Public sector pay 2011: pay freeze sets in

Author: Rachel Sharp

The median public sector pay award in the year to December 2011 stands at nil, with the Government's public sector pay policy seeing the pay freeze spread across numerous bargaining groups.

Key points

From the outset, 2011 was set to be a difficult year for public sector pay, as the pay freeze announced by the coalition Government extended across the sector. As Brendan Barber, TUC general secretary, puts it: "The overwhelming factor in public sector pay in 2011 has been government policy, and that looks like being the case again [in 2012]."

For employees covered by the independent public sector pay review bodies, 2011 marked the start of the two-year pay freeze for all employees earning a full-time-equivalent annual salary of more than £21,000. It was also the year in which all civil servants were affected by the policy: those departments and agencies that had frozen pay in 2010 entering the second year of their pay standstill were joined by those that were starting the pay freeze in 2011 because they were covered in 2010 by agreements made prior to the Government's announcement.

While workers in other groups, where pay is determined by bargaining arrangements outside the direct control of the Government, could not have a pay freeze enforced by government policy, neither could they rely on the Government's commitment to ensuring that the lowest paid (those with full-time-equivalent salaries of £21,000 per year or less) would receive an increase of at least £250 in each year of the pay freeze. Barber says: "The pay freeze for most public sector workers and £250 for those earning under £21,000 has mainly held except in local government, where a freeze across the board has been the norm."

The Scottish Government followed the coalition Government's policy, with finance minister John Swinney announcing a basic pay freeze for 2011/12 in the November 2010 Scottish Budget for all those earning £21,000 per year or more. The policy applies to the Scottish Government's main bargaining unit and other public bodies including the Scottish Court Service, some NHS senior managers and the Scottish Prison Service. In September 2011, the basic pay freeze was extended to cover 2012/13. The Scottish Government's pay policy also commits employers covered by it to apply a "Scottish living wage" of £7.20 per hour for 2012/13 (£7.15 per hour at the 2011 rate). In addition, the Scottish Government has continued its policy of no compulsory redundancies, providing that agreements are reached on flexible working practices to reduce costs.

The freeze is set against a persistently high level of inflation - on the retail prices index (RPI) measure, inflation had started rising over the final quarter of 2010 and remained at 5% or above for most of 2011. Dave Prentis, Unison general secretary, said: "The Government made 2011 an incredibly tough year for public service workers. It was the first year of a wage freeze across the board, and the second for hardest-hit local government workers. Families across the country are struggling with frozen pay as inflation just keeps on rising."

In the spring of 2011, the reports of several of the government-commissioned reviews were published:

• the first part of the review of police pay and conditions in England and Wales carried out by Tom Winsor;
• the final report of the Independent Public Service Pensions Commission chaired by former Labour minister Lord Hutton; and
• the final report of the review of fair pay in the public sector by Will Hutton.

The issue that provoked the greatest reaction among trade unions was the proposed reform of public service pensions. The ongoing general, and then scheme-specific, pension discussions formed a difficult background against which any other negotiations on pay or workforce changes would be considered.

March 2011 saw the publication of the reports of the pay review bodies. Although the review bodies expressed concern about their remit being restricted by the Government, they made recommendations in line with government policy, recommending an increase of £250 for those earning a full-time-equivalent annual salary of £21,000 or less. However, in the case of teachers, this was paid as a non-consolidated sum rather than an increase to pay points.

In June 2011, Chief Secretary to the Treasury Danny Alexander wrote to the chairs of the pay review bodies to confirm that they would be asked to follow the same approach for the 2012/13 pay round. The review bodies have therefore been asked only to make recommendations on pay uplifts for those members of their remit groups earning a full-time-equivalent salary of £21,000 per year or less (with the exception of the School Teachers' Review Body, which made a recommendation in 2011 covering both years of the pay freeze). For groups of workers paid more than £21,000, the review bodies may be asked to consider other issues, with the Government submitting evidence about recruitment and retention and other workforce issues. Alexander said that the question of how changes to public sector pensions affected total reward would be looked at in advance of the next pay round in 2013/14. However, he said that changes to pensions, including the proposed increases in pension contributions from 2012/13, "do not justify upwards pressure on pay".

