Freeze Public Sector Pay Until 2015: Recommendation From Policy Exchange Think Tank

The looming Emergency Budget on the 22nd seems to have got the think-tanks and lobbying groups busy firing out press releases and reports. Yesterday, "centre-right" think-tank, Policy Exchange, published a 104-page report, Controlling Public Spending recommending a 4-year pay freeze for public sector workers - though the recommendation is actually a 'hybrid approach', meaning that the total spend is frozen, but there is an expectation that some of the savings would be made through redundancies or not replacing retiring staff.

Policy Exchange, previously been described by Chancellor George Osborne as a "wellspring of new ideas...", say their proposal would save £26 billion overall.

The report, which seems to be largely based on ONS data, notes that jobs in the public sector are paid more than their equivalents in the private sector (except at the very top end, where the private sector races ahead). They also note how different the sectors are, and how difficult it is fairly compare them. Public sector workers are said to have more time in the job and more qualifications.

The report goes into some detail, but there is little mention of the effect of Single Status on council worker pay, despite its impact. Nonetheless, the report notes some of its effects - for example, that the lowest paid received above-average increases, though there is no particular acknowledgement of the pay reductions that the middle-paid tended to receive in return, nor much illumination of the 'flattening' effect on the spread of wages in the average-to-low section.

The report makes a valid point that paying the same wage for the same job across the country (apart from London) is essentially unfair, as cost of living varies widely. Sadly it describes this in terms of workers in low cost-of-living areas being paid a 'premium', rather than high cost-of-living workers being underpaid. It describes the process by which public sector pay bargaining operates, and while its descriptions and conclusions may be accurate for some areas of the public sector, the description of council pay being set by national pay bargaining seems over-emphasised, considering the effects of Single Status job evaluation and councils' freedom to apply 'market forces' pay supplements to retain staff. Whether this variation has led to a fair wage range based on local cost-of-living is another matter.

The report observes that within the public sector, 97% of the employment headcount increase has been within education and the NHS. Under the heading of 'Longer term reforms', it suggests that national pay bargaining ought to be phased out and that the cost of redundancies should be reduced. It notes that of the £67 billion increase in the payroll bill between 2002 and 2009, £14 billion of it was due to "the growth of management".

Dave Prentis, General Secretary of UNISON, described the report as "misleading and meaningless".

The report does make some valid and interesting observations and is worth a read for the analysis and graphing of ONS data and various insights, but it does seem to have a touch of anti-public-sector bias and perhaps a lack of direct experience of council work.


How Council Pay Works