On this page:
Pay deals break inflation target
Looking forward to 2008?
NHS
Local government
Slow progress on single status
Paving the way for new pensions
Opted-out councils
Fire service
Police
Central government departments
Probation service
Prison service
Schoolteachers' pay
Higher education
Further education
Table 1: Local government pay settlements, 2007
Table 2: Pay awards at opted-out local authorities, 2007
Table 3: Central government pay settlements, 2007 - examples
Table 4: Education pay settlements, 2007
Key points
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The 2007 public sector pay round has proved even more protracted and problematic than last year's, with the government struggling to keep pay rises within its inflation target of 2%. Our latest round-up of pay awards in the public sector shows settlements running above this level, at a median of 2.5% in the year to the end of November 2007.
Dissatisfaction with what the majority of public sector unions and employees view as below-inflation rises has bubbled to the surface more than once over the past few months - most noticeably with the strike action of 20,000 prison officers on 29 August and the ongoing pay dispute between the police and the government.
The employment relations fall-out following the government's determination to stand firm on public sector pay restraint was evident at this year's TUC conference. A number of motions were passed by congress, including one moved by the Public and Commercial Services Union (PCS) opposing the 2% pay limit and calling for a joint campaign of opposition including coordinated industrial action (see composite 12 in the list of congress decisions on the TUC website).
While Gordon Brown's inaugural speech to congress as prime minister struck a slightly more conciliatory tone on the nature of public services reform generally, there was no concession on the government's pay policy.
The recently published Pre-Budget Report and Comprehensive Spending Review (CSR) (on the Treasury website) states that public sector pay settlements "should continue to be consistent with the achievement of the government's inflation target of 2%". This indicates that there is unlikely to be a relaxation of pay discipline in the sector for the foreseeable future.
Pay deals break inflation target
IRS has analysed 67 public sector pay awards during the 12 months to 30 November 2007. Of these, 60 comprise a basic percentage increase, with the remainder providing for an increase based on performance. An analysis of the basic deals shows that:
- the median basic pay award was 2.5% in the year to 30 November 2007, which is above the government's 2% pay inflation target, but far below the 3.5% median recorded by the IRS pay databank for the private sector over the same period.
- the overall spread of cost-of-living awards ranged from a 0% pay rise for general medical practitioners working under the general medical services contract, to the increase of around 4% received by employees at the bottom of the pay scale covered by this year's pay deal at the National Assembly for Wales; and
- the majority of basic pay deals range in value between 2% and 3.3%. The upper quartile - the point at or above which the highest 25% of pay deals are located - is 3.3%, while the lower quartile is 2.3%.
Looking forward to 2008?
The current climate surrounding pay negotiations does not bode well for future employment relations in public services, or for the 2008 pay round. The chancellor's October 2007 Pre-Budget Report and CSR makes clear that there will be no change to the government's 2% inflation target on pay for the sector.
It is not only the headline level of pay rises that is prompting concern; a number of awards have been staged this year to further offset the inflationary impact of increases, and the independent role of review bodies has been called into question. These are issues that will continue to plague pay negotiations into 2008.
NHS
Pay negotiations affecting some of the biggest groups of NHS workers have been drawn out and difficult this year. At the beginning of 2007, the Nursing and Other Health Professions Review Body (NOHPRB) - covering employee groups such as nurses, health visitors and ambulance staff - recommended a 2.5% staged increase: 1.5% increase on all pay points and high-cost areas allowances from April 2007, with the remaining 1% uplift payable from November 2007.
The same staged offer was made to the 500,000 staff not covered by the NOHPRB but on the same Agenda for Change (AfC) pay scales. Pay awards for these NHS employees - including cleaners, craftworkers, builders and many office staff - are negotiated through the NHS Pay Negotiating Council (PNC). NHS employers were keen to achieve a settlement across all employee groups covered by the AfC framework before applying the award. This original offer was rejected by the PNC, while the Royal College of Nursing (RCN) - the professional union covering 380,000 nurses and other healthcare workers - responded to the offer by holding its first ever "indicative" national ballot for industrial action.
