FDA Written Evidence to the National Crime Agency Remuneration Review Body 2016 Review

Transcription

1 FDA Written Evidence to the National Crime Agency Remuneration Review Body 2016 Review Please Contact: Wynne Parry FDA 8 Leake Street London SE1 7NN

2 Contents Page 1 Summary 2 2 Context 2 3 Prohibition on taking strike action 3 4 General economy 4 5 Earnings data 4 6 Inflation 6 7 Recruitment and retention 6 8 Market Comparability 10 9 Pay & career progression 11 1 FDA Written Evidence to the National Crime Agency Remuneration Review Board

3 1. Summary FDA asks the Review Body to:- Take account of the relative detrimental market positions of NCA senior managers against their comparators in the private sector and police comparators, when considering their recommendations Consider the implications of the further five years of pay restraint imposed by the Treasury Recommend that any award this year takes account of the relative position of staff in all grades so that awards provide for genuine progression in the relevant range 2. Context 2.1 FDA represents senior managers and leaders in the National Crime Agency (NCA) and across government. Our members are employed in the Senior Civil Service and at delegated Grades 6 and 7. In the context of the NCA our members are employed as Directors, Deputy Directors and Grades 1 and FDA welcomes the opportunity to submit evidence to the National Crime Agency Remuneration Review Body (NCARRB). We believe that employees and the UK taxpayer benefit from an independent, evidence based review body that has democratic legitimacy through its government remit. We hope that government respects its independence and honours credible and considered recommendations. 2.3 The NCA is a law enforcement agency with national and international reach and the mandate and powers to work in partnership with other law enforcement organizations to bring the full weight of the law to bear in cutting serious and organized crime. NCA employees are however civil servants subject to the civil service code. To assist them in their crime fighting role staff NCA officers may be designated with one or more of powers and privileges of a constable, powers of a customs officer, and powers of an immigration officer (triple warranted). 2.4 As NCA staff are civil servants we have based the evidence in this survey around the same comparators and using the same pay and economic data as we include in submissions to similar civil service review bodies. Given the prominent crime-focused role of the agency we also believe it appropriate to compare the position of NCA senior staff with similar roles in the police particularly as many NCA staff will work in teams with police staff. The vast majority of NCA officers designated with powers hold tripartite powers (namely, the powers of a Constable (England and Wales); the powers of an Immigration Officer; and the powers of a Customs Officer) which are 2 FDA Written Evidence to the National Crime Agency Remuneration Review Board

4 collectively known as NCA Standard Powers (NCASP). A number of these officers will also be designated with the powers of a Constable (Scotland). 3. Prohibition on taking strike action 3.1 Unlike other civil servants NCA officers with powers are prevented from taking industrial action. 3.2 We recognise the importance of national security and the contribution made by our members in its defense. That was why FDA made an early decision agreeing to a Dispute Resolution Procedure (DRP) that would have introduced a no-strike agreement. 3.3 FDA was clear in its support for the DRP. It is regrettable that it was not possible for all parties to sign up to the draft document as this would have provided a route to ensure that employees below Deputy Director were covered under the same pay bargaining arrangements. 3.4 As in previous years FDA is mindful that we do not create 2 tiers of pay arrangements for employees working in the same grade. To that end FDA will be consistent in our evidence to both the NCARRB and to the employer as part of pay bargaining. 3.5 On 29 July 2014 following conclusion of the NCA pay award for those employees not covered by NCARRB, FDA wrote to the employer stating:- We of course understand why the Agency has proposed the same award as recommended by the Reward Review Body. In our evidence to the RRB we were clear that we did not want to see a two tier pay system develop between those dealt with by RRB and those remaining within the scope of collective bargaining. The current position is unsatisfactory and we need to review how we deal with future pay awards so that the process is seamless and seen to be consistent assuming that things remain as they are at present. FDA believes all the parties involved need to give careful thought to how this can be achieved and look forward to continuing dialogue on this. 3.6 As yet no discussions have taken place on this and FDA believes that the employer and its unions should consider this further. 3 FDA Written Evidence to the National Crime Agency Remuneration Review Board

