Civil Service Pay — [Mark Pritchard in the Chair]

– in Westminster Hall at 11:28 am on 7 March 2023.

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[Mark Pritchard in the Chair]

Photo of Beth Winter Beth Winter Labour, Cynon Valley 2:30, 7 March 2023

I beg to move,

That this House
has considered the civil service pay remit and the future of pay negotiations.

It is a pleasure to serve under your chairship, Mr Pritchard, in this extremely important debate. This is my second Westminster Hall debate on public sector pay and the threat of industrial action as a result of the Government’s decisions in recent months. As we approach Budget day, I want to use the debate to drill down into one area of public sector pay: the civil service.

The civil service employs around half a million people across the UK, ranging from Whitehall mandarins to work coaches in the Department for Work and Pensions and prison officers in the Ministry of Justice. Those people carry out absolutely vital services, and I believe that the long-term trajectory of pay settlements in the civil service exposes the Government’s intentions and the Conservative approach more generally. The civil service pay remit is a political imposition by the Government on the incomes of hundreds of thousands of employees, and the effect of the past 13 years of civil service pay remit decisions has been to create a crisis in civil service pay. What we are witnessing is clearly an intentional and systematic downgrading of the remuneration of work in the civil service. Without doubt, it is part of a Conservative agenda to shrink the state, shrink the share of the economy allocated to public spending, and shrink the share of the economy that rewards labour costs.

The UK civil service has had the lowest pay increases in the public sector since the election of the coalition Government. Analysis of the reduction in civil service pay suggests that salaries have fallen by between 12% and a staggering 23% in real terms at each grade of the civil service since 2010. The Public and Commercial Services Union has said that this year’s pay remit means that members are missing out on at least £2,800 this year, and research by the Prospect trade union has revealed that since 2010-11 a civil servant on a median wage has lost around £10,500, which is staggering.

Photo of Margaret Ferrier Margaret Ferrier Independent, Rutherglen and Hamilton West

I congratulate the hon. Lady on securing the debate. Some 49.7%, or nearly half, of civil servants earn less than £30,000. Many are struggling with the impact of rising inflation and living costs, and rising travel costs to reach work. Does she share my concern that the continued undervaluing of the civil service will lead to officials leaving and a worrying potential exodus of experience and expertise?

Photo of Beth Winter Beth Winter Labour, Cynon Valley

I thank the hon. Member for her contribution, and I will come on to recruitment and retention later.

There have been pay freezes and pay caps over the last 13 years. The situation has worsened in the past 12 months because of high rates of inflation and the lower allowance in the civil service compared with other public sector settlements. Civil servants had a paltry 2% pay rise imposed on them in the past year, which is more than 10% below the retail price index at its peak and almost 10% below the consumer prices index.

Civil servants, teachers and nurses have all suffered under the Conservatives’ low-pay agenda, and have all received a completely unacceptable and avoidable real-terms pay cut. The extent of the Conservative Government’s low-pay agenda is laid bare by the high number of civil service staff in receipt of the minimum wage. It is an absolute travesty that over a quarter of DWP staff are paid so little that the national living wage floor increase this April will push their salaries up. It is worth noting that when many Departments contract work, they insist that people get paid at least the real living wage as determined by the Living Wage Foundation, yet the civil service itself point blank refuses to guarantee to pay civil servants at least the real living wage.

Photo of Chris Stephens Chris Stephens Shadow SNP Spokesperson (Levelling Up)

I thank the hon. Member for giving way and emphasising that point. Does she share my concern, and that of many others, that the statistics she has just quoted are the reason for an increasing number of civil servants using food banks in order to survive week by week?

Photo of Beth Winter Beth Winter Labour, Cynon Valley

I thank the hon. Member for his contribution and I fully agree. I will come later to the stark figures on the use of food banks by civil service staff.

As I said, the past 13 years of pay freezes and pay caps have slashed the value of civil service pay. There is also the current civil service pay remit process, which is completely unacceptable. The FDA union describes the current system as “entirely flawed and incoherent” and as one that completely fails to allow for a strategic approach to pay, reward or meaningful negotiations.

Repeated pay cuts cannot simply be imposed without industrial disputes. Pay needs a negotiation between employers and employees. The current civil service pay remit process does not even offer the façade of employee involvement through the trade unions that even the increasingly discredited public sector pay review bodies are meant to offer. The end of national pay bargaining in the civil service by the Thatcher and Major Governments and the introduction of departmental and agency-delegated responsibility for setting pay continued the Tory ideological attack on the powers of the trade unions.

In the “Continuity and ChangeWhite Paper, John Major’s Tory Government set out how, previously,

“centralised pay systems covered groups of staff whatever department they worked in, with settlements negotiated nationally between the Treasury and the unions.”

Even the claim that pay is delegated is a fallacy. Pay continues to be determined centrally. Ministers can, and do, still determine pay in these different bargaining units. That is evidenced by George Osborne’s imposition of a two-year pay freeze in the civil service, which he did without permission from the delegated bargaining areas. He was allowed to do that. That has been the approach for the past 30 years. It now applies to more than 200 bargaining units across the civil service, from the DWP to the National Museum of Wales. It is not logical, practical or cost-effective, and is certainly not fair. The fragmentation of the pay system has been described by the former Minister for the Cabinet Office, the Secretary of State for Levelling Up, Housing and Communities, Michael Gove, in his evidence to the Select Committee on Public Administration and Constitutional Affairs as the “balkanisation” of pay. I would like to hear whether the Minister agrees with that comment.

What is the cost to the Government, both in finance and efficiency, given the duplication of human resource process, of changes to payroll procedures across so many units? It is just not cost-effective. Although civil service Departments essentially follow the same grading structure, the salaries paid at different levels by different Departments mean increasing disparities, resulting in significant inequalities. There has been an entrenchment of inequalities that existed in the 1990s, and an opening up of new gaps that did not even exist then. The PCS union has argued that as a result there has been an entrenchment of historic gender and ethnicity pay caps, and the development of pay differentials across Departments for the same grades. That includes women being paid less than men, and the pay process has not allowed them to break out of that. Last year, Civil Service World reported how the civil service’s median gender pay gap had widened for the first time in six years, with a gender gap in average hourly earnings of 11.3%. In most cases, where large median pay gaps exist, it is because there is a higher proportion of men in senior and more highly paid roles, or of women in more junior roles. The PCS has argued that, as civil servants are increasingly being co-located into regional hubs organised by His Majesty’s Revenue and Customs and by the Government Property Agency, the difference in pay between staff at the same grades is becoming increasingly apparent—so much so that the PCS has said that it is preparing to begin large-scale equal pay challenges, bringing cases on behalf of women in one bargaining unit against men in another.

Ethnicity pay gaps are also a significant cause for concern. Black members of staff are disproportionately employed in lower paid areas of the civil service. Only this morning, we heard shocking evidence of racism in the Cabinet Office from trade unions giving evidence to the Public Administration and Constitutional Affairs Committee. Regional inequalities have also been identified. For example, a median civil servant at administration assistant or officer level at the Ministry of Defence earns just over £20,000, whereas their equivalent in the Welsh Government earns around £24,500, nearly as much as the median executive officer, a grade higher, at the Department for Digital, Culture, Media and Sport.

The evidence clearly shows that the pay structures across the civil service are unequal, dysfunctional, broken and in urgent need of reform. The situation hinders the delivery of an efficient service, so the transfer of staff between Departments is complicated in the absence of a uniform and fair pay system, while the unfair pay differentials create obstacles to achieving effective joint working within or between Departments. As others have mentioned, poor pay and terms and conditions within the civil service are also resulting in recruitment and retention problems, which, in turn, are also very costly for the Government.