At the beginning of August an improved pay deal was offered, providing more money for the lowest-paid non-medical staff. The 2.5% award would still be staged in England, with a £400 increase for those employees on pay points 1 to 7 of the AfC pay scale, and the equivalent of 1.5% payable from 1 April 2007. The remainder is payable from 1 November 2007. Staff on pay points 8 to 18 would receive 2.5% and a flat-rate payment of £38, with 1.5% payable from 1 April 2007 and the remainder from 1 November 2007. The revised offer was accepted, although "with great reluctance", by the RCN.
In July 2007, the NOHPRB's remit was extended; first, to cover those NHS staff not within its remit but who are paid under the AfC pay system and, second, to include staff working in Northern Ireland. It was renamed the NHS Pay Review Body.
Other key pay awards for NHS staff groups in the past year include:
- General medical practitioners - doctors working under the general medical services contract received a 0% pay increase from 1 April 2007, as recommended by the Doctors and Dentists Review Body (DDRB). The British Medical Association has submitted evidence to the DDRB in advance of the 2008 award stating that next year's pay increase should be in the region of 3.6% to 4.3%.
- Consultants and specialists - following the DDRB's recommendations, hospital consultants, staff and associate specialists, non-consultant career grades and salaried dentists received a £1,000 flat-rate pay increase. To meet the chancellor's pay limit, pay rises exceeding 1.5% were staged, with 1.5% payable from 1 April and the remainder payable from 1 November.
- General dental practitioners - the DDRB recommended a 3% increase to be applied to the gross earnings base of general dental practitioners from 1 April 2007.
- Salaried primary dental care services (SPDCS) - following the DDRB's recommendation, staff working for the SPDCS received a £1,000 flat-rate pay rise from 1 April 2007, also paid in two stages.
- Doctors and dentists in training - the DDRB recommended that doctors and dentists in training receive a £650 flat-rate increase, with the equivalent of 1.5% paid from 1 April 2007 and any remainder paid from 1 November 2007.
- Chief executives and directors - "very senior managers" in the NHS are not covered by a pay review body; rather, their annual pay rise is recommended directly by the government. Chief executives, directors and other board-level managers received a 1.3% increase on basic pay from 1 April 2007.
Local government
The unions rejected the initial 2% pay offer made by the employers' side of the national joint council (NJC) for local government workers in England, Wales and Northern Ireland, in March 2007. An improved pay award for the 1.4 million employees covered by the NJC was made on 24 August. The revised deal - a rise of 2.475% on spinal column points 5 and above and a 3.4% increase on point 4 to take it to £6 an hour - was also rejected by Unison, although accepted by the GMB and Unite.
A narrow majority of Unison members subsequently voted in favour of industrial action but, at the end of October, the trade union side considered that the narrowness of the majority and the size of the poll "do not constitute the basis for viable industrial action to break the government's pay policy". The improved pay deal is therefore payable from 1 April 2007 (see table 1 for a summary of key local authority deals).
Slow progress on single status
The 2006/07 pay deal marked the end of a three-year deal that included the requirement for all local authorities to have completed and implemented equal pay reviews by 31 March 2007 (see our case study on pay equality at Devon County Council). Progress on meeting the single-status deadline has been sluggish, with just under half of local councils undertaking the necessary job evaluation and introducing "equality-proofed" pay structures by the target date. Equal pay disputes have broken out at a number of local authorities, with "no-win, no-fee" lawyers further complicating local negotiations.
Meanwhile, there has been a steady increase in equal pay tribunal claims. An important EAT ruling in the GMB v Allen case in July 2007 has implications for all further local negotiations on single status. The GMB union had appealed against an employment tribunal decision that it was guilty of indirect sex discrimination and victimisation against female members at Middlesbrough Metropolitan Borough Council. If the GMB's appeal had failed, it would have meant that trade unions would not have been able to negotiate on pay protection and back pay without risking legal proceedings from local government workers who felt they were missing out.
Paving the way for new pensions
Introduction of the new Local Government Pension Scheme (LGPS) in April 2008 has finally been agreed by local government trade unions, following years of intense negotiations and industrial relations conflict. The LGPS covers 3.5 million public sector workers in England and Wales and will phase out the "85-year rule". This allows some members to retire at the age of 60 on an unreduced pension, providing their age and service add up to 85 or more. Although additional protection from phasing out the 85-year rule has been conceded by the government, this aspect of the new scheme still represents "unfinished business", according to Unison.
