Public-sector pay review bodies 2014: emphasis moves to pay progression

Author: Rachel Sharp

In the second year under its policy of limiting public-sector pay awards to an average of 1%, the Government has focused on pay progression as well as continuing pay restraint.

Key points

  • The pay review body groups were covered for a second year in 2014 by the Government policy of restricting pay awards to an average of 1%, and the Government emphasised the need for ongoing pay restraint in setting out the approach the review bodies should take.
  • In the 2013 Budget the Government announced that reform of public-sector pay would focus on progression pay, and the review bodies were asked to take account of their remit groups' progression structure and distribution among staff in recommending the 2014 pay awards.
  • Although the review bodies' recommendations followed the Government's policy, for many groups of staff in England the recommended increases were rejected by the Government.

The seven independent public-sector pay review bodies, and two police boards, make recommendations on pay that affect 2.5 million employees - around 40% of public-sector staff - with a paybill of £95 billion. The groups of workers within the remits of the pay review bodies were covered by the Government's policy of restricting pay awards to an average of 1% for a second year in 2014.

This period of restraint was originally set to last for the two years following the two-year pay freeze, but was extended in the 2013 Budget for a further year. As well as announcing that public-sector pay increases would be limited to an average of up to 1% in 2015/16, the 2013 Budget included an announcement that the Government intended to seek further savings through reform of pay progression in the public sector.

Reforming progression pay

Chancellor George Osborne provided further detail on pay reform in the spending round speech in June 2013, saying that "the biggest reform we make on pay is to automatic progression pay". He confirmed the Government's intention to end what he described as this "antiquated" and "deeply unfair" practice in the civil service by 2015/16, and added: "We are working to remove automatic pay rises simply for time served in our schools, NHS, prisons and police. The armed forces will be excluded from these reforms."

In July 2013, Danny Alexander, chief secretary to the Treasury, wrote to the review bodies to outline how they should approach their recommendations on pay awards for 2014/15. In the letter, he emphasised that the case for continued pay restraint remained strong, saying that there were unlikely to be significant recruitment and retention issues for the majority of public-sector workforces over the coming year and that continued restraint would help to protect jobs and support the quality of public services.

He confirmed that pay awards should be applied to the basic salary - for example, not including overtime or London weighting. His letter also drew attention to the 2013 spending review announcement on progression pay, saying: "The review body is therefore invited to consider the impact of their remit group's progression structure and its distribution among staff in recommending annual pay awards."

The Government's approach to pay progression has been rejected by the Scottish Government, which states that one of the key features in its public-sector pay policy is that it retains discretion for individual employers to reach their own decisions about pay progression. For the groups in the NHS for which it provided a separate remit, the Scottish Government made clear that although its public-sector pay policy set an overall cost cap for increases in basic pay of 1%, this cap does not include pay progression or the measures to protect staff earning less than £21,000 per year.

The reports from the Armed Forces' Pay Review Body (AFPRB), the Prison Service Pay Review Body (PSPRB) covering England and Wales, the NHS Pay Review Body (NHSPRB), the Review Body on Doctors' and Dentists' Remuneration (DDRB) and the Review Body on Senior Salaries (SSRB) were published on 13 March 2014 on the Office of Manpower Economics website. The other two review bodies - the School Teachers' Review Body (STRB) and the new National Crime Agency Remuneration Review Body (NCARRB) - are due to submit their reports in May 2014. For the most recent pay award recommendations made by the STRB, which took effect in September 2013, see Public-sector pay 2013/14: Government pay policy sees awards at 1%.

Concerns about the Government's approach

The review bodies' reports - as they had done in the 2013 pay round - raised concerns about the Government's approach to public-sector pay and the effect of the sustained period of pay restraint on the morale and motivation of these remit groups. The SSRB was strident in expressing its view that the Government's policy could damage the ability to recruit and retain people of sufficient calibre for leadership roles, and that its approach was resulting in staff not feeling valued.

We are working to remove automatic pay rises simply for time served in our schools, NHS, prisons and police. The armed forces will be excluded from these reforms.

George Osborne, Chancellor of the Exchequer

Several of the review bodies said they felt that the well-publicised Government policy of limiting pay awards to an average of 1% resulted in expectations that this would be the level of award made, with any other outcome having a further damaging effect on morale. The review bodies covering the NHS were also concerned that continuing constraint on their remits was affecting their ability to carry out their work and resulting in their independence being brought into question, an issue also raised by the AFPRB.

The NHS pay review bodies expressed their disagreement with the Government's approach to incremental progression, which they view as part of the pay systems for NHS staff and distinct from the annual pay award - although the NHSPRB said it was finding it increasingly difficult to maintain this distinction because of affordability issues and the effect of the system on pay strategy.