Pay outlook: two more years of pay restraint

For those civil servants who started their pay freeze in 2010, after the emergency Budget announcement in June of that year, the freeze was expected to end in 2012/13. However, in his autumn statement on 29 November 2011, the Chancellor of the Exchequer, George Osborne, announced that the Government was to apply two more years of restraint to public sector pay. He said: "In the current circumstance, the country cannot afford the 2% rise assumed by some government departments thereafter. So instead, we will set public sector pay awards at an average of 1% for each of the two years after the pay freeze ends." Barber described this as government policy being "tightened another notch".

For the pay review body groups and others that entered the first year of the two-year pay freeze in 2011, the Chancellor's announcement means that their pay will be pegged back until 2015. Osborne described the 1% average increase as tough but fair, citing the fact that many in the public sector are entitled to annual pay progression even when pay is frozen. However, this is only the case where there is a contractual entitlement to progression, and many government departments have not been paying these increases during the pay freeze. The Police Arbitration Tribunal has also accepted the recommendation that most police officers will have pay progression frozen for two years.

The autumn statement document provided additional information about the application of the policy: "The Home Secretary will take into account the Government's overall pay policy when considering the Police Negotiating Board recommendations. The Government does not control pay awards within local government or the devolved authorities; budgets will be adjusted on the assumption of comparable action being taken and in line with devolved funding principles." In a written ministerial statement on 8 December 2011, Alexander said: "Departments will have flexibility over how they implement the pay policy across their workforces, with pay review bodies and negotiating machinery playing their usual role." As some departments are to end their pay freeze in 2012, further details on how the 1% average increase is to be applied are expected to be provided in the civil service pay guidance for 2012/13, due to be published by the Treasury shortly.

An end to national pay rates?

The Chancellor also announced in his autumn statement that the pay review bodies would be asked to look at how public sector pay can be made more responsive to local labour markets. Again, the statement document provided further details: "This will apply to all pay review body workforces, with the exception of doctors, dentists, the armed forces and the judiciary." This means that the policy applies to NHS workers covered by the Agenda for Change agreement and very senior NHS managers in England, the prison service and schoolteachers in England and Wales, and the senior civil service.

The document also proposed that market pay could be applied more widely in the civil service, saying: "The Minister for the Cabinet Office will review how more local, market-facing pay could be introduced in civil service departments. Secretaries of state may then choose to take forward recommendations for their departments."

The second part of the Winsor review of police pay and conditions is also looking at the issue of regional pay. The report is expected to be published this month.

The possibility of an end to national pay rates has caused concern among trade unions, with the Public and Commercial Services union (PCS) describing the issue of regional pay as "extremely detrimental to the 73% of PCS members who live and work outside the South-East". Although Barber says that the announcement could have an impact on pay outside London, he says: "Previous examinations of this have not come to much in the past because the fact is that, apart from higher pay in the capital, we don't really have regional or local pay rates in this country."

An early day motion (on the Parliament website) has been tabled calling for the policy of regional pay to be reconsidered and the first minister of the Welsh Assembly Government, Carwyn Jones, has suggested that he might look at the possibility of the Assembly taking over responsibility for public sector pay in Wales (on the BBC website). A private members' debate on the subject was held in Westminster Hall on 10 January 2012, during which the prospect was raised that regional pay could become as important an issue in industrial relations as public sector pensions reform.

Role of the pay review bodies

On 7 December 2011, the Chancellor wrote to the chairs of the pay review bodies to set out the detail of their remit on making pay more "market-facing". Following his autumn statement announcement that pay awards would average 1% for the two years following the pay freeze, he said that - in line with the normal process - the relevant secretaries of state and ministers would write to the review bodies before the 2013/14 pay round.