Analysis by the Institute for Government reveals that turnover in the civil service is the highest it has been for a decade, and that the recruitment and retention of highly skilled staff is a particular cause for concern. It stated:

“The National Audit Office, the Public Accounts Committee, Ministers and civil servants have described how a lack of specialist skills in areas from digital to finance has contributed to delays, cost overruns or policy and operational failures.”

Research commissioned by Prospect and the FDA this year concluded that in order to ensure that the civil service can recruit and retain the high numbers of staff required, it is essential that the Government urgently address the poor levels of civil service pay. That is all having a significant detrimental impact on staff.

In PACAC this morning, we discussed the civil service people’s survey and we heard shocking evidence of harassment, bullying, discrimination and racism in the civil service. I will just quote some startling figures from a recent PCS survey of its members: 85% said that the cost of living crisis has impacted their mental and physical health; over half fear losing their home; 40% say that they have used credit to pay for essential shopping; and almost a fifth say that they have missed work because of their inability to afford transport or fuel. As Chris Stephens has said, 40,000 are using food banks, and 47,000 people are claiming universal credit because pay is so low. That is totally unacceptable and that is why civil service staff have been driven—forced—to take industrial action.

Nobody makes the decision to take industrial action lightly; it is very much a last resort. It is not a choice but a necessity that has been forced on civil service staff. Since December, PCS has been engaged in a series of targeted industrial action across many Departments, including the Department for Environment, Food and Rural Affairs, the Driver and Vehicle Licensing Agency, the DWP and Border Force. That is why we will see over 130,000 civil servants take strike action on Budget day next week in an attempt to make this Government listen and improve their offer. PCS is not alone. The poor pay outcomes have also led the Prospect union to ballot its members and they have also overwhelmingly voted for industrial action. Even the fast-streamers organised by the FDA have voted for industrial action.

I am very conscious that some Government Members have sought many a time to assert that rising wages cause inflation by creating a wage spiral. I am confident that the Minister is aware that that does not stand up to scrutiny. Research by James Meadway for the General Federation of Trade Unions, cited in a recent pamphlet, said:

“Whatever it is that is driving inflation in the UK, it is not high wages. Wages have been low for a long time and are now falling very fast.”

Independent analysis commissioned from Incomes Data Research by Prospect and the FDA argues that,

“public sector pay rises might only lead to an increase in inflation if they at least matched or were higher than current rates of inflation, and then only if private sector employers followed suit, and then only if these employers then decided to deliberately pass on this aspect of increasing costs directly to consumers in the form of price rises.”

If the Government truly believe that they do not have the resources to fund the pay rise, they need to make it clear they will end some of the tax inequalities that continue to let the wealthiest off the hook and will introduce a new measure of wealth taxation.

Previously, I have highlighted what such measures might include, including the equalisation of the rate of capital gains tax with income tax, which, in a single measure, would raise up to £14 billion. The money is there; it is a political choice not to use it. The Government can afford to pay civil servants, all public sector workers and everybody who has been forced to strike a decent wage.

I will move to a conclusion. There are a number of issues that need addressing and I would welcome the Minister’s response to them. We need an audit of pay differentials impacting gender and ethnicity across Departments, an audit of pay differentials at the same employment grades across Departments, a grouping of agencies around their main Government Departments to harmonise pay arrangements and an acceptance of the need for pay remits that move the civil service towards national pay rates, which will establish moving floors at different grades and the safeguarding of differentials between grades. That should be a step on the way to the re-establishment of a national pay bargaining process that ends the refusal to negotiate with trade unions.

Indeed, Labour’s deputy leader, my right hon. Friend Angela Rayner, and her predecessor on the employment rights brief, my hon. Friend Andy McDonald, have set out that fair pay agreements will be negotiated through sectoral collective bargaining, reversing the decades-long decline in collective bargaining coverage. I am not asserting that that is a manifesto commitment to national pay bargaining for the civil service, but it is clear evidence of the direction in which the party intends to move. I refer people to the Labour party’s excellent “ A New Deal for Working People” employment rights Green Paper for more information.

Such an approach is essential in order to tackle the problems of insecurity, inequality, discrimination, enforcement, low pay and the raft of other issues that I outlined in my speech. Urgent action is also required, with the Government’s commitment to hold constructive talks with PCS to resolve the current dispute. In next week’s Budget announcement, we need a revision of the 2022-23 civil service pay remit that reflects an understanding that a 10% rise and a living wage of at least £15 an hour are wholly affordable—wholly in this Government’s grasp—and do not require a reduction in service provision. We need a reformed pay bargaining process for the civil service and across the public sector, and an end to the Tory low-pay agenda of holding down public sector pay. Diolch yn fawr, Mr Pritchard.

Photo of Mark Pritchard Mark Pritchard Conservative, The Wrekin

I remind Members to bob if they wish to speak, just to help the Chair—I think you all are, thank you. I call Chris Stephens.

Photo of Chris Stephens Chris Stephens Shadow SNP Spokesperson (Levelling Up) 2:50, 7 March 2023

It is a pleasure to see you in the Chair, Mr Pritchard. I refer the House to my entry in the Register of Members’ Financial Interests, particularly my position as chair of the PCS parliamentary group. I thought I would do that, Mr Pritchard, because we usually hear shouts from the Conservative Benches about the Register of Members’ Financial Interests, but I notice that those Members are on strike today. No one from the Conservative Back Benches is here to take part.

Who are the heroes of the pandemic? I would suggest that among those heroes are those who worked in the civil service, such as those who were in the Department for Work and Pensions when there was an explosion of universal credit claims that had to be processed and of people to be paid on time. It was those people who made sure that universal credit payments were paid on time, helping those in need. The heroes of the pandemic include those who worked in HMRC, who had to make sure that businesses, including small businesses, received furlough payments to help ensure that the economic wheels were turning. They include those in the civil service who put together the rules and regulations to update the public on what to do and how to comply with covid regulations, to ensure that the public were safe and protected.

As such, what is astonishing about this debate—as Beth Winter, who secured the debate, has outlined—is that the civil service seems to be treated worst of all across the public sector. Frankly, that is a disgrace. I want to concentrate on the economic case for giving civil servants and other public sector workers a real-terms pay rise. I note that in his demands for the Budget, my good friend Stephen Flynn, the leader of the SNP group, has said that we must have pay rises that match inflation. It is not public sector pay that increases inflation: it is prices. Food inflation is currently around 13%, yet we are offering some public sector workers 2% or 3%: that is not going to help them feed their families, and it is not going to help them going forward. We need to look very seriously at this situation.

The Conservative Government keep telling us that they are the party of efficiency and small government, yet they allow a situation in which there are over 200 separate pay negotiations across the civil service for those who work for the Westminster Government. The fact that so many different pay negotiations are being carried out across the civil service is something that you really could not make up. If the Conservative Government allow that situation to develop going forward, they are opening themselves up to equal pay claims, and I hope the Minister will tell us how they are going to cut the number of pay negotiations. There should be one set of pay negotiations covering those who work for the Westminster Government.

I know that many colleagues want in, Mr Pritchard, so the final point I will make is this: if people are talking, they are not walking. Far too often, we hear Government Members blaming society’s problems on not just refugees, as we heard in the main Chamber earlier, but trade unions. “It is the trade unions’ fault that we have so many societal problems at the moment”—what a risible argument! If the Government keep pursuing that level of tactic and introducing such rubbish legislation, such as the so-called minimum service levels legislation, it is only going to intensify the situation and make it worse. I want to hear from the Government how they are actually going to sit around the table and enter into meaningful negotiations like other Administrations do, including the Scottish Government.

Photo of Mark Pritchard Mark Pritchard Conservative, The Wrekin

I will have to enforce an informal time limit of five minutes.