The issue of effective performance management and appraisal - which is an essential element in moving from progression based on time served to progression based on performance or contribution - was also raised by the review bodies.

The PSPRB questioned the operation of performance-based progression while the performance management system is still being developed, saying that "guidelines and criteria for progression [for staff in open pay ranges] should be transparent and equitable". It requested more information about how performance management is applied to pay in time for its next report. The NHSPRB believes that inadequacies in the performance management system are preventing the Agenda for Change (AfC) structure from working as intended, while the DDRB suggested that the introduction of a robust appraisal process would require a cultural change in the NHS. The SSRB described the performance-pay systems of two of its remit groups - senior civil servants and very senior managers in the NHS - as "ineffective and demotivating", and called for them to be reviewed.

In spite of their reservations, the review bodies made recommendations in line with the Government's policy. However, while the recommendations of a 1% increase for the armed forces and the judiciary, and for most staff in the PSPRB remit, were accepted, the Government rejected the recommendations made for senior civil servants and for most of the NHS staff groups in England, although the recommendations for the NHS were accepted by the Scottish Government.

The review body outcomes covered in this feature are summarised in table 1, and examined in more detail below.

NHS Pay Review Body

The NHSPRB covers around 1.36 million NHS staff covered by the AfC agreement in the UK (headcount figure as at September 2012). The review body makes recommendations to the First Ministers and health ministers in Scotland, Wales and Northern Ireland, as well as to the Prime Minister and Secretary of State for Health. The review body commented that this year it had seen the approach of the four countries in the UK diverging more than in previous years, with the remits all seeking slightly different outcomes. It acknowledged that financial pressures are a significant issue across the UK.

In a follow-up to the letter received from the chief secretary to the Treasury, the remit from the Department of Health (DH) reiterated the Government's emphasis on reforming progression pay. It said that changes to AfC agreed for England by the NHS Staff Council in 2013 would take time to implement, and asked the review body to consider the existing progression structure and its distribution among staff when recommending the annual pay award. The remit also stressed the case for continuing pay restraint and said that for the NHS, affordability and the level of incremental pay would be "a critical element" as the review body determined whether or not any pay award was justified.

The Government is clear that time served is no longer an appropriate rationale for pay progression for staff in the public sector.

Department of Health

The remit from the Scottish Government highlighted features of Scotland's public-sector pay policy that were of relevance to the review body process: the provision for an increase in basic pay for all staff, subject to an overall cost cap of 1%, although it did state that there was no assumption that this would equate to a 1% uplift; and a minimum increase of £300 for staff earning less than £21,000 per year. The cost of this measure, and the cost of pay progression, are excluded from the 1% cap. Beyond that, it said that it wished the review body to be as free as possible in considering issues and making recommendations.

The Welsh Government asked the review body to consider whether or not an uplift to NHS salaries was appropriate in the current financial environment, and whether any award should be confined to the lower pay bands or to raising the starting rates for NHS employees to a salary matching the living wage level. The review body was also asked to look at whether a fixed-sum increase might be more appropriate than a percentage uplift, or whether or not a pay freeze would be appropriate for higher earners.

The remit from Northern Ireland said the Northern Ireland Executive would adhere to the UK Government's public-sector pay policies and, set against a background of financial pressure, asked the review body whether or not it was appropriate to provide an uplift to salaries.

Reform of Agenda for Change

Some of the parties, including the DH, suggested that it would be helpful if the review body made recommendations on how any pay award might be made dependent on the partners reaching agreement on AfC reform. The DH went further, suggesting that any award should be deferred by being tied to progress on reform.

The review body said it was of the view that reform of AfC should be dealt with by the NHS Staff Council, although it was prepared to assist in any way that all the parties felt was helpful. It suggested that the parties should clarify the changes needed to the current pay agreements to enable staff to deliver care seven days a week, and that negotiations to implement these changes should be carried out in tandem with those on changes to medical staff contracts, observing that progress on a wider seven-day service was urgently needed.

Despite the changes to AfC in England, the DH asked the review body to make observations on whether or not the AfC progression structure could be reformed to help improve performance and productivity. It sought recommendations on changes that would remove or reduce the cost of incremental progression, and make a stronger link between performance, pay and productivity.

We are finding it increasingly difficult to treat incremental progression distinctly from our considerations and recommendations on the pay uplift.

NHS Pay Review Body

The review body noted that much of the evidence presented had focused on the cost of incremental scales. This, it said, was not the right point for debate - rather, it believed that the system is not effective in rewarding performance because of inadequacies in the appraisal and performance management system. It observed: "There is a pressing need to manage and apply the agreed pay progression arrangements properly through the application of a simplified Knowledge and Skills Framework in order to ensure that pay progression is linked to competency development and performance, as was intended within AfC." It added that the incremental system is a fundamental part of the AfC structure and outside its normal remit on pay uplift.