He continued: "However, when it comes to setting pay policy after the freeze, the Government is concerned not only with the appropriate annual uplift, but also ensuring that overall public sector pay systems are the most appropriate for the modern labour market." The letters confirmed that the judiciary and the armed forces are excluded from this process and said that doctors and dentists have "currently been excluded".

The Chancellor asked the pay review bodies covering the remaining groups to "consider how to make pay more market-facing in local areas". He said that they should take into account factors including:

• the need to recruit, retain and motivate suitably able and qualified staff across the UK;
• the difference in total reward between their remit workforce and those of similar skills working in the private sector, by location;
• how private sector employers determine wages for staff in different areas of the country;
• what the most appropriate areas or zones by which to differentiate pay levels should be; and
• the need to ensure that proposals are consistent with the law on equal pay.

He also asked the review bodies to take into account whether or not, and if so how, the new approach could be delivered within national frameworks and whether the proposals should apply to existing staff, or to new entrants only. He stressed that the review bodies must consider the affordability of their proposals, saying: "These should not lead to any increase in paybill in the short or long term."

The Chancellor said that his letter would be followed by detailed remits from the various departments. For the NHS Pay Review Body and the School Teachers' Review Body (STRB), there will be a detailed remit from the relevant secretary of state, which the Chancellor said may also raise other pay reform issues.

The Review Body on Senior Salaries (SSRB) would receive further details in relation to senior civil servants and NHS senior managers. For the Prison Service Pay Review Body (PSPRB), the Chancellor acknowledged that the review body had already received evidence in relation to pay reforms for 2012/13 and asked it to consider how the reforms could be built on in future years. It would also receive further details from the Secretary of State for Justice. All were asked to submit initial findings by 17 July 2012 so they could feed into the 2013/14 pay round.

2011 pay round

XpertHR has collected details of the pay awards for 102 bargaining groups in the public sector with effective dates during 2011. Together, these cover around five million employees. The median basic award over the year to December 2011 stands at nil, unchanged on the median for 2010. The median has stood at nil throughout this period with the exception of three rolling years - to April, May and June - when it stood at 0.4%. Throughout this period, the lower quartile (below which the bottom quarter of deals lie) has stood at nil, while the upper quartile has increased slightly from 1.4% to 1.8% over the year.

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Measuring pay awards during the public sector pay freeze is far from straightforward. In calculating the median award, XpertHR records the basic increase awarded to the lowest-paid adult grade, so for bargaining groups where employees with full-time-equivalent earnings of £21,000 per year or less have been awarded an increase, in line with government policy, this is recorded as an award. However, in some organisations the award of a minimum of £250 has not been paid across the board but has been subject to employees meeting a required performance standard. Even if only a few employees have not met this standard, the award is strictly speaking a merit, rather than a basic, award.

In other cases, no increase has been applied to the pay scales - a freeze in basic pay - but employees may be eligible for progression pay regardless of their salary, so many with full-time-equivalent earnings of more than £21,000 per year will see their salaries rise although no cost-of-living increase has been awarded.

See the summary of pay awards in the public sector collected by XpertHR. Some of these are examined in more detail below.

Local government - England, Wales and Northern Ireland

Local government employers had announced that they would not be offering a pay increase in 2010 even before the coalition Government's decision to freeze pay across the public sector. In October 2010, Unison, Unite and the GMB, which make up the trade union side of the National Joint Council for Local Government Services (NJC) representing 1.4 million services workers, submitted a pay claim for the 1 April 2011 review date for an increase of at least £250 on all spinal column points. In February, the employers' side of the NJC responded to the claim saying that, to protect services and mitigate job losses and redundancies, they would again not be able to offer a pay increase for 2011/12. The employers said that the same applied to other local government groups in England and Wales: chief officers, chief executives and craftworkers.

