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benchmarking HR policy and practice
London allowances
IDS HR Study 904 • October 2009

Page 2 Overview
London waiting; London allowances at a glance

4 Sectoral round-up
A detailed look at the location allowances in three key areas of the London economy
– financial services, the public sector and retail – and a summary of developments in
other sectors

12 Company practice
A sector-by-sector guide to London, South East and other location allowances in
132 organisations

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 overview
London waiting
Employers are now using a wide range of approaches to recruit and retain employees in London and
other high-cost areas of the country, making it increasingly difficult to pinpoint a definitive London
‘premium’. There has been little significant upwards movement in the level of location allowances
this year, with the current economic climate meaning employers’ priorities are likely to lie elsewhere.
Median free-standing allowance
Over two-thirds of the 132 organisations
featured in this Study operate a system of free-
standing location allowances. Typically this
involves paying staff a defined amount, which is
not pensionable or enhanceable – in addition to
basic salary. In 2009, the median figure for inner
London allowances across our featured
organisations is £3,407. The median for the
finance sector – which has tended to lead the
way in terms of London allowances – is £3,653.
The public sector is not far behind with a median
of £3,379.
A variety of approaches
However, these figures do not fully capture the
true differential between pay in London and
elsewhere. Employers now adopt a variety of
approaches to location pay, encompassing
regional pay structures, salary supplements and
inherent pay flexibilities, alongside traditional
allowances. And often the higher payments are
targeted at specific offices, branches or stores
rather than being distributed purely on the basis
of distance from central London – although in
practice the highest amounts are nearly always
paid in central London. This has made it
increasingly difficult to pinpoint what might be
considered a definitive London ‘premium’.
Separate London pay scales
Some organisations, particularly in the civil
service, have separate higher pay scales for
London and the South East. The result is that the
differential over national rates for those working
in London tends to increase with seniority.
Organisations that take this approach sometimes
also pay a separate free-standing allowance.
Zonal pay systems
Zonal pay systems are common in the retail
sector. These typically encompass four to six pay
zones, progressing upwards from a national or
provincial scale. A number of factors may be
considered when allocating a store to a zone,
including recruitment and retention difficulties,
store turnover, the cost of living in the area and
local competition.
2 IDS HR Study 904 • October 2009
This approach enables stores to be re-allocated
to a new zone as and when local labour market
pressures dictate. It also allows a more targeted
response to localised recruitment problems and
can be more cost effective than a blanket
solution. In practice, however, moving a site to a
lower-paying zone when market pressures ease
would invariably prove difficult.
Using inherent pay flexibilities
Some organisations use the inherent flexibilities
within their existing pay structures to differentiate
on the basis of location. Broadbanded structures
in particular – which are relatively common in the
finance sector – can offer the scope to vary pay
levels in line with the market. In this way,
organisations are able to pay certain groups of
staff higher rates where there are skills shortages
without having to make increases across the
board. This approach, in particular, helps to
obscure the true London pay differential.
Little movement in 2009
Around two-thirds of the free-standing inner
London allowances paid by the organisations
featured in this Study remain unchanged for
2009. Where increases were made they tended to
be in line with across-the-board cost-of-living
rises to basic pay.
Impact of the recession
With the UK in recession during 2009 the lack of
any significant movement is unsurprising.
Perhaps most notably, negative inflation (the
RPI stood at -1.2 per cent in April) has eased the
pressure on employers negotiating pay increases
this year. In some instances there have been pay
freezes or pay cuts.
The banks (which are large employers in the
capital) have been looking to cut costs following
the banking crisis. However, there have been few
large increases to the location allowances paid
by the banks for well over a decade, with most
using other means of pay differentiation. Of
course, mergers in the finance sector could lead
to changes in location pay in the next few years.

Focus on key workers
Most of the movement in recent years has
occurred in the public sector and has been targeted
at key workers, leading to some of the highest
location premia. The combined London weighting
and London allowance for Metropolitan Police
officers is now £6,558. In the NHS, the maximum
‘high-cost area supplement’ in inner London is
At a glance: London allowances
Headline findings
● There has been little movement in the level of
location allowances in 2009.
● The median free-standing inner London
allowance across the featured organisations is
£3,407.
● Organisations now use a variety of systems to
differentiate pay on the basis of location,
including: traditional free-standing allowances;
separate pay scales for London; zonal pay
systems; and inherent flexibilities within their
pay structures. This makes it difficult to pinpoint
an exact London ‘premium’.
Finance sector
● There have been no increases to location
allowances in the finance sector in 2009.
● The median inner London allowance across the
finance sector as a whole is £3,653.
● The median free-standing inner London
allowance for the featured banks is £3,550.
● The median free-standing inner London
allowance for the featured building societies is
£4,389.
● The median free-standing inner London
allowance for the featured insurance companies
is £3,710.
● Most finance organisations continue to use a
system of free-standing allowances. However,
the allowance applied to particular branches is
now more often determined by recruitment and
retention issues than a fixed distance from
central London.
● The highest location payment made in the
finance sector is the £6,550 paid to permanent
bank officials at certain London branches of
Allied Irish Bank.
Public sector
● The median free-standing inner London
allowance across the public sector is £3,379.
IDS HR Study 904 • October 2009
Overview
now £6,080. Teachers in inner London on the
lowest pay point of the main pay scale were
awarded increases of 4 per cent from 1 September
2009. This takes the differential in pay between
inner London and national rates to £4,898 at this
level. In other parts of the public sector, however,
allowances remain below the £4,000 mark trade
unions were calling for some years ago.
● In recent years, most of the significant increases
to location pay have been for key workers in
London.
● The combined London weighting and
allowance for Metropolitan Police officers now
stands at £6,558.
● From September 2009, teachers in inner London
on the lowest pay point of the main pay scale
received a 4 per cent rise. Salary spine points on
the national scale were increased by 2.3 per
cent. The differential at the bottom of the main
pay scale for a qualified classroom teacher in
inner London compared to one on the national
scale is £4,898. The differential at the top of the
upper pay scale is £7,763 in inner London.
Retail sector
● Most retailers operate zonal pay systems.
● There are typically four to six zones, progressing
upwards from a national or provincial zone to
include outer London and culminating in either
the West End or central London.
● Stores are allocated to zones on the basis of a
number of factors, which can include
recruitment or retention difficulties, prosperity
within the area and the local crime rate.
● Some retailers continue to pay free-standing
allowances, but usually to senior salaried staff.
Other sectors
● British Gas Services has adopted a new method
for allocating locations to allowance bands,
replacing a system based on distance from
central London.
● Any movement in the level of London
allowances this year has tended to be in line
with across-the-board cost-of-living increases to
basic pay.
● The location allowances paid in the not-for-
profit sector often follow the advisory amounts
published each year by the local authorities NJC.
3
 analysis
Sectoral round-up
There are clear sectoral patterns in the form and level of London and other location allowances. We
highlight the latest developments and discuss the different methods used to differentiate pay on
the basis of location. In keeping with the composition of the capital’s labour market, we focus on
the allowances paid in the finance, public and retail sectors.
Financial services
Increases in London allowances in the finance
sector have been relatively uncommon in recent
years, with many remaining largely unchanged
since the early part of the decade and before. In
the past year, none of the 20 financial services
organisations participating in this Study
increased their location allowances.
Despite the lack of any major movement, the
allowances paid by the banks, building societies
and insurance companies remain among the
highest in any sector – a legacy of the rapid
expansion of the 1980s that saw the major clearing
banks sharply increase London allowances.
The median inner London allowance across the
20 financial services companies featured in this
year’s Study is £3,653.
Free-standing allowances
Free-standing allowances for London and other
regions remain the norm in the financial services
sector. These have traditionally been based
loosely on four or five geographic zones, defined
by their distance from the centre of London –
generally taken to be Charing Cross. The inner
London zone tends to encompass the area within
three to five miles of the defined central point,
while the furthest zone usually extends out to
between 22–25 miles. In some cases, though, the
M25 may act as a boundary or coverage may
stretch as far as 40 miles.
While these models provide a general guide to
the allowances paid in different areas, how
branches are allocated to particular zones is not
always strictly based on their geography. Local
labour market pressures could see a particular
office assigned to a higher zone, for instance.
Broadbanding
It is relatively common for organisations in the
finance sector to operate broadbanded pay
structures. These can be used in addition to
stand-alone allowances to target higher rates of
pay to specific skill sets or key individuals,
without having to increase a location allowance
that is applied to all staff indiscriminately. The
4 IDS HR Study 904 • October 2009
use of such pay systems to differentiate pay on
the basis of location or skills shortages may help
to explain why there has been little movement in
the level of free-standing London allowances in
this sector over recent years.
Regional pay structures
In some cases, location allowances operate
alongside wider regional pay structures. These
can offer a more flexible and targeted method
for dealing with recruitment and retention
difficulties and cost-of-living variations than
stand-alone allowances permit.
Banks
This Study details the location allowances paid
by ten banks. All of these continue to pay stand-
alone allowances and, on the face of it, use a
traditional zonal structure based on branch
distance from Charing Cross. However, in
practice there tends to be far greater flexibility
over how the level of location allowance for a
particular branch is determined.
For some, although given, the distances from
central London are now indicative only. For
example, at HSBC, branches are moved between
the areas depending on market need. Similarly,
at Lloyds TSB, branches and offices are allocated
to zones on the basis of local labour market
pressures as well as location.
None of the featured banks increased their
location allowances in 2009. The median central
London allowance for the banks is £3,550. The
highest premium is the £6,550 paid to
permanent bank officials (up to and including
assistant manager level) working at Allied Irish
Bank’s Gray’s Inn, Old Jewry, Tentender St,
Angel Court and Mayfair offices. This comprises
of a ‘central London premium’ of £3,000 on top
of the allowance of £3,550 paid to all staff at
these branches.
Increase with service
At one of our featured banks, the level of
location allowance rises with service. The inner
London allowance paid by Alliance & Leicester
increases from £3,520 to £4,200 for staff with
 Analysis

Pay differences across the UK locations meet a number of qualifying criteria.

