Budget Resolutions — House of Commons, 2017-11-27
Topic: Macroeconomics
Tanmanjeet Singh Dhesi (Labour, Centre-left): In 2011, the Conservative-led Government imposed a two-year pay freeze on public sector pay. In 2015, they imposed a maximum 1% rise for four years from 2016-17 onwards. The large number of letters and emails from my constituents in Slough highlight the strength of public concern. Indeed, an online petition launched by Unison calling for an end to the pay cap has more than 145,000 signatures. The Government have claimed that the pay cap has ended, yet the Chancellor announced nothing in his autumn Budget to give public sector workers the increase that they so deserve. The workers need an increase, and we all need them to have it. The Institute for Fiscal Studies has warned that if the cap remains, the public sector will "struggle to recruit and retain the workers it needs to deliver public services, and the quality of those services will therefore be at risk." Seven years into the public sector pay squeeze, our worst fears have been realised. Real-terms cuts to public sector pay are failing not just workers, but everyone who relies on these vital services. The cap and funding cuts have created a recruitment and retention crisis, meaning that we will all end up paying more in the end. The Government announced the cap and they have defended it on two grounds—that public sector pay remains attractive compared to the private sector, and that it is unaffordable to provide decent pay rises. However, neither argument stands. Just over a month ago, the Treasury’s own figures revealed that public sector wages had dipped below the private sector for the first time since before the financial crisis. Data showed that workers in the public sector were paid an average of 0.6% less than their private sector counterparts in similar positions, whereas the Treasury estimated in 2010 that public sector workers were 5.8% better paid than those in comparable roles in the private sector Recent research from the Institute for Public Policy Research has shown that if public sector pay was raised by inflation, 43% of the cost would be reclaimed by the Treasury through taxation, lower welfare payments and higher GDP growth—a boost of £800 million in the year 2019-20. Indeed, those sums could be reinvested in public services. If all 5 million public sector workers were granted a pay rise of 3%, the extra cost to the Treasury—over and above the Government’s already promised 1%—would be just over £3 billion a year. That is not a generous pay rise, and would not compensate for years of cuts in real wages. However, it would enable public sector workers to keep up with inflation. As if the pay cap had not crushed morale enough for these vital workers, the Government’s preparations for Brexit are placing additional strains on our public services. It is predicted that the extra inflation created by Brexit will cost the average public sector worker more than an extra £1,000 in real wage losses The UK’s public services keep the country on the road. Public sector workers already do more than anyone could reasonably ask of them. A pay rise for nurses, paramedics, fire officers and police officers is fair and affordable. I urge the Minister to take heed and do what is necessary for our nation’s interest.