I thought it would be helpful for staff if I laid out the implications of yesterday’s Budget for the Civil Service. Each department will be communicating in more detail soon, so I would recommend checking your intranets in the coming days. There have been important announcements about Pay and the Personal Allowance and support for childcare which I have set out below.
Pay
- The public sector pay cap will be extended into 2015-16 meaning that pay increases will be limited to a maximum of 1%.
- It will be up to departments and Pay Review Bodies to decide whether an increase below 1% is justified based on affordability and staffing needs.
- In June’s Spending Round the Government will seek to make significant further savings through reforms to progression pay.
- Progression pay has meant some people in the public sector have received pay increases of more than 7% in a given year during the pay freeze. The intention is that pay increases for those receiving progression pay will be brought closer to those of the wider workforce.
Spending reductions
- To help meet spending reductions the Chancellor has announced a 1% reduction in most Departmental resource budgets in 2013/14 and in 2014/15. This will save approximately £2.3bn in total.
- Departmental budgets will reduce by £11.5bn in 2015/16 in addition to an extension of the efficiency programme which is expected to save £5bn in efficiency and administration costs in 2015/16.
Personal Allowance
- The tax-free personal allowance will increase by £560 to £10,000 in 2014-15. By April 2014, the personal allowance will have risen by £3,525 since 2010 – an increase of 54% in four years in cash terms.
Support for Childcare
- The Government has announced support for childcare for working families. Families will receive 20% of their childcare costs, up to £1,200 per year per child from autumn 2015.
- Many civil servants are currently covered by the Employer Support Childcare system. This will be closed to new entrants in 2015, but staff who are members up to that point can choose to remain in the scheme. For many people the new scheme will be more generous.
The decisions on spending and pay reflect the tough economic circumstances facing the country. From my visits around the country I am confident that we have the ability to respond to these challenges.
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