5 4. General Economy 4.1 As the economy continues its gradual recovery, private sector companies are beginning to hire and will be willing to pay for the skills they need. The ONS Labour Market statistics for November show a continuing increase in employment in virtually all areas of the UK and Northern Ireland driven by increased private sector activity. 4.2 In comparison pay in NCA/SOCA has been constrained by governments pay policy including 2 years of pay freeze followed by the current imposition of a 1% increase to pay bill for the remainder of this parliament. The pay ranges for NCA staff transferring from SOCA have not increased since 2009 and pay awards have been in line with government pay policy with the 2015 award constrained by the 1% cap to pay bill increases. 5. Earnings Data 5.1 Whilst following the economic collapse in 2008 pay in other sectors was similarly flat, employers in the public sector did not face market pressure to review pay levels. This picture has changed and the private sector has seen continuous growth in recent years. This is beginning to feed in to earnings with average weekly earnings excluding bonuses increasing throughout 2014 whilst pay in the public sector recorded decreases during the year. As the economy continues to recover this is likely to see earnings in other sectors grow at a faster rate particularly for highly skilled employees. 5.2 The Annual Survey of Hours and Earnings (ASHE) is a reliable guide to how earnings are changing for the average employee. ASHE shows that median earnings for those in the same job for at least a year the vast bulk of employees grew by 4.3% in the year April 2014 to April This indicates relatively strong earnings growth for 80% of the workforce Between August to October 2014 and August to October 2015 in nominal terms (that is, not adjusted for consumer price inflation) total pay increased by 2.4%, lower than the growth rate between July to September 2014 and July to September 2015 (3.0%) but still higher than the increase allowed for in the Treasury pay guidelines. 5.4 At this juncture we wish to remind the Review Body of research quoted in our submission for the 2015 pay review conducted last year by the Institute for Fiscal Studies (IFS) that highlights the current and future problems faced by our members if the current limits on reward remain in place. Pay levels in the 1 ONS LMS November Annual Survey of Hours and Earnings ONS November FDA Written Evidence to the National Crime Agency Remuneration Review Board

6 civil service are more compressed than in the private sector meaning that the salary levels for senior grades in the civil and public sector are falling further behind the private sector. For a similar reason pay levels at more junior grades are much closer to market rates. 5.5 The IFS consider the forecast of the Office for Budget Responsibility that pay will continue to grow faster in the private sector than in the public sector over the next four years. IFS comment that if this is the case this implies that the gap between public and private sector pay levels will fall back to levels last seen in the late 1990 s and early 2000 s when there were recruitment and retention problems in parts of the public sector. 3 3 IFS Report R97 Public sector pay in the UK 5 FDA Written Evidence to the National Crime Agency Remuneration Review Board

7 6. Inflation 6.1 We argue that RPI remains the appropriate measure for pay bargaining, as this is the most accurate reflection of the real inflationary pressures our members face including housing costs. 6.2 Current inflation as measured by CPI remains negligible at 0.7% but using the reference measure for pay bargaining, inflation as measured by RPI was 1.1%. In their November Inflation Report the Bank of England forecasts inflation remaining at similarly low rates for 2 years but warns that this prediction is dependent upon the rate at which supply meets demand in the economy. They advise that:- Over the past few years UK demand is judged to have grown faster than potential supply, reducing the degree of slack in the economy. The MPC s best collective judgement is that spare capacity of around 1 2% of GDP remains, although there is a wide degree of uncertainty around that estimate and a range of views on the Committee. With limited slack remaining, the extent to which demand can grow without generating inflationary pressures will depend on how quickly supply capacity expands and how rapidly any pressure on supply feeds into wage and price inflation There is evidence of skills shortages across the economy and these are being felt within the civil service as much as the private sector. Any increase in inflationary pressure will only serve to make the position of our members even more uncompetitive. It is clear that the constraints imposed by the Treasury on pay budgets will allow government employers like NCA far less flexibility to respond to addressing recruitment needs than competitors in other sectors who will raise salary levels as needed to meet demand. 7. Recruitment and Retention 7.1 Following their election the new administration has applied the 1% ceiling for public sector pay budgets to annual increases until the end of the current parliament in Since 2010 taking the impact of government pay policy with increases to pensions contributions our members are at least 20% worse off than before We argue that this will result in increasing problems for the Agency in attracting and retaining the skilled leaders and managers it will need. 7.3 The current pay ranges for FDA grades in the NCA appropriate to NCARRB are below: 4 Bank of England Inflation Report November FDA Written Evidence to the National Crime Agency Remuneration Review Board

8 GRADE GRADE MINIMUM ( ) TARGET RANGE MINIMUM ( ) TARGET RANGE MID- POINT ( ) TARGET RANGE MAXIMUM ( ) GRADE MAXIMUM ( ) G1 63,078 72,550 76,368 80,186 80,883 G2 51,493 59,224 62,341 65,458 66, Pay is not the only element of any remuneration package but it is a primary consideration for any prospective employee seeking a senior management role in the civil service. As highlighted in our evidence to NCARRB last year our members report no opportunities for them to gain promotion in the NCA thus removing another avenue to improve their pay position. This year our members report that lack of career development has the single largest impact on their morale. No one has reported that their morale has increased over the last year. Most members we have engaged with report that they have given serious thought to leaving the Agency this year and more than last year report they are intending to look for opportunities outside of the Agency in the coming year. 7.5 In the light of the general improving jobs market in the private sector we are concerned that without early attention the reward package offered by the NCA will not prove attractive to either retaining staff or attract those seeking a senior career in the service. 7.6 It seems routine now in many departments and many professions that there is a recognition of the lack of market comparability of senior salaries. This is demonstrated by the scarcity of posts advertised externally on the minimum of scales, an implicit recognition that people cannot be recruited on these salaries that supports the case for re-evaluation of government pay policy. The customary practice of offering internal promotees a 10% uplift on the minimum similarly fails to offer an incentive for those who would 7 FDA Written Evidence to the National Crime Agency Remuneration Review Board

