1. Scope, roles and context for 2017-18
This guidance covers pay setting arrangements for civil servants throughout the civil service, including departments, non-ministerial departments and agencies, as well as for public sector workers in non-departmental public bodies (NDBPs)1 and other arm’s length bodies. Where reference is made to civil servants, it also includes references to other workers employed in an organisation covered by this guidance. The guidance provides a framework within which all departments will set pay for 2017-18, and for departmental pay strategies and pay reporting.
1.2 Roles in the pay process
HM Treasury has overall responsibility for the government’s public sector pay policy. This defines the overall parameters for civil service pay uplifts each year in the pay guidance, to ensure that civil service pay awards are consistent with the government’s overall objectives.
Cabinet Office has responsibility for civil service management. It works with departments and agencies on workforce and reward strategies to encourage greater consideration of workforce needs and properly tailored reward policies.
Departments have responsibility for implementing civil service pay policy for their workforce in a way that is consistent with the civil service pay guidance but also reflects the needs of their business and their labour market position. All pay remits must be approved by a Secretary of State or responsible minister, and each department, through its accounting officer, is responsible for the propriety of the pay award to staff.
1.3 Context for 2017-18
Average pay awards limited to up to 1%
Summer Budget 2015 confirmed that the government would fund public sector workforces for an average pay award of 1% for four years from 2016-17 onwards, applied in a targeted manner within workforces to support the delivery of public services.
Following Summer Budget 2015, Spending Review 2015 set out the spending reductions required to deliver the government’s consolidation plans through to 2019-20. As the public sector paybill makes up over half of departmental resource expenditure limits (RDEL), managing public sector pay within agreed departmental baselines and performance targets continues to be central to the government’s plans for fiscal consolidation and to protect jobs and services.
Progression pay reform
In the March Budget 2015 the government reported it had agreed proposals with all departments to remove any remaining entitlement to contractual progression pay in the civil service workforce. Spending Review 2015 confirmed that reforms in the last Parliament had included ending automatic progression pay across large parts of the public sector and introducing significant reforms for schools, civil service, police and prison workforces. Departments should have now removed automatic progression pay from their workforces, which should not be reintroduced.
Related obligations on departments
Departments are reminded of their obligation to comply with their public sector equalities duty (see Section 5) when implementing pay awards for their staff.
Departments are also expected to apply this guidance alongside the HM Treasury guidance on public sector pay and terms note published 5 February 2016.
1.4 Signing off pay remits
All department, agency and NDPB pay remits must be approved by the relevant Secretary of State (or responsible minister). They must comply with this guidance and associated guidance and controls issued by Cabinet Office unless alternative or modified arrangements have been agreed by the Treasury.
No additional approval of pay remits is required by HM Treasury (subject always to the requirements of Managing Public Money) unless the department is seeking alternative or modified arrangements, such as submitting a request for pay flexibility (Section 8). Departments are reminded to include full information about replacement or reformed pay terms in pay remit and other pay-related business cases, where relevant (Sections 5 and 7). Departments should first submit any business case to Cabinet Office (Section 8).
The only exceptions to this are those organisations that are the direct responsibility of HM Treasury ministers and those for which there is no relevant Secretary of State, as set out in Section 4. Their remits will continue to require HM Treasury minister approval.
1.5 Pay data reporting
In return for the continued delegation of pay to secretaries of state, departments are expected to provide data to HM Treasury on their forecast and outturn data for the pay round. This is to enable HM Treasury to confirm that departments are abiding by the parameters set in the annual pay guidance, to report overall priorities and risks to the chief secretary and to set overall civil service pay parameters for future years.
Departments are asked to submit this data using the Workforce and Pay Remit (WPR) application in OSCAR. One submission of data will be required covering the department’s remit year. Required data for each remit year includes revised outturn for 2015-16, outturn for the pay round for 2016-17 and a forecast for 2017-18 for relevant pay and workforce data and uplift factors.