Despite efforts by the trade unions to challenge the freeze and ensure that those with earnings below the pay freeze threshold would receive a £250 award, the employers' side ruled out further discussions, meaning that these workers had no pay increase for the second year in a row. Prentis says: "Even those on the lowest wages in local government did not get a penny more. Despite the Chancellor's much-hyped £250 promise to those earning less than £21,000, local government employers refused to pay up."

On 28 October 2011, the NJC unions lodged a claim for 2012/13 for "a substantial increase on all pay points". At the time of writing, the employers' side had yet to respond to the claim.

In spite of the pay restraint, a report published in December 2011 by the Local Government Association and the Audit Commission, Work in Progress: Meeting Local Needs with Lower Workforce Costs, quotes estimates that 145,000 jobs in local government have been lost in councils in England over the past year, with more job losses to come in the future. The report warns that much of this has been through voluntary redundancy, early retirement and recruitment freezes, but that compulsory redundancies are set to increase.

Local government - Scotland

Local government workers in Scotland are covered by a three-year pay award that was imposed from April 2010. Under the terms of this award, the second and third years were to be a pay freeze. Although the trade union side submitted a pay claim, the employers have not agreed to reopen negotiations, so pay has been frozen from April 2011. The pay claim included an underpin set at the Scottish Living Wage, which already applies to bodies covered by the Scottish Government's pay policy.

The Local Government and Regeneration Committee of the Scottish Parliament undertook an inquiry into a living wage for Scotland in December 2011, which looked into the introduction of a living wage by local authorities. According to Unison Scotland, nine local authorities have adopted the Scottish living wage. The findings of the committee's report are expected this month.

Opted-out councils

XpertHR has collected details of pay awards for bargaining groups in 33 councils that do not follow the national agreement. These are summarised in the pay review archive 2011. Many opted-out councils adopted the same approach as the NJC and froze pay across the board, although some did reflect government policy and award an increase for lower-paid staff (in a few cases as a one-off payment). The majority of councils continued to pay progression increases as usual, although in a handful these have been suspended. The median basic pay award in 2011 among the bargaining groups in councils for which we have details is nil.

Fire service

For the second year in succession, brigade managers did not submit a pay claim for their 1 January review date so no national pay award was made for this group. However, as in previous years, there is scope for local fire and rescue authorities to make individual arrangements for the 200 brigade managers covered.

In May 2011, the Fire Brigades Union submitted a pay claim for firefighters and control staff in respect of the 1 July 2011 review date, which noted that as far as the employees' side was concerned, the question of there having been no offer on pay for 2010 was not yet resolved. The claim for 2011 was for an increase on all rates equal to RPI inflation announced in June: the May 2011 RPI figure was 5.2%. The day the inflation figures were announced, the employers responded to the claim saying that because of the severe financial pressures facing authorities, for the second year in a row they would not be in a position to make an offer on pay. The employers acknowledged that a two-year pay freeze would put employees under pressure and proposed that discussions should be held to see if a different position could be taken for 2012.

Police - England and Wales

The coalition Government confirmed that it would honour the final stage of the three-year pay award agreed by the Police Negotiating Board (PNB), which covers officers across the UK, from the review date of September 2010, so police officers were covered by that award until the end of August 2011. Police staff in England and Wales covered by the Police Staff Council (which covers all forces except the Metropolitan Police, City of London, Surrey and Kent) were also covered by a three-year pay deal, with the final stage running until the same date.

In October 2010, Home Secretary Theresa May commissioned a review of police pay and conditions, covering both police officers and police staff in England and Wales. The reviewer, Tom Winsor, was asked to prepare a report on short-term improvements by February 2011, with recommendations on longer-term reform due by June 2011.

The first part of the Winsor review was published in March 2011. The report put forward 62 recommendations, which it estimated would save £485 million over three years if implemented from September 2011. These included a two-year pay freeze and suspending progression for the same period. May confirmed that the report's recommendations should be considered and asked the parties to report back to her by the end of July 2011.

In May 2011 it was announced that the timetable for the second part of the review had been extended to the end of January 2012.

