Offering senior civil servants larger pay rises than their more junior colleagues would be “almost certainly justifiable”, according to the Institute for Fiscal Studies, which has said higher wages will be needed to arrest high rates of churn.
The IFS’s latest report finds that in the last decade, pay has dropped significantly at all levels of the senior civil service, and compares poorly to senior staff in other areas of public service.
The Pressures on public sector pay report highlights the need for ministers to target pay increases strategically, given that large-scale additional public sector pay increases “could eat into the extra resources provided for public services that would be provided by higher real-terms spending”.
It says a 1% real-terms increase to day-to-day public service spending per year over the next four years would represent an additional £22bn of spending per year by 2028-29 – and that half of this figure would be taken up by the public sector pay bill if public servants’ wages were to rise by 0.5 percentage points faster than average earnings.
It argues that SCS pay may therefore be one worthwhile target for investment, given the significant real-terms decrease in senior civil servants’ wages and the corresponding effects on recruitment and retention.
Between 2013 and 2023, deputy directors’ pay has seen a nominal increase of around £11,500, or 16%, the report says. However, after adjusting for inflation, the real-terms value of their pay fell by 12%.
The real-terms percentage losses are greater for more senior roles, the IFS found. Using Cabinet Office figures provided by the Senior Salaries Review Body, which makes recommendations on SCS pay, the think tank calculated that directors are 14% worse off than in 2013 in real terms, whilst directors general are 16% worse off.
The SSRB has meanwhile judged that members of the SCS are paid less than for comparable roles in the private sector, the IFS said.
The think tank highlighted the longstanding issue of SCS churn as a concern, noting that in 2022-23, around 25% of senior civil servants changed jobs or left altogether. Changes between departments – which accounted for more than a quarter of this turnover – are “often driven by a lack of pay progression in role”, it says. Of those job leavers who had exit interviews, 68% said pay was a significant factor in their resignation.
Insufficient pay is affecting not only retention but also recruitment, according to the report, which says the SSRB has highlighted the quality of job applicants to the SCS as a concern.
Over time, the proportion of posts remaining unfilled after a hiring process and the share of processes that have only one appointable candidate have been rising, the report says. At the same time, the share of candidates considered good or outstanding fell from 68% in 2018-19 to 54% in 2022-23, the most recent year for which data was available.
Meanwhile, the quality of senior officials who leave the civil service is “often high”. In 2022-23, 72% of those exiting were graded as “regrettable” – the highest proportion recorded by the SSRB – meaning they were high performers or had particularly high potential.
The report also draws comparisons between the SCS and other senior members of the public sector that are covered by pay-review bodies – unlike rank-and-file civil servants, whose pay is decided without the advice of such a group.
The report notes that while high-ranking civil servants, senior members of the armed forces, the judiciary, senior NHS managers and chief police officers are all senior members of the public sector, “in many ways they look radically different”.
“This is true in the case of the challenges they face. Though not problem-free, recruitment and retention in the senior armed forces and for senior police officers are comparatively easy,” it says. By contrast, the senior civil service faces significant recruitment and retention issues, it says – adding that the judiciary faces “severe recruitment shortfalls” but “almost no issue retaining staff”, while among senior NHS leaders, staff turnover is high.
The report notes disparities in several areas of the public service between pay for more senior and more junior staff – with pay for more experienced teachers falling compared to that of new teachers, while the opposite is true for police officers.
It says that the civil service is “one area where targeting larger rises towards higher earners is almost certainly justifiable”, along with the judiciary, “both of which are experiencing significant problems due to pay”.
It argues that people in senior roles represent less than 1% of the UK’s 5.9 million public servants and that “even substantial pay rises for these groups would be rounding errors compared with the public sector pay bill as a whole”.
But it notes that public finances are not the only obstacle to growing senior officials’ pay packets. “Pay rises for these groups may therefore not need a financial solution, but perhaps a political one. They would necessitate a government being willing to pay some people more who are well paid when compared with the wider population, but not when compared with what many of them could earn elsewhere,” it says.