From the General Secretary
OUR REF JB/EW/001
15thJanuary 2002
Sir Michael Parry
Chair
Senior Salaries ReviewBody
Office of ManpowerEconomics
76 Oxford Street
London
SENIORCIVIL SERVICE PAY AND PERFORMANCE MANAGEMENT: SENIOR SALARIES REVIEW BODY:REPORT ON THE INDICATIVE PAY RANGES AND TARGET RATES FOR THE NEW SCS PAY SYSTEM
Thank you for thisfurther opportunity to offer evidence in advance of the report likely to bepublished in early February.
The FDA welcomed theReview Bodys report on indicative pay ranges and target rates for the new SCSpay system. On the basis of the reportand the attached documentation from Towers Perrin, we believe that the targetrates suggested by the Review Body fulfil the remit of the Government andCabinet Office set last spring. We aretherefore extremely disappointed that the Government has not implemented theReview Bodys recommendation.
The Cabinet Office maderecommendations to the Review Body for pay ranges and target rates prepared in thelight of the monies allocated for the new scheme by the Government. The Review Body have recommended targetrates about 10,000 higher than those proposed by the Cabinet Office, andhigher maxima. As paragraph 5.34 of theReport explains, to implement the Review Bodys recommended target rates on thebasis of the funding allocated by the Government would mean that theprogression time to the target rate from the median entry point would be fiveto eight years for a tranche one performer, and 15 to 22 years for a tranchetwo performer. For at least half ofmembers entering a pay band these progression rates would be even longer asthey will enter below the median entry point.
Clearly theseprogression rates would be unacceptable.In the SCS consultation pack issued by the Cabinet Office in January2001, the Cabinet Office argued that under the new scheme tranche oneperformers would progress from the median entry point to the target rate inthree to four years and tranche two performers progress from the median entrypoint to target rate in nine to ten years.To honour that commitment and implement the recommendations of theReview Body requires additional funding from the Government. The FDA believes that this funding should bemade available, particularly in the light of the leadership role that theGovernment is demanding from the SCS across the Civil Service.
The Governments refusalto allocate any additional monies begs the question of why the Review Body wereasked to undertake the comparability exercise in the first place. Instead of implementing the target rates asrecommended, the Government is now intending to put in place a hybrid and morecomplicated system with two target rates, with the target rate for the majorityof our members being that originally proposed by the Cabinet Office. We believe that this is likely to lead toconsiderable dissatisfaction amongst members.
There is no doubt thaton balance the new system of pay and performance management is an improvementon the current arrangements. Currentlyforty percent of the SCS are in pay band 1 with a current minimum of 44,038and maximum of 69,178. All of these members will be better off inthe new arrangements and will progress more quickly to the lower target rate(above the current maximum). SomeDepartments have significant numbers of JESP 9 11 posts in pay bands 2 and 3;the new proposals offer less for them.But it is also the case that many members who will move to the new paybands 2 and 3 will also have a higher target rate than their current maximumand progress more quickly to it. Themove from nine pay bands to three or four is also welcome. However the transitional arrangements arenot generous and compare badly with those offered by many departments atGrades 6 and 7. About 15% of people innew pay band 1 already earn between 69,500 and 78,000 and 70% of these willhave their salary frozen because they are not in tranche one, despite currentlyhaving an expectation of further progression.
Many aspects of the newperformance management arrangements are also an improvement, although the FDAremains very concerned about the implementation of relative appraisal and howin practice pay committees will work.We will be watching the situation very closely during the spring andsummer as decisions are taken for individual members.
However, theGovernments refusal to accept the recommendation of the Review Body byallocating the necessary funding to improve the SCS pay arrangements underminesthe Governments commitment to the SCS.Inadequate funding had been at the heart of the problems experienced inthe SCS pay system since 1996. TheReview Body recommended realistic market facing target rates at theGovernments request, and these are being discounted. This contrasts poorly with the improvements gained for staffbelow the SCS across many government departments. For example, the lower target rate of about 69,000 is only about10,000 more than the maximum of Grade 6 in many departments. There are still departments, for example CPSand Customs & Excise, where the minimum of Grade 6 is above the minimum ofnew SCS pay band 1 and a member is guaranteed to progress to the Grade 6 max inless than ten years.
We have suggested tomembers that they will want to consider the Government proposals. However, we believe that the issues raisedin the Review Bodys Report and the Governments response are serious enoughfor us to ask members their attitude to these proposals when they have had theopportunity to also examine the Review Bodys further report. We therefore intend to consult with membersabout their attitude to the proposals, and will inform the Review Body of theoutcome of this exercise.
In addition, we remainvery concerned at the Governments refusal so far to undertake an equal payaudit for the SCS and urge the Review Body to ensure that such an audit isconcluded before the end of 2002.
I hope that this ishelpful to the Review Body.
Yours sincerely
JONATHAN BAUME