The key issues when defining a ‘hot-spot’ include
The table below gives an overview of variations in
housing costs, branch accessibility, local
pay in different regions across the UK. All data is
taken from IDSPay.co.uk (see the inside front cover
competition for skills, other significant local
for details of this new service) and was correct at factors, and measurable recruitment and
28/09/2009. retention difficulties.
Region Average basic salary Still no move towards consolidation
London 31,973 While the idea of consolidating London
ROSEland 26,036 allowances into basic pay may remain appealing
South East excluding to many banks, the potential cost of such a move
ROSEland 25,823 continues to be prohibitive. As their free-
Scotland 25,526 standing allowances are typically non-
pensionable, any consolidation could prove
North West 25,192
expensive in terms of ongoing pension costs –
East of England 25,019 particularly for the clearing banks that have a
West Midlands 24,869 large number of staff based in the London area.
South West 24,735
Northern Ireland 24,580 Building societies
Wales 24,495 Much like the banks, most building societies
continue to pay free-standing location
North East 24,272
allowances. Two of them – Nationwide and
East Midlands 24,180 Yorkshire Building Society – operate systems
National (including based on the distance from Charing Cross. In
London) 25,725 practice, however, other criteria are often taken
Source: IDSPay.co.uk, September 2009 into account when allocating branches to bands.
Leeds Building Society pays different amounts
two years’ satisfactory service, and to £4,625 for based on labour market demand rather than
those with five years’ service. distance from central London.
South East allowances There has been no movement in allowance levels
Some banks still pay an allowance to staff for the building societies in 2009. The median
working in designated ‘large’ towns, most often inner London supplement is £4,389. While this
in the South East of England – see, for example, is higher than the figure for the banks, it should
National Australia Group (£770) and HSBC be seen in the context of the small number of
(£1,000). Allied Irish Bank pays £750 to staff branches – sometimes as few as one or two – that
working in Brighton, Cambridge, Oxford and some, mainly regional, building societies have in
Southampton, and £500 for those based in central London compared to the major high-
Bristol. street banks.
Regional pay Some of the building societies pay location
A few banks employ some form of regional pay allowances outside London. For example,
alongside their location allowances. For Nationwide pays a separate allowance in each of
example, HSBC operates a three-band regional its 132 ‘national plus’ branches – typically in big
pay system for clerical staff: band C covers cities.
central London; band B is typically for major
towns and cities; and band A is typically for Insurance companies
more rural locations. Staff in central London London allowances for insurance companies
therefore receive higher basic pay as well as a follow a similar pattern to those at the banks
free-standing allowance of £4,000. and building societies, with an inner or central
London allowance and further bands for specific
‘Hot-spot’ supplements offices in outer London and the ‘ROSEland’
To help overcome recruitment and retention (Rest of South East England) area. The median
difficulties at particular branches across the central London allowance across the featured
country, Alliance & Leicester allows minimum insurance companies is £3,710, with the highest
salaries to be increased by £1,000 where allowance of £4,008 paid by Allianz Insurance.

IDS HR Study 904 • October 2009 5

London allowances
A short history of London weighting
The origins of London weighting can be found in an early civil service
scheme, which actually paid employees working inside the capital less
than those based outside London. During the 1950s, the Priestly
Commission suggested this trend be reversed. It recommended a
national pay scale with pay additions for staff in central London,
which would provide them with the same purchasing power as
colleagues on smaller salaries in lower-cost areas.
First official steps
The first definitive move came in 1974 when a Pay Board Inquiry led
to the publishing of annual indices, which looked at the added costs
of living in the capital, paying close attention to housing, travel and
consumer costs, the extra ‘wear and tear’ associated with journeys to
work and the lower standard of housing in London. The enquiry also
established a series of boundaries – set as the distance from Charing
Cross – to determine the level of London weighting that should be
received. This method is still used by many organisations today,
particularly in the banking sector.
The Department for Employment ceased to publish the indices in
1982, with the Government arguing that a company’s ability to pay –
and not cost compensation – should be the main determinant of
geographical pay relativities.
Market forces reign
By 1987, London allowances had become increasingly influenced by
competition for staff, particularly in the rapidly expanding finance
and retail sectors. Unemployment dropped, while prices rose, and
organisations found it more and more difficult to recruit staff. As a
result, the major clearing banks increased their inner London
allowances by 50 per cent to £3,000.
The emergence of ROSEland (location supplements for staff in the
Rest of South East England) was a natural by-product of these trends,
as low unemployment and high staff turnover spread to the South
East and down the M4 corridor. Some retailers began to move to zonal
pay, offering the possibility of upgrading individual stores to higher
pay rates to solve staffing problems.
Recession hits home
The recession of the early 90s led to the freezing of the majority of
London allowances. Thereafter, employers became more careful
about building, what many of them considered to be, top-heavy
allowances into their pay systems. Finance firms increasingly moved to
broadbanding and started using salary movements on top of London
allowances. So, while the median free-standing London allowance at
the banks has since only increased to just over £3,500, some are now
effectively paying higher premia by adjusting basic pay for employees
working in the capital.
Public sector catches up
In recent years, the majority of activity has taken place in the public
sector as it seeks to address difficulties in recruiting and retaining ‘key
workers’ in London and the South East. For example, police officers
working for the Metropolitan Police typically receive a total
supplement of just over £6,500, while qualified teachers in inner
London can earn as much as £7,763 a year more than their
provincially-based counterparts.
6 IDS HR Study 904 • October 2009
Public sector
Following significant movement in recent years,
some of the London allowances paid in the
public sector are now on a par with, and in some
cases exceed, the free-standing allowances paid
in the finance sector. Most of the featured public
sector organisations continue to raise their rates
on an annual basis in line with the agreed
increase to basic pay.
Police
The combined London payment for police
officers has risen to £6,558. This figure
comprises a pensionable London weighting
element of £2,220 and a non-pensionable
London allowance of £4,338. While the former
is paid to all police officers in the London area,
the latter is only received by those recruited after
1 September 1994. Those in post before this date
receive a housing allowance (worth an average
of £5,430 for Metropolitan Police officers) and
a lower level of London allowance (£1,011 – the
rate in 2000) plus London weighting.
The Met’s professional and support staff also
receive location supplements: £3,379 in inner
London and £1,836 in outer London.
Forces around London
Police forces surrounding London expressed
some concern that they could lose officers to the
Met when the higher weighting and allowance
payments were introduced in 2001. The
perceived threat was further exacerbated when
the Met arranged free rail travel within 70 miles
of London for its police officers. As a result, a
two-tier location allowance was established
whereby officers in the five forces immediately
bordering London – Essex, Hertfordshire, Kent,
Surrey and Thames Valley – receive £2,000,
while those in Bedfordshire, Hampshire and
Sussex receive an allowance of £1,000. These
allowances remain unchanged.
Much like for the Met, the allowance is only
payable to officers recruited after 1 September
1994 and to those recruited before this date who
are not in receipt of a housing allowance (worth,
for example, up to £4,275 for officers in Essex
and up to £3,438 for officers in Surrey).
Special priority payments
In addition to these location allowances, up to
40 per cent of the force strength in eight areas –
the Met, Essex, Kent, Hertfordshire, Surrey,
Thames Valley, Bedfordshire and Sussex – are
eligible to receive ‘special priority payments’.

These are one-off lump-sum, non-pensionable
payments ranging from £500 to £3,000 (or up to
£5,000 in exceptional circumstances). They are
intended to reward officers in posts that carry
significantly higher responsibility than the norm
for their rank, present particular recruitment or
retention difficulties or have especially
demanding working conditions or environments.
National Health Service
Under Agenda for Change, NHS staff receive
‘high-cost area supplements’. These apply to all
employees except those covered by the Doctors’
and Dentists’ Pay Review Body and very senior
managers. The supplements are expressed as a
proportion of basic pay (including the value of
any long-term recruitment and retention premia)
subject to minimum and maximum amounts.
The formulae used to calculate the supplements
remain unchanged. However, an increase to
basic salaries of 2.4 per cent from April 2009
means that the amount employees receive has
increased. In inner London (where staff receive a
supplement of 20 per cent of salary) employees
receive £3,947 to £6,080 depending on basic
pay. The payment range is £3,339 to £4,256 in
outer London (based on 15 per cent of salary),
and £912 to £1,581 in the fringe (5 per cent).
Recruitment and retention premia
NHS employers also have scope to pay
recruitment and retention premia. However, to
qualify, local employers must show that ‘market
pressures would otherwise prevent the employer
from being able to recruit and retain staff in
sufficient numbers for the post concerned at the
normal salary level for a job at that weight’. In
addition, they must have exhausted all non-pay
benefits and other avenues for improving
recruitment and retention, and they must consult
with neighbouring trusts.
These premia can be applied nationally where
there are particular recruitment and retention
problems across the country. The combined
value of any nationally or locally determined
premia would not normally exceed 30 per cent
of basic pay.
Teachers
There are four geographically determined pay
spines for qualified teachers in England and
Wales – national, inner London, outer London
and the fringe area. From September 2009, the
differential in pay for a qualified classroom
teacher at the bottom of the main scale in inner
IDS HR Study 904 • October 2009
Analysis
London is £4,898. At the top of the upper scale,
this rises to a maximum of £7,763. The
increased differential can be broadly explained
by a higher 2009 pay award for teachers in
London. In inner London, those on the lowest
pay point received a 4 per cent rise, while those
on the upper scale received 3 per cent. Salary
spine points on the national pay scale were
increased by 2.3 per cent.
The differential over the national rate for
teachers in outer London ranges from £3,450 at
the bottom of the scale to £3,594 at the top.
Teachers in the fringe area in the lowest grade
receive a differential of £1,015, while those in
the highest receive £1,016.
Excellent teacher scheme (ETS)
Teachers who have been at the top of the upper
pay spine for a minimum of two years are eligible
to apply for ‘Excellent Teacher’ status. ETS
teachers are paid a spot salary within a range,
with the maximum and minimum amounts
adjusted as part of the annual pay review.
The 2009 review saw a change to the way this
range is calculated. The minimum is now the
highest possible rate for classroom teachers plus
8 per cent. The maximum is calculated by
adding the minimum rate to the value of the
maximum of the independent teaching and
learning responsibilities allowance (ordinarily
payable to teachers who fulfil specific duties
within a school). The result of these changes is
that, from September 2009, ETS teachers in
inner London could earn up to £8,384 (the
differential over the national pay rate at the
maximum) more than their counterparts in the
rest of the country. The differential for outer
London is £3,881 at the maximum and £1,097
at the maximum in the fringe.
Sixth-form colleges
Teachers in sixth-form colleges received an
increase of around 2.45 per cent to their London
allowances from September 2008, taking the
level of inner London allowance to £3,508,
outer London to £2,338 and fringe to £926.
Negotiations for 2009 were ongoing at the time
of going to press.
Further and higher education
Further education
The Association of Colleges (AoC) has not set
any new London allowance rates since 2002. At
this time, they stood at £2,385 in inner London,
£1,566 in outer London and £616 in the fringe.
7
London allowances

Average earnings in London and the South East compared with the UK as a whole

Average male earnings in London are around 37 per cent
higher than those in the UK as a whole according to the 2008
Annual Survey of Hours and Earnings, published by the
Office for National Statistics (the corresponding figure for
women is around 29 per cent). In the South East, earnings
are 6 per cent higher for men (around 1 per cent for women)
than those throughout the UK.
The table below provides a comparison of average gross
weekly earnings between London, the South East and the
UK as a whole for full-time male and female workers. Details
are given by broad occupational group and for selected non-
manual industries.
The differential between London and the UK as a whole is
significantly higher for financial services than the other
service sectors. Male earnings in London are almost 40 per
cent higher than for the UK as a whole in financial services
(around 48 per cent for women). By comparison, the
differential is almost 13 per cent for men (and 24 per cent for
women) in health and social work and 17 per cent for men
(and 14 per cent for women) in education.
Accounting for London variations
While these figures give an interesting insight, they should
be treated with caution when it comes to determining a
London ‘premium’. Several factors account for the large
differences in earnings between London and elsewhere.
While these include the effect of London allowances and
pay differentials as reported in this Study, more
importantly the profile of jobs in London compared with
the UK as a whole is not a comparison of like with like. In
the capital, there is a far greater predominance of white-
collar workers than elsewhere. Moreover, there is a higher
concentration of highly-paid senior and professional jobs –
this factor alone has a considerable impact on average
earnings.

