Headlines: May 10th, 2011

Despite pay freezes, recruitment bans and efficiency savings, public sector pay kept rising until December 2010. This is the conclusion of Policy Exchange, the think tank for new politics, following a scrutiny of statistics from the Office for National Statistics. The figures give cause to revise the proverb: there are lies, damned lies and statistics from ONS.

The ONS data reveal that the gap between public sector and private sector pay is still rising. Despite private sector workers losing out during the recession, public sector workers have seen their advantage grow. The new analysis shows that despite the coalition’s attempt at pay restraint, public sector salaries continued to rise as late as December 2010. That was despite pay for many workers in the private sector actually falling even before inflation is included – meaning that many private sector workers will have seen drastic cuts in their standard of living.

This conflict with reality arises because the ONS is required to use the public sector definition as any organisation wholly owned by the taxpayer. This brings in the payrolls, including bonus payments, of bailed-out banks such as RBS, Lloyds Banking Group and Northern Rock. It also includes Bradford and Bingley plc. While London Underground is within the public sector, universities are in the private sector. These numbers from ONS are clearly useful for some purposes, but not for measuring public sector pay nor for comparing it with pay in the private sector

More reliable data from Local Government Employers Pay and Workforce Survey and referring to local government only, shows a real term fall in the total gross pay bill in the 2 years since 2008/9.

The analysis shows that the basic pay bill has increased from £24.1 billion in 2008/09 to £24.5 billion in 2010/11 an increase of 1.73%. When inflation is taken into account, this is a real terms fall of 4.87% in the basic pay bill. The total gross pay bill showed a slower growth from £25.4 billion in 2008/09 to £25.7 billion in 2010/11, an increase of 1.24%. When inflation is accounted for this is a real terms fall of 5.36%