The data submitted should cover the department itself, any non-ministerial departments falling within the area of responsibility of their Secretary of State and any agencies or NDPBs that they sponsor.
The Workforce and Pay Remit template should be completed in full. Detailed guidance and requirements are provided in Sections 6 and 7, and information is also available on the OSCAR website.
Departments should submit data on OSCAR for each remit as soon as they are approved, but in any case by 30 August 2017 (if necessary on a provisional basis in the first instance).
Failure by a department to provide appropriate data, or provide it in good time, may result in HM Treasury re-imposing the requirement for HM Treasury approval of remits for that department in future years or taking other action to encourage better compliance.
2. Main factors affecting pay-setting for 2017-18
All departments and their sponsored bodies are expected to implement the policy that public sector pay awards will be limited to an average of up to 1%, and to follow this guidance when setting pay remits for 2017-18.
2.1 One per cent average annual award
The increase in remuneration cost (IRC) will be limited to 1% for staff covered by each departmental remit. All elements which increase paybill cost must be included, except employer National Insurance Contributions and employer pension contributions. For example, the following must be included:
- any remaining progression increments
- introduction of new allowances
- increases to existing allowances
- cost of increases in the non-consolidated performance pot above its existing proportion of total paybill
- non-consolidated payments (except for payments related to performance from the non-consolidated performance pot)
- buy-out of allowances or non-pay entitlements
- incentive payments relating to the implementation of pay reforms
- cost associated with changes in non-pay benefits (e.g. leave entitlements)
- increases arising from pay restructuring (e.g. associated with machinery of government changes or repositioning staff within the pay range)
- non-pay rewards
- salary sacrifice schemes2
For individual employees, the actual increase in pay will vary according to criteria determined by the department, including location and performance. Further guidance on the IRC is included in Section 6.
Specialist pay proposals for some Commercial and Digital, Data and Technology roles were agreed during 2016-17 with specific pay arrangements. Departments should consult with the relevant function if they seek further details of these arrangements.
2.2 Progression Pay
Increases arising from contractual progression pay increments of any description (whether the entitlement arises in the context of a performance related pay system or otherwise) should only continue to be paid where such increments remain a legal entitlement. However, no additional increases to pay (such as increases to progression pay scale-points) may be paid in such cases, including those at the pay scale maxima. For those staff at the maxima of the contractual progression pay scale, this means that only discretionary, non-consolidated, pay increases could be made as part of a department’s overall pay remit considerations, unless departments submit a business case for a consolidated award.
Departments and NDPBs must include any remaining contractual progression increments to which there is a legal entitlement as part of the 1% award.
All departments with progression pay have now submitted proposals to HM Treasury and the majority have completed reforms in accordance with business cases approved by the chief secretary. Any progression pay still in place in core departments or their ALBs not agreed through business case approvals will be in breach of government policy and must be notified to HM Treasury immediately.
Going forward, departments should ensure that pay arrangements they put in place do not involve automatic time served progression pay, or create an entitlement for employees to receive automatic increments.
2.3 National Living Wage
For 2017-18, departments should include any increases in pay as a consequence of the introduction of the National Living Wage as part of the pay award and captured in the IRC.
2.4 Non-consolidated performance pay
Non-consolidated performance pay will continue to be managed, as in previous years, with each department’s non-consolidated performance pay “pot” calculated as a fixed percentage of pay-bill.
2.5 Exceptional recruitment and retention pressures
HM Treasury will consider requests from departments for the flexibility to address specific recruitment and retention pressures, which could include specialist pay, by re-allocating funding within their overall pay-bill from the non-consolidated performance pay “pot” to fund targeted recruitment and retention incentives. For proposals approved (in advance) by HM Treasury, departments may reduce their existing pot by up to 50% to fund recruitment and retention proposals.
The pot adjustment is subject to an overall limit of 0.5% of the baseline pay-bill, and would be available only where this would not jeopardise the operation, development or effectiveness of performance-related pay arrangements in the department. More details of the scheme are set out in Section 8.