Photo of John Martin McDonnell John Martin McDonnell Labour, Hayes and Harlington 2:55, 7 March 2023

My hon. Friend Beth Winter and Chris Stephens have comprehensively covered most of the issues. There is little to say, apart from maybe the Minister saying, “I give up and we’ll go and sort this out.” I also declare an interest as a member of the PCS parliamentary group. There is no financial relationship as such; it is not even affiliated with the Labour party, although I keep trying.

I want to get across to the Minister what the Government need to face up to. In recent years, the Government have come for civil servants’ pensions. They lost in court over that, but they have not even addressed the legal judgment. In addition, they cut their redundancy payments, and now they are insulting them with a 2% pay offer. As the hon. Member for Glasgow South West said, these are the people who worked throughout the pandemic, and were applauded by Government Ministers for what they did. I remember the then Chancellor applauding HMRC and Department for Work and Pensions staff for the role that they played, many of them working from home. And then they get the insult of a 2% pay increase. It is no wonder that, for the first time in civil service history, there will be 100,000 civil servants on strike in a week’s time.

The Government rely on the myth that it is nothing to do with them, and all to do with the Departments that are negotiating. That myth has been exposed time and time again. The pay remit is set by central Government. As my hon. Friend the Member for Cynon Valley said, the Government hide behind ludicrous pay structures. Having 200 individual units is not just inefficient but completely counterproductive. The result is that the civil service is demoralised, and it is failing to retain and recruit in many sectors. At the same time, I never expected public servants to be paid such low real pay. We have seen the issues with food banks, and some workers not even being able to afford the transport costs to get to work. Collectively, as a Parliament, we are the employers. Parliament holds Government to account; we all have to shoulder a responsibility. The Government have to recognise just how serious the situation is. They cannot underestimate the depth of anger that is out there among civil servants, their families and their communities.

The Government have hidden behind the high cost of settling at inflation-proofing; they themselves have used the mythical figure of £28 billion. The Institute for Fiscal Studies has already said that there is 4% to 5% within the Government’s existing budget structures for 2022-23, so the cost to get to inflation-proofing may be more like £15 billion to £17 billion. I will not go into detail, but others have pointed out how much the Government will get back in tax, national insurance contributions and so on. As a result of that, we are talking about single figures in terms of the cost to ensure that civil servants are inflation-proofed. The Bank of England destroyed the argument that this causes inflation in some way. Some 80% of the inflationary factors are external, and not to do with pay. The Government cannot argue that wages are causing inflation when they have been held down for 13 years. As others have said, they are now between 12% and 23% lower.

Finally, we need an inflation-proofing offer immediately so we can avoid the industrial action that is taking place. We want a reform of collective pay bargaining structures so we can get away from the current ludicrous system and back to collective bargaining itself. I think that in the future, all pay settlements across the whole economy should minimally be based on inflation-proofing, so that people are not impoverished as a result of pay settlements imposed upon them by the Government.

Photo of Geraint Davies Geraint Davies Labour, Swansea West 2:59, 7 March 2023

I disclose an interest: my father was a civil servant. He was in charge of economic development at the Welsh Office and was instrumental in getting the DVLA to come to Swansea, which I represent.

The Government have treated the DVLA appallingly, particularly during the pandemic, when something like 500 people caught covid at the Swansea centre. Even though the unions and the management agreed a policy to mitigate risk that allowed more people to stay at home, the then Transport Secretary, Grant Shapps, intervened and pulled it off the table, forcing a strike. That was a taste of things to come: the Government have provoked unnecessary strikes across the board and failed to negotiate in order to create a political atmosphere in which they can say to the electorate, “It’s the strikers versus the people. Who are you going to vote for?” It is completely cynical and counterproductive.

In Swansea and many parts of the country that have very poor communities—Swansea was a recipient of EU structural funding—people have not had proper pay increases. We know about inflation. According to the Environment, Food and Rural Affairs Committee, food inflation is at something like 17%. People have been given an offer of 2%, so it is no surprise that they have been provoked. Those public servants are one of Britain’s greatest achievements. They provide neutral support and advice to Ministers, and public services to the people.

Of course, the inflation was to a certain extent provoked by the Ukraine war, but it is interesting that energy inflation in Britain is much higher than it is in the rest of Europe, which is much more exposed to Russian gas. We have seen the fuel companies’ massive profiteering; those windfall profits should be properly taxed.

In addition, food price inflation has been pushed by retailers’ and food producers’ profiteering. During the pandemic, because farmers could not sell their products to the hospitality sector, which was closed, the retail sector took advantage by pumping up prices while costs were going down, doubling their profits. Again, in theory, they should face a windfall tax. Profiteering, the Ukraine war and Brexit, which of course added 6% to inflation, have pumped up costs for people who have faced 13 years of pay freezes. It is no surprise, therefore, that something like 40,000 of them are relying on food banks.

We want a proper negotiation. People know that there is not an unlimited amount of money, but treating them like dirt and pushing them on to their knees is a recipe for making them rise up and strike. That is completely unnecessary; we want to move forward.

People in the civil service accept that they earn a little less because they are public servants and their heart is in the right place, but they are being driven to take action. We have a tight labour market because there is not freedom of movement. We have had reckless covid management, so tens of thousands of people have long covid and are not as productive. The Government resist allowing civil servants to work from home, as we saw in the DVLA. We should support people in work, invest in them, allow them to work from home and provide wi-fi clouds to make them more productive.

I look forward to a growing economy in which we invest in a growing future, rather than a hobbled economy in which we kick people who are already down. We need a strategic approach to this problem, and I very much look forward to a Labour Government, as we have in Wales, who talk to the unions and people in work in partnership, so we can grow together in the knowledge that we all face constraints. We need to do that in an adult way, rather than with a bullying approach that provokes strikes and poverty.

Photo of Jim Shannon Jim Shannon Shadow DUP Spokesperson (Human Rights), Shadow DUP Spokesperson (Health) 3:03, 7 March 2023

I congratulate Beth Winter—I hope that is the right way of pronouncing her constituency; I am definitely improving—on securing the debate. My constituency borders Belfast, so I have a large number of constituents employed in the civil service. This debate therefore is especially relevant to me.

I have been in this world a wee while. When I was in school, which was not yesterday, most of my friends leaving school sought jobs in the civil service. It offered job progression for many, and people had those jobs for life.

Today, life has changed. People change their jobs much more than they ever did. The problem that I see —others have said this, and I want to confirm it—is that people with civil service jobs come to me in the office in need of genuine help because they have financial difficulties or are using food banks. They sometimes come to me and say, “Jim, I’m under a bit of pressure with my mortgage. Can you approach the mortgage people and see if we can get a bit of space?” They want to make their payments—it is not that they do not want to—but they are having difficulty trying to manage them.

After a lengthy time of small increments and pay freezes, junior and senior civil servants were offered a pay increase of 2% in March 2022, with Departments having the flexibility to pay up to 3% in certain circumstances. By comparison, pay awards of 4% to 5% have been agreed in the public sector following industrial action, while the private sector has agreed awards of over 6%. I am not saying that the private sector should not do that, but if it can do it, civil servants should be given the same.

Overall, the median salary in the civil service has risen by 3% since 2010—less than the median real-terms changes at each individual grade. This is being driven by the increased seniority of the civil service. I read an interesting article, which said:

“While it is likely that at least some of this is a genuine change in composition, it is also likely that some civil servants are being promoted to boost their salaries, to stop them from leaving the civil service and to manage morale, rather than because their skill-set and responsibilities demand it. These promotions are likely to be focused in the middle grades, where there are more roles people can be promoted into than at senior levels. And it is harder to promote a junior official in an administrative, operational role because of the different responsibilities at the EO level.”