The staff side and the official side of the PNB, which was considering the recommendations in respect of police officers, failed to reach agreement by the July deadline, and the matter was referred to the Police Arbitration Tribunal (PAT). The hearing was held on 8 and 22 November 2011, and the tribunal's decision was announced on 9 January 2012. The PAT had been asked to consider 18 recommendations of the Winsor review on which the PNB had failed to reach agreement; agreement had been reached on a further nine recommendations which the PAT was not asked to look at.

The tribunal's findings will now be considered by the Home Secretary, who must take them into account before reaching a final decision.

Discussions on Winsor's recommendations covering police staff have also been difficult, and were ongoing at the time of writing. Police staff unions separately submitted a pay claim for a £250 increase on all salary points and deletion of the lowest point, and, at the time of writing, the staff unions were considering a pay offer.

Police - Scotland

Although the PNB covers police officers in Scotland, the Winsor review of police pay and conditions extends only to England and Wales. In August 2011, the Scottish Government confirmed that Winsor would not be introduced in Scotland and it has announced that the eight Scottish police forces will be restructured into a single force by 2013. For 2011, the existing pay structures continue to operate, which means that police officers still have their terms and conditions agreed at the PNB. In February, the Cabinet Secretary for Justice, Kenny MacAskill, confirmed that changes to police pay and conditions in Scotland would come into effect from 1 April 2011 following agreement at the PNB - the changes introduce an on-call allowance and plain clothes allowance for officers in the federated ranks, and remove the award of special priority payments. Chief officer and superintendent bonus payments have been suspended for one year.

The negotiating body for police staff in Scotland is the Police Staff Council (Scotland). Discussions on changes to terms and conditions, including shift allowances and overtime pay, are ongoing.

Armed forces

Members of the armed forces at and below the rank of brigadier are covered by the Armed Forces' Pay Review Body (AFPRB). As with the other pay review bodies, its remit was restricted to making recommendations on pay for those earning £21,000 per year or less. The AFPRB recommended that military pay scales for those earning £21,000 per year or less, regardless of the X-factor element of pay, should be increased by £250 from 1 April 2011, and the Government accepted its recommendations in full. Senior members of the armed forces are covered by the Review Body on Senior Salaries (SSRB), which, while it was not asked to make recommendations on pay, did recommend that the performance management and pay system for the senior military should be reviewed. This recommendation was accepted by the Government.

Government departments and agencies

In 2011, workers in government departments, agencies and non-departmental bodies were all covered by the public sector pay freeze, either in the first year of the two-year freeze, or - where no award had been agreed for 2010 prior to the government announcement in the June 2010 Budget - the second year. The Civil Service Pay Guidance issued by the Treasury in February 2011 confirmed that the pay freeze would apply to all those earning a full-time-equivalent salary of more than £21,000, with those earning below this threshold receiving an increase of at least £250. This could be paid either through a basic award (an increase to pay steps or band maxima or minima) or through the metric known as "increase for staff in post", or ISP, which includes progression increases.

Where pay progression was found to be a contractual entitlement, these increases have been paid - this is the case at the Home Office, the Department for Communities and Local Government (DCLG), the Department for Transport (DfT) and for former Department for Business, Enterprise and Regulatory Reform (BERR) staff in the Department for Business, Innovation and Skills (BIS), for example. Where normal progression for these staff did not result in those with full-time earnings below the pay freeze threshold receiving an increase of at least £250, this was dealt with in a variety of ways. At the Home Office and DCLG, the progression increase was topped up to exactly £250, while former BERR staff in BIS who were at the top of their pay scale received a consolidated increase of £300. At the DfT, employees below the pay-freeze threshold and not eligible for progression received a consolidated increase of £250 on a mark-time basis.

The other staff group at BIS, former staff from the Department for Innovation, Universities and Skills, were found not to have a contractual entitlement to progression increases. However, those with earnings below the pay freeze threshold also received a consolidated award of £300.