Comparison of full-time average gross earnings between London, the South East and the UK
London South East United Kingdom
Male Female Male Female Male Female
Occupations £pw £pw £pw £pw £pw £pw
Managers & senior officials 1,263.20 864.60 962.80 704.20 937.90 670.70
Professional 980.90 811.90 831.40 660.00 818.40 694.90
Associated professional & technical 811.70 635.40 628.10 526.90 641.80 535.00
Administrative & secretarial 524.70 478.30 468.50 386.80 440.30 382.10
Skilled trades 566.20 398.90 504.50 382.50 491.00 340.70
Personal service 494.70 386.00 392.30 316.10 389.20 324.60
Sales and customer service 373.10 344.00 341.30 308.30 339.80 296.80
Plant & machine operatives 549.50 438.60 475.90 339.90 460.00 327.80
Elementary 403.20 319.60 389.30 290.60 367.10 288.30
Selected industries (non-manual)
Wholesale & retail 634.30 485.50 607.90 437.60 531.80 392.10
Financial 1,363.60 866.60 810.50 562.20 977.00 585.90
Public administration & defence 788.50 623.50 635.60 495.00 644.20 493.90
Education 733.70 604.10 656.80 512.20 629.10 528.80
Health & social work 788.40 600.20 701.10 461.00 699.60 482.80
All service industries 872.70 625.40 668.20 489.30 644.50 489.00
All employees 862.40 624.60 669.20 489.40 631.10 485.50
Source: 2008 Annual Survey of Hours and Earnings, Office for National Statistics.

Since then, the AoC has recommended that Pre-1992 universities

colleges increase their allowances in line with the
annual pay award each year. In our analysis, we
have derived figures for 2009 by applying each
of these recommended figures (most recently, 3.2
per cent in October 2008). This gives allowances
of £2,864 in inner London, £1,878 in outer
London and £740 in the fringe area. In practice,
however, there is now local variation in the levels
and systems of location pay at different colleges.
London weighting has not been covered by
national agreements at the ‘old’ universities since
1992 and has been a matter for local
negotiation. As a result, there is variation in the
payments made by the different London
institutions. In some, allowances have remained
frozen at the 1992 rates, while others have
increased the level and/or consolidated the
premiums into basic salaries.

8 IDS HR Study 904 • October 2009


Post-1992 universities
The 2006 Higher Education national pay
agreement recommended that post-1992
universities that retained separate London
weightings increase them on average by the same
percentage uplift as agreed for basic salaries. The
figures we provide have been calculated by
applying the recommended increases to basic
salary each year. Since 2006, these have been:
3 per cent from August 2006; 1 per cent from
February 2007; 3 per cent from August 2007;
3 per cent from May 2008; and 5 per cent from
October 2008.
On this basis, the allowance for lecturers would
be £3,267 in inner London, £2,111 in outer
London and £818 in the fringe. However,
individual universities may not have followed
this approach and there is now a great deal of
variation in the allowances paid locally.
Local government
London allowances for local government
employees were consolidated into inner and
outer London pay spines as part of the 1997
single-status deal. However, the national
agreement continues to set rates for free-
standing allowances paid in the fringe areas.
These now stand at £798 in the inner fringe and
£555 in the outer fringe. The agreement also
recommends rates for inner and outer London
allowances – £3,299 and £1,775 respectively –
which are still followed by a number of
organisations in the not-for-profit sector.
Fire service
The London-wide allowance for firefighters was
increased by 2.45 per cent in July 2008 to
£4,959 a year. No agreement for 2009 had been
reached at the time of going to press.
The Surrey location allowance of £1,213
remains unchanged since 2003, while the rates in
Langley and Slough were increased to £790
(from £769) and those in Bracknell, Maidenhead
and Windsor were increased to £550 (from
£535) from April 2009.
Prison service
The ‘locality payments’ in the prison service
were unchanged this year. The ‘top rate’, paid in
inner London prisons, remains at £4,250 a year
and the lowest rate – Band 6 – £250.
A range of factors are considered when
determining which sites qualify for the payments
and at what level, including the cost of living
IDS HR Study 904 • October 2009
Analysis
(incorporating housing costs), unemployment,
regional earnings and staff turnover. Local
management or trade unions can apply annually
for sites to be included or promoted to a higher
tier, but any decision is made centrally.
Civil service
London pay scales
Separate London pay scales remain popular
among the featured civil service departments. In
some instances, the differential between London
salaries and those elsewhere is constant at every
point on the pay scale. At the Department for
Business, Innovation and Skills, for example,
The London Living Wage
The London Living Wage (LLW) is a notional figure calculated by the
Greater London Authority (GLA). There is no legal obligation for
employers to pay it. Large organisations in both the public and private
sectors typically pay their direct employees an hourly rate significantly
above the National Minimum Wage (NMW). However, there has been
a trend in recent years for many of the lowest-paid jobs to be
outsourced. A key aim of the London campaign has been to
encourage employers to take greater responsibility for their indirect
outsourced employees.
Calculating the living wage
The LLW is reviewed annually by the Living Wage Unit of GLA
Economics – it rose by 15 pence to £7.60 an hour in May 2009. The
methodology behind how it is calculated is explained in the group’s
report, ‘A Fairer London: The 2009 Living Wage in London’.
The report calculates two estimates for the poverty threshold in
London. The first is found by estimating the minimum income needed
by a weighted range of typical families to address their basic
requirements. The other figure is based on income distribution, found
by using the Government’s poverty threshold measure of 60 per cent
of median income. Taking the average of these two figures gives an
estimated London poverty wage of £6.65 per hour, some 14.5 per cent
above the NMW of £5.80 per hour effective from October 2009. To
provide a margin against unexpected circumstances, the LLW is set
15 per cent above the poverty threshold.
Living Wage Employer award
The community organisation London Citizens runs the Living Wage
Employer award. To gain the award, employers must make sure that
all their staff, including contracted support staff, are: paid at least the
LLW; eligible for at least 20 days’ paid holiday a year plus bank
holidays; eligible for at least ten days’ full sick pay per year; and are
allowed free access to a trade union.
According to the group, there are now more than 80 ‘Living Wage
Employers’ in London, including the GLA, the Metropolitan Police and
Transport for London, as well as various private sector organisations,
including Barclays, KPMG and PricewaterhouseCoopers.
For more information, please see IDS Pay Report 1028.
‘A Fairer London: The 2009 Living Wage in London’ is available online
at www.london.gov.uk
9
London allowances
employees in London receive a salary £3,500
higher than those on the national scale.
Employees at Acas working in inner London
receive £4,000 more than those on the national
pay scale.
At other departments and agencies, the
differential can vary by grade. For example, at
the Department for Work and Pensions, the
inner London differential ranges from £3,490 to
£5,280, and at the Identity & Passport Service
from £3,910 to £6,008. Overall, the highest
possible differential is £6,717 at the Valuation
Office Agency.
Differential in basic pay plus allowance
At some civil service organisations, separate
London pay scales operate alongside a system of
free-standing allowances. For example, staff at
the Home Office working in the capital receive a
differential of between £535 and £3,590
depending on grade, as well as a separate
location allowance of £3,020 in Inner London.
Some organisations operate separate pay scales
that cover all staff, while free-standing location
allowances are targeted at specific groups of staff.
At the Valuation Office Agency, for example, band
3 staff in central London receive an allowance of
£500 in addition to the relevant differential.
Free-standing allowances
A number of the featured civil service
organisations continue to use free-standing
allowances to differentiate between pay levels in
London and elsewhere. The highest of these is
the £4,730 paid to non-resident staff at the
Corporation of London working in the centre of
the capital.
Retail
This HR Study includes details of the location-
based payments made by a wide variety of retail
companies, from fast food outlets to chain stores
and specialist retailers. These organisations take
a variety of approaches to address recruitment
and retention difficulties presented by locations
in high cost-of-living areas.
Zonal pay systems
The majority of the featured retailers operate
multiple pay scales across a number of zones,
usually spreading out from central London. The
exact number of zones varies, but typically there
are four to six, progressing upwards from the
national and provincial scale to include outer
10
London and culminating in either the West End
or central London.
Allocating locations to zones
Stores or branches in London tend to receive the
highest allowances, followed by the rest of the
South East, but the allocation of stores to
specific zones is rarely based on location alone.
For example, a number of factors, including
prosperity within the area and local crime rate,
are considered at Somerfield. To avoid any
doubt, most retailers compile a list of all
locations, specifying which zone each and every
store is in.
Out-of-town retail parks and airports sometimes
attract a higher salary or allowance due to the
competition for staff and the high travel costs
associated with these locations. Pret A Manger,
for example, continues to operate higher pay
scales for staff working at its airport outlets at
Heathrow, Luton and Stansted.
It is also relatively common for stores in major
towns or cities outside the South East to attract
a premium rate of pay. Marks and Spencer, for
example, has different rates for hot-spots in the
South and in North and Central England.
Peacocks Stores has a separate ‘exceptions’ zone,
which is applied in specific difficult to recruit
areas.
Pay differentials
In the company practice section of this Study, we
express the differential between the national/
provincial band and the higher pay bands as an
hourly rate. These differentials are, therefore,
rarely a fixed amount and vary each year
depending on the annual uplift to pay rates. If
the same percentage increase is applied to all
salaries, the differential will increase in that year.
However, if higher percentage increases are
applied to the bottom of the national or
provincial zone, the differentials may actually
reduce.
Impact of the national minimum wage
Increases in the national minimum wage over the
last few years have led to many differentials in
the retail sector shrinking, as the lowest rates of
pay increase faster than those at the top end.
This accounts for a few cases where the
differentials for some of the higher bands are
smaller than last year. The two lowest pay rates
at some retailers, such as C&J Clark
International and Next Retail, have been merged
as a result of this development. In instances
IDS HR Study 904 • October 2009

