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Many civil servants will bid farewell to their offices wary of what 2011, the crunch year for the Coalition, will bring. So huddling around departmental Christmas trees provided by benevolent PFI contractors – the fairy personally affixed to the top by the steady hand of the health and safety conscious permanent secretary – seasonal cheer may prove hard to come by. The senior civil service has been subject to pay restrictions since Alistair Darling announced a one-year pay freeze in 2009. Courtesy of Francis Maude's crusade for transparency, many of these senior salaries are now in the public domain. But from 2011 a two-year pay freeze will affect all civil servants earning more than £21,000 a year. The Treasury will cast a hawkish eye on pay agreements or ‘remits' agreed by the biggest departments, DWP, HMRC, MoJ, MoD and the Home Office. Popular attitudes to public sector pay and conditions seemingly trail far behind this sterner reality. Reaction to the Office for National Statistics findings that public sector workers earn on average £3,600 more than their private sector peers for 100 less hours work a year was predictably savage. It generated talk of ‘pay apartheid' and government inefficiencies from the Taxpayers Alliance and the Daily Mail. In his final outing before the public accounts select committee Sir Leigh Lewis, the outgoing permanent secretary for the department for work and pensions lamented the commonly held perception of ‘idle penpushers'. But wrongly held assumptions about pay and working life might be the least civil servants have to fear. Lord Hutton's consultation paper on unfunded public sector pensions schemes was published in the midst of the tuition fees drama. It contains serious implications for civil servants' monthly pay cheques. The investigating commission estimates that a 0.5% reduction in the discount rate would require a rise in contributions by an average of 3% of the average pay bill or £3bn to £4bn a year. Given the commission's view that the current rate is at the high end of the scale and likely options for change, civil servants presently paying 6% of monthly wages into their pension schemes could see this proportion soar to 15%. This hike would, in part, be met by the Government as employer – but might encourage staff to withdraw from pension schemes altogether. Jonathan Werran is editor of Governetz Public Property

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WHITEHALL

Inside View

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