Starting salary negotiation advice in public sector

1. Get a bicycle
2. Stop nickel and dimeing the pay. If this job expands your career horizon, that is more important than the salary differences you mention.
3. Only you can balance the price of giving up the permanent job.

I work in one of the TUs and it's a nice place to work and very flexible if you have kids etc. I'd forgotten that proper coffee breaks existed where you can sit down for 15-20 mins elevenses in a canteen!! I'd be a grade or two higher than you.

If I were you, I don't think I would leave a fully permanent role though to take a 2.5 yr contract with no real uplift in earnings from day 1. If you jumped 8-10k more salary maybe it would be worth a punt but not for a tiny bit extra like you are talking about.

Depending on your age and family committments I would not think increasing your commute time is advisable at the present as fuel costs are going up every week at the moment. Do you like where you work ? - if so I would be inclinded to stay as a permanent, pensionable job is not easy to come by. I wouldn't advise giving it up for a specific purpose contract. However if you fancy a challenge and have no family committments it could be worth a try. Good luck.

Unless the position offered has the potential to make you more employable generally, I don’t see any upside. It’s been made clear that the job isn’t permanent.

It depends on your attitude towards potentially being let go in a couple of years. (Are you even sure you would be entitled to increments in the circumstances?) if it came to it, would the extra income in the short term compensate for having to find a job in a couple of years?

These are questions only you can answer.