Good morning. Barring a crisis or conflict that would be eccentric to overlook, I thought I would spend this week discussing in more detail the policy issues that the Labor government must address if it is to achieve its specific goals . Today: some thoughts on civil service reform, particularly on civil service remuneration.

Freeze and juice

What is the simplest way to control public spending, or at least appear to do so? Freeze salaries, because savings multiply over time, but they make less headlines than job cuts. And what is the easiest way to increase your income? Freeze the thresholds at which people begin to qualify for higher income tax rates, because it doesn’t generate headlines or controversy the way a simple income tax increase does.

But in the long run, both policies create the wrong incentives. And taken together, they create some nasty unintended difficulties.

For example, the pay freeze means that doctors’ pay has been further eroded compared to other OECD members, which is part of why we have a retention problem in the NHS. These salaries have historically been relatively low compared to our peers, because the structure of the health service is “efficient” at suppressing clinic salaries. Added to this, the freezing of the threshold increase now means that many people on salaries which are not by definition reasonably high salaries are now brought into the top 40p income tax rate bracket.

These two things come together in a really unhelpful way in Whitehall: the pay freeze has reduced civil service wages relative to those in the private sector. This is especially true in roles that will be very important if the government is to reap the benefits of machine learning and the digital transition.

It is true that the civil service and the public sector still offer much more generous pension plans than most private sector employers. But it is equally true, and more importantly from a recruitment and retention perspective, that most people, early in their careers, don’t give much thought to retirement plans (which is why The introduction of opt-out pension schemes has been a good thing!), and few people think about it mid-career as perhaps they should either.

Once people enter the civil service, the best way to get a pay rise is to get promoted, which usually involves changing departments, meaning the civil service doesn’t have as much of institutional memory within the departments that she would have idealized.

If you want to make the civil service work better, you need to change these pay and promotion incentives. This could involve some very delicate political battles over the balance between current pay deals and your potential pension plan. This could require some structural changes in the way promotions and salary increases are carried out in the senior civil service. But one way or another, the government must be prepared to do one or both of these things.

Now try this

I saw the rebirth of That of Matthew Bourne Swan Lake at Sadler’s Wells this weekend. It’s excellent (again!). You can listen to the recording of Swan Lake (the André Previn/LSO version from 1976) here.

In the news today

• Reset chats | The EU is drawing strict red lines for its upcoming “reset” negotiations with the UK, according to internal discussion papers. Brussels demands a early agreement on fishing rights and reiterating the “no-selection” principles that the European Commission set out in 2017 when dealing with the UK. Today, Rachel Reeves will prepare the ground in Brussels for an “ambitious” new economic partnership with the EU, as it promises to fully honor the post-Brexit agreements concluded by the last Conservative government.

• UK reflects on position on Hayat Tahrir al-Sham | The Minister for the Cabinet Office of the United Kingdom said the government was “quickly” considering its position on the Islamist group that toppled the Assad regime, banned by the UK as a terrorist organisation, and that the immediate future in Syria is “very uncertain”.

• All constructor, no filler | Local council commissions would be bypassed on planning decisions to avoid ‘damaging delays’ in building housing, prisons and infrastructure, under proposals to be put forward by Keir Starmer as he seeks to achieve ambitious targets for housing construction.

• Technical personnel mobilized for civil service reform | Ministers will try to recruit start-ups in the technology sector “service periods” of six to 12 months to implement Keir Starmer’s “plan for change”, reports Matt Dathan of the Times.