It is important to make that public and put it on the record, because that is what is happening to civil servants. They are not getting the pay rises that they justifiably should; instead, they are being moved about and given higher grades. That might help in the short term, but it does not really help them at all.

It is clear that in-house tinkering to try to meet the needs of the workforce has reached its limit, and Ministers must recognise this and begin to find a way forward to meet the need. Being a civil servant used to be known as a job for life—it was when I was a young boy—but staff increasingly feel overworked, underpaid and underappreciated. What a disappointment that is. Some civil servants are left feeling that, because they are not in as bad a financial position as those in retail, they should not complain. There is almost a guilt complex among some of them as well, but the fact is that to have happy, efficient staff, our civil service must lead the way.

To have staff who are not invested in doing the bare minimum but who are thankful for a decent job, we need to restore pride in their work and increase job satisfaction, which comes with the recognition that a decent pay rise takes on board, and I support staff in their aim on this. I am aware that working in the civil service has its advantages, such as decent annual leave, sick pay and maternity pay. These perks have carried people through for many years, but staff are now concerned about how they will stay warm on their days off at home. Given that they cannot afford to go on holidays either, it is clear that the perks are not enough to make people stick at it.

The fact is that those in decent jobs are precluded from the help that comes with universal credit or other benefit streams. Their children do not get free school meals and they are at risk of losing child benefit, despite the fact that they are under more financial pressure than when the child benefit threshold was set in 2013. The price of public transport and parking is up, and all bills have risen, yet their wages have not even tried to compete. There is only so much that a “job for life” means if that life is not of a decent quality. I say with great respect and honesty to the Minister that I join my colleagues on this side of the Chamber in asking for change and for reasonable adjustments to help civil servants to have a normal life like everybody else.

Photo of Margaret Greenwood Margaret Greenwood Labour, Wirral West 3:08, 7 March 2023

It is a pleasure to serve under your chairmanship, Mr Pritchard. I congratulate my hon. Friend Beth Winter on securing the debate.

I pay tribute to the unions that are working tirelessly on behalf of their members in their fight to secure fair deals on pay. Many Wirral West residents work in the civil service and a number of them—members of the PCS—have written to me in recent weeks. They have expressed their frustration and dismay that the civil service pay remit for 2022-23 limited pay increases to just 2% to 3%. They have also rightly pointed that, at the time, this

“represented a significant, real-terms pay cut given that inflation was already running at around 9%”.

We must also remember that the pay remit for 2022-23 has been set against a backdrop of a decade of real-terms pay cuts. According to PCS, as a result of pay being frozen and capped, the living standards of many of its members have fallen by about 20% in real terms in the last decade. The average PCS member is worse off by £2,300 a year since 2011.  When the remit was announced in March last year, PCS was right to describe it as

“an insult to PCS members who helped to keep the country running during the pandemic”.

As I wrote in an email to the Chancellor just last week, the rhetoric of Ministers has not always recognised the dedication of civil servants, many of whom are still dealing with the impact of the covid-19 crisis, including those dealing with backlogs in the Home Office and criminal courts.

The PCS survey results are shocking, with 18% of members admitting to missing work because they cannot afford transport or fuel to get there; 37% of respondents saying that they are looking for a job outside the civil service and considering a career change for the good of their health; and 85% of members saying that the cost of living crisis has affected their physical or mental health. Shockingly, figures also suggest that 40% of PCS members are using food banks, and 47% are claiming universal credit because their pay is so low. It is therefore incredibly disappointing that the Government have ruled out a resettlement of the pay offer for the current financial year.

PCS is calling for a 10% pay uplift, an end to the pensions overpayment of 2%—which it says costs civil servants an average of £500 a year—and guarantees on the protection of the existing compensation scheme terms and job security. Constituents who have written to me have been clear that they

“would much prefer a negotiated settlement with the employer than to have to take…industrial action, particularly at a time when the cost of living is as high as it is.”

As we have seen elsewhere in the public sector, the Government’s refusal to pay workers the fair wage they deserve has left them feeling that they have no choice other than to go on strike to get their message across.

When it comes to pay remit guidance for 2023-24, the Chancellor of the Duchy of Lancaster has said that it will be put together

“in the context of higher inflation”,

and that he would

“expect some of that to be recognised in the sort of pay settlement” that the Government are able to give civil servants. Nevertheless, he has tempered expectations, suggesting that civil servants will be left disappointed once again by the Government.

That is not good enough. The Government must ensure that civil servants receive the fair pay rise that they deserve. The Government’s attack on the rights of working people is wholly unacceptable, with the Strikes (Minimum Service Levels) Bill leaving some civil servants, as well as workers in key sectors, potentially at risk of losing their jobs as a result of industrial action agreed in a democratic ballot. That is very draconian indeed. It is a pernicious piece of legislation and it must be withdrawn immediately.

Will the Minister also address the issue of job cuts in the civil service? Last May, the Government announced that there would be 91,000 job cuts in the civil service within three years. The Prime Minister initially scrapped those plans when he came to office, but there were reports recently that there are still likely to be significant job cuts in the civil service, although no numbers have been confirmed yet. The Government should not need reminding that job cuts in the civil service would be detrimental to the quality and availability of the public services on which we all rely. As Amy Leversidge, the assistant general secretary of the FDA union said during a recent meeting of the Public Administration and Constitutional Affairs Committee, the Government

“cannot expect everything that was delivered with over 400,000 civil servants to be done with 91,000 less.”

Will the Minister commit to protecting jobs in the civil service? Will he revisit the 2022-23 civil service pay settlement in the light of the cost of living crisis and rising inflation? Finally, will he give a reassurance that hard-working civil servants will receive the pay and conditions they deserve in the next financial year?

Photo of Mick Whitley Mick Whitley Labour, Birkenhead 3:13, 7 March 2023

It is a privilege to serve under your chairmanship, Mr Pritchard. I thank my hon. Friend Beth Winter for securing this important debate and for so evocatively laying bare in her opening remarks the scale of the crisis facing the civil service.

In recent days, Conservative Members have dedicated much of their energy contriving to impugn the conduct of the former second permanent secretary to the Cabinet Office. However, I have noticed with interest the lengths to which many of them have gone to make clear, regardless of their views of Sue Gray, the high esteem in which they hold the civil service. As the Paymaster General himself echoed in his remarks to the House yesterday, this nation’s civil servants are diligent and hard-working, and display the utmost integrity in the exercise of their duty. The question facing Conservative Members, and which I hope the Minister will address in a moment’s time, is: why should civil servants be denied the fair and long-overdue pay rise that will allow them to keep their heads above water during the most precipitous collapse in living standards in a generation?

The Government are impotent without the civil service, and nowhere was that more clearly demonstrated than during the height of the pandemic. That global health crisis necessitated the most radical expansion of state involvement in the lives of ordinary people since at least the second world war. Furloughed workers needed to get paid, businesses needed financial support, and the health service required additional resources on an unprecedented scale.

Notwithstanding the Government’s many failings during those dark days, not a single one of our successes in the fight against covid—including the vaccine roll-out—would ever have been possible without the hard work and dedication of the civil service. And yet, in November last year, those same workers were told by the Government that they deserved a measly pay rise of just 2% during a period of record inflation, when food prices have risen by more than 16% and October’s mini-Budget catastrophe sent mortgage rates and rents soaring. That is an insult. All of that comes after over a decade in which a public sector squeeze has seen pay fall at every grade of the civil service by between 12% and 23% in real terms.