where they have been retained, the differences in
pay between them are often minimal.
Free-standing allowances
Free-standing allowances are far less common in
the retail sector – where employees tend to be
paid hourly – than elsewhere. Among our
featured organisations, AJT Trading,
Waterstone’s and Blackwells operate free-
standing allowances for all staff in the relevant
locations. However, this form of payment is
often limited to salaried managers or supervisors
only – as at Halfords, McDonalds and Makro
Self-Service Wholesalers.
The distinction between differentials and
allowances is sometimes blurred. For example,
some retailers, such as Comet, separate their
location payments into zones but still consider
them to be supplements on basic pay.
Allowances as a percentage of salary
In some cases, location allowances are expressed
as a percentage of salary. At Kwik-Fit, for
example, autocentre staff receive an allowance
equivalent to 7.5 per cent of basic salary in
London and 5 per cent of basic salary in the
Thames Valley and the South East. At Laura
Ashley, the differential for a fully-trained sales
adviser in inner London is 10 per cent on the
rates paid elsewhere.
Labour market top-ups
A ‘top-up’ system is another method some
retailers use to ensure their pay rates in particular
locations remain competitive in the local labour
market. These can be operated either instead of,
or in addition to, other location-based
arrangements. Wilkinson (Home & Garden) has
two levels of labour market ‘top-up’ to boost pay
in tight labour market areas, such as inner and
outer London, and the Thames Corridor.
Other sectors
Energy & water
In the energy and water sector, Sellafield
increased its location allowances as part of its
annual pay agreement in 2009 – employees in
London now receive a supplement of £4,725.
IDS HR Study 904 • October 2009
Analysis
National Grid’s allowance remained the same,
but the London weighting structure at the
organisation is currently under review with
changes anticipated in the next year.
British Gas Services scrapped its traditional
London allowance system for industrials based
on distance from Charing Cross in 2009. The
organisation is based in geographic patches that
do not neatly fit with such a rigid structure. It
now determines the level of allowance by
allocating specific locations to one of five
separate bands.
IT, telecommunications & media
In the IT, telecommunications and media sector,
there was no movement in London supplements
in 2009. The BBC’s allowances for employees in
the Metropolitan Police District remained
unchanged at the time of going to press – staff
earning £25,000 or more receive an allowance of
£3,537 and those earning less than £25,000,
£4,080 – with the latest pay offer proposing
rates stay the same. Meanwhile, BT’s central
London allowance for non-management grades
remained at £3,116.
Transport, storage and distribution
In the transport, storage and distribution sector,
rates remained the same at First Great Western,
Parcelforce and Royal Mail. National Express
East Coast, South West Trains and Network Rail
all increased their rates in 2009.
Not-for-profit
Many of the featured not-for-profit
organisations base their London allowances on
the advisory amounts published each year by the
local authorities NJC. The 2009 figures were
£3,299 for inner London, £1,755 for outer
London, £798 for the inner fringe and £555 for
the outer fringe. Organisations in the sector that
do not follow these recommended amounts
usually still pay a free-standing London
allowance – the highest at Help the Aged is
£5,135. Johnnie Johnson Housing is an
exception, where employees working in
Hertfordshire receive 6.3 per cent of basic salary
as a location supplement.
11
 company practice

Page Page
Banks 12 Construction 19
Building societies 13 Transport, storage & distribution 19
Insurance companies 14 IT, telecommunications & media 21
Retail 14 Other services 21
Energy & water 18 Not-for-profit 21
Oil, chemicals & pharmaceuticals 18 Public services 22
Other manufacturing 19

Unless stated otherwise, allowances are shown as annual salaries, and distances quoted are from Charing Cross. Where
there has been a recent change, the figures in brackets show the previous level of allowance. The fourth column (Pen)
indicates whether an allowance is pensionable. The next column (Enh) shows whether it is enhanceable (ie is considered
part of basic pay for the purpose of calculating overtime and/or shift premium payments).

Organisation & effective date Location Allowance Pen Enh Other information

Banks
Abbey Inner London Yes Yes *Outer London rate varies according to job
1.3.08 (0–5 miles) 3,500 role and market data – some roles receive a
higher allowance due to the business unit
Outer London they operate in
(5.1–37 miles) 1,500 to 2,000*

Alliance & Leicester Group Inner London (0–4 miles) 3,520 No No *After two years’ satisfactory service
1.7.92 4,200* **After five years’ satisfactory service
4,625** A ‘hot spot’ location payment of £1,000 is
payable on minimum salaries where certain
Intermediate London (4–7 miles) 2,575 qualifying criteria are met, including housing
3,205* costs, branch accessibility, local competition
3,570** for skills, other significant local factors, and
measurable recruitment and retention
Outer London (7–16 miles) 1,470
difficulties
2,050*
2,465**

Fringe London (16–22 miles) 735

995*
1,315**

Allied Irish Bank City office (Angel Court), Gray’s Inn
1.1.05 (Archway), Hampstead (Kilburn),
Mayfair, Tenterden St, Undershaft
Hammersmith, Totteridge & Whetstone
(North Finchley), Wanstead, Wembley,
Wimbledon
No No *From 1.6.07 permanent bank officials (up to
and including assistant manager level) in
3,550* Gray’s Inn, Old Jewry, Tenterden St, Angel
Court and Mayfair receive a further ‘central
London premium’ of £3,000
2,700

Bromley, Uxbridge, Watford 1,602

Brighton, Cambridge, Oxford

Southampton 750

Bristol 500

All other locations 350

Barclays Bank 0–5 miles 3,550 No No

1.10.04 5–10 miles 2,550
10–22 miles 1,670
22–25 miles 750

Co-operative Financial Canary Wharf, Holborn, Prescot Street, Yes No

Services Islington, Treasury 4,000
(formerly Co-operative Bank and
Co-operative Insurance Society)
1.4.08*

12 IDS HR Study 904 • October 2009

 Company practice

Organisation & effective date Location Allowance Pen Enh Other information
Co-operative Financial Croydon, Ealing, Kingston-upon- Yes No
Services (cont’d) Thames, Lewisham, Walthamstow,
Wood Green 3,000

Dartford, Romford, Watford 2,000

Brighton, Bristol, Cambridge, Chatham,

Chelmsford, Colchester, Guildford,
Luton, Oxford, Portsmouth, Reading,
Southampton, Southend-on-Sea,
Swindon 1,000

HBOS Inner London (0–3 miles) 3,450 No No In addition, HBOS has a separate salary guide,
1.10.02 Outer London (3 miles to M25) 2,250 which is also influenced by location.
M25 to 40 miles 1,200 Generally, this means staff working nearer
central London receive higher basic salaries,
which are pensionable

HSBC 0–3 miles* 4,000 No No *Distances are indicative only. In practice,

1.4.01 3–6 miles 3,000 branches are moved between the areas
6–22 miles 2,000 depending on market needs
Designated South East towns 1,000 HSBC also operates a regional pay structure
for clerical staff based on three regions: C, for
central London; B, typically for major towns
and cities; and A, typically for more rural
locations

Lloyds TSB* Zone 1 3,450 Yes** No * Includes Scottish Widows

1.10.07 Zone 2 2,200 **Allowances pensionable for some staff only
Zone 3*** 1,725 ***Branches and offices are allocated to
zones on the basis of local labour market
pressures as well as on location

Location examples:
Zone 1: Cannon Street, Charing Cross, Islington, Oxford Street
Zone 2: Bromley, Putney, Mitcham
Zone 3: Dorking, Epsom, Sutton, Watford

National Australia Group Less than 6 miles 3,595 No No *Abingdon, Banbury, Basingstoke, Bath,
1.4.05 6–16 miles (Enfield and Watford) 2,311 Bedford, Bournemouth, Brighton, Bristol, Bury
16–22 miles (St Albans) 1,438 St Edmunds, Cambridge, Cardiff, Chelmsford,
South East* 770 Crawley, Essex-Laindon, Exeter, Guildford,
Hemel Hempstead, Hertford, High Wycombe,
Hitchin, Luton, Maidstone, Milton Keynes,
Oxford, Portsmouth, Plymouth, Reading,
Slough, Southampton, Stevenage, Taunton

Standard Chartered Bank London allowance 3,896* No No *With the majority of employees based in the
capital, London weighting no longer applies
to new recruits. Stated allowance only applies
to staff on older contracts

Building societies
Chelsea Building Society Inner London 3,500 No No
1.4.08 Outer London 2,000

Location examples:
Inner London: Chelsea, City, Fulham, Hampstead, Kensington, Lewisham, Streatham, West End
Outer London: Bromley, Croydon, Ealing, Guildford, Harrow, Kingston, Reading, Sunbury, Sutton, Watford

Leeds Building Society London, Epsom, Reading 4,254 No No Allowances are based on labour market
1.8.08 demand rather than on miles from central
Barkingside, Stevenage, Watford 2,781 London
Banbury, Birmingham, Bristol, Cardiff,
Cheltenham, Gloucester, Manchester,
Southampton 1,823

Leeds (city centre) 600

Nationwide Zone 1 (0–5 miles) 4,550 No No *There are 132 ‘national plus’ locations
1.10.08 Zone 2 (5–10 miles) 3,150 nationwide – typically branches in big cities
Zone 3 (10 miles to M25) 2,000
Zone 4 (‘national plus’ branches)* 950

IDS HR Study 904 • October 2009 13

London allowances

Organisation & effective date Location Allowance Pen Enh Other information
Skipton Building Society Central London 4,700 No No
1.4.01 South East (Cambridge, Croydon,
Guildford, Harrow, Kingston, Oxford,
Reading, St Albans) 4,200
Yorkshire Building Society 0–5 miles 4,389 Yes Yes
1.7.07 6–15 miles 2,655
16–25 miles 1,941
26–30 miles 1,062

Insurance companies
AEGON UK Central London (City of London, No No
(formerly Scottish Equitable) West End, Holborn) 3,500
1.1.01 Reading 2,000
Harrow 1,900
Croydon 1,850
Guildford 1,350
Maidstone 900
Chelmsford 850
Bristol 800
Allianz Insurance Inner London 4,008 No No
1.5.04 Guildford and Woking 1,260
Chelmsford, Luton, Maidstone,
Tunbridge Wells 825
Bristol, Liphook, Southampton 540
Aviva 0–3 miles 3,710 No No
1.4.01 3 miles to M25 1,725
Royal & SunAlliance Inner London (0–4 miles) 3,750 No No
1.4.01 Outer London (4 miles to M25) 1,725
Zurich Financial Services Inner London 3,200 No Yes
1.4.00 Outer London (Heathrow, Sutton,
Watford) 1,700
Brighton, Chelmsford, Guildford,
Maidstone, Slough 825