However, it said: "We are finding it increasingly difficult to treat incremental progression distinctly from our considerations and recommendations on the pay uplift." It urged the parties to quickly agree a thorough review of the pay structure, including the incremental scales, to enable it to support patient care and affordability. The review body said it would be prepared to look at this if given an appropriate remit.

Because the remits from the various administrations across the UK differed, the review body had to decide whether to make different recommendations for each of the countries or whether to maintain the UK-wide AfC pay scales. As the parties favoured retaining a UK-wide structure, the review body concluded that its recommendations would reflect this, but observed that it could not say that this would continue to be the case in future years. The review body decided that a pay increase of 1% would be appropriate, and that this should be consolidated, because a non-consolidated award could have an adverse effect on motivation. It therefore recommended a 1% increase to all AfC pay points from 1 April 2014, with the same increase applied to high-cost-area supplement minima and maxima.

Recommendations rejected for NHS in England

Responding to the report, Jeremy Hunt, Secretary of State for Health, described the recommendations for a 1% consolidated rise for staff on top of automatic increments as unaffordable and said this would risk the quality of patient care. He said: "It is not possible to maintain appropriate numbers of front-line staff, give a general pay rise of 1% and pay for incremental progression." He set out the Government's alternative approach, saying "all staff will receive at least an additional 1% of their basic pay next year". Staff who are at the top of their pay scales, and so not eligible to receive incremental pay, will be given a non-consolidated 1% payment in 2014/15, while others will receive at least this amount through progression.

Hunt went on to explain that it was the Government's intention that the same approach would apply in 2015/16, with staff receiving either a non-consolidated payment worth 2% of pay or incremental progression. The review body will therefore not be given a remit to make recommendations on a pay award for this group next year, although it may be asked to look at contract reform issues. However, Hunt added that the Government would be prepared to reconsider the position and make a consolidated award if the NHS trade unions were prepared to agree to a one-year freeze on incremental pay in 2015/16.

Hunt's response applies only to NHS staff in England. The Scottish Government confirmed that it would accept the recommendation of a 1% across-the-board increase, and would also implement its public-sector pay policy of awarding an uplift of £300 on pay points under £21,000 as a consolidated increase on gross 2013/14 pay. In Scotland, in line with the commitment that NHS staff earn at least the Scottish living wage, point 1 on the AfC matrix is not used.

There is a pressing need to manage and apply the agreed pay progression arrangements properly.

NHS Pay Review Body

For Wales, Mark Drakeford, Minister for Health and Social Services, said that an award would be made with a cost equivalent to that of implementing the DH's proposals in Wales. He added that discussions would be held between the employers and trade unions and staff associations as to how this might be distributed. A Welsh Government spokesperson said discussions were expected to be held throughout April.

Separate negotiations on changes to AfC have been taking place in Wales. The changes largely mirror those made in England last year but are time-limited until March 2017, and the trade unions are currently consulting on these.

At the time of writing, the response from the Northern Ireland Executive had not been confirmed.

The AfC pay scales are shown in table 2, which highlights the differences between the pay points in England and Scotland.

Review Body on Doctors' and Dentists' Remuneration

The DDRB covers more than 200,000 doctors and dentists working in the NHS in the UK. As was the case for the NHSPRB, the remits received from the four countries differed.

The remit from the DH again stressed the reforms to progression pay, saying: "The Government is clear that time served is no longer an appropriate rationale for pay progression for staff in the public sector." Although discussions are underway on contractual arrangements for consultants and doctors and dentists in training, the DH asked the review body to consider the existing progression structure when recommending the annual pay award, and in line with the NHSPRB remit said affordability and the level of incremental pay that staff would receive would be critical.

The remit from the Welsh Government mirrored that given to the NHSPRB, as did the remit from the Scottish Government, while the remit from Northern Ireland asked the DDRB to consider pay progression as part of its review. 

The DH asked the DDRB to consider making recommendations dependent on agreements to contract reform, effectively deferring the award. As the health departments in Northern Ireland, Scotland and Wales did not support this, and not all the remit groups are involved in negotiations, the review body concluded it would not be appropriate to endorse this proposal.

The review body said it was aware that the parties were separately undertaking negotiations on doctors' and dentists' contracts that were clearly related to pay, making a "compelling" case for an across-the-board uplift.

The DDRB reiterated its view on incremental pay progression, saying that if it were to offset the earnings growth arising from increments against the annual pay award this would "undermine the fundamental principle on which incremental pay scales are based". It went on to say that if employers found the cost of increments to be unaffordable, this should be addressed through negotiation. In finding a better balance between pay, performance and productivity rather than time served, the review body emphasised the importance of a robust appraisal process and suggested this would require a major shift in the culture of the NHS.