Enrico Tortolano, head of national bargaining policy at PCS, explains: "The public sector pay freeze was the dominating feature of the 2011 pay round. The issue of pay progression, and its status regarding the pay freeze, has been an issue in many bargaining areas." Initial research by PCS indicates that progression has been paid - because it has been found to be contractual - in around half of employers it has surveyed. In some cases payment has been achieved after trade unions have obtained legal advice challenging the employer's position that progression is not contractual.

One example of a change of stance is the Home Office, where in 2010 only the consolidated element of progression was paid - a position reversed in 2011, when non-consolidated payments for the 2010 stage were subsequently paid. At the Department for the Environment, Food and Rural Affairs, no progression was originally paid in the 2010 stage of the freeze, but in 2011 it was decided that reserved rights to milestone progression would be honoured, with payments also made retrospectively to cover the 2010 stage.

In other cases, some staff groups have received progression and others have not - at the Ministry of Justice, incremental progression increases have been paid to the staff in the lowest two pay bands, but those in higher bands paid £21,000 per year or less have received a consolidated increase of £250.

Among the awards collected so far by XpertHR, many have not paid progression increases. In some of these cases, staff earning £21,000 or less on a full-time-equivalent basis have received a flat-rate increase of exactly £250. This is the case at HM Revenue and Customs, the Food Standards Agency and the Department of Health, among others. Other departments have awarded higher increases than the minimum £250 specified by the Government: at the Department for Work and Pensions, flat-rate increases of between £400 and £540 have been applied to salaries of £21,000 or less, while at the Foreign and Commonwealth Office increases range from £250 to £500. The flat-rate payment for those earning £21,000 or less is paid regardless of performance in some cases, although in many departments the award can be withheld for those whose performance is not satisfactory.

Many departments have continued to pay non-consolidated awards to recognise top performers; the pay guidance specified that there could be no increase to the non-consolidated performance pot during the pay-freeze period.

The details are included in the summary of pay awards in the public sector collected by XpertHR.

Civil Service Compensation Scheme

The new Civil Service Compensation Scheme took effect in December 2010, after the proposed changes had been accepted by several unions but while the PCS and POA ballots were still ongoing. Both PCS and the POA rejected the new scheme when their ballots closed in January 2011 and sought judicial review of the scheme under human rights legislation. In August 2011, the application for judicial review was dismissed. The judge found that, although the changes did amount to interference with a person's possessions, the interference did not go beyond what was necessary to achieve the aim of making budget savings.

Prison service

The PSPRB makes recommendations on operational managers, prison officers and support grades in England and Wales, and produces a separate report covering the Northern Ireland Prison Service.

The review body's restricted remit for 2011/12 meant that it was only asked for recommendations for those earning at or below the Government's pay freeze threshold of £21,000 per year. It recommended an increase of £250 on all pay points below this level, with the same recommendation for Northern Ireland.

As well as facing a second year of frozen pay, the prison service workforce in England and Wales will see further change, as the employers have continued to develop proposals for workplace reform. A new working structure was set out in November 2011 by the National Offender Management Service, which includes a new pay and grading structure intended to cover not only those staff within the PSPRB remit but also industrial, administration and support, and professional and specialist grades. The proposals will be considered by the review body and are expected to come into effect for new staff from April 2012. Existing staff will retain their current terms and conditions but will be able to opt in to the new terms.

Pay in the Scottish Prison Service is normally determined by negotiation between the employer and the trade unions, and is covered by the Scottish Government's pay policy. From the 1 October review date, eligible staff received pay progression, and the pay point at the top of the lowest pay band was increased by £250 to meet the Government's commitment that staff earning less than £21,000 should receive at least this increase. This also required the bottom point of the next pay band to be increased to avoid overlap.

