The deputy general secretary of the Prospect union has hit out at the Treasury's latest civil service pay guidance, saying the ongoing 1% cap is a "damaging false economy" in spite of new senior civil service pay freedoms for departments.
The 2016-17 guidance set out last week by the Treasury confirms that average pay rises for civil servants will continue to be capped at 1%, with limited flexibility for departments to reallocate money from within their overall paybill to ease recruitment and retention pressures.
Following a report by the Senior Salaries Review Body (SSRB), the Cabinet Office also announced that departments would be granted more freedom to give one-off bonuses of up to £5,000 to "outstanding" members of the senior civil service (SCS).
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That move was designed to address what the SSRB said were "major anomalies" in the SCS pay system, including managers earning less than their juniors and external hires earning significantly more than those promoted from within.
It came as MPs on the Public Accounts Committee highlighted a rise in the civil service's use of consultants and temporary staff, and urged departments to set out their long-term skills requirements, supported by stronger follow-up from the Cabinet Office.
Seizing on PAC's report, Prospect's Garry Graham – whose union represents around 30,000 specialists and managers in the civil service – said "sclerotic, uncompetitive pay restraint" was "resulting in a failure to recruit across government".
He added: "This is not sustainable."
“Furthermore, the PAC tells us that the civil service and its agencies are increasingly relying on the use of consultants, who can often cost twice as much as the equivalent members of staff. In other words, the much-trumpeted cost savings achieved through pay restraint are a damaging false economy.”
Graham highlighted Prospect analysis of the latest Ministry of Defence workforce management statistics, showing that Defence Equipment and Support spends more than 8% of its monthly pay bill on consultants, even though those 254 outsiders represent just 2.5% of its overall workforce.
Graham said: “On the face of it, the figures suggest there are at least parts of the civil service that could afford to pay much more market-competitive rates."
While this month's SSRB report said there was "no clear evidence of recruitment and retention problems" across the wider senior civil service, it flagged up a disconnect between "the jobs people have, how well they perform in them and what they are paid relative to their peers" and urged the government to carry out a "fundamental" review of the system.
The Cabinet Office is currently drawing up a civil service-wide workforce strategy, which is expected to be published in the spring.