INDEPENDENT? Pay Review Bodies
Posted byRiff 22nd Dec 2022 Posted inUncategorizedTags:Independent Pay Review Bodies, Inflation, Pay rises
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The pay review bodies, which cover 2.5mn public sector workers, have until now had the support of both unions and the government. But disputes this year have left trust in the system at breaking point.
Are the pay review bodies independent?
Pay body members are appointed by ministers but according to Cope they "fiercely guard their independence". However, union leaders complain that the independence of the individuals who sit on the bodies is compromised because their remit is set by the government and it requires them to have regard to affordability constraints, departmental spending plans and the government's 2 per cent inflation target.
Disney said these conditions constrained what the bodies could determine as a fair settlement. "You don't want to recommend something that is likely to be rejected [by ministers]," he said.
But he added that the bodies have more independence today than at other times — such as when they had to impose a government mandated public sector pay freeze in the austerity years after 2010. Ben Zaranko, senior economist at the Institute for Fiscal Studies, said the Treasury's spending plans played a large role in the outcome of pay review recommendations and while affordability was important, other parts of the remit given to the bodies made little sense. "There is no reason pay review bodies should be fine tuning [public sector] wages to affect economy wide inflation," he said, adding that was the Bank of England's job.
This is probably the most difficult period in its history. Born as a result of pay conflicts between the government and NHS doctors in 1963, and extended to 45 per cent of public sector workers thereafter, independent pay review bodies have traditionally been supported by all sides as a means for determining wages that keeps public sector incomes in broad alignment with similar private sector remuneration. But public sector unions have lost trust in the independence of pay review body recommendations and many are now threatening to boycott the process next year, demanding direct collective bargaining with ministers instead.
Pat Cullen, general secretary of the Royal College of Nursing, said her union had been "hoodwinked into lending credence to this process for years" and patience was now running out. "The government is using the pay review body for cover and for this exact reason unions like us are seriously looking at whether we take part anymore," she said.
Elsewhere in the health sector, the GMB union, which represents ambulance drivers among others, has said it is pulling out of the process next year and will not submit evidence to the NHS pay review body. The Unite union, which claims to represent 100,000 public sector workers, said the bodies were "not fit for purpose".
Senior health sector managers, represented by a joint venture between Unison and the First Division Association say the "writing is on the wall" for the pay review system. Kevin Courtney, the joint general secretary of the National Education Union, told the FT that education unions were widely considering a boycott of the process next year because "the government was hiding behind the [pay review bodies'] so-called independence".
Is there a solution to the impasse with the unions?
The government has already started the 2023 pay review and with unions debating whether to participate, a resolution of the 2022 dispute is needed for next year's process to be meaningful. Disney said it would take too long to reflect falls in public sector pay relative to the private sector in the 2023 process, so he urged ministers to find extra money for a one-off non-consolidated payment in the meantime to settle the disputes. "No doubt the Treasury would resist substantial payments in the face of its anti-inflation strategy, but . . . increases in earnings present a much lower risk to increasing the rate of inflation compared to some of the other fundamental drivers," such as energy prices, he said.
What are Pay Review Bodies?
Pay Review Bodies are independent panels – technically, non-departmental public bodies – that gather evidence and then provide the government with advice each year on pay for many public sector workers. The government ultimately decides the level of public sector pay (or in the case of public services such as the NHS which are devolved, the devolved governments set their own arrangements). But for around half of the public sector workforce these decisions are informed by the independent pay review bodies.
How many pay review bodies are there?
There are nine pay review bodies. They are:
Armed forces' pay review body (AFPRB)
Review body on doctors' and dentists' remuneration (DDRB) – covering nearly 250,000 hospital doctors, GPs and dentists
NHS pay review body (NHSPRB) – covering around 1.4 million NHS workers, including: nurses and health visitors; midwives; ambulance staff; scientific, therapeutic and technical staff; hotel, property and estates staff; and all but the most senior managers
Prison service pay review body (PSPRB)
School teachers' review body (STRB)
Review body on senior salaries (SSRB) – covering judges, senior civil servants, senior members of the armed forces, senior police officers, and the most senior NHS managers
Police remuneration review body (PRRB)
National Crime Agency remuneration review body (NCARRB)
Together, these pay review bodies cover around 45% of public sector staff. The main groups not covered by a pay review body are civil servants (apart from the most senior ones) and local government employees.
