National Policing Issues

Police Pay Award 2007

Andy Reed MP explains the controversy surrounding the police pay award 2007.

Background to Public Sector Pay - the Government View

Public Services Pay and a Strong Stable Economy

The Government has a responsibility to maintain economic stability in order to promote growth and job prospects for all. That means that levels of public sector pay are an important part of inflation control – low inflation has provided the platform for record employment levels, higher investment in public services, productivity and economic growth and better-paid public servants.

• Public servants are vital to the delivery of good public services

• Setting pay at the right level is key to recruit, train and motivate valued public sector workers

• But the Government also needs to achieve this in a way that is consistent with maintaining macroeconomic stability in order to promote growth and job prospects for all

• The level of public sector pay is an important part of inflation control

• Low inflation has provided the platform for record employment levels, productivity and economic growth

• Higher investment in public services has led to more and better paid public servants

• Conversely, high inflation means high interest rates and high mortgage payments for ALL families including those in the public sector

• Average mortgage rates were 5.64% in September 2007 compared with 11% between 1979-97 saving mortgage holders approximately £4,000 a year on average

• Therefore it is vital we remain vigilant over inflation with awards based on the CPI inflation target of 2%

The recent record on public sector pay:-

Under-investment in public services during the 1980s and early 90s led to severe recruitment and retention problems across the public sector.

Labour’s commitment to public services has allowed us to overcome these widespread problems.

Our overall investment, and the value of the total reward package for public sector workers, has helped deliver major growth in a number of frontline workers since 1997 with:

• 80,000 more nurses
• 36,000 more doctors
• 35,000 more teachers
• 102,000 more teaching assistants
• 14,000 more police officers

Indeed, from 1997 – 2006 we have seen significant average earnings increases for key frontline staff such as:

• 44% (or £9K) for nurses;
• 69% (or £31K) for hospital doctors
• 97% (or £19K) for ambulance staff;
• 39% (or £6K) for police officers
• 41% (or £9K) for teachers; and
• 35% (or £7K) for prison officers.

Public sector average earnings growth exceeded private sector growth from 2000-2006 with public sector average earnings growing consistently above Consumer Price Index (CPI) inflation.

In the public sector, pay is only one aspect of a wider total reward package. For example, pension benefits in the public sector are still among the most generous across the economy and coverage is considerably higher in the public sector.

Current issues

Following recent pay growth and the healthy recruitment and retention situation, it is vital we remain vigilant over inflation with awards based on the CPI inflation target of 2%.

The Government has a responsibility to maintain economic stability in order to promote growth and job prospects for all. That means that levels of public sector pay are an important part of inflation control – low inflation has provided the platform for record employment levels, higher investment in public services, productivity and economic growth and better-paid public servants.

The Bank of England considers pay restraint across the economy to be key in maintaining low and stable inflation – in April 2007, the governor of the Bank of England, Mervyn King, wrote to the then Chancellor Gordon Brown because the CPI measure was more than one percentage point above the government's 2% target.

It is in this context that the Government staged pay review body pay awards this year, giving pay awards averaging 1.9%.

Similarly, the pay award for Police Officers will also average 1.9% over the year to September 2008. This is the arbitration award of 2.5%, but to be paid from December rather than September. The award reflects principally the very healthy recruitment and retention conditions, and the financial and service delivery challenges within the CSR07.

Some compare these basic increases with inflation, and it is true that workers at the top pay scales will only receive this. However, many others will receive a further increase from progression worth an additional:

• 3-4% for individual nurses;
• 4-8% for individual teachers;
• 2-6% for individual police officers; and
• 5-9% for individual prison officers

Level of pay in public sector

There have been recent accusations about the level of pay in the public sector, particularly for those working in the civil service. But:

• Fewer than 2% of civil servants are on the national minimum wage – covering support grades such as cleaners and messengers where local employers have decided that this is appropriate for their local labour market

• The latest available civil service statistics show that the median salary for the civil service, on a Full Time Equivalent basis is £20,000. This figure excludes overtime or one-off bonuses.

• The lower paid public sector worker will be in receipt of a generous pension package, unlikely to be available to the lower paid elsewhere.

• As with other workers across the economy, public sector workers are also eligible to claim tax credits which offer support for all families with children and an income up to £58,000

• The tax credit system is an inclusive system offering support for all families with children and income up to £58,000 (up to £66,000 for families with a child under one)

• Around 9 out of 10 families with children are entitled to tax credits

Police Officer pay: Key facts

The Police Officer pay award balances the need to enable the recruitment, retention and motivation of suitably qualified officers, whilst being non-inflationary and fiscally sustainable.

Pay levels

• In 1997 a constable’s starting salary was £15,438. After this pay award, all police constables will be paid more than £21,534. This is a 39% increase

• During this period RPI inflation has increased by 30%. So constable pay has increased by 9% above inflation. The starting pay for sergeants (£32,985) and inspectors (£42,264) has increased similarly

• On top of the pay award uplift, all constables, sergeants and inspectors not already at the top of their scales receive automatic annual increments worth between 2% and 6%. For instance, a constable completing 2 years service would receive an increment of nearly 6% on top of the uplift

• After this pay award a constable will be paid more than £21,534 and those with the longest service now receive £33,810 at the top of the scale

• The overall benefits package includes additional payments for hard to fill posts, regional allowances and highly favourable pension schemes

• Police officers are not the only public sector group without the right to strike; for example prison officers, who also received 2.5% staged to 1.9%

• Nationally, the police service has among the best recruitment and retention in the public services. Applicants far outstrip the requirement for recruits and wastage rates are very low

• Regional allowances: officers in the South East get an additional £1,000 or £2,000, officers in London get an additional £6,393 plus free travel.