Schoolteachers

The STRB covers teachers in England and Wales. It published its recommendations on pay for teachers earning £21,000 per year or less alongside the other pay review body reports in March 2011, and these were subsequently included in the STRB's report published in May 2011. The STRB recommended that a non-consolidated payment of £250, in monthly instalments and pro-rated for part-timers, should be paid to unqualified teachers on points 1 to 3 of their pay scale from 1 September in each year of the two-year pay freeze. Following consultation, education secretary Michael Gove incorporated this recommendation into the School Teachers' Pay and Conditions Document 2011.

In March 2011, Gove commissioned an independent review of teachers' standards. The second part of the review was published in December 2011, and recommended that the existing post-threshold, excellent teacher and advanced skill teacher standards should be discontinued and a new master teacher standard introduced. The Department for Education is to consider the effect of these changes and will ask the STRB to look at the implications for teachers' pay.

The STRB had been expecting to receive a further remit during the course of 2011 to make recommendations on introducing "greater freedoms and flexibilities" to make the pay and conditions framework less rigid but at the time of writing this had not been received.

In Scotland, a package of changes was introduced for schoolteachers that included a two-year pay freeze from April 2011. A review has also been conducted into teacher employment in Scotland, which among its recommendations includes ending the Chartered Teacher scheme.

School support staff

In October 2010, the Government announced that the School Support Staff Negotiating Body, which had gained statutory power at the start of that year, was to be abolished. Under a clause in the Education Act 2011, which received Royal Assent in November 2011, the abolition of the body is expected to take effect on 1 February 2012.

Higher education

In April 2011, the higher education unions submitted a pay claim for the August 2011 review date. The claim included an increase to pay points that ensured there was no real-terms pay cut (with reference to RPI inflation), or a greater underpinning lump sum for the low paid, as well as an increase in London weighting and changes to the national pay framework. In July, the employers made a final offer of an increase of £150 on all pay spine points, and this remained the position despite the support staff unions - Unison, Unite and the GMB - initiating the disputes procedure. The education unions (the University and College Union (UCU) and the Educational Institute of Scotland (EIS)) reluctantly accepted the offer, as did the GMB, and the offer was noted by Unison following further discussion. Unite, however, was unable to accept or note the offer, but as the four out of five unions had done so, the Universities and Colleges Employers Association advised that the award be implemented, backdated to the 1 August review date. At the time of writing, Unite was considering its response to the move.

Further education

The headline figure in the pay claim from the further education trade unions in England was a 4% pay award underpinned with a minimum £750 flat-rate increase. The employers' side, the Association of Colleges (AoC), made a final recommendation (which is not binding on colleges) that increased the lowest point on the pay scale by £309, other points below £21,000 by £200 and higher points by £125. The offer was accepted by a majority of unions and the AoC confirmed its final pay recommendation was payable from the 1 August 2011 review date.

In Wales, employers' body Colleges Wales negotiates with the recognised unions. There is an agreement that pay scales will maintain parity with those of teachers, so as teachers were covered by the first year of the two-year public sector pay freeze in England and Wales the further education teachers' main grade scales were also frozen. Support staff earning less than £21,000 per year on a full-time-equivalent basis received a consolidated increase of £250.

Sixth-form colleges

Parity with teachers in schools is key for the trade unions representing teaching staff in sixth-form colleges and this formed the basis of their pay claim for 2011, which called for the restoration of parity following the lower increase received in 2010 by teachers in sixth-form colleges. Their support staff colleagues submitted a claim for a substantial increase on all salary scales with a minimum increase of £250 for all staff. However, the Sixth Form Colleges Forum stated that it would not be making any pay offer for staff in 2011 and, despite requests for further discussions, that position has not changed. Unison, which represents support staff, said it was particularly disappointed that even the lowest-paid staff would see no increase.

NHS

Staff covered by the Agenda for Change agreement come under the remit of the NHS Pay Review Body (NHSPRB). This was the only group in the NHS that had members that were excluded from the public sector pay freeze, although the Review Body on Doctors' and Dentists Remuneration (DDRB) was asked to carry out a review of compensation levels and award schemes for NHS consultants. This review was submitted to the Government in July 2011 but has not yet been published.