Who sits on the pay review bodies?
Each pay review body is usually made up of between six and eight members. The chair of each committee is appointed by the prime minister, while the other members are appointed by the prime minister or the relevant secretary of state, based on merit and following an open process. Vacancies are advertised publicly.
They are appointed for a three-year term, which can be renewed once.
Review body members come from a range of backgrounds and bring a variety of expertise. Each review body typically has members who provide the following range of perspectives: sector experts, human resources and remuneration experts, professional economists from academia or elsewhere, and former trade unionists.
What are the pay review bodies' remits?
Each pay review body has a terms of reference, which sets out its overarching objectives. Each year, the relevant secretary of state then supplements this with a remit letter, emphasising which factors the body should focus on that year and any specific constraints on the issues that the review body is asked to consider.
The terms of reference and remits typically cover a range of factors, including: the need to recruit, retain and motivate the necessary quality and number of staff; regional and local variation in labour markets; the overall spending envelope available to the relevant department or service; the government's inflation target.
In some years, pay review bodies have also been constrained to make recommendations that are consistent with a particular cap on overall pay growth – for example, in 2011 and 2012, the government imposed a pay freeze for workers earning over £21,000 a year and so pay review bodies made no recommendations on pay for staff on higher salaries.
Public sector pay growth was then limited to an average of 1% between 2013 and 2017. Public sector wages were also frozen during the 2021/22 pay round due to the coronavirus pandemic, meaning public sector workers received the same pay in 2021/22 as in 2020/21. The only exceptions were those earning less than £24,000 a year, who were guaranteed a pay increase of at least £250, and NHS workers. Remit letters sent by secretaries of state to pay review bodies took account of this and asked for advice on how to implement the £250 rise for lower paid workers.
Each review body usually has some freedom in how it interprets its terms of reference. For example, the NHSPRB's terms of reference state that recommendations should "have regard to…the Government's inflation target". However, in 2022, the body essentially concluded that its recommendations were not meaningfully constrained by this, saying: "As earnings growth remains substantially below inflation, we judge that increases in earnings present a much lower risk to increasing the rate of inflation compared to some of the other fundamental drivers."
How do the pay review bodies reach their recommendations?
Pay review bodies all follow a similar procedure when advising the government on pay. First, the relevant secretary of state issues a remit letter to the pay review body covering sectors overseen by their department (so the home secretary would issue a remit letter for the police and National Crime Agency remuneration review bodies, for example). Normally, secretaries of state will use their remit letter to formally request recommendations on employee pay and ask pay review bodies to consider certain objectives such as affordability, recruitment and retention and the state of the wider labour market. When the government has an overarching public sector pay policy that overrides the pay review bodies process (see above), secretaries of state will ask for the views of the pay review body on how to implement this overarching policy.
Following this, pay review bodies then receive evidence from a range of sources, such as trade unions and employers on issues relating to pay and retention. At this time, the government also submits its formal pay offer. This is a detailed series of proposals on the future level of pay for specific groups of employees. For example, HM Prisons and Probation Service's submission to the Prison Service Pay Review Body for the 2022/23 pay round contained 12 separate proposals covering all staffing grades, increases in grades, restructuring of pay bands and allowances.
In light of this evidence, pay review bodies then make a recommendation to the government on the level of pay.
What does the government do with the pay review body recommendations?
The government is not bound by the review bodies' recommendation. The prime minister and relevant secretaries of state decide how to react to the advice provided.
The UK government determines when it will respond to and publish the reports of pay review bodies. Secretaries of state usually respond to pay review body recommendations through issuing a written ministerial statement in parliament.
The recommendations of pay review bodies are usually accepted by the government. However, there have been times when the government has over-ridden their recommendations – for example, in 2022, the government chose not to implement the full recommendations of the senior salaries review body.
What were the latest recommendations from the pay review bodies?
Recommendations from all the pay review bodies (except for the National Crime Agency) which will inform pay rises for the 2022/23 financial year were published alongside the government's response on 19 July 2022. As the pay review bodies have reported after the financial year started (which was at the beginning of April), most pay increases will not be implemented until the autumn but will be backdated to the start of April.
https://www.ft.com/content/0953587e-6a20-40d4-8459-d4d7a2aa4d27
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