2.6 Paybill control pilot scheme
At Autumn Statement 2013 the government announced that it would pilot paybill control in a small number of government organisations from 2014-15. The requirement in Section 2 that the annual award should average at 1% does not apply to those organisations while participating in the pilot.
3. Pay timetable, feedback and contacts
3.1 Pay timetable
It will be for departments to determine when they submit their remits to the relevant minister and enter into negotiations with the Trades Unions. HM Treasury will require departments to report pay data on OSCAR once ministers have approved their remits (but in any case by 30 August 2017).
3.2 Feedback and contact details
Departments are invited to submit feedback to HM Treasury and Cabinet Office on this year’s guidance and on the remit process as a whole. This will help to identify any areas for further improvement in future remit rounds. Any queries in relation to this guidance, or the remit process in general, should be addressed to these contacts.
3.3 Workforce, Pay and Pensions Team – HM Treasury
Workforce Pay and Pensions Team
HM Treasury, Zone 2 Red
1 Horse Guards Road
London SW1A 2HQ
3.4 Civil Service Workforce Reform – Cabinet Office
CS Workforce Reform Team
Cabinet Office, 4th floor
1 Horse Guards Road
London SW1A 2HQ
4. Organisations requiring HM Treasury approval
All ministerial and non-ministerial departments, agencies and NDPBs should submit their pay remit to their Secretary of State or responsible minister for approval. They must comply with this guidance and associated guidance and controls issued by Cabinet Office.
Two groups of organisation will continue to submit their remit to HM Treasury for approval. The first group comprises those that are the direct responsibility of HM Treasury ministers, and will therefore be signed off by HM Treasury ministers in the same way that other organisations will be signed off by their own Secretary of State. These are set out in the box below.
Organisations that are the direct responsibility of HM Treasury ministers:
- HM Treasury
- HM Revenue and Customs
- Government Actuary’s Department
- National Savings and Investment
- Valuation Office Agency
- Debt Management Office
- Office for Budget Responsibility
The second group comprises those for which there is no Secretary of State with the authority to determine pay. These are set out in the box below:
Organisations for which there is no Secretary of State with the authority to determine pay:
- Government Communication Headquarters
- Secret Intelligence Service
- The Security Service
5. Pay remit process and approval
5.1 Remit process for departments
Departments are required to set out their pay award proposals to the relevant Secretary of State in a short business case. Remit proposals must be assessed against the criteria for remit approval set out below. Information supplied by departments in their business cases must be robust in supporting the proposals, and departments should ensure that both relevant HR and Finance Directors have cleared the proposals, before being submitted to the relevant Secretary of State.
Departments should not enter into formal negotiations with Trades Unions until their remit has been agreed by the relevant Secretary of State. If organisations are uncertain about what constitutes ‘formal negotiation’ they should contact Cabinet Office. Departments are encouraged to work constructively with the relevant Trades Unions on the development of their overall pay and reward strategies, prior to their remit being submitted to the relevant minister.
It is government policy not to reopen civil service pay remits, once the relevant Secretary of State has approved them. Pay remits are considered and approved on the basis of the proposals submitted in the supporting business case. If, during subsequent negotiations with Trades Unions, any significant deviations are made from those proposals, then these need to be reported to the Secretary of State, or HM Treasury as appropriate, before any final agreement is reached. Any organisation that is uncertain as to whether what they are agreeing constitutes a significant difference from that agreed under the remit should contact HM Treasury for advice.
Pay settlement changes are expected to apply from the settlement date, upon which the department’s pay remit year commences, and not deferred.
5.2 Remit approval
The Secretary of State should assess the business cases submitted to them against the following factors:
- departments need to demonstrate that their proposed pay remit is affordable within settlements agreed under the Spending Review process
- the requirements in section 2 of this Guidance must be met
- the business case should cover, where relevant:
- the workforce groups that are affected, and the internal and external labour market in which they operate
- the relevant local labour market in which staff operate
- the recruitment and retention situation within the workforce
- compliance with age discrimination and equal pay legislation, including the need for departments to have due regard to their equality obligations and the public sector equalities duty, and to record their findings on this
- the total reward of staff, including pensions and conditions of service
- any structural changes or reforms to pay arrangements
5.3 Legal commitments
Departments are advised to take legal advice on the drafting of any pay commitments to ensure that these are affordable and consistent with this guidance.
