Public sector pay review bodies 2010: senior salaries, doctors and dentists

Author: Rachel Sharp

The expected freeze on the basic pay of senior staff was confirmed with the publication of the public sector pay review body reports on 10 March 2010. While the Government accepted many of the recommendations, some targeted increases were rejected and other awards were reduced.

Key points

A significant proportion of public sector workers have their pay set by six independent public sector pay review bodies, which - together with the School Support Staff Negotiating Body and the two police boards - cover groups with a paybill in excess of £56 billion.

The review bodies make recommendations on pay which are then accepted or rejected by the Government. In relation to the pay increases for 2010, however, the review body process was undermined when the Government announced in October 2009 that it intended to freeze the pay of senior public sector workers (on the Office of Manpower Economics website), and proposed awards of up to 1% for other groups not in multi-year deals. It said that it favoured maintaining existing multi-year pay awards.

The independence of the pay review body process in future years is even more uncertain, as the Government confirmed in the Budget 2010 its intention to cap basic pay awards across the public sector at 1% in 2011/12 and 2012/13, while the Conservative Party has proposed a pay freeze for all public sector workers in 2011 except those earning less than £18,000 a year.

Several significant groups of public sector workers had agreed to three-year pay deals in 2008, including those covered by the NHS Pay Review Body. The review body confirmed the increases for the final stage of this award in December 2009, and the new Agenda for Change pay bands from 1 April 2010 are available on the NHS Employers website. Schoolteachers in England and Wales and police officers are also covered by long-term deals for 2010. This left those groups covered by the Review Body on Senior Salaries (SSRB), the Review Body on Doctors' and Dentists' Remuneration (DDRB), the Prison Service Pay Review Body (PSPRB) and the Armed Forces' Pay Review Body (AFPRB), whose reports were published on 10 March 2010.

In this article, we look at the increases for those groups covered by the SSRB and the DDRB, as well as the pay increases for MPs and ministers. The awards for these groups are summarised in table 1.

Table 1: Summary of pay review body awards covered in this feature

Employee group (nos. covered)	2010 pay award	Previous increase
MPs (646)	1.5% pay increase from 1 April 2010.	2.33% pay increase from 1 April 2009.
Review Body on Doctors' and Dentists' Remuneration - NHS doctors and dentists (194,000)	From 1 April 2010, consultants will not receive a pay award. The pay for salaried doctors and dentists in England below this level will increase by 1%. In Scotland and Wales, foundation house officers and their equivalents will receive a higher award of 1.5% as recommended by the review body. Payments to independent contractor general dental practitioners (GDPs) and general medical practitioners (GMPs) will be increased by amounts designed to give a nil increase in net income for each group assuming efficiency savings of 1% of operating costs.	From 1 April 2009, the pay of salaried groups increased by 1.5%. Payments to independent contractor GDPs and GMPs were increased by amounts designed to give an increase in net income of 1.5% for each group.
Review Body on Senior Salaries - judiciary (2,151)	No change to salaries from 1 April 2010.	1.5% increase to judicial salaries from 1 April 2009.
Review Body on Senior Salaries - senior civil service (4,271)	No increase to base pay from 1 April 2010. The bonus pot remains at 8.6% of paybill.	From 1 April 2009, the minimum and maximum of each pay band increased by 1.5%. Base pay increased by 2.3% on average (made up of 1.5% new money and 0.8% recyclables). The bonus pot remained at 8.6% of paybill.
Review Body on Senior Salaries - senior military (136)	The three-year pay scale restructuring programme is completed with no further revalorisation, and the bottom step of the two-star pay scale is removed to achieve a pay increase of at least 10% on promotion to two-star.	2.8% increase to base pay. X-factor for two- and three-star officers at 25% of the value at the top of the OF4 scale from 1 April 2009 rather than being phased in.
Review Body on Senior Salaries - very senior managers in the NHS (1,120)	No increase to base pay from 1 April 2010. Bonus pot remains at 5% of paybill.	From 1 April 2009, 1.5% increase in performance-related base pay. Bonus pot remained at 5% of paybill.

Review Body on Senior Salaries

The SSRB's remit covers four groups: the senior civil service, senior military officers, the judiciary and "very senior managers" in the NHS.