Retail
AJT Trading London (including Staines) 1,170 No No
Branch sales staff
1.2.97
Argos Zone F £1.26ph* (£1.28) Yes Yes *Differential over Zone A/B rate
Sales assistants Zone E 99pph (£1.01)
1.10.09 Zone D 74pph (76p)
Zone C 30pph (32p)
Examples of locations:
Zone F: Holborn, Kensington, Marble Arch, New Oxford Street, Whitechapel Road
Zone E: Brixton, Peckham, Shepherds Bush, Wandsworth, Wimbledon
Zone D: Crawley, Leatherhead, Reading Forbury, Staines, Woking
Zone C: Camberley, Harrogate, Leighton Buzzard, Romford, Welwyn Garden City
Asda London 84pph* (83p) Yes Yes *Differential between London and provincial
Hourly-paid staff in stores established hourly-pay rates
South East, Home Counties that have
1.10.08
stores with specific recruitment
problems 42pph (41p)
B&Q Zone I £2ph* No No *Differential over provincial zone A
Customer advisors Zone F £1.25ph
1.2.03 Zone E £1ph
Zone D 75pph
Zone C 50pph
Zone B 25pph
Blackwells Inner London 2,750 Yes No
1.3.02
Boots The Chemists Pay zone 4 £1.72ph* (£1.73) Yes Yes *Differential over Zone 1 provincial rates
Sales assistants (experienced) Pay zone 3 86pph (89p)
1.6.09 Pay zone 2 54pph (53p)

14 IDS HR Study 904 • October 2009

 Company practice

Organisation & effective date Location Allowance Pen Enh Other information
Boots The Chemists (cont’d)
Locations are as follows:
Zone 4: Bloomsbury, Brent Cross, Camden Town, Canary Wharf, Chiswick, Covent Garden, Hammersmith, Heathrow Airport, Holborn, Kensington, Paddington Station, Pimlico,
Westminster
Zone 3: Brixton, Cambridge, Chichester, Dorking, Feltham, Godalming, Guildford, Hemel Hempstead, Leatherhead, Maidenhead, Oxford, Potters Bar, Reading, Rickmansworth,
Ruislip, Sevenoaks, Slough, Southend-on-Sea, Staines, Tunbridge Wells, Twickenham, West Thurrock, Wimbledon, Windsor, Woking
Zone 2: Aberdeen, Aldershot, Ashford, Bath, Basingstoke, Birmingham, Bournemouth, Brighton, Bristol, Bury St Edmunds, Canterbury, Cardiff, Eastbourne, Edinburgh, Folkestone,
Harrogate, Henley, Leamington Spa, Maidstone, Milton Keynes, Northampton, New Malden, Peterborough, Portsmouth, Purley, Shrewsbury, Sidcup, Stoke-on-Trent,
Sutton Coldfield, Swansea, Telford

Borders UK Band 1 80pph* Yes Yes *Differential over Band 3 and 4 (regional pay
Booksellers Band 2 35pph scale) for staff at starting rate
1.4.09

C&J Clark International Zone F 82pph* (80p) *Differential over Zone A/B, the lowest
Sales team members Zone E 18pph provincial rate for over 18s
1.4.09 Zone D 8pph
Zone C 6pph

Wage scale location examples:

Zone F: Heathrow Airport, Kensington, Oxford St – Marble Arch, Oxford St – Tottenham Court Rd, Regent St, Piccadilly, St Helier, Victoria St
Zone E: Beckton, Beaconsfield, Bicester, Brent Cross, Chiswick, Fulham, Hammesmith, Kilburn, Kingston, Maidenhead, Oxford, Reading, Staines, Uxbridge, Watford, Windsor
Zone D: Barking, Basingstoke, Birmingham, Bracknell, Camberley, Elephant & Castle, Hatfield, Henley-on-Thames, Marlow, Richmond, Romford, St Albans, Wandsworth,
Weybridge, Woolwich
Zone C: Bath, Billericay, Borehamwood, Bristol, Cardiff, Cheshire Oaks, East Ham, Evesham, Finchley, Loughton, Luton, Muswell Hill, Stratford-upon-Avon, Stratford, Walthamstow,
Wimbledon

Comet Zone 5* 3,000 Yes No *Differentials over the provincial pay zone
1.7.02 Zone 4 2,000 Although the pay structure is divided into
Zone 3 1,350 zones, location allowances are still considered
Zone 2 500 as supplements to basic pay
A ‘scarce skills premium’ was introduced for
‘white goods’ engineers employed in the
South East from 1.7.03 aimed at tackling
recruitment and retention pressures on these
staff. The premium is incorporated into basic
salary

Locations are as follows:

Zone 5: Central London
Zone 4: Barking, Brentford, Catford, Chadwell Heath, Crawley, Crayford, Croydon, Enfield, Farnborough, Friern Barnet, Guildford, Greenwich, Hendon, High Wycombe, Mill Hill,
New Malden, Newbury, Old Kent Road, Orpington, Reading, Slough, South Ruislip, Twickenham, Watford, Wembley, West Thurrock
Zone 3: Aylesbury, Basildon, Basingstoke, Bristol, Bury St Edmunds, Cambridge, Chippenham, Dunstable, Gravesend, Harlow, Hatfield, Hemel Hempstead, Luton, Maidstone,
Northampton, Oxford, Rayleigh Weir, Rochester, Stevenage, Swindon, Tunbridge Wells
Zone 2: Ashford, Bath

Early Learning Centre Pay province 5 73pph* Yes Yes *Differential over pay provinces 1 and 2 for
Retail staff Pay province 4 62pph retail staff aged 18 and above
1.5.09 Pay province 3 22pph

Location examples:
Pay province 5: Central London – Chelsea, Kensington (total of two stores)
Pay province 4: Outer London – Bluewater, Milton Keynes, White City (total of five stores)
Pay province 3: South East, large cities and out-of-town locations – Brent Cross, Manchester (total of 33 stores)

Halfords Inner London 2,708 (2,668) Yes No

Store managers and deputy Outer London 2,108 (2,077)
managers
1.4.09

Homebase Zone 5 45pph* Yes Yes *Differentials over zones 1, 2 and 3 for sales
Sales assistants Zone 4 15pph assistants paid at the standard rate
1.4.08

Location examples:
Zone 5: Crawley, Exeter, Harrogate, Kingston, Milton Keynes, Richmond, Slough, Staines, Woking
Zone 4: Cambridge, Ewell, Hatfield, Kensington, Sevenoaks, Watford

Kwik-Fit London 7.5% of basic salary No No

Autocentre staff Thames Valley and the South East 5% of basic salary
1.11.03

IDS HR Study 904 • October 2009 15

London allowances

Organisation & effective date Location Allowance Pen Enh Other information
Ladbrokes Central London £1.26ph Yes No *This allowance is also paid in some other
Shop managers & deputies Inner London (eg Peckham, Brixton, locations (eg Oxfordshire, Hertfordshire, Kent)
1.3.02 Plaistow) 99pph to assist recruitment
Outer London (eg Hounslow, Edgware) 66pph All shop staff working five days a week and
South East* (eg Bromley, Romford) 38pph over 21 hours within central London are
eligible to apply for a free travelcard after
Cashiers (1.3.02) & trainee deputy Central London £1.75ph three months’ service (this is a taxable benefit)
managers (1.3.05) Inner London £1.32ph
Outer London 94pph
South East* 48pph

Laura Ashley Zone 1 (inner London) Differential of 10%* *Over zones 2, 3, 4

Fully trained sales adviser

Makro Self-Service London* 71pph (69p) Yes Yes *Also includes Reading
Wholesalers Provincial allowance (Glasgow, Bristol,
Shopfloor staff Edinburgh, Rayleigh) 26pph (25p)
1.7.08

Managers London* 1,500

1.7.03

Marks & Spencer Oxford Street £1.55ph Yes Yes Each store falls within one of six location
Sales adviser Inner London £1.00ph zones. Any store that believes it merits a
1.10.05 Other inner London and key ‘hot spots’ higher location premium must present its case
in the South 74pph to the Reward team. A decision is then made
Outer London 46pph on the basis of the comparative pay and
Other key ‘hot spots’, North and benefits for the area, recruitment difficulties
Central England 28pph and staff turnover

McDonald’s London 3,000 No No *Only applies to a couple of restaurants

Salaried managers South East* 1,500
1.4.01

Mothercare Pay band 1 £1.36ph* Yes Yes *Differential over pay band 5, the lowest
Customer service advisers Pay band 2 63pph provincial rate
22.6.08 Pay band 3 38pph
Pay band 4 10pph

Location examples:
Pay band 1: Brent Cross, Oxford Street, Watford, Weybridge (total of four shops)
Pay band 2: Douglas, Jersey, Milton Keynes, Thurrock (total of 12 stores)
Pay band 3: Avon Meads, Gateshead, Newbury, Oxford (total of 39 stores)
Pay band 4: Canterbury, Edinburgh, Stevenage, Swindon (total of 29 stores)

Next Retail Zone 4 (Central London) £1.30ph* Yes Yes *From 1.2.07, zone 2 (major UK cities) was
Sales consultant merged with zone 1 (national rate). The
1.2.09 Zone 3 (Outer London and large South figures shown are the hourly differential over
East towns) 33pph (34p) the basic national rate (ie Zone 1/2) for adult
new starters
Stores are allocated to zones on the basis of
location

Location examples:
Zone 4: Bond Street, Covent Garden, Ealing, Holborn, Kensington, Oxford Street, Wood Green
Zone 3: Basildon, Cambridge, Enfield, Gatwick, Ilford, Kingston, Maidenhead, Oxford, Slough, Uxbridge, Watford

Peacocks Stores London 33pph* (38p) Yes Yes *Differential over standard pay rate
Sales assistant (after six months’ Exceptions** 70pph (74p) **Difficult to recruit areas
service)
1.10.08

Managers and assistant managers Inner London (inside inner ring road) 3,000 No No
1.4.05 Outer London (inside M25) 2,000

Pret A Manger Airport outlets** 75pph* No Yes *Differential over national rates
6.7.07 **Includes Heathrow T1, T3 and T4, Luton
and Stansted

Sainsbury’s Band 5 85pph** Yes Yes *Base rates increased from 6.9.09;
Hourly-paid staff in stores Band 4 63pph differentials unchanged
6.9.09* Band 3 51pph **Supplement on band 1 rate
Band 2 25pph