Ministerial approval of pay remits is on the basis that an organisation does not enter into any legally binding agreements in Trades Unions negotiations that effectively commit it to automatic costs in the future.
5.4 Senior staff
Senior civil servants and NDPB equivalents are not included within the civil service pay guidance. However, senior staff have an important leadership role in demonstrating the need for pay decisions to follow public sector pay policy. Therefore any annual pay increase or decision to award performance-related pay to such staff must be considered alongside and according to the same principles as the pay remit of the rest of the organisation.
Pay award arrangements for all senior staff, including those in NDPBs, should be consistent with government pay policy and the arrangements for senior staff in NDPBs should be in line with the arrangements for the Senior Civil Service. This is led by Cabinet Office.
6. Pay reporting requirements
This section summarises the data that departments are expected to report to HM Treasury for the 2017-18 remit year.
Departments are asked to provide updated data using the appropriate template in the Workforce and Pay Remit (WPR) module of the OSCAR system. The template includes formulae and drop-down lists where relevant, and indicates which cells need to be populated, to make completion more straightforward. It also includes validation checks to help reduce the likelihood of erroneous data being entered.
Each department should submit data covering the department itself, each non-ministerial departments falling within the area of responsibility of their Secretary of State, each agency that they sponsor and each NDPB. Departments should not in general combine data relating to separate remits. Exceptionally, aggregate data may be entered for NDPBs with prior HM Treasury agreement.
The data required is outturn for 2015-16 and 2016-17, and a forecast for 2017-18. Outturn data should be consistent with published resource accounts, (allowing for differences arising from the financial year basis of the latter) and forecasts, including any forecast changes to staff in post, should be consistent with the in-year expenditure forecasts that all central departments routinely provide to HM Treasury via the OSCAR network.
Data must be provided for the delegated civil service grades, and not combined with SCS data or data for SCS-equivalent grades. The OSCAR system makes provision for the separate collection of data relating to the Senior Civil Service but departments are not currently required to submit data on SCS or SCS-equivalent grades. Data should be provided for the year of the pay remit, not the financial year.
If there are significant anomalies in the data, for example because it represents less than a full year of activity, or there are large differences between successive forecast and outturn figures for a particular year, departments should provide a brief explanation, either in the space provided on the OSCAR template or in an email to WPP team at HM Treasury (see Section 3 for contact details).
6.1 Definition of pay data
This section explains the information that is required in each section of the pay data reporting template. Please contact HM Treasury if you have any further queries.
Total paybill (£ million)
Total paybill: The template calculates total paybill as the sum of direct wages and salaries, pension contributions and National Insurance Contributions. Includes all staff-related costs (excluding the cost of staff not on the formal civil service payroll), comprising direct wages and salaries, employer pension contributions and employer National Insurance Contributions – and should include staff paid from programme budgets.
Direct wages and salaries: The template calculate direct wages and salaries from the sum of pay, allowances, non-consolidated performance (e.g. bonuses) and overtime entered in the OSCAR template. Direct wages and salaries include all the elements that go to employees on a current basis (as opposed to pension payments, for example, which are deferred).
Pension contributions: Enter the total cost to the department of pension contributions. Employer National Insurance Contributions: Enter the total cost to the department of employer National Insurance Contributions.
Exit costs: Enter the exit costs. These include any benefits to an individual, in the form of pay, pension or other remuneration, when leaving service (through either compulsory redundancy or other agreed departures) other than entitlements accrued in the normal course of employment up to and including the exit date.
Non-paybill staff costs (£ million)
Consultants/interim/agency staff costs not included in the paybill: Enter the total cost of all staff who are not on the formal civil service payroll, including for example, consultants, interim and agency staff.