Opted-out councils
Local authorities that have opted out of the main national pay agreement awarded a slightly higher median basic pay settlement than those authorities that are covered by the NJC settlement (see table 2). The median increase of the 28 pay deals collected by IRS was 3% and the awards ranged from 2% to 3.86%. Of the 26 councils for which we have the previous year's details, 42% (11 councils) awarded higher settlements, 35% (nine councils) awarded a lower settlement and 23% (six councils) paid the same.
Fire service
Around 58,000 firefighters received a 2.4% pay increase effective from 1 July 2007. This brings the basic annual salary of a trainee firefighter to £20,396 and that of a competent firefighter to £27,185. The award is determined by the National Joint Council for Local Authority Fire and Rescue Services according to a formula set out in the 2003 "Fire service pay and conditions agreement". The formula requires all pay rates to be adjusted in line with the movement in the average pay for the associate and technical classification in the Annual Survey of Hours and Earnings.
Police
The 2007 pay round for key police groups has been particularly problematic. Negotiations about the annual pay increase for 170,000 police officers were referred to the Police Arbitration Tribunal for the second year running. The 2007 offer of 2.325% was turned down by the staff side of the Police Negotiating Board, the body responsible for determining pay increases for police constables, sergeants, inspectors and chief inspectors. A counterclaim for a 3.94% rise for all ranks was submitted by the staff side in July 2007.
Since 1979, the annual pay rise for the police force has been index-linked to the annual uprating of non-manual pay settlements in the private sector, but this year's pay offer was based on a new formula involving a dozen public sector pay deals. The tribunal’s binding decision for a 2.5% pay award from 1 September 2007 was announced on 29 November, but this was swiftly followed by the news that the government intended to pay the 2.5% from 1 December 2007 for nine months rather than backdate the increase to the September anniversary date, reducing its value to 1.9% on an annualised basis. At time of writing, the government has signalled its intention to stand by this decision, with Brown arguing (on the 10 Downing Street website) that it would not make sense to make higher pay rises that would then be "wiped out" by higher inflation.
Meanwhile, a 2.5% pay offer to 50,000 police support staff in England and Wales has been rejected. In addition, more than 9,000 police support staff working for the Metropolitan Police were balloted in November by the PCS on whether or not to accept a 2.25% pay offer, effective from 1 August 2007. The offer was overwhelmingly rejected.
Central government departments
Several central government departments, including the Department for Business, Enterprise and Regulatory Reform (DBERR), the Highways Agency and the Driving Standards Agency have yet to settle for 2007. This slow progress on pay settlements reflects the 2% maximum pay increase outlined in the Treasury's "Civil service pay guidance" for 2007-08. (See table 3 for a summary of example pay deals.) The overwhelming majority of those deals that have been settled comprise performance- and progression-related increases, with many imposed following rejection by members of the PCS.
Negotiations concerning the 2007/08 pay award for more than 100,000 staff at the Department for Work and Pensions have been particularly tense. The employer side's staged three-year pay offer was rejected in the summer. On 9 November, the PCS announced it was sending ballot papers for strike action out to its 80,000 members over the threatened imposition of the award, with an affirmative vote leading to a 48-hour strike on 6 and 7 December 2007.
Probation service
April 2007 saw the application of the final year of a three-year pay deal for probation staff that implements the new national negotiating council pay and grading structure. Those employees below the development point of their pay band moved three increments up the pay scale; those at the development point moved up two increments; and those between the development point and the maximum moved up one increment. Revalorised pay bands were also implemented and underpinning payments were made "where appropriate". For example, all full-time employees who received a 2007/08 salary increase less than £700 were awarded a £700 "make-up" payment.
Prison service
Discontent among prison officers over the staging of the pay award recommended by the Prison Service Pay Review Body - comprising 1.5% from 1 April 2007 and a further 1% from 1 November 2007 - came to the fore in August. The Prison Officers' Association (POA) took strike action that was deemed to be in breach of a collective no-strike agreement by the courts. The action ended when the POA agreed to talks with the Ministry of Justice over pay. As well as raising an interesting debate about the issue of no-strike agreements in the public sector, the dispute has also put the spotlight on the role of the recently established independent review body for prison officers.