The review body recommended an increase of 1% from 1 April 2014 to the national salary scales for doctors and dentists and to the salary range for salaried general medical practitioners, concluding that this was "appropriate and justified". For independent contractor general medical practitioners (GMPs), the review body recommended an uplift in overall general medical services contract payments designed to result in an increase of 1% to their income; with the same increase in income for general dental practitioners (GDPs) effected by an increase in the gross earnings base or item-of-service fees in each of the four countries. The report noted that the review body accepted that the Government has the right to reject or modify its recommendations, but said that in view of the evidence-based and independent nature of its work, it hoped this would be only in "exceptional circumstances".

Hunt gave the same response to the DDRB's recommendations as to those made by the NHSPRB: the 1% consolidated rise for employed doctors and dentists in England was rejected, with staff receiving either incremental progression or a non-consolidated payment of 1%, with the same approach the following year (when the non-consolidated increase will be worth 2%). As was the case with the NHSPRB, the DDRB will not be given a remit to make pay recommendations next year but may be given a remit to consider the contract negotiations taking place for consultants and doctors in training. Again, the Government would be prepared to reconsider the position if the trade unions agreed to freeze incremental progression for a year.

Hunt said the Government accepted the recommendation on GMPs, but reduced the uplift applied to gross earnings for GDPs.

The Scottish Government accepted the recommendations of a 1% increase in basic pay and the increase for general dental practitioners. It also announced that general practitioners in Scotland would receive a 1% pay increase.

In Wales, the recommendation on GMPs was accepted, but a lower-than-recommended increase confirmed for the value of dental contracts. For non-consultant salaried doctors, discussions will be held between employers and the British Medical Association (BMA) in Wales about how the equivalent cost of implementing the DH recommendations in Wales could be distributed. For consultants, it said BMA Wales would be invited to combined negotiations on the outstanding proposals on the consultant contract and the pay issue for 2014/15.

At the time of writing, the response in Northern Ireland had not been confirmed.

Prison Service Pay Review Body

The PSPRB makes recommendations on the pay of 26,046 operational managers, prison officers and support grades in the public-sector prison service in England and Wales. A new pay structure, Fair and Sustainable, was introduced in 2012 and applies to new staff. Existing staff were given the opportunity to opt in to the new system, but they can choose to remain in their existing closed grades with a further opportunity to opt in each year after the application of any pay award from the 1 April review date. The review body therefore has to consider staff in two different pay systems in making its recommendations. It noted that there are significant differences between the pay of prison officers on the closed grades and those on the new system, so there is no financial incentive for the majority of staff in closed grades to move across. It is concerned about the lack of clarity over how long it will take for all staff to transfer to the new pay structure, with the risks involved in running two pay structures alongside each other over many years.

It is not possible to maintain appropriate numbers of front-line staff, give a general pay rise of 1% and pay for incremental progression.

Jeremy Hunt, Secretary of State for Health

There is a further complication in that most Fair and Sustainable pay bands apply both to operational staff that come within the review body's remit and to non-operational staff outside its remit group, on whose behalf it does not receive evidence but to whom the review body's recommendations automatically apply. Pay bands 1 and 6 are for non-operational staff only and are not covered by the review body's recommendations. Bands 2 to 5 cover prison officer and support grades and contain incremental pay points, while bands 7 to 11 cover operational manager grades and are open ranges.

Fewer staff have moved on to the new system than had been anticipated, with around 16% on Fair and Sustainable terms and conditions, despite the National Offender Management Service (NOMS) evidence that around 28% would benefit financially from these arrangements. NOMS proposed changes to the Fair and Sustainable pay points and ranges so that more staff would benefit from opting in to the new structure, while proposing no increase to the pay of staff in closed grades.

However, the review body found evidence of decreasing morale and motivation in its remit group, which it said had potentially significant implications for productivity and effectiveness. Staff in closed grades had expected to receive a consolidated increase of 1% in 2013, in line with Government policy, and had been demotivated when the review body recommended that they receive only progression or a non-consolidated flat-rate payment instead. Morale and motivation had also been affected by increasing pension contributions and inflation reducing the real value of their pay.

The PSPRB therefore made recommendations that attempted to balance two main issues: that of motivation, and of encouraging staff on the closed scales to move to the new pay system. It supported the NOMS proposals for managers, which it hoped would encourage these staff to opt in and lead by example. However, it did not believe that the case for the NOMS proposed changes to pay bands 2 to 5 was compelling. Instead it recommended a pause in the approach of increasing the incentive to opt in for officer and support grades, with an award for staff on both the new pay system and - in what it described as "exceptional circumstances" - the closed grades to give the 1% consolidated award many believed the Government policy implied. It recommended an increase in line with the pay award to the Tornado payment (see below), with other allowances unchanged.