16 IDS HR Study 904 • October 2009

 Company practice

Organisation & effective date Location Allowance Pen Enh Other information
Sainsbury’s (cont’d)
Locations are as follows:
Band 5: Camden, Chiswick, Cobham, Cromwell Road, Finchley Road, Fulham, Guildford, Islington, Pimlico, Richmond, Surbiton, Sury Basin
Band 4: Bishops Stortford, Burpham, Colney Park, Crawley Central, Fulham Broadway, Horsham, Kilburn, Kiln Lane, Kings Mall, Loughton, New Barnet, Thorley, Walthamstow,
Walton-on-Thames, West Green, Whitechapel
Band 3 includes: Avenue Road Local, Balham, Barnes Local, Basingstoke, Battersea Park Local, Beaconsfield, Borough High Street Local, Bracknell, Charing Cross Local, Chesham,
Clapham, Crystal Palace, Dalston, Didcot, Farnborough, Godalming, Golders Green, Harrogate, Haywards Heath, Holborn Central, Paddington Station Local, Pinner, Reading,
Romford, Sevenoaks, Tottenham, Tunbridge Wells, Uxbridge, Victoria
Band 2 includes: Alton, Aylesbury, Banbury, Blackhall, Brentwood, Cold Bath Road Local, Coldhams Lane, Harlow, Heyford Hill, High Wycombe, King’s Road Local, Knaresborough
Local, Meadowbank, Murrayfield, Northgate, Oxford, Sidney Street, Slough, Welwyn Garden City, Witney, Woodhall Farm
Somerfield Stores Level 5* 65pph** Yes Yes *The level at which a store is paid is
Customer assistants and determined by a number of factors including:
Level 4 40pph
supervisors location; local competition; recruitment
1.10.05 Level 3 15pph difficulties; prosperity within the area; local
crime rate
**Differential over levels 1/2
Superdrug Inner London £1.01ph * Yes Yes *Differential over provincial rate.
Sales staff Outer London 36pph While described as inner and outer London
1.10.08 Large cities 10pph allowances, these payments are now used for
other locations where there are recruitment
Managers Premium 2 (Inner London) 2,500 to 7,700 Yes No difficulties, such as Milton Keynes
1.10.08
Premium 1 (Outer London) 550 to 4,000
City 550 to 4,000
Waitrose Pay zone 4 71p to 89pph* *Differential between London and provincial
Retail staff (adult recruitment (70p to 92p) top rate, depending on job and grade
range) Pay zone 3 36p to 57pph Waitrose does not apply separate or specific
1.4.09 (36p to 56p) location allowances to its store pay rates.
Pay zone 2 17p to 22pph Instead, it has four, broadly regional, pay
(14p to 22p) zones and within each of these, individual
stores agree their own recruitment rates for
the year at the annual pay review according to
the local market and their ability to recruit
high-calibre applicants
Examples of pay zone locations:
Pay zone 4: Belgravia, Bloomsbury, Gloucester Road, Holloway Road, King’s Road, Marylebone
Pay zone 3: Beaconsfield, Canary Wharf, Esher, Kingston, Rickmansworth, South Harrow, West Ealing, Windsor
Pay zone 2: Banstead, Harpenden, Marlow, Petersfield, Reading, Sevenoaks
Waterstone’s Zone A: Central London 2,900 Yes Yes *Employees at the company’s store at
1.5.07 Manchester Airport are paid the zone C rate
Zone B: Inner M25 1,700
Zone C: Outer M25* 1,000
WH Smith Zone H £1.40ph Yes No* *Location allowance is not paid on any
1.9.02 overtime worked over 39 hours
Zone G £1.25ph
**Paid to store staff only at this location
Zone F £1.00ph
Zone E 75pph
Zone D 60pph
Zone C 40pph
Zone B 20pph
Locations are as follows:
Zone H: Oxford Street
Zone G: Baker Street, Douglas (Isle of Man)**, Fleet Street, Hammersmith, Holborn Circus, Kensington, Kingsway, Leadenhall, Notting Hill Gate, Sloane Square, Strand
Zone F: Brixton, Elephant & Castle, Fulham, Jersey**, Kilburn, Peckham, Richmond, South Hampstead, Surrey Quays, Wimbledon
Zone E: Bluewater Park, Brent Cross, East Sheen, Kingston upon Thames, Putney, Thurrock, Wandsworth, Watford Harlequin
Zone D: Balham, Barnet, Beckenham, Bromley, Catford, Chiswick, Croydon, Ealing, Enfield, Forest Hill, Golders Green, Greenford, Greenwich, Harrow, Hounslow, Ilford, Lewisham,
Mill Hill, Muswell Hill, North Finchley, Palmers Green, Reading, Romford, Sevenoaks, Slough, Staines, Stratford East, Streatham, Sutton, Temple Fortune, West Ealing, West
Wickham, Willesden Green, Windsor, Wood Green, Woolwich
Zone C: Barking, Beckton, Bexleyheath, Bracknell, Camberley, Cambridge, Caterham, Cheam, Crawley, Dagenham, Dartford, East Ham, Edgware, Eltham, Epsom, Farnham,
Gerrards Cross, Godalming, Guildford, Harpenden, Hayes, Hemel Hempstead, Henley on Thames, High Wycombe, Loughton, Maidenhead, Marlow, New Malden, Orpington,
Oxford, Pangbourne, Radlett, Rickmansworth, Ruislip, St Albans, Swindon, Tonbridge, Trafford Centre (Manchester), Tunbridge Wells, Uxbridge, Wallington, Walton on Thames,
Weybridge, Worcester Park, Woking, Wokingham
Zone B: Aylesbury, Basildon, Basingstoke, Beaconsfield, Berkhamstead, Brentwood, Brighton, Cowley, Cribbs Causeway, Dorking, East Grinstead, Grays, Gyle, Haywards Heath,
Horsham, Hove, Leatherhead, Luton, Maidstone, Milton Keynes, New Mersey, Newbury, Redhill, Waltham Cross, Welwyn Garden City

IDS HR Study 904 • October 2009 17

London allowances

Organisation & effective date Location Allowance Pen Enh Other information
Wilkinson (Home & Garden) Labour market top-up:* Yes Yes *Used in stores where there is a tight labour
7.4.03 Level 1 50pph market, such as inner and outer London and
Level 2 25pph the Thames corridor

Energy & water

British Gas Services Band 1 5,047 Yes No *New system for allocating locations
Industrials Band 2 4,529 introduced in 2009. The previous system was
1.4.09* Band 3 4,011 based on distance from central London as
Band 4 1,293 follows: inner London, £4,639; Metropolitan,
Band 5 647 £4,164; outer London, £3,689; up to 30
miles, £1,189; up to 50 miles, £594
**A location allowance of £2,000 for offices
in the Metropolitan area was consolidated
into basic pay from 1.4.05. Homeworkers in
London continue to receive this allowance
Staff** 0–4 miles 3,289 Yes No
1.7.06 Within M25 (field-based employees
only) 2,056
Examples of locations:
Band 1: Central London, Dulwich, Richmond
Band 2: Greenwich, Hadley Green, Mill Hill
Band 3: Brentford, Bromley, Dartford
Band 4: Epping, South West Surrey, West Kent
Band 5: East Sussex, Farnborough, West Sussex
E.ON UK Inner London 3,048 Yes No *Currently under review
(formerly Powergen) Outer London 1,931
Generation South-East 859
1.4.08*
National Grid Inner London 3,820 Yes Yes *From 1.7.07, ex-Transco staff were moved to
Ex-NGC and ex-Transco* Metropolitan 3,325 the same rate as ex-NGC staff
1.7.08 Outer Metropolitan** 960 **Extends as far as Basildon, Bishops
Stortford, Harlow, Hemel Hempstead, High
Wycombe, Hitchin and Luton. Staff based in
this area prior to 1 July 2003 receive an
allowance of £1,745. New staff receive £960
Sellafield London 4,725 (4,620) Yes No
(formerly British Nuclear Fuels)
1.4.09

Oil, chemicals & pharmaceuticals

AAH Pharmaceuticals Romford, Ruislip 2,798 Yes No
1.4.08
BOC Gases Within M25 2,008 Yes No
Bulk drivers
17.6.08
IPA* 1,856 Yes No *Industrial, professional and administrative
1.6.08 staff

PG&P 1,782 Yes No

1.9.07
Special Products 1,968 Yes No **Currently under negotiation
1.6.08**
Sureserve 1,844 (1,792) Yes No
1.1.09
ExxonMobil International 0–4 miles 3,300 No No
1.12.99 4–16 miles 1,700
Leatherhead 1,500
Hess Central London office (the Strand) 3,000 No No
1.1.91
ICI Inner London 3,900 No
1.3.02

18 IDS HR Study 904 • October 2009

 Company practice

Organisation & effective date Location Allowance Pen Enh Other information
Kodak Central London 3,461 (3,436) No No
1.1.09

Shell 0–4 miles 4,100 No No London-based staff work a 36¼-hour week

1.3.07 4 miles to border of London boroughs 2,080 compared with 37½ hours nationally
Beyond London boroughs up to 25 miles 990

Other manufacturing
Corus Millbank office 4,350 Yes No
1.10.06

Gallaher Weybridge 2,025 No No

Office staff
1.10.08

Imperial Tobacco 0–10 miles 3,326 No No

Sales staff 10 miles to M25 1,663
1.6.08

Solaglas London 2,805* Yes *Differential between general and London

General staff South East rate. Figure given is for the minimum starting
1.4.08 (mainly restricted to M25 area)** 2,400* rate for employees in grade P
**Applies to sales executives only
Contracting project staff London 6,247*
1.4.08

Construction
Electrical Contracting JIB Within M25 £1.55 to £1.64ph* Yes Yes *Differential between standard and London
5.1.09 (£1.49 to £1.57) rate for approved electricians. First figure
applies if company provides transport; second
figure, if individual provides own transport

Environmental Engineering Within M25 2,820* (2,700) *Minimum recommended figure

NJC It is up to individual employers whether the
Technical, administrative, clerical allowance is pensionable or enhanceable
and managerial staff
1.1.09

Heating, Ventilating and
Domestic Engineering JCC
Craftsmen/installers
6.10.08
Daily travel allowance* *This higher scale of daily travel allowance,
Direct distance from residence to job: introduced in April 2005, is payable only to
0–15 miles £6.69 a day those operatives whose permanent home
15–20 £9.13 a day address and centre are within the M25
20–30 £12.97 a day Operatives who qualify to receive it may work
30–40 £15.73 a day at jobs within or outside the M25
40–50 £18.59 a day Operatives who live outside the M25 can
qualify for a daily travel allowance if they are
required to travel to a job or lodge within the
M25. These rates (from 3.9.07) are 15–20
miles, £2.44; 20–30 miles, £6.28; 30–40
miles, £9.04; 40–50 miles, £11.91

Thermal Insulation 0–35 miles £1.43 per day* *London supplement to main travelling
Contracting NJC (£1.26) allowances, which ranges from £2.87 (£2.49)
1.1.09 a day for distances between 5 and 10 miles to
£20.84 (£18.15) a day for a labourer and
£21.68 (£18.88) for a thermal insulation
engineer travelling distances between 30 and
35 miles. For distances over 10 miles the total
allowance comprises a taxable and a tax-free
element

Transport, storage & distribution

Civil Aviation Authority Inner London 3,997* Yes Yes *Differential for staff in inner London. The
Economic Regulation Group previous free-standing inner London
1.4.08 allowance of £3,720 was consolidated into
basic salary from 1.10.06