Schoolteachers' pay
Schoolteachers in England and Wales were awarded a 2.5% increase to all pay scales from September 2007 in the final stage of a two-year deal following the School Teachers' Review Body's (STRB) recommendations in 2005 (see table 4).
The STRB's 2005 proposals included an inflation "reopener" clause. This means that, if the average rate of headline inflation drops below 1.75% or rises above 3.25% in the 12 months preceding April 2007 or April 2008, any of the consultees can ask the STRB to consider the case for seeking a remit from the secretary of state to review teachers' pay. In view of increasing inflation, in spring 2007 the STRB asked the government to activate this pay mechanism trigger and review schoolteachers' pay.
Despite inflation averaging 3.75% over the 12 months to April 2007, the then education secretary Alan Johnson rejected the STRB's request. Instead, he suggested that the review body should "consider these concerns alongside other evidence about retention and recruitment and the impact on budgets when making recommendations for the next pay award", due from September 2008.
Around 63,000 schoolteachers in Scotland received a 2.25% pay rise in the final year of a four-year deal. In their case, a reopening clause was triggered because the average annual rate of increase in the consumer prices index for the 2006 calendar year was higher than 2.25%. The Scottish Negotiating Committee for Teachers has yet to agree a supplementary increase to be paid.
Higher education
In contrast to the high-profile industrial action staged by the Association of University Teachers and the National Association of Teachers in Further and Higher Education in early 2006, 2007 saw a smooth annual pay round in the sector. This year involved the application of the second year of the three-year deal agreed between the Universities and Colleges Employers Association and the representative unions at the Joint Negotiating Committee for Higher Education Staff.
From 1 August 2007, lecturers and support staff in higher education were due a 3% salary increase. Year three of the deal comprises two stages: 3% or £420 (whichever is the greater) from May 2008 and 2.5% (or the September retail prices index if this is greater) from October 2008.
According to the University and College Union (UCU), approximately four-fifths of establishments have now implemented the 2004 national framework agreement, with the remainder expecting to achieve implementation by early 2008. The pay modernisation agreement requires institutions to assimilate employees to a new single pay spine based on equal value principles.
Further education
The 2007 staged pay offer of 2% on all salaries and allowances from 1 August 2007 and a further 1% from 1 February 2008 has been rejected by the UCU, although the Association of Teachers and Lecturers concluded that "this was the best deal that could be achieved by negotiation". The UCU threw out the 2007-08 pay offer from the Association of Colleges at a special conference held on 6 October 2007, on the basis that the offer represented a pay cut, and agreed to ballot its further education members on industrial action.
In 2006, the pay award for further education institutions in England saw lecturers and support staff get a 2% basic pay rise from August, with a further 1% increase from 1 February 2007 - the same deal that has been turned down this year.
This article was written by Rachel Suff, a freelance employment researcher and writer.