The recommendations effective from 1 April 2014 are:

  • a 1% increase on pay points in Fair and Sustainable pay bands 2 to 5, with staff below the maximum who had a performance marking of "achieved" or "exceeded" progressing by one pay point;
  • a 1% increase on pay points in the closed officer and support grades, with staff below the maximum of these grades also entitled to contractual progression;
  • no pay award for those in the senior manager and manager closed grades, who have contractual entitlement to progression of one pay point or a non-consolidated award for those on the maximum, and access to a consolidated increase if they opt in to the new structure;
  • changes to some pay range maxima in bands 7 to 11 designed to allow a 2% consolidated payment on opt-in, and changes to the minima of all pay ranges to ensure all have a maximum that is 20% more than the minimum;
  • staff in bands 7 to 11 with a performance marking of "achieved" or "exceeded" receive 4% consolidated pay progression, capped at the band maximum, with an additional 1% non-consolidated payment for those with an "exceeded" marking;
  • a 1% increase on the pay points and spot rates for staff from the former HMP Wolds who transferred from G4S to NOMS in equivalent grades to the closed officer and support grades; and
  • an increase of 1% in the Tornado payment - paid to teams of staff that deal with serious incidents in prisons - to £19.51 per hour.

While it supports the introduction of Fair and Sustainable, the review body concluded that there is a need for more effective engagement with staff to build trust in the new system, and asked the parties to improve communication so that staff can understand what the pay, terms and conditions would mean for them. The trade unions have raised issues about the job evaluation of the new grades. There is also a lack of clarity about pay progression in bands 7 to 11, and the review body expressed concern about the performance management system still being a "work in progress" and said it was difficult to understand how individual performance-related progression could be delivered while this was the case. It requested more information about how the performance management system is applied to pay in time for its next report, which will also look at the locality pay zone structure.

The review body said that it believed its proposals met the Government policy of pay awards averaging 1%, delivering an award at that level for most staff. It considered the additional costs of pay progression and non-consolidated performance payments to be separate from the paybill costs associated with the annual pay award, which was also the case for the costs associated with staff opting in to the new pay system. Jeremy Wright, the Minister for Prisons and Rehabilitation, said the Government accepted the recommendations in full.

The review body produces a separate report on the Northern Ireland Prison Service, which is expected later in the year.

Armed Forces' Pay Review Body

The AFPRB covers around 166,500 service personnel at and below the rank of brigadier and equivalent. Senior officers in the armed forces fall under the remit of the Review Body on Senior Salaries. The armed forces are excluded from the Government's reforms of pay progression "due to the unique nature of their careers", although in the remit letter to the review body, Secretary of State for Defence Philip Hammond noted that there will be a comprehensive review of current pay arrangements, including progression arrangements, as part of work designed to modernise conditions with a "new employment model".

The Ministry of Defence (MoD) proposed a uniform increase of 1% to base pay for all ranks, with the same increase applied to compensatory allowances and most rates of recruitment and retention pay, in line with Government policy on public-sector pay. The review body had commissioned research on pay comparability, which found that pay of service personnel was broadly comparable with that of civilians in both the private and public sectors. It also noted that in other parts of the public sector, increases in pension contributions had resulted in a decrease in take-home pay for some groups, highlighting the value of the non-contributory armed forces pension scheme. This, together with the evidence on affordability and the fact that the MoD did not believe there was a general problem with recruitment and retention, led the review body to conclude that an increase of 1% in base pay from 1 April 2014 was appropriate. It also endorsed the MoD's proposals on the uplift of most rates of recruitment and retention pay.

Hammond said the review body's recommendations would be accepted in full. Some additional financial incentives proposed by the MoD were endorsed by the review body outside of the normal pay round, including extending the period of entry to the reserve commitment bonus scheme to 31 March 2017 and doubling the value of the scheme to £10,000 (before tax), although the review body noted that the incentives should not be used as compensation for failures in the recruitment process. It also made several comments regarding the need for better future planning of staffing levels.

Review Body on Senior Salaries

The SSRB makes recommendations on pay for the senior civil service (SCS), senior officers in the armed forces, the judiciary, very senior managers (VSMs) in the NHS, and - for the first time this year - the new police and crime commissioners (PCCs).

As was the case last year, the review body was critical of the Government's approach to the pay of its remit group and said it was vital for the Government to demonstrate that it values leadership in the public sector, because as the economy recovers it will be increasingly difficult to recruit and retain high-quality people while paying them much less than they could earn in the private sector.

It added: "[The Government] can show its commitment both by short-term measures at little or no cost to remove petty restrictions affecting our remit groups, and by developing longer-term workforce and reward strategies for these groups to ensure an adequate supply of suitably able and qualified people."