In the introduction to its 2010 report, the review body noted that, other than for the senior military, the Government had not followed its recommendations for pay in 2009. It said this decision was disappointing, and it felt these groups had been "singled out for worse treatment than other public sector workers". Pointing out that the public sector needs to offer sufficient pay to recruit, retain and motivate people of high calibre for these senior posts, the review body expressed the concern that its remit groups felt that their loyalty and goodwill were being taken for granted by the Government.

One example it highlighted was the three-year pay deal for the senior civil service that the Government had proposed. The Government evidence to the review body for 2010 said that this deal, due to run from 2008 to 2011, was "not the same as the multi-year pay deals agreed for other remit groups". The Government had not accepted the review body's recommendations for the 2009/10 stage of the award, and for 2010 it proposed that there should be no increase in the paybill per head metric used in the agreement.

The unions involved, the FDA and Prospect, expressed their concern about the Government imposing a pay freeze on the senior civil service for 2010, saying that not only was the Government reneging on the three-year pay settlement, but the decision "effectively signals that any commitment to pay reform is to all intent and purpose dead".

The review body said that, while it accepted the need for public sector pay restraint, it was not convinced by the explanation for why this deal should not be honoured and believed the Government's approach was inconsistent.

It also dismissed the argument that senior staff should show leadership on pay restraint, saying that it had seen no evidence that the settlements for its small remit groups affected behaviour in the wider economy, especially given that more junior staff covered by other review body groups were receiving increases.

However, the SSRB said that the public sector could not be immune from the "stark reality" of the economic background, and concluded that there was no justification for a general increase for any of its remit groups at a time of unprecedented economic difficulty and pressure on public finances.

Senior civil service

The SSRB's remit covers all 4,271 members of the senior civil service. They are divided into three main pay bands (1, 2 and 3) below the level of permanent secretary, with an additional band (1A) used by a few departments. The 36 permanent secretaries have a separate band.

Members of the senior civil service are usually eligible for a performance-related increase in basic pay. In addition, 8.6% of the paybill is put aside to fund non-consolidated payments to reward performance against in-year objectives.

Three-year senior civil service agreement scrapped

As outlined above, the Government's evidence to the SSRB proposed that honouring the final year of the three-year deal for the senior civil service would be "inappropriate, in the current economic climate" and emphasised that senior staff had a responsibility to demonstrate leadership on pay restraint. The Government also informed the review body that departments would be instructed to use recyclable savings, which are estimated to be worth 1% of paybill, to address pay anomalies in the senior civil service and asked it to endorse this approach. Recyclable savings, which arise when employees who leave are replaced by staff on lower salaries, had originally been part of the three-year pay award.

While the SSRB recommended no general increase to the base pay for the senior civil service, it proposed an uplift to £61,500 (around 5%) to the minimum of the lowest pay band (band 1) to start to address the problem of the overlap between the pay for this band and that for the highest grade outside the senior civil service (grade 6). The review body also recommended that the budget for non-consolidated payments should remain at 8.6% of paybill. On the question of using the recyclable savings to address pay anomalies, the review body asked the Government to reconsider its approach to recyclables in the senior civil service pay system, as well as producing a report on how departments have identified and addressed pay anomalies.

Government response to senior civil service recommendations

Prime Minister Gordon Brown said that the Government had decided to accept some, but not all, of the recommendations of the review body. The proposals not to increase base pay, or the level of the non-consolidated performance pay pot, were accepted. However, the recommendation to increase the minimum of pay band 1 was not accepted. The pay ranges therefore remain at their 2009 levels.

Jonathan Baume, general secretary of the FDA, criticised the decision not to accept the proposal to increase the minimum of band 1, but welcomed the decision to honour performance-related pay.

Senior officers in the armed forces

The SSRB's remit group consists of 136 officers at two-star level and above.

In 2008, the SSRB recommended a three-year programme to restructure the senior military pay scales. This was designed to ensure that one-star officers receive at least a 10% increase to base pay on promotion to two-star, and also required the scales for three- and four-star officers to be restructured. The review body set out the proposed scales for each of the three years, to be revalorised in 2009 and 2010 in line with its recommended awards in those years. In 2009, the Government accepted the recommendation to increase military pay by 2.8% in line with the uplift proposed for lower ranks by the AFPRB. The AFPRB has recommended, and the Government accepted, an increase of 2% for the main armed forces group from 1 April 2010.

