Budget 2015 - the sequel: George Osborne screws the Civil Service...

It might have been easy to miss amidst the torrent of announcements that George Osborne finally made it clear that, whilst Britain deserves a pay rise, his largesse does not extend as far as the civil servants who are expected to deliver his reforms.

The announcement that pay restraint would be extended for another four years will have come as a body blow to many who have seen their pay go backwards relative to the wider economy over the past five years, by as much as 15% in some cases.

As the Budget Report says;

1.85 In the last Parliament, the government exercised firm restraint over public sector pay to deliver reductions to departmental spending, saving approximately £8 billion. As set out by the Chancellor at Autumn Statement 2014, the government will need to continue to take tough decisions on public sector pay in order to deliver reductions to departmental spending and protect the quality of public services. 

1.86 Overall, levels of pay in the public sector are now, on average, comparable to those in the private sector. However, public sector workers continue to benefit from a significant premium once employer pension contributions are taken into account, as shown in Chart 1.10. 

1.87 In light of this and continued low inflation, the government will therefore fund public sector workforces for a pay award of 1% for 4 years from 2016-17 onwards. This will save approximately £5 billion by 2019-20. The government expects pay awards to be applied in a targeted manner within workforces to support the delivery of public services.

In other words, £13 billion worth of cuts have been, and are to be, borne by public servants who have seen their job security taken from them, their pension contributions trebled and quadrupled, and their workloads increased - 'doing more with less' has become the ever-present buzzphrase in central government.

But, we were all in it together, weren't we? And the country was in a hole, right?

Well, if you look at the OBR projections for the next four years, average earnings growth is expected to be 3.8% over the next four years, compared to the 1% increase permitted for the public sector. And inflation? Approximately 1.7%, which means that public sector workers will fall far behind their private sector counterparts and see real terms cuts for good measure.

Now, it should be noted that a 1% increase in the paybill does not equate to a 1% increase across the board. Public sector jobs come with a payscale, whereby you enter at the lowest level (usually) and reach the maximum for the grade by means of increases over a period of years. Thus, those at the top of the payscale get less. The more numerate amongst my readers will see where the issue is here. Experienced staff will be even worse off, as has been the case for the past five years.

One side effect of the reduction in public sector jobs over the past five years is a significant fall in recruitment, and a resultant greying of the workforce that remains. Indeed, Lin Homer, Chief Executive of HM Revenue & Customs, noted that very concern a few years ago, and the National Audit Office repeated the message last month.

And, when the greybeards go, as they undoubtedly will, many sooner rather than later, the promise that pay will fall behind inflation from the day a new recruit walks through the door is hardly likely to act as an incentive to join. And, for those who have marketable skills, the decision as to whether they stay or go just got a whole lot easier.

You might almost think that the Conservatives wanted to destroy the public sector. But who would administer the country then?...