Let us be very clear about what that squeeze has meant for those working in the civil service. Of all PCS members surveyed, 85% said that the cost of living crisis has impacted their physical and mental health, over half are worried about losing their homes, and nearly one in 10 have been forced to resort to food bank use. One constituent recently wrote to me to say that they felt at their wits’ end. Another asked for assistance in dealing with the payday lenders they had been forced to turn to in order to make ends meet, while another said that the challenge of keeping up with mortgage payments had left them feeling like a prisoner in their own home. We should not be surprised that a third of all respondents to the PCS survey said they were looking to leave the civil service entirely, and that a career change would do good for their mental health.

Next week, as the Chancellor delivers his Budget, more than 100,000 PCS members will be on picket lines across the country to tell this Government that enough is enough. I will be proud to stand with them as they do so. It is time for this Government to realise that this country cannot survive without its public servants, and those public servants cannot survive on warm words alone. In the national interest, I urge the Minister to get around the table and negotiate the fair pay rise that our civil servants so rightly deserve.

Photo of Ian Byrne Ian Byrne Labour, Liverpool, West Derby 3:17, 7 March 2023

It is an honour to serve under your chairship, Mr Pritchard. I thank my hon. Friend Beth Winter, who is a good friend, for securing this important debate, and for her excellent speech. I hope I have pronounced her constituency right, or she will kill me.

Although I have no formal interests to declare, I am a proud member of the PCS parliamentary group. I stand in full solidarity with the civil service in Liverpool, West Derby, and across the country, who are taking industrial action as a last resort over their pay, pensions and job security. It was an absolute privilege to stand with civil servants on an historic day at the PCS picket line in Whitehall last month, with quite a number of colleagues from this side of the House. It is a position they should never have been put in.

Workers in the civil service have not had a real-terms pay rise for over 11 years. Salaries have fallen by between 12% and 23% in real terms at each grade since 2010. There would be an uproar among MPs if that happened to them. There has been a sustained pay cut—a disgraceful pay injustice that has resulted in the loss of at least £2,800 a year in pay to individual civil servants. The pay structures across the civil service are fragmented into over 200 bargaining units, a system that the FDA trade union has rightly described as “dysfunctional and broken”.

That broken system has resulted not only in low pay but in wide variations of pay across the service, equal pay issues and a gender pay gap, as well as a recruitment and retention crisis. On top of that, civil servants have been overpaying pension contributions by £500 a year since 2019. The situation is grim.

This Government’s decade of brutal and unrelenting austerity has cut our public services to the bone and forced people who deliver those services into abject poverty. One in six people in my constituency are missing meals or going without food, and that includes many civil servants. In a PCS survey of its members, 35% of respondents said that they had skipped meals because they had no food, 18% that they have had to miss work because they cannot afford transport or fuel to get there, 85% that the cost of living crisis has affected their physical and mental health, and 52% that they are worried about losing their homes as bills and inflation rocket. Forty thousand civil servants are estimated to be regular users of food banks—I have seen that myself in the pantries that we run in Liverpool—and 47,000 are claiming universal credit because the pay is so low.

Let us just reflect on those statistics. The very people we trust to ensure that the social security system works for those in need are now being driven into hunger because of the poverty pay they receive. That encapsulates 13 years of Tory rule, which has driven many members of our public sector staff into poverty. Political choices are being made that have caused so much harm and misery to our communities. I have heard Members say, “Enough is enough,” quite a lot, certainly earlier on in the Chamber for the immigration statement. Let us use those words today to frame this economic injustice for all our loyal public servants; and let us hope the Minister uses them when we talk about that economic injustice.

The Government’s derisory 2% pay offer for 2022-23 is an absolute insult to those civil servants and their families. Inflation is over five times as high, and food inflation is around nine times as high. Trade unions representing staff, including fast streamers, are now taking industrial action as a last resort. One-hundred thousand civil servants will take strike action on Budget day next Wednesday: a day that the Government could use—if they had the political will and leadership, Minister —to announce an inflation-proof pay rise for public sector workers to avoid the strikes.

On Friday, I received a disappointing response from the Minister for the Cabinet Office to my letter raising the issues that I have raised in this debate. In that correspondence, he said that he would

“like to take this opportunity to reiterate…our gratitude for the exceptional commitment Civil Servants and public servants have shown in supporting essential public service delivery during this challenging time.”

Yet, further on in the letter he says that he recognises that the current civil service pay uplift

“will be below current levels of inflation.”

Warm words mean absolutely nothing to civil service staff in West Derby and across the country, who are not being paid enough to live off. I am also extremely disappointed that the Minister for the Cabinet Office appeared to suggest in that letter that pay restraint is somehow linked to getting inflation under control. The FDA’s independent analysis debunks the Government’s claim that public sector pay awards cause inflation. Inflation cannot be caused directly by public sector wage rises, and there is no evidence that this can occur indirectly.

I and my constituents are dismayed by the Minister for the Cabinet Office’s correspondence, and I am appalled by the Government’s overall approach to public sector pay disputes. Rather than taking the mature and robust step of offering an acceptable settlement on pay, terms and conditions, the Government have instead taken the reactionary step of ramping up anti-strike rhetoric and placing regressive legislation against industrial action on the statute book. That is not leadership when it is needed. We must be better than this. Those loyal public sector workers deserve the Minister’s action and support. We urge the Minister today to listen to the demands of civil service staff and their trade unions, and to provide them with pay justice and improved conditions. They and our nation deserve nothing less.

Photo of Kirsty Blackman Kirsty Blackman Shadow SNP Spokesperson (Cabinet Office) 3:23, 7 March 2023

I appreciate you chairing this afternoon’s debate, Mr Pritchard. We have been particularly raucous and difficult to control, so congratulations on taking on that most difficult role this afternoon.

I also thank Beth Winter for taking forward this incredibly important debate. I was going to start by discussing the question she asked yesterday in Department for Work and Pensions questions—to which the Secretary of State responded by tacitly acknowledging that more than a quarter of DWP staff are paid so little that the minimum wage increase in April will lift their salaries. How have we reached a situation where they are so poorly valued and so poorly paid that they are not even paid the real living wage? They are simply paid the Government’s pretendy living wage.

Given that such a high percentage of them claim universal credit, as Ian Byrne has just stated, how is that cost-effective for the Government, never mind anything else? If people are paid so little that they need other Government funding to allow them even the most basic standards of life, something is going wrong. As so many Members have said, these are people who worked day in, day out during the course of the pandemic. They worked so hard to ensure that others were able to access the vital public services that we all need and that became incredibly important—far more important than before the pandemic—for so many. People were putting themselves at risk by travelling and working during lockdowns and the pandemic. It is a travesty that those people have been undervalued to such an extent.

Comments have also been made about gender-based discrimination and job cuts, and the fact that the Government expect people to do more work for less pay. Nobody wants to do more work for less pay. We should value the folk who deliver the most vital public services. During sittings of the Procurement Bill Committee, which some Members here attended, we tried to ensure that the Government would write a real living wage into procurement contracts. It is important that the real living wage is paid. When we write procurement contracts it is important that that is a requirement on external contractors or companies, but it should also be required of all public services.

We are doing everything we can in Scotland. Ensuring that people such as those working in adult social care are paid the real living wage is resulting in a significant increase in the number of people being paid an amount on which it is possible for them to live. That also reduces reliance on the benefits system and ensures that people have dignity and can avoid having to go to food banks to provide basic services for their families.

The Minister might talk about the amount of money that the Government have given to people for electricity and gas bills, but it is not enough. People are still struggling. The money given to support people with energy costs does not fully cover the increased costs, and that is not to mention the 17.1% inflationary increase in the cost of food. The highest increase is for the most basic food, yet we cannot avoid buying pasta, potatoes and rice.