First Great Western Inner London 2,235 Yes No

1.6.08 Outer London 1,006
South East 479

IDS HR Study 904 • October 2009 19

London allowances

Organisation & effective date Location Allowance Pen Enh Other information
Home Delivery Network Inner London (Gatwick, New Cross, No No
30.6.09 Romford) £46.58pw (£47.05)
Outer London (Hitchin, Maidstone) £23.80pw (£24.43)
Wembley, Mitcham and Woodford £46.58pw (£45.45)
Reading £46.58pw (£43.51)
National Express East Coast Inner London* 2,360 (2,280) Yes Yes *Home station King’s Cross or Bounds Green
1.4.09 Outer London** 1,060 (1,022) Depot
**Home station Stevenage
Second year of a 2-year deal
Network Rail Inner London Yes No
1.4.09 (0–16 miles) 2,400 (2,250)
Outer London
(16–40 miles) 1,323 (1,240)
South East (M25 corridor) 859 (805)
Parcelforce
CWU grades Inner London 3,639 Yes No
1.7.08 Outer London 2,158

CMA grades Inner London 3,553 Yes No

1.7.08 Outer London 2,107
RAC Motoring Services London 1,804 Yes No
1.10.09 Feltham 1,500
Royal Mail Letters *No change in 2009 due to pay freeze
1.4.08*
Postal grades (single operational Inner London £88.42pw** Yes No **Differential over national scale
and operational support) Outer London £64.65pw
Admin grades:
Letter administrator 1 Inner London 4,425
Outer London 3,061
Letter administrator 2 Inner London 4,435
Outer London 3,067
Secretarial grades Inner London 4,348
Outer London 2,908
Process engineering grades Inner London 4,383
Outer London 3,027
Middle managers Inner London 3,976
Outer London 2,564
Guildford, Hemel Hempstead, Oxford,
Reading, Redhill, Sevenoaks, Tunbridge
Wells. Winchester 1,509
Cambridge, Milton Keynes, Slough,
Stevenage 1,161
Ashford, Chichester, Harlow &
Chelmsford, Salisbury, Worthing 775
RRIS supplements: Guildford, Hemel Hempstead, Oxford,
Postal grades (operational and Reading, Redhill, Sevenoaks, Tunbridge
operational support grades) Wells, Winchester £35pw No No
Cambridge, Milton Keynes, Slough,
Stevenage £27.50pw
Ashford, Chichester, Harlow &
Chelmsford, Salisbury, Worthing £20pw
Harrow, Kingston, St Albans, Watford £10pw
Bromley, Sutton, Twickenham,
Uxbridge £5pw
Admin grades Defined areas*** 570 ***Defined areas were introduced in 1989
when there were general recruitment and
Secretarial grades Inner London 540
retention difficulties. Areas were selected
Outer London 250
based on local unemployment rates and staff
Process engineering grades Defined areas 572 turnover
Postal and admin grades receive a Scottish
distant islands supplement of £803pa

20 IDS HR Study 904 • October 2009

 Company practice

Organisation & effective date Location Allowance Pen Enh Other information
South West Trains Inner London 1,949 (1,860) *Difference between pay for drivers and front-
Front-line staff (including clerical, Outer London 874 (834) line staff due to percentage increase applied
station, and revenue protection South east 415 (396) across the board
staff)
1.10.08
Drivers* Inner London 1,931 (1,851)
1.10.08 Outer London 866 (830)
South East 411 (394)

IT, telecommunications & media

BBC Metropolitan Police District £3,537 – for Yes No
1.8.08 employees earning
£25,000 and above;
£4,080 – for
employees earning
less than £25,000
BT 0–4 miles 3,116 Yes No *Includes the following locations: Bromley,
16.1.08 4–18 miles* 1,509 Byfleet, Cheshunt, Chigwell, Dartford,
Leatherhead, Reigate, Romford, St Albans,
Staines, Uxbridge, Watford, Welwyn Garden
City
In the future, increases to London weighting
will be 75% of the percentage increase
agreed at the annual pay review

Other services
British School of Motoring Greater London 3,061 Yes No
1.1.08 Home Counties 1,581
Camelot Central London office 3,500 No No
1.4.02
Jarvis Hotels South East (Central London and Yes Yes *The London differential is only paid to
15.10.06 M25 hotels) 14pph* employees in the lowest grade
Otis Channel Islands 4,810 (4,774) Yes No
1.9.09 London branches 2,704 (2,684)

Not-for-profit
Advance Housing & Support Outer London 1,483 Yes Yes
1.4.07 Inner Fringe & Home Counties 1,051
Age Concern England Norbury 2,972* (2,935) Yes Yes *Former freestanding allowance consolidated
1.4.09 into basic pay from 1.4.09
Barnardo’s Inner London 3,299 (3,266) Yes No
1.4.09 Outer London 1,755 (1,738)
Inner Fringe 798 (790)
Outer Fringe 555 (550)
Blue Cross London (Victoria, Merton, 3,506* (3,371) No No *An extra £1,219 (£1,172) is also paid to
1.1.09 Hammersmith) employees earning under £24,000 (£23,435)
**For employees earning less than £18,278
Regional allowance (Burford, 366** (352)
(£17,575)
Cambridge, Kimpton, Lewknor,
Northiam, Southampton)
British Association for London 3,267 (3,181) Yes *Currently under review
Adoption & Fostering
1.4.08*
Choice Support Inner London 2,600 Yes No An overtime rate of £8ph is paid in London,
1.10.08 Buckinghamshire 2,000 Bucks and Hants, compared to £7 elsewhere
Hampshire 2,000
Citizens Advice London 3,434 (3,340) Yes Yes *Currently under negotiation
Head office staff
1.8.08*
Help The Aged Within M25* 5,135 (5,027) Yes** Yes *Help the Aged’s head office is located in
1.5.09 London N1
**Optional

IDS HR Study 904 • October 2009 21

London allowances

Organisation & effective date Location Allowance Pen Enh Other information
Johnnie Johnson Housing Hertfordshire 6.3% of basic salary Yes Yes

NSPCC Inner London 3,267 Yes No

1.4.08 Outer London 1,737
Inner Fringe 789
Outer Fringe 549

Oxfam 0–5 miles 3,010 No No *Only paid in full to those earning up to

1.9.08 5.1 miles to M25 1,930 No No £20,160 working in areas with a high cost of
‘Hot spots’ 1,300* Yes No living

Remploy Within M25 and Leatherhead 1,378 Yes No

All staff
1.7.05

Rethink Inner London 3,111 Yes Yes

All staff Outer London 1,657
1.4.06

RNIB Inner London 3,299 (3,267) Yes No

1.4.09 Outer London 1,755 (1,738)
Inner Fringe 798 (790)

RNID Inner London 2,750* Yes Yes *Differential over national pay rate.
1.4.02 Outer London 1,100 Allowances were incorporated into basic pay
from 1.4.05

Save The Children Fund

Former freestanding allowances of £3,197 for inner London, £1,694 in outer London, £766 for inner fringe and £527 for outer fringe consolidated into basic pay from 1.4.09.
Starting salaries and pay increases will reflect regional employment markets.

Shaftesbury Society Inner London 3,197 (3,150) Yes Yes

1.4.09 Outer London 1,694 (1,669)
Inner Fringe 766 (755)
Outer Fringe 527 (519)

Turning Point Inner London (inside London Boroughs) 3,561 (3,468) Yes Yes
1.4.09 Outer London (within M25) 1,689 (1,641)
Fringe 708 (687)

Victim Support Central London 2,800 Yes Expressed as a London salary differential
1.4.07 Outer London 1,800

Public services
Acas London 4,000* Yes Yes *Differential between London and national
1.8.04 scales at each step

Arts Council England National office (Westminster) & London 3,470 Yes
1.4.09 Arts office (Farringdon)

Corporation of London Inner London (0–6 miles) 4,730 (4,610) Yes No *Currently under review
Non-resident staff Outer London (more than 6 miles) 2,840 (2,770)
1.8.08*

Resident staff Inner London (0–6 miles) 4,200 (4,100)

1.8.08* Outer London (more than 6 miles) 2,540 (2,480)

Department for Business,
Innovation & Skills
(formerly Department for
Business, Enterprise and
Regulatory Reform)
1.8.03*
London differential** 3,500 Yes Yes *Currently under review
**Differential between London and national
scale at all points
Market-related pay enhancements are paid to
staff in specialist roles actively using certain
skills

Department for London differential* 2,518 to 5,820 Yes Yes *Differential between London and national
Environment, Food and Rural scales depending on grade
Affairs
Pay ranges A–J
1.7.09

22 IDS HR Study 904 • October 2009

 Company practice

Organisation & effective date Location Allowance Pen Enh Other information
Department for Work and Inner London* 3,490 to 5,280 Yes Yes *Differential between London and national
Pensions (3,460 to 5,220) scales based on maximum payment for each
Admin assistant (min) to grade 6 Outer London** 2,340 to 4,310 band, depending on grade
(max) (2,320 to 4,260) ** Covers areas within 20 miles of Charing
1.7.09 Specified location pay zone (SLPZ)*** 1,840 to 3,830 Cross
(1,820 to 3,790) ***The SLPZ zone includes the following
South East locations: Abingdon, Aylesbury,
Bedford, Biggleswade, Bletchley, Brighton,
Cambridge, Chesham, Didcot, Dunstable,
High Wycombe, Luton, Milton Keynes,
Newbury, St Neots, Swindon, Witney. Many of
these sites previously received recruitment
and retention payments
Employees work 36 hours in London, 37
elsewhere
Department of Health Inner London differential* £3,350 (£3,200) Yes Yes *Differential between London and national
1.8.09 Outer London differential £1,675 (£1,600) pay scale
Environment Agency Inner London 3,372 (3,306) Yes No
1.7.09 Outer London 1,672 (1,639)
Fire Service Up to former GLC boundary 4,959 (4,840) Yes No *Currently under review
1.7.08*
1.9.03 Surrey 1,213
1.4.09 Langley & Slough 790 (769)
Bracknell, Maidenhead & Windsor 550 (535)
Further Education Inner London 2,864 ** (2,775) Yes Yes *The Association of Colleges (AoC) no longer
Lecturers Outer London 1, 878 (1,820) sets London allowance figures. Colleges may
1.10.08* Fringe 740 (717) choose to increase their allowances in line
with the annual pay award but there is local
variation
**The figures given here were derived by
applying every AoC-recommended increase to
basic salary since the last time separate
London weighting figures were published in
2002. They then stood at £2,385 (inner
London), £1,566 (outer London) and £616
(fringe)
Health and Safety Executive London weighting 3,837 (3,762) Yes No Employees work 41 hours gross in London,
1.10.08 42 elsewhere
HM Land Registry London differential** 3,060 to 3,978 Yes Yes *Currently under review for 2009
Registration assistant to senior (3,000 to 3,900) **Differential between London and provincial
registration administrator Inner London (Holborn) 2,448 (2,400) Yes No scales
1.6.08* The inner London allowance is paid in
addition to the London scales
HM Revenue & Customs London differential** 2,186 to 5,498 Yes Yes *Currently under review
HMRC harmonised pay scale (2,596 to 5,337) **Differential between London and national
Administrative assistant to large scales based on a minimum payment for each
business team leader pay band
1.6.08*
Home Office London differential* 535 to 3,590 Yes Yes *Differential between London and national
Administrative assistant to Grade 6 (526 to 3,535) scales depending on grade (based on ‘target
1.7.09 rates’), paid in addition to the London location
allowance. There are separate pay ranges for
staff based at Gatwick.
1.7.08 London locational allowance: Recruitment and retention allowances may be
Inner London 3,020 paid to recruit to specialist grades with
Intermediate London 1,710 marketable skills or ‘pockets’ of problems in
Outer London 1,240 generalist grades
Employees work 41 hours gross in London, 42
elsewhere
Identity & Passport Service London differential* 3,910 to 6,008 Yes Yes *In April 2007, the IPS incorporated its
P01 to grade 6 (4,093 to 5,760) London location allowance into its pay scales.
1.8.09 The organisation now has separate London
and national pay scales for each grade – the
figures given are the differential in minimum
pay rates depending on grade