9 previously have sought promotion or plan to join the SCS from the delegated grades. 7.7 In addition the civil service reform plan, 2 years on report makes recommendations on a greater focus on external recruitment. It is evident that we are simply going to repeat the mistakes of the past. As more posts are recruited externally, so the reality will be that these will be paid significantly higher on entry than existing post holders. 7.8 This two-tier workforce will create further resentment among internal candidates who will see external hires paid significantly more without any clear justification other than the pay disparity with the external market. The lack of any pay progression ingrains these differentials and causes further resentment. 7.9 The FDA is finding evidence from across the service to suggest that despite being perceived by many as benefiting most from the current system, many of those appointed from outside the civil service say they are very dissatisfied with the overall pay arrangements. Those with private sector experience will readily recognise the chasm that exists between salaries in the public and private sectors for comparable roles As has previously been discussed, the reform of the civil service pension arrangements has eroded some of the added value provided by that scheme. The increase in employee contributions to the pension scheme announced by the Chancellor in 2010 and the new tiered structure of contributions in the 2015 scheme disproportionately affects senior staff. Pension contributions from April 2015 are now 7.35% for officers earning between 47,001 and 150,000. As last year respondents tell us that that pensions changes have a negative impact on their morale and motivation. In addition the change to the contracted out rebate will also mean that from April members will pay additional National Insurance further reducing the value of their salary Each year the FDA surveys members to gain their views on pay, morale and motivation. No respondents could see any link between their performance and the pay outcome from last year. Three quarters of respondents were dissatisfied with the pace of pay progression. Half of respondents reported as being very dissatisfied with the current pay arrangements. Our members tell us that they see no link between their pay and their performance and that they are dissatisfied with the pace they are progressing in their pay band. One member quotes still being below the target minimum after 7 years service At the time of drafting this evidence we had not seen a grade breakdown of the NCA results from the 2015 Civil Service Staff Survey but it is clear that overall the level of dissatisfaction with pay has worsened with only 22% believing their pay matched their performance. Only 21% were satisfied with the overall pay and benefits package. 8 FDA Written Evidence to the National Crime Agency Remuneration Review Board

10 7.13 There is plenty of evidence of the pay gap that already exists between roles in the civil service and elsewhere. In 2012 FDA commissioned Income Data Services to provide comparative data on pay levels in the civil service for similar roles in the private sector. This found that: - Civil service Grade 7 roles can be compared with IDS level 8 roles across the rest of the economy. The median pay of Grade 7 civil servants is behind the median pay of comparable roles in all other parts of the economy, by as much as 32 per cent behind the median pay of roles in the private services sector of the economy Civil service Grade 6 roles can be compared with IDS level 9 roles across the rest of the economy. The median pay of civil service Grade 6 roles is behind the median pay of all other comparable roles across the rest of the economy, and by as much as 54 per cent of the median pay of both the financial services and manufacturing sectors 7.14 In the same year the Cabinet Office commissioned a pay survey by the Hay Group and this too found that pay levels for civil service grades SEO and above were significantly behind similar roles in the private sector 5. Data for FDA Grades is shown in the table below. Public Private Grade Q3 MED Q1 Q3 MED Q1 Compariso n Median Band ,82 298,92 246, Band 150,80 136,00 130,00 203,62 171,64 149, Band 91,755 83,052 75, ,94 96,134 83, G6 80,932 70,623 63,488 91,682 78,925 68, G7 65,195 59,195 53,403 76,591 66,334 58, We suggest that those gaps will have grown further since the survey was produced and this represents a serious challenge to the aim of the NCA to attract and retain the best talent. There are at last some early signs that the government is only too aware of the uncompetitive position of civil service pay for managers and professionals. In evidence to the Public Administration and 5 Hay Pay Survey for Cabinet Office FDA Written Evidence to the National Crime Agency Remuneration Review Board