Senior civil service

The number of staff in the SCS remit group increased by 2% in 2013, to 3,695, having fallen for the previous two years, as some staff transferred from non-departmental public bodies to departments as a result of Government changes. There are four pay bands for senior civil servants, with a separate band for permanent secretaries.

The SSRB has repeatedly called for the Government to overhaul the SCS pay system, which it believes is "beset with problems", but in its 2014 report concluded: "It is clear to us that the Government is unwilling to envisage reform of the SCS pay system during this period of public-sector pay restraint, which is likely to last until the next general election and possibly longer." It concluded that as far as the SCS was concerned, it was "marking time" until a change in policy allowed the pay system to be revised. In the meantime, the review body recommended that an additional principle be added to the SCS reward system: it should be able to recruit, retain and motivate sufficient suitably able and qualified people. It also recommended that departments be instructed to carry out exit interviews for all SCS members leaving before normal pension age, using a standardised approach.

The Government's proposals on pay were little changed on those made in 2013, and argued that 0.09% of the SCS paybill should be used to increase pay band minima of bands 1, 2 and 3 to reduce overlaps across SCS pay bands, with the balance of 0.91% used by departments for targeted base pay increases and general increases taking account of performance and other business needs. Up to the top 25% of performers should receive non-consolidated awards subject to a limit of 3.3% of the SCS paybill.

The SSRB supported the increases to the pay band minima, effective from 1 April 2014, but noted that to adopt the same pay proposals as last year would be "potentially divisive and could seriously damage the morale and motivation of those whose pay is frozen for a fifth year". Instead, it believed there was a strong case for a uniform increase of around 1% to all except the bottom 10% of performers, who should receive nothing. It also recommended that the individual caps on non-consolidated performance-related payments should be restored. It believed the pay band minima for the three tiers for the pay of permanent secretaries should be increased to maintain the overall SCS pay structure, and a pay award of around 1% applied to this group as for the rest of the SCS.

Although the Government accepted the introduction of a new reward principle and the approach to exit interviews, as well as the increases to the SCS pay bands, it rejected the recommendations on the pay increase and the cap on performance awards, saying these did not give departments the flexibility they require. Instead, departments will target increases within the 1% average award in line with the Government's proposals. The increases to the minima of the permanent secretary pay tiers will be considered by ministers, taking account of the views of the permanent secretary remuneration committee.

Senior officers in the armed forces

As at 1 July 2013, there were 128 senior officers in the armed forces at 2-star level and above. This is the only group in the remit of the SSRB that has incremental pay progression, and the Government has excluded the armed forces from reform of this element of pay. The MoD proposed that the same pay increase should apply across all ranks, and said a 1% award could be funded from its budget, but no more. In the absence of evidence of retention problems the review body supported this proposal for a general 1% pay increase from 1 April 2014, and maintaining the differential of 10% between the pay of 1-star and 2-star rank (before X-factor), which was accepted by the Government.

The judiciary

There are 2,188 salaried judicial office holders in the UK falling under the remit of the SSRB. The Government proposed an increase of 1% for all judges, and the review body found no problems with recruitment and retention that justified a higher increase, so recommended a 1% salary increase with effect from 1 April 2014. It also recommended that the Government addresses the outstanding recommendations from the 2011 major review of the judicial salary structure by 2015, before the start of the next major review.

The Government accepted the recommended pay increase, but added: "Due to the continuing fiscal challenge and broader public-sector pay policy, it has not been appropriate to respond to the SSRB's latest recommendations about the major review." It said the proposals would be considered as a broader strategy was developed.

Very senior managers in the NHS

Since the reorganisation of the NHS under the Health and Social Care Act 2012, the main employer of VSMs under the remit of the SSRB is NHS England. The DH estimated the number in the SSRB remit at around 424. The majority of the VSMs in the NHS are employed in NHS trusts and clinical commissioning groups, in which the pay of senior managers is not under direct government control. The review body recognised that this created a system in which one group of managers has its remuneration constrained at national level while their employers compete for staff with other organisations that are not subject to these constraints, adding: "We doubt whether this is sustainable in the long term."

A new pay framework, based on job evaluation, was introduced in 2012 for VSMs, but the SSRB last year highlighted problems with its operation, including: lack of migration to the new framework; pay overlaps at the bottom of the scale; and inadequacy of the performance pay system. Hunt has announced a review of the VSM framework and has also asked the employers of VSMs in the SSRB remit group to reduce the redundancy terms for their VSMs.

The DH argued that a pay award for VSMs was neither affordable nor necessary. It believed the only justification for an award would be "clear and compelling evidence of issues with recruitment, retention and motivation". While agreeing that there were no generalised problems with recruitment and retention, on the basis of fairness and to signal that their work is valued and recognised, the review body recommended that the salaries of VSMs should be increased by 1% from 1 April 2014.