Non-consolidated performance pay pot (% of paybill)
Non-consolidated performance pay pot (% of paybill): Enter the size of the non-consolidated performance pay pot expressed as a percentage of pay-bill. Note that this may differ from outturn or forecast expenditure on non-consolidated pay recorded as a component of salaries and wages.
Paybill per head (£)
Paybill per head: The template calculates two measures to show the total paybill divided by the workforce size. Paybill per head (headcount) is total paybill divided by headcount. Paybill per head (FTE) is total paybill divided by full-time equivalent (FTE) workforce.
Average earnings per head: The template calculates two measures to show direct wages and salaries (i.e. pensionable pay – i.e. excluding employer pensions and NICs) divided by the workforce size. Average earnings per head (headcount) is direct wages and salaries divided by headcount. Average earnings per head (FTE) is direct wages and salaries divided by FTE workforce.
Please ensure that headcount and FTE are calculated on the required basis for all years, and if necessary enter revised figures.
Headcount: Enter the total civil service workforce on a headcount basis, calculated as the average for the remit year based on the size of the workforce at the end of each month.
Full time equivalent: Enter the total civil service workforce on a full-time equivalent basis, calculated as the average for the remit year based on the size of the workforce at the end of each month.
Number of exit packages: Enter the number of exit packages made within the year. This should relate to the ‘exit costs’ figure reported under paybill.
Wastage and vacancies (%)
Vacancy Rates: Enter the number of unfilled posts (or forecast vacancies) in the final month of the remit year in question, expressed as a percentage of (headcount at the end of the month plus vacancies). This figure should reflect the number of posts that are either unfilled or filled by contract staff, which will be advertised under civil service fair and open competition rules. This figure should not include vacant posts that will be removed as part of organisational restructuring or planned workforce reductions.
Staff wastage: Enter the proportion of employees leaving the organisation over the year (excluding redundancies but including exits due to all other factors including performance related exits and ill-health retirements) as a % of total workforce. Excludes those employees moving between jobs within the organisation.
Change in pay from previous year (%)
Basic award (%): Enter the average % increase to the steps (for a step based pay system) or maxima/minima (for a non-step based pay system) of the pay ranges within an organisation. These figures are only required for the years in which the department was in the pay freeze. See section 6.2 of the Civil Service Pay Guidance 2011-12 for further details.
Pay drift (%): The template calculates pay drift as the difference between average earnings growth % and basic award %.
Average earnings growth (%): The template calculates this as the change in average earnings per head (FTE) from the previous year, as a % of average earnings per head in the previous year. It includes all changes in direct wages and salaries.
Percentage increase in remuneration cost (IRC) (%). Enter the percentage change in the IRC. This is the difference between the projected remuneration cost and the baseline remuneration cost expressed as a percentage of the baseline remuneration cost (see Section 7 for further details). All departments should enter data for all three calculations of the IRC:
- Increase in remuneration cost
- Increase in remuneration cost excluding legally binding progression increments or progression buy out costs
- Increase in remuneration cost excluding progression increments or progression buy out costs, and PRP pot switches
For those departments to whom the below do not apply, the figures will be identical:
- departments that pay contractual progression increments or
- departments who have agreed a switch in funding from the non-consolidated performance pay pot to fund recruitment and retention pressures
Those departments that fall under either or both of the above are expected to report the effects of these factors on their IRC by entering outturn and forecast data for all three versions of the IRC.
National Living Wage (NLW)
Number of employees on the NLW: The number of eligible employees that are on (or are within 5 pence of) the NLW from April in the pay remit year. For example, as of April 2017, the rate of National Living Wage will be £7.50.
Cost of the NLW: The increase in paybill incurred by the uprating of the NLW within the pay remit year - i.e. the cost of increasing the wages of eligible employees to meet the legal entitlement of paying the NLW.
7. Other pay definitions and notes
7.1 Baseline remuneration cost
The baseline remuneration cost is the cost to the department, for the remit year, of the expected staff complement, excluding the costs of progression or revalorisation or any other increases. Baseline remuneration cost does not include employer national insurance and pension contributions.