The Government need to step up. They need to properly negotiate with trade unions. Nobody wants to take industrial action. It is not the case that trade unionists hate work. They have been forced into this situation because of the UK Government’s unwillingness to negotiate. In Scotland we have negotiated pay deals far more successfully. We have experienced strikes in Scotland, but we have constantly been round the table talking. We have been able to make much higher pay offers despite the fact that we have a legal requirement to have a balanced budget. We do not have the same flexibility as the UK Westminster Government on budgets. They can pay people by making in-year changes to budgets. We cannot do that in Scotland, yet we have prioritised pay because we recognise how important our public sector workers are. We recognise how vital the services that they provide are, so we are doing everything that we can to make the best possible pay offers.

Job cuts have been mentioned, but we are trying to ensure that people are not asked to do more work for less pay. We are putting in other provisions as well to ensure that we have enough staff. Obviously, we are hampered in that by Brexit.

In spite of a decade of real-terms pay cuts and the lack of flexibility in the Scottish budget, we will keep on fighting for a better and fairer Scotland. On Thursday, the Minister of State, Department for Energy Security and Net Zero, Graham Stuart accused me of using the need for a balanced budget in Scotland as a convenient scenario. It is not convenient! It is incredibly inconvenient that Scotland has to have a balanced budget and that we cannot therefore make the offers we would like to make and provide people with cost of living uplifts. We have been arguing for decades for independence for Scotland so that we do not have to work within this framework and so that we have the ability to make our own choices about spending and about the money that we have as a Government to spend. The UK Government’s continued cuts to the budget mean that our budget is less and we do not have the power or the flexibility to sort out that situation.

This debate has been incredibly interesting because Conservative Back Benchers have not come to the debate to provide their input. Do they not think that DWP staff are important? Do they not think that Home Office staff and DVLA staff are important? Do they not think that they should be coming out to bat for their constituents and providing that level of support? We are not asking for anything excessive. We are asking simply for the Government to look at inflation-level increases. That is not a completely crazy idea. It would allow people to have the dignity to support themselves and, as I have said a couple of times, not to find themselves entangled in the benefits system, where they are having to claim universal credit. People do not want to be in that system, but when the Government are not paying them enough and when Government Members are standing up in Parliament, as they did yesterday, and doing everything they can to smear the name of the civil service, we will have a situation where those dedicated public servants will be saying, “Enough is enough. We are not continuing to work for this Conservative Government, who continually undervalue us and refuse to negotiate reasonable pay uplifts.”

Photo of Florence Eshalomi Florence Eshalomi Shadow Minister (Cabinet Office) 3:31, 7 March 2023

It is a pleasure to serve under you, Mr Pritchard. I, too, pay a big tribute to my hon. Friend Beth Winter for securing this really important debate. Her passionate opening remarks highlighted why we are having the debate. I want to go back to some of the points that she highlighted.

In the recent survey conducted by the PCS union, 85% of its members said that the cost of living crisis had had a big impact on their mental and physical health. If people are not in a fit position to go to work, how are they supposed to carry out even the basic functions that they are employed to do? When we talk about people using food banks, some Members of this House basically say that that is incorrect, but the figures do not lie: 40,000 of that union’s members say that they are using food banks. That should shame us. Those are staff members, people in work and with a salary, having to rely on food banks. That should not be happening in 2023. Of those PCS members, 18% said that they had missed work because of their inability to afford transport or fuel—the energy companies and fuel companies are making record profits but not passing the benefit down to people who are filling up at the petrol stations—and 40% said that they had had to use credit for essential shopping. We saw what happened a few years ago with the rise of loan companies and loan sharks. If we are not careful, the number of people who have to rely on credit for the basic necessities—for basic bills—will creep up. That is what is happening to people who are in work. In-work poverty should not be happening.

Many hon. Members have highlighted issues across their constituencies, and I think about my own constituency, just over the bridge, where a significant number of civil servants live. Many Members have highlighted how hard our civil servants worked during the pandemic. Jim Shannon highlighted the fact that, if we are honest, a job in the civil service is no longer a job for life. I will be honest: when I graduated, I applied for the fast stream, but I failed at the first hurdle and I thought that that was the end of my career. A number of people who have worked in the civil service feel that they have no career progression. Their pay is stagnating, and they are leaving. He is right; it is no longer a job for life.

My right hon. Friend John McDonnell highlighted the fact that the 2% increase is an insult—nothing more—because inflation is skyrocketing and the cost of everything is going up for our civil servants. My hon. Friend Ian Byrne highlighted the really big issue that civil servants are having to rely on food banks. I totally agree with him that the situation is grim. To repeat his words, we are forcing people into abject poverty because they are having to choose. That should not be happening. I also agree with Kirsty Blackman that as a result of what the Government are proposing and the fact that they are not negotiating, fewer people will be doing more work for less pay. That should not be happening, either.

My hon. Friend Geraint Davies raised the issues with the DVLA, which we all remember, and the shameful way in which the former Secretary of State for Transport, the right hon. Member for Welwyn Hatfield (Grant Shapps), handled that situation, with hard-working staff not being treated right. These issues are happening while the Government refuse to negotiate with our civil servants. If we look back to the pandemic, civil servants kept the country going and on its feet, whether by putting emergency measures in place, adjusting to new realities or taking on the mammoth task of dealing with so many different schemes, including furlough. Let us be honest: even now, those civil servants are still working to clear up backlog Britain. We have all seen that backlog in our casework, whether it is with the Home Office, the DVLA or passports. The civil servants are still working to clear it up, and trying to fix the problems of the past 12 years that have been caused by the Government’s mismanagement.

Our public services are at breaking point. That is not the fault of the hard-working public sector staff; it is the fault of the Government, who have failed and let down our valued institutions—the Government who do not value our staff, and who have failed to recruit and retain staff across the public sector. We are now in a situation where civil servants feel that they have no choice but to go on strike. Like many people, they are seeing their bills and the cost of food rise. The hon. Member for Aberdeen North mentioned pasta, potatoes and rice; whenever I get updates from the food banks in my constituency, those are the key items that they want people to drop off. Those basic items are now so expensive, and the truth is that civil servants’ pay is not keeping up with those increases. The Government are more determined to scapegoat workers and avoid fixing a mess that they created than they are to get around the table and negotiate, including in the civil service.

We cannot expect the civil service to be attractive to external employees when civil servants are expected to withstand threats to their jobs. My hon. Friend Margaret Greenwood highlighted the fact that just over a year ago, the Government threatened to cut 91,000 jobs across the civil service. That caused endless sleepless nights for those who were worried about the future of their jobs. Thankfully, those plans have been shelved, but given the merry-go-round of Ministers that we have had, how can anyone joining the civil service now be sure that that proposal will not come up again? That uncertainty and real-terms pay cuts are hindering the civil service’s ability to retain and recruit staff. Too often, that results in the false economy of having to rely on external contractors and consultants within the civil service. Year after year, public money is being spent on external consultants, rather than attracting the knowledge that we need in-house and training people to have that knowledge. We have simply outsourced the pay rise that our civil servants need to keep up with the cost of living to the profits of consulting firms. That is a horrific waste of money, resulting directly from 12 years of Government neglect and ideology-driven pay decisions.

When we consider civil service pay, we must look at its impact on equality. There are around half a million civil servants, who are responsible for delivering vast amounts of our public services. It is critical that our civil service is representative of our society as a whole, but we cannot expect it to be representative when pay across the civil service is unequal. My hon. Friend the Member for Cynon Valley mentioned the shocking issues that PACAC explored around racism in the civil service—I hope the Minister and his colleagues will be looking at that—and the shocking fact that the gender pay gap in the civil service increased drastically in 2022, with the median pay gap increasing by almost 70% in just one year. We cannot tackle inequality in society if inequality is entrenched in our civil service.