In response, Prime Minister David Cameron said the Government was not able to accept this recommendation, stating that these managers must set an example of pay restraint and that their pay should be subject to greater restraint than that of staff delivering front-line services. He said: "In the view of the Government, this can be achieved only by a zero pay award in 2014/15." Although their salaries will not increase, the top 25% of performers in this group are eligible to receive up to 5% of their pay as a non-consolidated performance payment.

Police and crime commissioners

In 2011, the SSRB was asked by the Home Secretary to recommend pay arrangements for the new role of PCCs in England and Wales. It recommended that the pay of PCCs should be between £65,000 and £100,000 and that it be broadly linked to the size and complexity of the respective police force. It further recommended that this group should be added to its annual remit, and that it be asked to carry out a full review of the PCC roles and remuneration in the third year of office so that any pay recommendations can take effect from the next round of elections in 2016.

This is the first year that the 41 directly elected PCCs have been included in the SSRB's remit.

In its evidence, the Home Office said that it took the view that PCCs should not receive a pay increase in 2014/15, as they had been in place for less than a year when the evidence was submitted. The review body considered that it was still unclear whether or not the current pay rates reflected the nature and weight of the jobs, and accordingly recommended no increase in pay. For future years, it agreed with the Home Office request that the review date be moved from April to May to help with budget planning.

The Government accepted the recommendation that rates of pay for PCCs should remain unchanged - but rejected a recommendation that the rules and guidance relating to expenses should be reviewed, saying that it would work with the Association of Police and Crime Commissioners to ensure expense arrangements are clear.

Police Remuneration Review Body

The pay of police officers is currently negotiated by the Police Negotiating Board (PNB), which resulted in an agreement to increase salaries by 1% effective from 1 September 2013. The PNB was also asked to consider some of the recommendations of the Winsor review of police pay and conditions in England and Wales, but was unable to reach agreement on the issues of compulsory severance for police officers and the management of officers on restricted duties, which were referred to the Police Arbitration Tribunal. The tribunal's findings were published in December 2013, accepting the recommendations on restricted duties but rejecting those on compulsory severance. In February 2014 the Home Secretary, Theresa May, accepted the tribunal's findings, although she stressed that while compulsory severance would not be introduced "at this time", this was something she believed the Government and police should continue to consider.

Also as a result of recommendations in the Winsor review, provisions to set up a Police Remuneration Review Body (PRRB) were included in the Anti-Social Behaviour, Crime and Policing Act 2014. This review body will replace the PNB and will cover police officers in England, Wales and Northern Ireland, with a separate PNB for Scotland being established. It is proposed that once the PRRB is established, it should be combined with the National Crime Agency Remuneration Review Body - which became operational in October 2013 - and that it cover the pay and allowances of National Crime Agency officers and police officers.

The remuneration of senior police officers will be considered by the SSRB.

Table 1: Summary of pay awards covered in this article

Employee group (nos. covered) 2014 pay award Previous increase
Armed Forces' Pay Review Body - service personnel (around 166,500) 1% increase in base pay, reserves' bounties, compensatory allowances and most rates of recruitment and retention pay from 1 April 2014. 1% increase on basic salary and payments including specialist pay and compensatory allowances from 1 April 2013; X-factor increased to 14.5% of basic pay from 1 May 2013.
NHS Pay Review Body - all staff paid under AfC in the NHS in the UK (1,357,208) Pay points in England remain unchanged on 2013 levels (with the exception of minor adjustments to ensure each incremental increase is at least 1%); staff at the top of the pay scales receive a non-consolidated payment worth 1% of pay, and other staff receive incremental increase. In Scotland, pay points increased by 1%, with an increase of £300 for pay points below £21,000, in addition to incremental progression for those below their pay band maximum. No decision has been confirmed on the increase that applies in Wales or Northern Ireland. 1% increase to all pay points from 1 April 2013 and to the minima and maxima of the high-cost-area supplements.
Prison Service Pay Review Body (England and Wales) - operational managers, prison officers and support grades (26,046) Increases of 1% to pay scales for prison officers and support grades in addition to progression increases for eligible staff, either contractual for those on the closed grades or performance-related for staff on the new Fair and Sustainable pay system. Increases for manager grades depend on their contractual entitlement on the closed scales, or on changes to pay scales and progression on the Fair and Sustainable open scales. Increases to Fair and Sustainable pay bands, plus one point incremental progression or 1.5% progression increase for those in bands without fixed pay points. Staff remaining on the closed pay scales receive contractual incremental progression and those at the top of the old grades receive a non-consolidated payment of £250.
Review Body on Doctors' and Dentists' Remuneration - NHS doctors and dentists in the UK (208,839) In England, pay scales for salaried doctors and dentists remain unchanged, with non-consolidated increases worth 1% made to staff at the top of pay scales, and other staff receiving pay progression. Pay scales in Scotland increased by 1% from 1 April 2014. The increase that will apply in Wales and Northern Ireland has yet to be confirmed. National pay scales for salaried doctors and dentists, and the range for salaried general medical practitioners, increased by 1% from 1 April 2013.
Review Body on Senior Salaries - judiciary (2,188) 1% salary increase from 1 April 2014. 1% salary increase from 1 April 2013.
Review Body on Senior Salaries - police and crime commissioners (41) No increase in salaries. -
Review Body on Senior Salaries - senior civil service (3,695) Minima of pay ranges other than band 1A increased. The remainder of the 1% increase used to make base pay awards worth between nil and 9% from 1 April 2014, with no increase for staff in the bottom 10% of performers. The top 25% of performers are eligible for non-consolidated performance awards from a pot worth 3.3% of paybill. Consolidated increases will be limited to an average award of 1%. Minima of pay ranges other than band 1A increased. The remainder of the 1% used to make base pay awards worth between nil and 9% from 1 April 2013, with no pay award for staff in the bottom 10% of performers. The top 25% of performers were eligible for non-consolidated performance awards from a pot worth 3.3% of paybill.
Review Body on Senior Salaries - senior military (128) 1% increase to base salary from 1 April 2014. 1% increase to base salary from 1 April 2013. From 1 May 2013, for 2- and 3-star officers, the X-factor increased as recommended by the AFPRB (this is applied at 25% of the cash value of the X-factor at the top of the OF4 pay scale).
Review Body on Senior Salaries - very senior managers in the NHS (estimated to be 424) No basic pay increase. VSMs will be eligible to receive performance-related payments. 1% pay increase from 1 April 2013, other than for those not performing satisfactorily. In addition, VSMs were eligible to receive performance-related payments.