IDS HR Study 904 • October 2009 23

London allowances

Organisation & effective date Location Allowance Pen Enh Other information
Local Authorities Inner London* 3,299 (3,267) *The national agreement continues to set
1.4.09 Outer London* 1,775 (1,738) London fringe area allowances. The NJC also
Inner fringe* 798 (790) publishes advisory amounts for inner and
Outer fringe* 555 (550) outer London allowances for its subscribers
based on the former APT&C agreement

Locations are as follows:

Inner London: Camden, Hackney, Hammersmith & Fulham, Islington, Kensington & Chelsea, Lambeth, Southwark, Tower Hamlets, Wandsworth, Westminster
Outer London: Barking & Dagenham, Barnet, Bexley, Brent, Bromley, Croydon, Ealing, Enfield, Greenwich, Haringey, Harrow, Havering, Hillingdon, Hounslow, Kingston-upon-
Thames, Lewisham, Merton, Newham, Redbridge, Richmond-upon-Thames, Sutton, Waltham Forest
Inner fringe: Broxbourne, Dartford, Elmbridge, Epping Forest, Epsom & Ewell, Reigate & Banstead, Slough, Spelthorne
Outer fringe: Basildon, Bracknell, Brentwood, Dacorum, Chiltern, East Herts, Guildford, Marlow, Maidenhead, Mole Valley, Runnymede, Surrey Heath, St Albans, Tandridge,
Thurrock, Waverley, Windsor, Woking

Met Office Inner London (0–10 miles) 2,789 (2,695) No No *Currently under negotiation
1.7.08* Outer London (11–18 miles) 1,470 (1,420)

Ministry of Defence Inner London recruitment & retention Yes No From 1.8.07 all London-based staff not in
Non-industrial staff (RRA) allowance 2,700 (2,500) receipt of the London RRA receive an
1.8.09 additional 2.5% step on the first movement
Outer London RRA allowance 1,250 (1,200) towards creating a London pay lead

National Air Traffic Services Inner London 4,189 (4,067) Yes No *Paid to staff at a few of the organisation’s
1.1.08 Outer London 1,918 (1,862) more inaccessible sites
Remote Radio Station Allowance* 682 (662)

National Audit Office London differential 5,245 to 5,376* Yes Yes *Differential between London and provincial
Assistant auditor scales depending on scale point
1.4.09

National Health Service Inner London 20% of salary* – Yes No *The ‘high-cost area supplements’ introduced
1.4.09* minimum payment under Agenda for Change apply to all NHS
of 3,947 (3,855), staff, except those covered by the Doctors’
maximum of 6,080 and Dentists’ Pay Review Body and very senior
(5,938) managers
Employers also have scope to pay recruitment
Outer London 15% of salary – and retention premia. These can be awarded
minimum payment either on a national or local basis or both, but
of 3,339 (3,261) in total would not normally exceed 30 per
maximum of 4,256 cent of basic salary. They can be awarded on a
(4,156) short-term or long-term basis.

Fringe 5% of salary –
minimum payment
of 912 (891),
maximum of 1,581
(1,544)

Police London weighting 2,220 (2,106) Yes No Inspectors and chief inspectors have higher
Police officers London allowance 4,338* No No London pay scales
1.7.09 *Paid in addition to London weighting for
staff in post after 1.9.94. Staff in post before
1.4.01 Essex, Hertfordshire, Kent, Surrey, this receive a housing allowance (worth an
Thames Valley 2,000** No No average of £5,430 for Met Officers)
Bedfordshire, Hampshire, Sussex 1,000** Free rail travel is provided to serving officers
within 70 miles of London
Professional & support staff Inner London 3,379 (3,209) Yes No **Allowances payable to officers recruited
(Metropolitan Police) Outer London 1,836 (1,745) since September 1994 not in receipt of
1.4.09 housing allowances (worth, for example, up
to £4,275 for officers in Essex and up to
£3,438 for officers in Surrey)
Special Priority Payments (SPPs) are available
and can range from £500 to £3,000 or up to
£5,000 in exceptional circumstances

Prison Service Band 1 4,250 Yes No

1.4.07 Band 2 4,000
Band 3 3,100
Band 4 2,600
Band 5 1,100
Band 6 250

24 IDS HR Study 904 • October 2009

 Company practice

Organisation & effective date Location Allowance Pen Enh Other information
Prison Service (cont’d)
Locations are as follows:
Band 1: Brixton, Holloway, Pentonville, Wandsworth, Wormwood Scrubs
Band 2: Feltham, Huntercombe, Latchmere House, The Mount, Prison Service HQ (Westminster)
Band 3: Belmarsh, Bronzefield, Coldingley, Downview, High Down and Send South Central Area Office (Woking)
Band 4: Aylesbury, Bedford, Bullingdon, Bullwood Hall, Chelmsford, Grendon, Croydon HQ, Reading, Woodhill, South Central Area Office (Aylesbury)
Band 5: Lewes, Winchester
Band 6: Birmingham, Bristol, Littlehey, Long Lartin, Onley
Probation Service London 3,800 (3,700) Yes Yes
1.4.09
Sixth-Form Colleges Inner London 3,508 (3,424) Yes *Currently under negotiation
Teachers Outer London 2,338 (2,282)
1.9.08* Fringe 926 (904)

Support staff Inner London 3,348 (3,195)

1.9.08 Outer London 1,854 (1,697)
Inner Fringe 863 (769)
Outer Fringe 619 (531)
Teachers (E&W) Inner London 4,898 to 7,763* Yes Yes *Pay differential with national rates (main and
1.9.09 (4,373 to 7,298) upper pay scales) for qualified classroom
Outer London 3,450 to 3,594 Yes Yes teachers – figures given are the differential for
(3,373 to 3,515) the lowest (M1) and highest (U3) grades
Fringe area 1,015 to 1,016
(992 to 993)
‘Excellent teachers’ Inner London 8,384** (5,382) **From 1 September 2008, excellent teachers
1.9.09 Outer London 3,881 were paid a spot salary within a range. The
Fringe area 1,097 figure given is the differential in maximum
salary
The five fixed levels of recruitment and
retention allowances were abolished from
1 April 2004. School governing bodies are
now responsible for such payments and can
set the exact level of these as they see fit,
although they are intended to be ‘one-off’
payments or for a fixed period only
The inner London pay spine covers staff teaching at schools in inner London and some outer London boroughs. It covers Barking & Dagenham, Brent, Camden, Ealing, Greenwich,
Hackney, Hammersmith & Fulham, Haringey, Islington, Kensington, Lambeth, Lewisham, Merton, Newham, Southwark, Tower Hamlets, Wandsworth and Westminster
The outer London spine covers schools in Barnet, Bexley, Bromley, Croydon, Enfield, Harrow, Havering, Hillingdon, Hounslow, Kingston-upon-Thames, Redbridge, Richmond-upon-
Thames, Sutton and Waltham Forest
The fringe area refers to Bracknell, Slough, Windsor and Maidenhead in Berkshire; South Buckinghamshire and Chiltern, as well as Basildon, Brentwood, Epping Forest, Harlow and
Thurrock and the districts of Broxbourne, Dacorum, East Hertfordshire, Hertsmere, St. Albans, Watford, Welwyn Garden City and Hatfield
Universities (New) & Inner London 3,267 (3,111) Yes No Allowances can vary greatly between different
Colleges of Higher Education Outer London 2,111 (2,010) institutions. These rates are typical amounts
Lecturers Fringe 818 (779) incorporating agreed increases
1.10.08* *As part of the 2006 national pay deal,
institutions retaining separate London
Admin, technical and computer Ex-ILEA 4,220 (4,019) weightings were recommended to increase
staff Other inner London 3,739 (3,561) these on average by the same percentage
1.10.08* Outer London 3,561 (1,889) uplifts applied to basic pay – 3% from 1.8.06,
Inner fringe 875 (833) 1% from 1.2.07, 3% from 1.8.07, 3% from
Outer fringe 627 (597) 1.5.08 and 5% from 1.10.08
Manual and ancillary staff Ex-GLC area 2,808 (2,674)
1.10.08* Inner fringe 903 (860)
Outer fringe 636 (606)
Universities (Old) 0–5 miles 2,262 Yes No A number of universities are currently
Technical staff 5–10 miles 1,292 reviewing their London allowances on an
1.7.92 10–18 miles 937 independent basis and some already pay staff
above the nationally agreed rates
Other staff including academics 0–18 miles* 2,134 *Including Royal Holloway and Bedford New
1.7.92 College (Egham, Surrey)

Valuation Office Agency London differential 2,330 to 6,717 Yes Yes *Differential between London and provincial
Band 6 (min) to Band 1 (max) (within M25)* (2,255 to 6,585) scales, depending on pay band
1.8.08

IDS HR Study 904 • October 2009 25

London allowances

Organisation & effective date Location Allowance Pen Enh Other information
Valuation Office Agency Special circumstances location 1,200 Yes Yes **Differential over provincial scales for offices
(cont’d) allowance** in areas with recruitment and retention issues
in certain pay bands. Offices in this category
Inner London Premium Payment 1,050 Yes Yes are located in Aylesbury, Bristol, Cambridge,
(0–5 miles) Guildford (Godalming), Oxford, Reading and
Tunbridge Wells
Band-specific allowance for band 3 500 Yes Yes
staff in London

Band-specific allowance for band 3 250 Yes Yes

staff in provincial offices

Vehicle Operator Services Within M25 area 4,000 Yes

Agency
1.8.06

26 IDS HR Study 904 • October 2009

 October 2009
*256177*

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