Pay progression for most health employees will from 2015-16 be tied “more closely” to their achievement of local performance standards, George Osborne announced today.

The chancellor’s 2013 spending review, published this afternoon, stated that government departments would put in place plans to “end automatic time-served progression pay in the civil service by 2015-16”.  

On top of this, it added: “Most health staff will be subject to local performance standards which will link progression pay more closely to performance, not time served, and the Government will seek further reforms.”

The spending review document said tighter controls on progression pay would come on top of plans, announced in the 2013 budget, to limit public sector pay awards to an average of up to 1 per cent in 2015-16.

It added: “Despite pay restraint across the public sector since 2010, average public sector pay growth has continued to exceed that in the private sector.

“A key driver of this is progression pay, with some employees enjoying automatic annual pay increases of up to 7 per cent. This is unfair to those public sector employees who have seen their pay awards frozen, or restricted to one per cent, and unfair to the many private sector workers who have seen no or low pay growth.”

The NHS Employers organisation secured an agreement with trade unions in February making it easier to link pay progression to performance under the Agenda for Change Framework, which affects almost one million NHS staff.

It has now entered preliminary talks with the British Medical Association in a bid to re-negotiate junior doctor and consultant contracts.

As part of its evidence to the NHS Pay Review Body in October, NHS Employers argued incremental “drift”, where staff progress automatically through pay bands on the Agenda for Change framework, added around 2 per cent to each NHS trust’s pay bill annually.

Automatic rises for doctors, who are covered by a separate contract, can range from 3 to 8 per cent of pay a year, according to NHS Employers. For wider NHS staff, increments can result in increases of 1.8 to 3.7 per cent a year.