Pay: Public-sector workers will not get full recommended rise

The Cabinet yesterday wiped almost a third - more than pounds 400m - off pay rises recommended for 1.3m public sector employees, from nurses and teachers to Whitehall mandarins. Anthony Bevins, Political Editor, reports the spin and the deal.

The average April pay increase recommended in four independent pay review body reports published yesterday came to 3.9 per cent, with an increase of pounds 1,309m in the annual pay bill.

After the Treasury and the Cabinet had finished with the proposals, the package had been slashed back to 2.7 per cent, with an increase in the pay bill for 1998-99 that could range from pounds 896m to pounds 906m, depending on "weighting".

In a written Commons reply, Tony Blair said the Government had "decided to accept this year's main pay recommendations in full".

Then came the snag: "However, to ensure that departments can accommodate the costs without damaging front line services and to ensure that these awards do not lead to unwelcome increases in pay pressures throughout the economy more generally, we have decided that it is essential to stage their introduction."

From April, all those covered by the pay reviews would get an extra 2 per cent, with the backlog payable in full from 1 December - hardly payment in full of the recommendations made.

Nevertheless, putting a further gloss on the deal, the Prime Minister said: "The effect of staging is that, on average, the rates to be paid from April 1998 are 3.3 per cent higher than those paid from April last year." That reflected the staging of last year's pay reviews finally coming on stream.

"And the rates to be paid from December 1998 will be 3.9 per cent higher than those paid from last December" - which was another way of saying that the full recommendation was being stalled until the final monthly pay cheque of the year.

The most telling figure provided by Mr Blair was the overall comparison between the 1997-98 paybill and the bill for the next financial year, which will only go up by 2.7 per cent - almost 30 per cent less than the average recommendation made by the pay review bodies.

According to official calculations, the biggest blow was received by GPs. They had been recommended a 5.2 per cent rise; they get 2.1 per cent for the year as a whole, compared with 2.6 per cent for teachers and nursing staff.

The Prime Minister's spokesman said the delicate state of the economy required moderation; excessive pay increases would risk higher interest rates, while restraint would help in the creation of more jobs.

It was also pointed out that Mr Blair and Cabinet colleagues were giving a lead, and making a personal sacrifice, by forgoing, for the second year running, substantial pay increases to which they were entitled under the terms of last year's Senior Salaries Review Body report.

Mr Blair will continue receiving a salary of pounds 102,417, compared with the pounds 143,860 to which he is entitled up to April, and will stay on that salary at least until March 1999. There are currently 17 departmental heads in Whitehall who receive more than the Prime Minister.

But buried in the text of the latest Senior Salaries Review Body report, there was an even more remarkable figure. Last year, there were some senior civil servants who received pay increases of 10 per cent - four times the average 2.4 per cent received across the public sector.

Under a performance pay system, officials immediately below the top-ranking permanent secretary level had been given general pay rises of up to 8.5 per cent in 1997.

However, the report added: "We note also that the handful of exceptional performers received awards of 11 per cent in 1996 and 10 per cent in 1997, which are in line with awards at senior levels in the private sector."

the Salary structure

Salary review bodies' recommendations for 1 April 1998, to be paid in full only from 1 December 1998.

Grade A (lowest) nurse aged 18 plus pounds 8,315-pounds 10,170

Army private pounds 9,527-pounds 16,673

Newly-qualified honours graduate teacher pounds 15,012

Members of Parliament (from 1 April) pounds 45,066

General medical practitioner pounds 55,470

Brigadier pounds 65,291

Lowest-ranking judge (outside London) pounds 70,848

Minimum Permanent Secretary's pay pounds 95,720

Recommendations and actual increases for 1998-99 (compared with 1997- 98).

Actual %* Actual paybill

rise

Basic military 2.6%(3.75%) pounds 123m(pounds 179m)

General medical practitioners 2.1% (5.2%) pounds 58m(pounds 80m)

Nursing and other staff 2.6% (3.8%) pounds 240m(pounds 351m)

School teachers 2.6% (3.8%) pounds 305m(pounds 446m)

Judiciary 2.5% (3.5%) pounds 5m(pounds 6m)

All groups 2.7% (3.9%) pounds 906m(pounds 1,309m)

* Recommended