Table 1: Local government pay settlements, 2007 |
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Bargaining group (nos. covered) |
Latest settlement |
Previous settlement |
Corporation of London - all (3,500) |
2.5% increase to basic pay and London weighting from 1.7.07. |
2.8% across-the-board increase on basic pay and London allowances from 1.7.06. |
Local authorities, England and Wales - chief executives (407) |
2.475% basic increase from 1.4.07. |
Third part of a three-year deal awarded 2.95% from 1.4.06. |
Local authorities, England and Wales - chief officers (7,187) |
2.475% increase from 1.4.07. |
2.95% from 1.4.06 in third year of three-year deal. |
Local authorities, England and Wales - chief, deputy and assistant fire officers (191) |
Second year of two-year pay deal payable from 1.1.07 gave 2.3% increase comprising 2% basic rise and 0.3% in recognition of revised conditions of service. |
First year of two-year deal from 1.1.06 paid 2.5% increase plus an additional 1.2% in recognition of revised conditions of service. |
Local authorities, England and Wales - services employees (1,400,000) |
2.475% basic increase plus additional increase for lowest-paid bringing minimum to £6 an hour, from 1.4.07. |
2.95% basic increase from 1.4.06 (third year of three-year deal). |
Local authorities, England and Wales - Workshops for the Blind (560) |
2.475% basic increase from 1.4.07. |
2.95% across-the-board increase from 1.4.06. |
Local authorities, Scotland - chief officers and chief executives (1,064) |
2.5% in second year of two-year award, from 1.4.07. |
2.5% from 1.4.06 in first year of two-year deal. |
Local authorities, Scotland - manual and white-collar employees (220,000) |
2.5% basic rise in second year of two-year deal, from 1.4.07. |
2.5% from 1.4.06 in the first year of two-year settlement. |
Local authority fire and rescue services - firefighters (58,000) |
2.4% increase from 1.7.07. |
2.7% basic increase from 1.7.06. |
Police support staff, Scotland (8,000) |
2.45% from 1.9.07. |
2.25% from 1.9.06 in second part of two-year deal. |
Table 2: Pay awards at opted-out local authorities, 2007 |
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JANUARY 2007 |
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Bargaining group (nos. covered) |
Latest settlement (basic % increase) |
Previous settlement (basic % increase) |
Tandridge District Council - all (350) |
3.3% |
3.25% in second year of two-year deal. |
Waverley Borough Council - white-collar staff (500) |
3.7% |
3.0% |
APRIL |
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Bargaining group (nos. covered) |
Latest settlement (basic % increase) |
Previous settlement (basic % increase) |
Aylesbury Vale District Council - all (609) |
3.0% |
3% basic increase, plus additional increases from 0.66% to 2.81% depending on grade. |
Buckinghamshire County Council - all white-collar employees (9,200) |
2.5% |
3% in second year of two-year deal. |
Dartford Borough Council - all (450) |
3.0% |
3.0% |
East Hampshire District Council - white-collar staff (320) |
3.0% |
2.8% |
Hertsmere Borough Council - all (350) |
3.0% |
3.0% |
Huntingdonshire District Council - white-collar staff (1,400) |
3.0% |
3.0% |
Kent County Council - white-collar and some manual staff (15,000) |
2.0% |
2.83% |
Maidstone Borough Council - all (650) |
2.5% |
2.2% basic increase. Single status implemented with 4% total paybill cost. |
Mid Bedfordshire District Council - all (320) |
3.0% |
0.5% |
Reigate and Banstead Borough Council - manual, professional and clerical staff (600) |
2.7% |
2.3% |
Shepway District Council - all (465) |
2.5% |
3.4% |
South Buckinghamshire District Council - white-collar staff (160) |
2.0% |
2.95% |
South Oxfordshire District Council - white-collar staff (270) |
3.4% |
2.8% |
Surrey County Council - all (12,000) |
2.0% |
2.0% |
Surrey Heath Borough Council - all (283) |
3.13% |
2.17% |
Thanet District Council - all (560) |
3.86% |
3.25% |
Tonbridge and Malling Borough Council - all (400) |
3.0% |
2.95% |
Wealdon District Council - all (550) |
2.5% |
3.0% |
Woking Borough Council - all (650) |
3.0% |
3.5% |
JULY |
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Bargaining group (nos. covered) |
Latest settlement (basic % increase) |
Previous settlement (basic % increase) |
Ashford Borough Council - all (550) |
2.9% |
2.65% |
Babergh District Council - staff on local pay arrangements (300) |
3.2% |
3.0% |
Dover District Council - all (467) |
2.5% |
3.0% |
Runnymede Borough Council - all (500) |
2.8% |
3.0% |
Table 3: Central government pay settlements 2007 - examples |
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Bargaining group (nos. covered) |
Latest settlement |
Previous settlement |
Armed Forces Review Body - armed forces (190,000) |