The SSRB emphasised that it was essential for retention of suitable officers that the overall remuneration package for senior officers was maintained, and felt that its pay scale restructuring programme should be completed. Although it did not believe a general pay increase was necessary, or justified, it recommended one further change; removal of the lowest step of the two-star pay scale. This would ensure the increase on promotion would be 10%, taking into account the 2% increase received by the lower ranks.

The Government accepted the SSRB's recommendations, and table 2 shows the 2010 pay scales, adjusted to include the increase in the X-factor (an element of pay that recognises the disadvantage of conditions of service experienced by members of the armed forces compared with civilians) resulting from the AFPRB recommendations, which extends to the senior pay scales.

Table 2: Senior military officer pay scales, 1 April 2010

Pay scale point	Two-star officer, £pa1,2	Three-star officer, £pa1	Four-star officer, £pa	Chief of Defence Staff, £pa
6	119,214	152,642	185,184	-
5	116,924	148,265	181,553	-
4	114,678	144,016	177,993	252,698
3	112,476	138,569	173,652	247,743
2	110,317	132,084	169,416	242,885
1	108,201	125,908	165,284	238,123
1. Pay scales include X-factor at the rate of £2,383, equivalent to 25% of the cash value of the X-factor at the top of the OF4 pay scale. 2. The lowest step of the two-star pay scale has been removed. Source: SSRB.

Judiciary

The SSRB makes recommendations on the pay of all 2,151 salaried members of the judiciary. This group is unique among the SSRB's remit in that members of the judiciary are paid spot rates, with no incremental increase or performance-related element to their pay. The SSRB said that the evidence presented to it showed no significant problems in recruiting and retaining people of suitable quality to the judiciary. It acknowledged the concern expressed by the Lord Chief Justice and his colleagues about the Government's decision not to accept the recommended pay award for 2009, and noted the risk that the pay of judges would fall behind that of the other remit groups because of the absence of pay progression. However, in view of the background against which it was making its recommendations, the review body said it could not justify a pay increase for a group who were all paid more than £100,000 a year. It therefore recommended no uplift to salaries. The Government accepted the recommendation, so the salaries remain at their 2009 levels (see table 3).

The SSRB carries out a major review of the judicial salary structure every four or five years, and is in the process of conducting a review with a view to including the recommendations in the 2011 SSRB report.

Table 3: Judicial salaries, 1 April 2010

Group	Job examples	Salary, £pa
1	Lord Chief Justice	239,845
1.1	Lord Chief Justice of Northern Ireland; Lord President of the Court of Session; Master of the Rolls; President of the Supreme Court	214,165
2	Chancellor of the High Court; Deputy President of the Supreme Court; Justices of the Supreme Court; Lord Justice Clerk; President of the Family Division; President of the Queen's Bench Division	206,857
3	Inner House Judges of the Court of Session; Lords Justices of Appeal; Lords Justices of Appeal (Northern Ireland)	196,707
4	High Court Judges; Outer House Judges of the Court of Session; Puisne Judges (Northern Ireland)	172,753
5	Circuit Judges at the Central Criminal Court in London; President, Employment Tribunals (England and Wales); Senior Circuit Judges	138,548
6.1	Circuit Judges; Sheriffs; Regional Chairmen, Employment Tribunals (England and Wales)	128,296
6.2	Deputy Senior District Judge (Magistrates' Courts)	120,785
7	Employment Judges; District Judges; Immigration Judges	102,921
Source: Ministry of Justice.

Very senior managers in the NHS

"Very senior managers" (VSMs) in the NHS were brought within the SSRB's remit in July 2007. This group consists of around 1,120 chief executives, executive directors and senior managers with board-level responsibility who report to chief executives in Strategic Health Authorities, Special Health Authorities providing a national service to the whole of England, primary care trusts and ambulance trusts. It does not cover senior managers in other NHS organisations in England, or those in NHS organisations in Scotland, Wales and Northern Ireland. About 10% of VSMs are not covered by the framework that governs pay for this group, as they are on pre-framework contracts.

The pay for VSMs depends on their organisation's banding, which is determined by weighting factors. Annual increases in base pay and non-consolidated bonuses depend on performance. The pot available for performance bonuses is set at 5% of paybill.

