George Osborne. Photo: Peter Macdiarmid
Public sector workers in the firing line (again)
George Osborne has certainly got his work cut out with the Spending Review next week.
On the one hand, the Chancellor has pledged to find a further £20bn of departmental cuts in order to meet his spending targets. On the other, he has a fresh commitment to find £4bn for cyber-security and military spending in the wake of the Paris attacks and is faced with financial meltdown in the NHS, the police warning of threats to public safety, adult social care in crisis and a £4bn hole in his welfare spending plans in the wake of the defeat on tax credit cuts. All this in the context of public borrowing still over £50 billion or four times higher than originally planned in 2010.
Commitments to ‘protect’ spending on education, health, defence and international aid means that there are some very rough times ahead for the rest.
With the Chancellor searching for easier targets, public sector workers can expect themselves to be once again in the firing line.
In its uniquely charming way, the Daily Mail this week spelled out what some of this might look like:
The crackdown on public sector pay, which comes ahead of what are expected to be deep cuts in the Chancellor’s spending review next week, could include:
- A cap on pay-offs for public sector bosses;
- A review of sickness pay entitlement;
- A 10 per cent cut in agency staff spending;
- Changes to ‘progression’ payments that give guaranteed pay rises;
- Cuts in the pension entitlements of staff who take early retirement.
Individual Cabinet ministers will be asked to produce proposals on how they can make the savings – with lavish pay-offs for fat cat bosses a particular target.
The government is already legislating to impose a £95k cap on ‘exit payments’ for public sector workers through clauses tacked on to the Enterprise Bill currently making its way through parliament. The cap will include redundancy payments but also a whole range of other costs too, including early access to unreduced pensions – the kinds of remedies that employers like to use when managing the large scale restructuring and job losses currently being seen in the public sector.
An important point to note is that when the full range of payments are included, the cap will impact on workers with long service who earn less than £30k a year – not quite the “fat cats” that Mail would have you believe. This is a penalty for long service, not high pay.
The fact that large parts of the public sector, including the civil service and NHS, have existing caps as part of agreements negotiated with employers and Tory ministers in the last government seems to be neither here nor there. And now the government looks set to clamp down still further.
It is very worrying that the government is signalling its intent to go after early access to pensions, when in some parts of the public sector such as local government, this formed part of the pensions settlement that unions agreed with the last government, a deal supposed to be guaranteed for twenty five years.
It looks like the government will also be going all out to remove pay progression in the remaining parts of the public sector where it still exists, replacing it with individual performance related pay schemes that are increasingly out of favour in a private sector that is supposed to be setting the trend. We have long argued that in vast and complex organisations like the NHS, pay progression is the most efficient, transparent and fair way of recognising the additional skills and experience that staff acquire as they progress in their careers.
Now it seems, leading private sector thinkers are of the same mind. Writing in the Harvard Business Review in April this year, senior executives from Deloitte said that 58 per cent of the managers they surveyed believed that their current performance management approach “drives neither employee engagement nor high performance”. But as a neat way of ensuring that a fixed percentage of your staff don’t get a wage rise this year, the Treasury are more than eager to push it through with the Daily Mail cheering on from the sidelines of course.
Gunning for sickness absence also plays to popular stereotypes, despite the fact that evidence points to public sector workers taking less short term sickness absence than colleagues in the private sector. Of course, what you do find is that public sector employers tend to have better arrangements for staff with long-term conditions, many of which derive from the high risk and stressful occupations that you find in the public services. If real savings are to be found here, it will be at the expense of health and emergency service workers in very difficult circumstances.
With the Chancellor yet again attempting to balance the books on the back of public sector workers pay and conditions, we’re looking at yet another grim attack on those of us that are, in the government’s words, “doing a a great job running services that everybody relies upon”.
One thing the Daily Mail did get right, unions will “fiercely resist” this.