A 3.3% increase in basic pay for the majority of services personnel covered by the pay review body from 1 April 2007. Personnel on pay level 1 receive 9.2% and those on pay level 2 receive 6.2%. |
3.3% for privates, lance corporals and equivalent ranks; 3% pay rise for all other ranks and commissioned officers, from 1.4.06. |
Department of Culture, Media and Sport - all except senior civil service (480) |
Award worth 3.7% of paybill from 1.8.07. |
Settlement worth 4% from 1.8.06, 3.83% to fund increases in consolidated pay and improvements to conditions of service, with 0.17% to fund bonus payments in 2006/07. |
Department for the Environment, Food and Rural Affairs - all except senior civil service (7,300) |
Award worth 2.9% of paybill from 1.7.07. All satisfactory performers move up two points on the pay scale, giving increases worth between 2.64% and 4.61%. Those employees at maximum receive 2.64% unconsolidated payment. |
Performance-based increases gave payments of up to 2.75% or £500, whichever is the greater, from 1.7.06. |
Environment Agency - staff (11,400) |
Performance-based award giving average 3.99% increase in salary from 1.7.07. Includes a 2% increase to salary "entry zone" minima and maxima and grade maxima. Most staff receive progression increases, with increases above grade maximum non-consolidated. Most allowances increased by 1%, with emergency response standby rates increased by 10% and callout rates by 5%. |
Performance-based awards of up to 4.4% from 1.7.06. All allowances increased by 2%. |
Foreign and Commonwealth Office - all except senior civil service (5,980) |
3.62% average earnings growth in final year of three-year deal, from 1.4.07. |
4.06% earnings growth from 1.4.06. |
HM Revenue & Customs - all except senior civil service (102,000) |
3.1% average earnings increase from 1.6.07 in final year of three-year deal. |
5.35% average earnings increase in second year of three-year deal. |
Ministry of Defence - all non-industrial staff except senior civil service (50,000) |
Award worth 3.5% of paybill pays average 2.5% individual increases from 1.8.07 through pay progression in second year of two-year pay award. |
First year of two-year pay deal giving one step increase per year for staff worth 2.5% per year. |
National Assembly for Wales - all (6,500) |
New pay structure based on broad bands introduced in first year of three-year award from 1.4.07, which is worth 3.2% of paybill in each year. In year one, employees at the bottom of the pay scale receive a pay rise of around 4% as a result of moving to the new scale point. |
2.5% increase on all points in pay bands from 1.4.06, except target rate or maximum of each band, which is increased by 3.5%. |
Northern Ireland Civil Service - all except some agencies and senior civil service (25,000) |
Increase in earnings growth of 4% in second year of three-year deal from 1.8.07. |
Three-year pay deal with overall earnings growth worth 12% from 1.8.06. |
Prison service (England and Wales) - governors, managers, prison officers and support grades (32,431) |
Restructuring of pay spine to seven points from 1.4.07. Those not benefiting from restructuring receive a 2.5% basic increase. |
Basic increase of 1.6% underpinned by £425 from 1.4.06. New top and bottom rates of locality pay worth £4,250 and £250, respectively. |
United Kingdom Hydrographic Office - all (1,000) |
Basic 1.9% increase plus progression increases worth an additional 1% of paybill from 1.8.07. |
3% basic increase from 1.8.06. |
Table 4: Education pay settlements, 2007 |
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Bargaining group (nos. covered) |
Latest settlement |
Previous settlement |
Schoolteachers, England and Wales (521,000) |
2.5% increase to salary levels and teaching and learning payments from 1.9.07. |
2.5% increase to salary levels and teaching and learning payments from 1.9.06. |
Schoolteachers, Scotland (63,000) |
2.25% in final year of four-year deal from 1.4.07. |
2% basic increase from 1.4.06 in third year of pay settlement. |
Sixth-form colleges - support staff (7,000) |
2.5% basic increase from 1.9.07 plus an additional increase to lowest pay spine point (8), bringing it to £6 an hour or £11,577 a year. Support staff standards payment (SSSP) unchanged at £300. |
2.5% increase to all spine points from 1.9.06. Staff with satisfactory appraisal can apply for SSSP of £300. |
Sixth-form colleges - teachers (8,856) |
2.5% increase from 1.9.07. |
2.5% on all points on the main pay scale from 1.9.06. |
Universities (Joint Negotiating Committee for Higher Education Staff) - lecturers and support staff (250,000) |
3% basic increase from 1.8.07 in second year of three-year pay award, plus a further increase of 3% or £420 from 1.5.08. |
Three-year award worth 13.1% in compound increases. Greater of 3% or £515 from 1.8.06 and 1% from 1.2.07 in first year of deal. |