One point I would like the Minister to come back on is whether he agrees with the Women and Equalities Committee, which reported last year on the ethnicity pay gap—another key issue within the civil service. Does he agree that the first step in addressing the pay disparity is to ensure that ethnicity pay gap reporting is mandatory? I urge him to outline the measures he is taking to address the pay gap in the civil service.

The Government have a responsibility to ensure our public services are run well and our public sector workers are treated fairly. The next Labour Government’s mission will be to grow our economy, ensure that we have high-quality public services and ensure that our workers have better pay and conditions. Labour’s new deal for working people looks to deliver on this mission for the civil service and across society. The cost of living crisis is driving our civil servants to breaking point. It must be a priority for the Government to get to grips with this crisis and ensure that working people do not continue to suffer. Working people need a fair deal. The Government must get around the table to ensure that our public services are not ravaged by the outcomes of 12 years of Conservative failure and mismanagement.

Photo of Alex Burghart Alex Burghart The Parliamentary Secretary, Cabinet Office 3:40, 7 March 2023

It is an honour to serve under your chairmanship, Mr Pritchard. I start by congratulating Beth Winter on securing the debate, as I welcome the opportunity to discuss these issues. I am sure the Chancellor will have heard her remarks. The Government are obviously in the process of preparing for the Budget in the very near future.

At the outset, I want to join all Members in recognising the extraordinary hard work and dedication of the civil service. I cannot accept the remarks made—admittedly, as an aside—by the hon. Members for Aberdeen North (Kirsty Blackman) and for Vauxhall (Florence Eshalomi) about how the Government are in some way scapegoating civil servants. That is absolutely not the case. It was not the case in the urgent question in the House yesterday. Obviously, a lot of people in the Cabinet Office are sad about what has happened over the past few days, but that in no way detracts from our huge respect for our exceptional civil servants, on whom we rely every single day. It is important for me to put that on the record.

As right hon. and hon. Members will undoubtedly be aware, civil service pay is determined by separate processes for delegated grades—typically grade 6 and below—and the senior civil service. For delegated grades, the Cabinet Office publishes the pay remit guidance annually. The guidance is a cost control document setting out the parameters of average awards in a pay remit year for Departments. For the senior civil service, the Senior Salaries Review Body makes independent recommendations to the Government based on evidence provided by the Government and data from recognised trade unions and the labour market.

In the 2021 spending review, the then Chancellor of the Exchequer announced the end of the temporary pay pause in the public sector, including the civil service, starting from the year 2022-23, throughout the duration of the spending review period to 2024-25. The strong recovery in the economy and labour market at that time allowed us to return to a normal pay setting process. Again, right hon. and hon. Members will be aware that new challenges then emerged. We are operating now in a very different economic environment. Higher than expected global energy and goods prices have already led to unavoidable increases in the cost of living in the UK, and the repercussions of Putin’s illegal invasion of Ukraine have added considerably to those pressures.

Last year, the civil service pay remit guidance allowed Departments to make awards of up to 3%, which we absolutely recognise is below inflation. The Government of course recognise the significant strain that cost of living pressures are putting on everyone, including civil servants, and this Government have been helping with energy support and other cost of living payments for the most vulnerable.

Photo of Chris Stephens Chris Stephens Shadow SNP Spokesperson (Levelling Up)

The Minister mentioned the pay remit guidance. For clarity, can he confirm that the pay remit guidance is one document—that there is only one piece of pay remit guidance? If so, why are there 200 sets of negotiations across Westminster Government Departments?

Photo of Alex Burghart Alex Burghart The Parliamentary Secretary, Cabinet Office

The hon. Gentleman will be glad to hear that I will come to that point very soon.

As everyone will, I hope, appreciate, the Government put fiscal responsibility at the very centre of our policy, and we are taking appropriate steps to manage inflation. Obviously, at the moment, it is not public sector wages that are driving inflation. Many factors are driving inflation. Inflation is besetting our closest friends and competitors around the world; it is an international problem. However, if we were to take the advice of John McDonnell, Ian Byrne and others, we would find ourselves in trouble.

The Governor of the Bank of England and its chief economist have both said that inflation-matching pay rises in the public sector can spill over into higher pay across the economy, and that would make the fight against inflation even more challenging. That is why halving inflation is the top of the Prime Minister’s five immediate priorities, alongside growing the economy, reducing national debt, getting the NHS backlog down and stopping small boats crossing the channel. Our focus is on pay for 2023-24.

Photo of John Martin McDonnell John Martin McDonnell Labour, Hayes and Harlington

It is difficult to see how a reasonable settlement below the rate of inflation—for example, the fire brigade settlement of 7%, with backdating and 5% for next year—could in any way offend against the Bank of England Governor’s comments. Have the Government even considered an offer of that sort to the civil service?

Photo of Alex Burghart Alex Burghart The Parliamentary Secretary, Cabinet Office

The right hon. Gentleman is a former shadow Chancellor. He will appreciate that the higher the pay settlement, the slower the rate of decline in inflation is likely to be. [Laughter.] He laughs; I hope he has realised how the numbers work.

Photo of John Martin McDonnell John Martin McDonnell Labour, Hayes and Harlington

This is unique in economic history in this country. We are arguing that a pay award below the rate of inflation is still inflationary. I have never heard that one before, and I think we should record it for posterity.

Photo of Alex Burghart Alex Burghart The Parliamentary Secretary, Cabinet Office

I know the right hon. Gentleman is new to this House, and I am delighted to be able to tell him that the minutes of this debate will indeed be recorded for posterity. He will understand that the sooner the speed of inflation comes down to a manageable level, the sooner we can return to growth in the economy. The sooner the whole economy benefits, the sooner public services will benefit. He proposed an inflation-matching pay rise, but that would certainly not help bring down inflation, and he knows that. It is very easy to propose things from the Labour Back Benches that sound good, but that are impractical and damaging. The Government have to take fiscally responsible decisions.

The Chancellor of the Duchy of Lancaster and Secretary of State, my right hon. Friend Oliver Dowden, said in a recent PACAC evidence session that considerations for the pay settlement this year will, of course, be done in the context of higher inflation, but that

“we have to be cognisant of wider pressures on the public finances, which ultimately can be paid for only by higher taxes, by increased borrowing or by savings elsewhere in the Government…Ministers have to take difficult decisions.”

Photo of Geraint Davies Geraint Davies Labour, Swansea West

The Minister is making the case for a balanced approach. The Chancellor’s objective is to halve inflation this year, from 10% to 5%, so prices will have risen 15% over two years. Given that, what would be a reasonable and balanced pay award to civil servants over those two years, in the Minister’s view?

Photo of Alex Burghart Alex Burghart The Parliamentary Secretary, Cabinet Office

Those conversations are ongoing, as the hon. Gentleman will be aware. It is not within my remit to speculate on that.

Photo of Alex Burghart Alex Burghart The Parliamentary Secretary, Cabinet Office

I will come back to the hon. Gentleman’s point.

Salaries for junior grades in the civil service remain comparable with private or public sector equivalents. Many civil servants also benefit from defined benefit schemes, where employers contribute around 27% of earnings. In contrast, most private sector employees receive defined contribution pensions, which are dependent on investment performance, and where employer contributions are typically around half those in the public sector.

As I mentioned at the beginning of my speech, pay arrangements for civil servants below the senior civil service are delegated to Departments as separate employers. That has been the case since 1996, and was not a position overturned by the previous Labour Government. The annual pay remit guidance sets out the financial parameters within which civil service Departments can determine pay awards for their staff. Negotiations take place between organisations and trade unions. The Cabinet Office does not negotiate or consult on pay or changes to terms and conditions outside the civil service management code. Ultimately, it is for Departments to decide on their pay awards and how they are structured, in the light of their own budgets and priorities, and to negotiate with their trade unions.