The NHSPRB took the same approach as the AFPRB and PSPRB, and decided to recommend an uplift of £250 to scale points worth £21,000 per year or less. In addition, some restructuring of pay bands agreed as part of the previous three-year pay deal was implemented.

In Scotland, the lowest point in the pay structure cannot be used because of the Scottish Government's commitment to the Scottish Living Wage, which applies to NHS staff.

Review of public service pensions

The interim report of Lord Hutton's Independent Public Service Pensions Commission, published in October 2010, considered the case for delivering savings on public service pensions within the spending review period. It found there was a case for employees to pay higher pension contributions, and in the October 2010 Comprehensive Spending Review, the Government announced that increased employee contributions would be phased in from April 2012. It set out plans to save £2.8 billion per year by 2014/15, with each scheme (except for the armed forces) to deliver savings equivalent to 3.2 percentage points in employee contributions over the same period.

The Government has carried out consultations on its proposed increased pension contributions effective from April 2012 for the NHS Pension Scheme, the Principal Civil Service Pension Scheme and the Teachers' Pension Scheme. The outcomes of these consultations were published in December. For the Local Government Pension Scheme, the only funded scheme, the consultation looked at contributions over a three-year period and also covered amending the accrual rate. The proposed increases for police officers were set out in a letter from Home Secretary Theresa May to the Police Federation and there were also consultations on the firefighters' pension schemes.

The Government had already announced in the 2010 Budget that consumer prices index (CPI) inflation, rather than RPI, would be used to uprate public sector pensions with effect from April 2011. In December 2011, an attempt by unions and pensioners' groups to challenge this decision in the courts failed, although they are appealing against this decision.

The final report of Lord Hutton's commission, looking at the long-term future of public service pensions, was published on 10 March 2011. Its recommendations included: members moving from the current final-salary arrangements to career-average schemes; the member contribution rate being related to earnings; and normal retirement ages under the schemes rising in line with the state pension age. In the 2011 Budget on 23 March, the Chancellor confirmed that the Government accepted the report's recommendations "as a basis for consultation with public sector workers, trades unions and others, recognising that the position of the uniformed services will require particularly careful consideration". The document said: "The Government will set out in the autumn proposals that are affordable, sustainable and fair to both the public sector workforce and taxpayers."

Negotiations on the changes to pension schemes have been taking place centrally through the TUC and at individual pension scheme level. Talks have been fraught with difficulty and there have been two days of industrial action. The first, at the end of June, involved the PCS and teaching unions the UCU, NUT and ATL. A day of action on 30 November 2011 was supported by more than 20 trade unions.

On 2 November, the Government put forward a revised offer for the four major public service schemes (NHS Pension Scheme, Principal Civil Service Pension Scheme, Teachers' Pension Scheme and Local Government Pension Scheme (LGPS)), which set out some protection for those within 10 years of retirement and improved accrual rates for the new schemes, which are due to be introduced in 2015 (2014 for the LGPS). However, the day of action still went ahead. On 20 December, the Government announced the "heads of agreement" (on the Treasury website) which set out the main elements of the reformed schemes based on the revised offer. The Chief Secretary to the Treasury said that the majority of unions had agreed to these in principle and further industrial action would be suspended while the details were resolved and unions consulted their members.

Barber said: "Since the day of action we have seen a new atmosphere in the negotiations... It's important to stress that no agreements have been reached, but unions now have proposals to put to their executives and members. We have reached a stage where the emphasis in most cases is in giving active consideration to the new proposals that have emerged rather than considering the prospect of further industrial action."

Proposals on the schemes for the police, armed forces, judiciary and firefighters are expected to follow.

The combination of ongoing pensions talks, the continuing pay freeze and the prospect of pay restraint and regional pay thereafter suggests that 2012 will be another year of difficult industrial relations in the public sector, with government policy continuing to dominate.