7.2 Projected remuneration cost
The projected remuneration cost is calculated by adding the increase in remuneration cost arising from the remit proposals to the baseline remuneration cost.
Example: if the total costs of the remit proposals were £100,000 and the baseline costs were £2,000,000 the projected costs would be £2,100,000.
7.3 Increase in remuneration cost (IRC)
As stated in Section 2, the IRC includes all increases arising from the remit proposals, apart from employer National Insurance Contributions and pension contributions, and is net of any offsetting reductions in the costs.
The IRC calculation should assume that all increases are implemented from the settlement date. Departments cannot reduce the IRC by deferring the date of implementation of component increases.
7.4 Non-consolidated performance payments
Non-consolidated performance payments are awarded to staff based on performance either at an individual, team or organisational level. They are re-earnable and do not have associated future costs. Types of payment include:
- performance related payments based on individual contributions to the organisation and assessed by the Departments performance management system
- special bonus schemes for individual payments for special projects or outstanding pieces of work that are not covered by the normal performance management system
Non-consolidated performance payments met from the performance pot should be excluded from the IRC calculation. However, non-consolidated payments not related to performance, as well as increases in the non-consolidated performance pot, must be included in the IRC calculation.
7.5 Calculating the performance pot
The organisation’s existing non-consolidated performance pot is a cash value derived from a percentage of the consolidated baseline paybill, and not a fixed cash amount.
Example: In 2016-17, an organisation has a consolidated paybill of £20 million and has built up a non-consolidated performance pot of 3%. The cash value of the non-consolidated pot is therefore 3% of £20 million, and so equals £600,000. In 2017-18, because of staff reductions, the consolidated baseline paybill is reduced to £19 million. While the non-consolidated pot as a proportion of consolidated paybill remains unchanged at 3%, the cash value is reduced to £570,000 (3% of £19 million).
7.6 Other non-consolidated payments
Non-consolidated payments other than those related to performance must be included in the IRC calculation.
7.7 Progression Pay
Progression pay systems are those under which pay to individuals in a specific grade or post increases periodically according to pre-determined increments or amounts (or would be expected to do so in the absence of public sector pay restraint). In some cases this is subject to a satisfactory performance assessment and/or may be a legal entitlement. Progression pay cost is the cost of moving someone through the pay range and in spine point or step based system relates to the costs of incremental steps. In milestone- and reference-point based systems, progression means the cost of moving staff within the pay range.
Revalorisation relates exclusively to spine point or step based systems and is the value by which all points on the pay spine are increased. This may be different for different grades.
7.9 Non-pay rewards and benefits
These include increases in annual leave entitlements, reduction in working hours, etc. The cost of such changes should be calculated and included in the IRC calculation.
7.10 Non-paybill staff costs
This covers consultants/interim/agency staff costs not included in the paybill. It includes the total cost of all staff that are not on the formal civil service payroll, including for example, consultants, interim and agency staff.
7.11 Remit year
The period for which the approved pay remit applies. Remits apply for one year but the settlement dates, i.e. the date upon which the pay remit year commences, vary from one body to another.
7.12 Recyclable Savings
Recyclable savings are generated when staff leave the organisation and are replaced by entrants with a lower salary cost. The difference between the leaver’s salary costs and the entrant’s salary costs is the saving to the paybill. These savings should not be applied to reduce the Percentage Increase in Remuneration, and should therefore be netted out of the calculation.
Vacant posts do not generate recyclable saving, because until the post is filled the salary cost to the paybill cannot be determined.
8. Meeting recruitment and retention pressures
HM Treasury will continue to consider requests from departments for the flexibility to address specific recruitment and retention pressures which could include specialist pay by re-allocating funding within their overall pay-bill from the non-consolidated performance-related pay “pot” (PRP pot) to fund targeted recruitment and retention incentives. See Section 7 for an explanation of non-consolidated performance pay and the calculation of the pot.