Affordability

Salaries account for some 80% of overall police service expenditure (including police staff).

The Police Federation wanted 3.94%, while the Home Secretary and the Tribunal awarded 2.5%. If we had gone with the Federation, that would have meant over 1,870 fewer police officers a year.

The Home Secretary took the decision to stage the award, by paying it from 1 December, not 1 September. That will release a one-off £40m – equivalent to over 800 officers for a year.

Altogether this year, the decision is equivalent to having over 2,670 officers more than if the Federation had got their way.

Recruitment and retention

Over the last two years in England and Wales 12,357 constables have been recruited from 76,383 applicants - ratio of 6:1 applicants per post.

In Northern Ireland, the ratio was 17:1 applicants per post and in Scotland 5.5:1 applicants per post.

In all cases applicants far outstrip the requirement for recruits. This high level of application’s demonstrates that the benefits package including pay is competitive.

Pensions

In addition, officers still have favourable pension arrangements. Under the old pension scheme (the Police Pension Scheme 1987), to which the vast majority of officers belong, Officers can retire with an immediate pension after 30 years of service – which in practice makes their earliest normal pension age 48½.

The high value of the Police pension scheme scheme is reflected in the high contribution rates – contributions currently set at 24.6%. In comparison, for example, in the NHS employer contributions are 14%.

Andy Reed's Personal view

Police officers affected have asked for my personal opinion – and as always I am more than happy to give it. Hopefully Police Officers will recognise me as somebody who has always been sympathetic to their cause over the last 15 years. That means you get my personal opinion – not a government line and not a Police Federation circular line either. It means I can be fairly objective. When faced with a ‘protest’ the easiest thing for a quiet life would be to just agree with the protesters. This is not my style. I prefer to look into the whole situation and see where both sides are coming from. Below I am happy to criticise the government where appropriate in speaking up for police officers, but equally I think we public sector workers have to understand our role in the bigger picture of public finances, inflation and the macro economy. I took a similar position during the Fire-fighters strike – talking and finding a middle way through. Guess what – the prediction I made at the start of the dispute about the final solution was about 90% accurate. At the time fire-fighters I spoke to agreed at the start with the analysis off the record but had gone too far publicly to back down. I hope the Police Federation have not led Officers down the same line again by over reacting. I fear they may have done this.

I fully understand how hard it is to see how your personal pay award has anything to do with the macro economic performance of the whole economy. However, I would urge people in the public sector to understand their role. As you can see from the figures above the government have recognised this over the last decade with massive recruitment to key parts of the public sector and above inflation increases in pay to make up for a decades of underpayment. Again I think this 12 month pay settlement has to be put into that context.

Ministers would love to do the easy thing all of the time. I know I would. Who really thinks Ministers would really like to upset anybody. It would be much easier in life if we gave every lobby what they wanted – or would it. The reality is that we take the last 10 years of economic growth and stability for granted. But it is hard won by taking tough decisions when there are pressures. Just carrying on with above inflation increases may be popular for 1 year – but what happens when inflation rises and interest rates have to rise to keep it down. So it’s a tough choice. One that clearly many of us would never have to really like facing. In fantasy politics you could always take the easy popular decision without the consequences. We did too much of that in the past and paid the price of 2 of the deepest recessions since the war and millions unemployed.

If you want me to be honest I also feel that the level of the reaction from Police Officers is disproportionate to the settlement – in which 2.5% has been added to salaries. The 3 month staging has been common in all other pubic sector jobs this year (including MPs who only got 1.5 %!!) so this could not have been a total surprise.

However, what I will say is that I believe the whole thing could have been handled better by the Home Office and I have contacted the Home Office Ministerial team to express my dismay at the problems this has caused with police officers. I accept the point that the Federation are making about the good faith placed in arbitration. This is my criticism of the Home Office in this matter. I think they should have been more up front about this at the start of the process as it was widely known and understood by every other part of the public sector. However, I have to say I have also been surprised by the lack of public support for the police from non-police families. Indeed I would say the response has been equally negative about the police position as the governments.

My question to the Home Office has been around the cost in their budget. I wanted to know what the consequences of not saving £40m would be. Obviously they believe it could cost about 800 Police Officers jobs and put pressure on tough budgets for Police Authorities. The Federation and some Chief Constables say they can afford it. We need to see the whole picture on this because the Chief has been complaining about Police funding for some years.

So to conclude. I think the handling of the current problem was pretty poor on both sides. I do think Ministers have to take the tough decisions we would all love to avoid and so I am sure they are trying to act in the interests of all of us in the long run and for the strength of our hard won economic stability. However, if it is proven that Police Authorities have the cash to pay the backdating without affecting any frontline services then I think they should look again. I have not seen this evidence yet. But if it is forthcoming I will continue to press the Home Secretary to look at giving Police Officer the ‘lost £179’ for September to December. The Ministerial team have lost a great deal of goodwill because of the way they have handled this matter. As I said above they should have been more upfront about the fact that Police Officers would be constrained by the same tough public pay policy as the rest of the pubic sector from the start and stuck to it.
For information I also attach the list of the pay awards MPs received in the last 6 years as some officers seem to have been given some misleading information.