The review body noted some concerns about the pay framework, particularly in relation to organisations in low bands and the overlap between the VSM pay framework and the top two pay bands on the Agenda for Change (AfC) pay structure in the NHS, which includes staff reporting to the VSMs. It believed that many of these issues would be addressed when job evaluation for VSMs was carried out, but expressed disappointment at the timescale for doing this (in March, the NHS Chief Executive said that April 2011 would be the ideal implementation date). In the meantime, it made what it called "holding" recommendations for this group.

The review body recommended no increase to the size of the bonus pot. In relation to base pay, it said that the salary overlap between VSMs and staff on AfC should be eliminated over time. As the AfC pay scales will be increased by 2.25% from 1 April 2010 in the final stage of the three-year pay award agreed for this group, the SSRB recommended that VSMs on annual salaries below £80,000 should receive the same increase in base pay. To avoid anomalies that this might cause, it recommended that VSMs on salaries between £80,000 and £81,799 should have their pay uplifted to £81,800. It recommended no increase for those on salaries of £81,800 or more.

In his response to the report, the Prime Minister said that the Government accepted the recommendations on the size of the bonus pot and that those on salaries of £81,800 or more should see no increase. However, it rejected the recommendations for uplifts for those on lower salaries, and the pay bands remain at 2009 levels (see table 4).

Table 4: Pay ranges for chief executives in the NHS, 1 April 2010

Pay band	Primary care trust, £pa	Ambulance trust, £pa	Strategic health authority, £pa	Special health authority, salary range, £pa
1	105,315	112,764	161,091	Group 3: 99,829-141,861
2	116,401	121,355	171,831	Group 2: 141,861-162,878
3	127,486	128,873	182,570	Group 1: 162,878-183,894
4	138,571	-	-	-
5	149,657	-	-	-
London	-	150,351	204,048	-
Source: SSRB.

Parliamentary pay

The pay award for ministers is linked by legislation to the pay rises received by the senior civil service. As a result of the Government's decision on senior civil service pay, ministerial pay will not increase from 1 April 2010. In the statement on the SSRB report, the Prime Minister said that paid ministers would also waive the increase to which they are entitled as an MP.

The pay rise for members of Parliament is determined separately by the SSRB, and is set at the median of the increases for 2009 received by 15 groups of public sector workers including the senior military, the judiciary, prison service staff and police officers as well as several government departments. On 26 February, the chairman of the SSRB wrote to the Speaker of the House of Commons to inform him that the increase for MPs from 1 April 2010 would be 1.5% (external website).

Review Body on Doctors' and Dentists' Remuneration

The Review Body on Doctors' and Dentists' Remuneration makes recommendations on the pay increases for around 194,000 doctors and dentists working for the NHS across the UK, including consultants, specialty doctors, doctors and dentists in training, general medical practitioners and general dental practitioners.

The DDRB said it had not been an easy pay round, and it was aware of the tension between the pressure on the NHS budget and the effect of uncertainty about the prospects for inflation on its remit group. While the review body accepted that it would be difficult to justify pay increases for highly paid staff, it was not persuaded that the Government's assertion that senior groups should show leadership in pay restraint was relevant to its remit groups.

The DDRB also found contradictions in the Government's approach to pay for 2010, in particular that the Government had not favoured reviewing the final year of the pay award for the majority of NHS staff on AfC contracts, some of whom are paid more than many of the DDRB's remit group.

The review body found no evidence of significant problems with recruitment and retention among its remit group. It noted that the health departments had emphasised the importance of getting value for money from the paybill, which makes up a large proportion of the NHS budget, and that pressures on finances were extreme. It took the view that affordability had to be considered alongside other matters such as recruitment, retention and motivation. As in previous reports, the review body reiterated its opinion that incremental increases should not be taken into account when setting the level of the annual pay award.

In their evidence to the pay review body, the health departments said that they saw no reason for the NHS to be exempt from a "realistic approach" to public sector pay. They proposed a differential uplift, with consultants and self-employed doctors and dentists receiving no uplift and an increase of up to 1% for other staff. The British Medical Association (BMA) wanted a basic earnings increase of 2%, and did not support a flat-rate increase or a differential increase. The British Dental Association requested an increase of 3.6%.

The review body noted the need for any uplift to be modest, and for resources to be targeted where they are most needed, in this case, at the more junior grades. It therefore recommended a differential uplift for three groups:

• foundation house officers (FHO) and their equivalents - an increase of 1.5% on the national salary scales. For FHO 1 posts that attract only basic pay, a banding multiplier set at 1.05 of basic salary;
• registrars, specialty doctors and associate specialists grades, salaried general medical practitioners (GMPs) and salaried dentists - an increase of 1% on the national rates; and
• consultants, independent contractor GMPs and general dental practitioners (GDPs) - no increase.