There are many merits to the delegated model, as the last Labour Government recognised. Civil service Departments deal with many different, complex issues. That means it is really important that Departments continue to have the flexibility to tailor their own pay and grading arrangements to enable them to recruit, retain and reward the hard-working civil servants who deliver for them.

Pay remit guidance also allows Departments to seek further flexibility for a pay award above the headline range for pay awards. That has enabled some Departments to make higher awards to their staff in return for productivity and efficiency gains, or to reform terms and conditions of employment, in order to deliver transformational reform. That has been demonstrated in pay deals at His Majesty’s Revenue and Customs and the Ministry of Justice in recent years.

We continue to explore opportunities for greater coherence for reward in future years in support of civil service challenges and priorities, which is where the work of cross-Government professions and functions have a particularly valuable role to play. The Minister for the Cabinet Office met with some of the main civil service unions on 12 January to listen to their representations on pay, as part of an exchange of information to inform pay for 2023-24. That is supported by continuing dialogue at official level.

The Government remain committed to holding discussions about pay for 2023-24. We want to work constructively with the civil service trade unions as the Government consider the pay remit guidance, the delegated grades and the evidence to the Senior Salaries Review Body on senior civil service pay. I am confident that when we announce the 2023-24 civil service pay remit guidance, we will continue to strike the balance between appropriate reward and the need to live within our means as a nation.

Photo of Chris Stephens Chris Stephens Shadow SNP Spokesperson (Levelling Up)

The Minister has confirmed that there is one pay remit guidance. Do the Government have any plans to cut the numbers of negotiations? There are currently more than 200 across Westminster Government Departments.

Photo of Alex Burghart Alex Burghart The Parliamentary Secretary, Cabinet Office

The hon. Gentleman will have heard me say that we consider there to be many advantages to this model.

The purpose of Westminster Hall debates is for the Minister to come and listen to what colleagues in the House have to say. It was interesting, listening to the hon. Member for Vauxhall, to hear that a lot of the positions from the Labour Back Benches do not necessarily accord with the position of the Labour Front Bench. I wonder whether one of the things that is happening in this Westminster Hall debate is an internal debate within the Labour party being aired in public. There was no position from the Labour Front-Bench spokesperson on collective bargaining, on the pay offer, or on PCS strike actions.

Photo of Florence Eshalomi Florence Eshalomi Shadow Minister (Cabinet Office)

On this side of the House, we will make sure that we negotiate—sit around the table and address the concerns. It is not for me to say, “This is what we will offer.” It is about sitting down with the unions, outlining the concerns and then coming to a decision.

Photo of Alex Burghart Alex Burghart The Parliamentary Secretary, Cabinet Office

I respect the hon. Lady’s position. However, that is not the position that many of her colleagues have taken here today. It is important that the Labour party comes to an agreed position before the next election. If it does not, we will be sure to remind the public that the Labour party does not have a position on this, whereas the Government do.

Photo of Beth Winter Beth Winter Labour, Cynon Valley 3:53, 7 March 2023

I am wondering if the Members on this side of this room are living in a parallel universe to the Minister, given that he did not address any of the points we raised in any substantive way. I will follow up my questions and comments and those of others in writing to the Minister; I hope I can get a more comprehensive response.

We have heard today about what Chris Stephens called the heroes of the pandemic: our public servants. And yet, they have had the lowest pay increase in the public sector since the advent of the coalition Government back in 2010. The civil service staff are demoralised, angry, frustrated and desperate. They are suffering extreme hardship, using food banks and unable to afford to go to work.

You have not addressed any of the real hardships that they are facing, which have been caused directly by your policies and your low pay agenda. A civil service member of staff contacted me yesterday and described themselves as, “The poor relations who feel totally overlooked by society.” You have it in your gift to redress this—to address the problems that these workers face. On behalf of the PCS parliamentary group, we formally invite you to join PCS members on the picket line next week to listen to the real-life experiences of PCS members. If you are not going it for the staff who are suffering, do it for yourself. It is not efficient—

Photo of Mark Pritchard Mark Pritchard Conservative, The Wrekin

Order. I remind the hon. Lady to address her remarks through the Chair, rather than using “you”. The Minister is responding on behalf of the Government.

Photo of Alex Burghart Alex Burghart The Parliamentary Secretary, Cabinet Office

I hope you’ll be there, Mr Pritchard; you’ve been invited.

Photo of Mark Pritchard Mark Pritchard Conservative, The Wrekin

I am neutral. I remind the hon. Member to address her remarks through the Chair. The Minister is here representing the Government rather than as an individual.

Photo of Beth Winter Beth Winter Labour, Cynon Valley

I just wish that people could tell how passionate I and others feel about this.

Photo of Mark Pritchard Mark Pritchard Conservative, The Wrekin

Indeed, there are a lot of passionate feelings on both sides of this debate.

Photo of John Martin McDonnell John Martin McDonnell Labour, Hayes and Harlington

There was a flippant remark from the Minister with regard to meeting PCS members. I just remind him that PCS members in my constituency—two Border Control staff—died during the pandemic because of covid. They sacrificed their lives keeping this country safe.

Photo of Alex Burghart Alex Burghart The Parliamentary Secretary, Cabinet Office

On a point of order, Mr Pritchard. The right hon. Gentleman knows full well that there was no flippant remark about PCS whatsoever. [Interruption.] There was no flippant remark whatsoever. The record will state that all I said was that you had been invited to join the picket line, Mr Pritchard. That is not a flippant remark about PCS.

Photo of John Martin McDonnell John Martin McDonnell Labour, Hayes and Harlington

This is a serious debate about people living in poverty.

Photo of Alex Burghart Alex Burghart The Parliamentary Secretary, Cabinet Office

It was not a flippant remark about PCS. The right hon. Gentleman knows that it was not.

Photo of Mark Pritchard Mark Pritchard Conservative, The Wrekin

Order. The Minister is entitled to put his point of order—although it is not a point of order. However, it has been put on the record by our excellent Hansard colleagues here. We go back to Beth Winter for the last three minutes of the debate.

Photo of Beth Winter Beth Winter Labour, Cynon Valley

May I ask, through the Chair, whether the Minister will agree to attend the picket line to listen to the real-life experiences of so many thousands of civil service staff? As I began to say, if the Government are not going to address these issues for the people who are suffering, surely they will do so, because it is in their own interests. The overwhelming evidence shows that the current system is not efficient. It is not cost-effective and it will not address the cost of living crisis—

Photo of John Martin McDonnell John Martin McDonnell Labour, Hayes and Harlington

Could my hon. Friend give way to the Minister so that he can respond and confirm whether he is coming to meet the PCS members next week?

Photo of Beth Winter Beth Winter Labour, Cynon Valley

I certainly would like to give way.

Photo of Mark Pritchard Mark Pritchard Conservative, The Wrekin

The Minister can choose to respond or not, because he has concluded his remarks. If he wants to intervene, he can, but it is entirely down to him. The hon. Member who moved the motion can continue for the last minute and then allow me to put the Question, or can talk out her own time, which will mean the Question is not put. She can make that decision. [Interruption.] Order. The right hon. Gentleman should know, as he has been here for a very, very long time. I have been very patient with him.

Photo of Mark Pritchard Mark Pritchard Conservative, The Wrekin

Whether or not the right hon. Gentleman thinks he has been here too long is entirely a matter for him. He will come to order, thank you.

Photo of Beth Winter Beth Winter Labour, Cynon Valley

It is my strongly held opinion that it is in everybody’s interest that people across the public sector are given an inflation-proof pay rise. I urge the Government to follow the lead of the Welsh and Scottish Governments and enter into proper negotiations with the civil service to address the horrendous situation that people are experiencing.

Question put and agreed to.

Resolved,

That this House
has considered the civil service pay remit and the future of pay negotiations.