Key features of this flexibility are:
- recruitment and retention: departments are expected to provide evidence of exceptional recruitment and retention needs which will be addressed in a targeted way
- permanence: any agreed reduction of the PRP pot will be permanent, to avoid the creation of ongoing increases in paybill costs
- limit on conversion: departments cannot convert an amount exceeding 50% of the PRP pot (or 0.5% of baseline paybill if less)
A more detailed exposition is provided below.
8.1 Reduction in PRP pot
Departments and NDPBs are permitted to reduce their PRP pot as a percentage of consolidated pay-bill only to offset agreed increases in pay-bill costs applied to meet targeted recruitment or retention pressures (“PRP-related funding”).
The permitted reduction in the PRP pot is capped at an amount equivalent to 50% of the pot, or 0.5% of the baseline paybill if smaller, in order to ensure that departments maintain sufficient resource to continue to fund non-consolidated performance arrangements.
PRP pots may not be reduced to provide additional funding for the consolidated pay-bill generally (for example to fund an across-the board increase in excess of 1%), but must be targeted to address recruitment and retention pressures.
Funding remaining within the ring-fenced PRP pot following an agreed reduction is expected to be applied to performance-related payments in accordance with the Civil Service Employee Policy best practice model. To avoid this flexibility resulting in subsequent paybill increase, the reduction in the PRP pot will be permanent once the pot as a percentage of pay-bill has been reduced. Departments must be satisfied that their proposed reduction will not jeopardise the operation, development or effectiveness of their performance-related pay arrangements.
8.2 Funding increases in pay
PRP-related funding must only be applied to specific targeted recruitment and retention pressures. HM Treasury will exceptionally consider proposals for targeted consolidated increases, if supported by a sufficiently robust case.
For proposals which will result in changes to employer superannuation and earnings-related National Insurance Contributions (ERNIC) costs (or are likely to do so), for example arising from a switch of funding from non-consolidated pay to consolidated pay, PRP-related funding will be 85% of the reduction in the PRP pot.
The agreed increase in paybill excluding the PRP pot and offsetting PRP pot reduction will come within the scope of the IRC calculation (see Section 6), but will be in addition to the 1% limit for the IRC.
8.3 Business case requirements
Departments wishing to take advantage of this flexibility are required to submit a business case to Cabinet Office in the first instance in support of the proposal. The flexibility is also available to NDPBs who should submit business cases to Cabinet Office through their sponsor department. The business case will be expected to include all relevant information and financial data, including:
- details of the recruitment or retention pressure to be addressed, including supporting evidence
- metrics relevant to the proposed increase in (non-PRP pot) paybill, including:
- the number and nature of posts involved
- existing and proposed pay rates and payments
- whether increases are consolidated or non-consolidated
- the total number of posts covered by the remit
- the impact of the proposal on the remit paybill excluding the PRP pot (amount and percentage)
- the amount of the existing PRP pot calculated as a percentage of the 2015-16 baseline pay-bill, and the percentage
- evidence to confirm that the proposal complies with the limits of the scheme set out above: the amount of the proposed reduction to the existing PRP pot, also expressed as a percentage of the pot and of the baseline pay-bill; and that the proposed pay-bill increase is offset by the PRP pot reduction, taking account of any adjustment for employer superannuation and ERNIC costs
- an explanation as to how the proposal will not jeopardise the operation, development or effectiveness of existing performance-related pay arrangements
HM Treasury will also take into consideration whether rates of pay relevant to the applicant’s remit are already high compared with the rest of Whitehall, although this does not rule out higher-paying departments taking advantage of this flexibility.
Throughout the Guidance the term “department(s)” includes all organisations (ministerial and non-ministerial departments, agencies and NDPBs) that come within its scope, unless the context clearly implies otherwise. ↩
A letter from the Financial Secretary to Secretaries of State on 3 November 2009 clarified the rules on salary sacrifice schemes in the public sector. Departments should refer to this if needed. ↩