Independent contractor GMPs and GDPs are self-employed, so rather than simply making a recommendation on the increase to their pay as it does for salaried groups, the review body makes a recommendation on the increase to the value of their contracts designed to give the desired uplift in income, taking into account staff costs and other expenses.

For GMPs, it recommended an increase of 1.34% to the overall value of the General Medical Services contract, to be distributed across the various elements of the contract.

For GDPs, there are different systems in England and Wales, Scotland and Northern Ireland. The review body recommended an uplift of 1.44% to the gross earnings base in England and Wales, using a formula that provides for practice expenses and dentists' pay. It recommended that Scotland and Northern Ireland should adjust their fee scales to allow for changes in expenses, but if evidence to do this was not available, the increase of 1.44% recommended in England and Wales should be applied.

Government response to recommendations on doctors and dentists

In a written ministerial statement, Andy Burnham, secretary of state for health, said that the Government accepted most of the recommendations, but it did not accept that there was a case for FHOs to receive an award of 1.5%, reducing this to the same level as other doctors and dentists below consultant level, 1%. The new pay scales for England are available on the NHS Employers website. The Government also rejected the recommendations on the increases to the contracts for GMPs and GDPs, saying that an assumption that efficiency savings of 1% could be made should be included in the calculations. This reduced the uplift to 0.8% for GMPs and 0.9% for GDPs.

The Governments in Scotland and Wales announced that they would honour the recommendations for salaried doctors in full, but would reduce the uplifts for GMPs and GDPs in line with the decision in England. At the time of writing, the decision for Northern Ireland had yet to be made.

Union reaction

The British Medical Association (BMA) expressed disappointment that the Government had overruled some of the review body's recommendations, particularly the increase for junior doctors. Dr Hamish Meldrum, chairman of council at the BMA, said: "We are well aware of the financial climate in which this decision is being made, but the independent pay review body took these factors into account in coming to its recommendations.

"Many doctors have already undergone pay freezes or sub-inflation pay rises in recent years and this announcement will mean a pay freeze for the most highly experienced senior doctors. The Government has also scaled back the uplift that was essential to counter increases in GPs' expenses, which has resulted in another pay cut for family doctors," he said.

The chair of the British Dental Association (BDA) general dental practice committee, Dr John Milne, said that general dental practitioners would be disappointed with the award. He continued: "The decision to ignore the review body's recommendation that efficiency savings should only be considered retrospectively will be viewed with particular concern." This disappointment was echoed by those representing salaried dentists. Keith Altman, chair of the BDA's central committee for hospital dental staff, said the award would "do little for the morale of dedicated professionals working with very limited resources" and described the decision not to award the uplift to consultants as "lamentable".

New report on senior public sector pay

In December 2009, the Prime Minister asked the SSRB to lead a review into senior remuneration in the public sector, because of the Government's "serious concerns" about the high level of pay in some parts of the sector. The review body's interim report was published to coincide with the 2010 Budget on 24 March 2010.

The review body estimates that more than 25,000 people working in the public sector earn more than £100,000 a year, with "significant numbers" earning in excess of £150,000. A substantial proportion of the latter group are medical practitioners: in England alone, the report finds that in the region of 4,900 consultant medical staff have total NHS earnings above £150,000 a year. It estimates that at least 700 other staff in the public sector have earnings at this level, including around 200 senior members of the judiciary, some 120 local authority chief executives, and about 90 senior civil servants. It said that, in general, people paid at these levels in the public sector "are carrying out highly responsible jobs, often delivering vital public services ... But", the review body continued, "given the level of individual earnings and the total sum of money involved, the public is entitled to reassurance that pay at this level is fully justified and that it is being used to drive high levels of performance".

The SSRB identified the need for clear rules setting out standards and principles on senior pay. It included in the report a draft code of practice on top-level reward. The Budget 2010 report announced that the Government accepted the results of the SSRB's review, and will work with the review body to consult on detailed implementation of the code's provisions. All public sector organisations have been asked to explain how they will comply with the code by the end of the year.

The review body will now develop sector-specific pay benchmarks, starting with local authority chief executives and senior health sector managers.