Table 2: Agenda for Change pay bands in England, 1 April 2014, with pay points applicable in Scotland shown in brackets

Pay band Job examples Minimum, £pa Maximum, £pa
1 (spine points 1-3, or 2-3 in Scotland) Finance assistant, healthcare science support worker (entry level) 14,294 (15,058) 15,013 (15,414)
2 (spine points 1-8, or 2-8 in Scotland) HR assistant, clinical support worker, phlebotomist 14,294 (15,058) 17,425 (17,803)
3 (spine points 6-12) Finance officer, clinical support worker (higher level) 16,271 (16,660) 19,268 (19,627)
4 (spine points 11-17) HR administrator, dental nurse 18,838 (19,202) 22,016 (22,236)
5 (spine points 16-23) HR adviser, physiotherapist, nurse 21,478 (21,602) 27,901 (28,180)
6 (spine points 21-29) Midwife, nurse team leader, finance section manager 25,783 (26,041) 34,530 (34,876)
7 (spine points 26-34) HR team manager, clinical psychologist, nurse team manager 30,764 (31,072) 40,558 (40,964)
8a (spine points 33-38) Principal finance manager, modern matron 39,239 (39,632) 47,088 (47,559)
8b (spine points 37-42) Social care programme manager, chief finance manager 45,707 (46,164) 56,504 (57,069)
8c (spine points 41-46) Communications service manager, clinical psychologist consultant 54,998 (55,548) 67,8051 (68,484)
8d (spine points 45-50) Head of estates, head of arts therapies 65,922 (66,582) 81,6181 (82,434)
9 (spine points 49-54) Director of estates and facilities, nurse/midwife consultant higher level 77,850 (78,629) 98,4531 (99,437)

1. In England, the top two spine points in bands 8c, 8d and 9 are annually earned.
Source: NHS Employers job profile index and Pay and Conditions Circular.

Table 3: Armed forces pay scale examples, 1 April 20141

Rank2 Minimum, £pa Maximum, £pa
Officers up to and including brigadier
Brigadier (OF6) 99,154 103,167
Major (OF3) 48,934 58,605
Lieutenant, second lieutenant (OF1) 16,468 33,507
Other ranks3
Warrant officer 1 (OR9) 39,548 47,902
Sergeant (OR6) 30,750 37,836
Private and lance corporal (OR2 and OR3) 17,945 29,651

1. Including X-factor.
2. Rank shown for army personnel, but applies to equivalent ranks in the air force and navy.
3. The pay structure for other ranks is divided into higher and lower pay bands: the minimum shown in the table is the minimum of the lower pay band, and the maximum the top of the higher band.
Source: AFPRB.

Table 4: Senior civil service pay band values, 1 April 2014

Pay band Minimum, £pa Maximum, £pa
1 (Deputy director) 62,000 117,800
1A (Deputy director) 67,600 128,900
2 (Director) 85,000 162,500
3 (Director general) 104,000 208,100
Source: Cabinet Office.

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