11 Constitutional Affairs Committee in an introductory session held on 30 November, Minister for the Civil Service Matt Hancock revealed Cabinet Office plans to introduce new pay scales for specialists with the minister advising the Committee - I want permanent civil servants with those skills within the civil service, and that s why we re bringing in new pay bands for those with specialist skills in order to ensure that these skills are deeply embedded in the civil service We would want the NCA to explore how such a development may assist them in arriving at a new settlement for its senior staff. 8. Market Comparability 8.1 The NCA brings together employees from different organizations to disrupt and fight serious organized crime. This requires co-operation and closer working between partners from different agencies. NCA staff are civil servants with triple-warranted powers, operating across a broader arena of law enforcement than other potential civil service comparators customs officers, home office and immigration and tax inspectors. 8.2 We argue that a key contributor to the cohesion of the NCA and its ability to foster strong relationships of trust with the police and its other partners will be a sense of value and consistency on reward. Over the last year we have seen the law enforcement feel of the organization strengthen. As the Agency has developed it has become more evident that it is more closely aligned to the police than the civil service. 8.3 We have heard the point raised that NCA staff are hankering after a world based on a police past that no longer exists however each year the unions submit comparability reports based on existing police pay and benefits and it is clear from these that the disparity in pay is both current and real. NCA is rightly proud to declare itself as a law enforcement agency yet shy of addressing the pay comparability issues this raises. 8.4 At present there is a significant disparity in pay levels between senior NCA officers and their comparable grades in the police service as the table below highlights. At G2 the pay disparity with a Superintendent of Police is over 10,000 at both the minimum and maximum of range. 10 FDA Written Evidence to the National Crime Agency Remuneration Review Board

12 Comparison with pay levels NCA/Police Grade / Rank Minimum * Target Maximum Difference at Minimum between SOCA/ACPO Difference at Maximum between SOCA/ACPO G Chief Supt G Supt Pay Progression 9.1 Treasury guidelines on pay instruct Departments to include the cost of pay progression within the 1% cap imposed for salary reviews. The Treasury has also sought to remove time served progression from departmental and NDPB pay systems. The use of the term time served is not one the FDA recognizes and we maintain that recognition of skills and experience through a system of pay progression remains a key tool for motivating employees. 9.2 Pay progression is a staggering of payments to reach the correct rate for the job. The actual rate for the job is the top of the pay band and staff will usually start at the bottom of the band and then after gaining experience (and sometimes on-going training) will, over time, go through the pay bands to the top. Many staff will then remain at the top of the band until they are promoted; change jobs or their job is re-graded. Staff can be at this level for many years where they are considered to be performing the full range of duties and have achieved the right level of competence. 9.3 The NCA arrangements in theory allow for progression up to and beyond a target rate. In recent years payments have been awarded as a consolidated flat rate cash equivalent. This approach means that our members who earn higher salaries receive smaller increases than their colleagues in other grades. This adds to the frustration of our members who in addition to receiving minimal pay awards, with no progression in their pay range at a time when the salaries paid for their skills and contribution fall further behind those paid in the private sector. 9.4 We presented evidence last year to demonstrate the poor relative position of staff in Grades 1 and 2 against mid/target points in their pay scale. 11 FDA Written Evidence to the National Crime Agency Remuneration Review Board

13 89% OF G1 staff are paid between the range min and mid-point 82% OF G2 staff are paid between the range min and mid-point 63.4% OF G1 staff earn less than the target range minimum of 72, % OF G2 staff earn below the target range minimum of 59, We are arriving at the view that having a pay range where the higher points are in truth unattainable is unsustainable. On the current trajectory many staff in Grades 1 and 2 will struggle to reach the defined target (market) rate let alone the range maxima. Over recent years we have struggled to identify the Agency s overall pay strategy. An equitable strategy would make sure that staff in all levels of the organisation can progress through their respective pay range. The FDA believes we need to urgently review the current pay arrangements and pay ranges to agree a more relevant and achievable set of pay arrangements. 9.6 In the short term we ask the Review Body to task the Agency with pursuing a method of distributing the funds for the 2016 award in such a way to provide genuine progression in the pay range for each grade. One way could be to base flat rate increases on the maximum for each grade. Career Progression 9.7 There are few if any opportunities for promotion for staff in G1 and G2 within the Agency with our members continuing to report that they do not consider that they have been able to access adequate opportunities for personal development to enhance skills and competencies and that processes for promotion are neither clear nor transparent. 9.8 Morale has either decreased or stayed the same. No one reports increased morale. A significant proportion of our members have seriously considered leaving the civil service in the past 12 months and are more inclined to look for a role outside of the service. 9.9 In summary, FDA members are trapped by declining salary value in their current role without the opportunity to improve their career and salary prospects through promotion into the next grade or roles at SCS level. When seeking promotion to the SCS existing employees are likely to face competition from external candidates who will be able to access far higher starting salaries 9.10 We ask the NCARRB to take this evidence into account when considering the 2016 award. 12 FDA Written Evidence to the National Crime Agency Remuneration Review Board