Runaway Public Sector Pay Is a Tory Myth

Taj Ali

Public sector workers aren't overpaid. In fact, successive Tory cutbacks mean that they earn less today than they did a decade ago – and the latest pay freeze will push many into hardship.

Last week, in his Spending Review, chancellor Rishi Sunak confirmed that there would be a pay freeze for the majority of public sector workers. As many have noted, the measure essentially imposes a real-terms cut to the wages of millions of public sector workers.

Public sector workers make up more than half of the key workers who were showered with praise earlier this year – including by the government – for the central role they have played in keeping the country going during the pandemic. As a result, the pay freeze has rightly been acknowledged as a kick in the teeth to teachers and other local authority employees.

To justify his decision, Sunak has played divide-and-conquer. Pitting public sector workers against private workers, he argues that he can’t justify a raise for the former while the latter face job cuts and reduced incomes.

This tactic is a way of shirking responsibility. It’s in all our interests to see public sector workers given an adequate wage: a real-terms pay cut in the public sector has implications for the private sector, too. Money is taken out of the national economy, meaning slower economic growth.

Perhaps more importantly, public sector workers have suffered ten long years of austerity. Prior to the pandemic, government policy already meant that public sector pay was falling behind the cost of living; the average earnings for public sector workers in 2020 were 1.5% lower in real terms than they were a decade before. Using the plight of private sector workers this year as an excuse to justify further hardship to public sector workers is deeply cynical.

When public sector workers have tried to fight back against these cutbacks, they have been hindered by anti-trade union laws. Just two years ago, PCS union balloting showed widespread support for strike action – but a strike proved impossible. The Trade Union Act of 2016 increased the turnout threshold for strike ballots to 50%, a standard which doesn’t apply to any election in British politics. As the long public sector pay squeeze has continued, the means to organise against it have been limited.

At the same time, austerity created desperate hardships for working-class communities up and down the country, who are still reeling from its impact, and those employed by local authorities were often worst affected. The government cut non-ringfenced grants to local councils (grants which can be used for whatever the council deems necessary) from £32.2 billion to £4.5 billion over just ten years.

My local council in Luton is facing this pay freeze for its workers in the context of potential bankruptcy, which has led to a series of cuts to public services too. In the absence of adequate government support, Luton relied heavily on the local airport for income, and the airports own financial challenges have had a drastic knock-on effect. The staff who maintain Luton’s struggling children’s and social care services will now be faced with both a real-terms salary cut and with further potential cuts in their professional service budgets, which will inevitably continue to make work much harder. For other councils, such as Croydon, bankruptcy is already a reality.

The public sector pay freeze has reignited debates about public spending. Some have argued that there is simply not enough money to fund a public sector pay rise, but nothing could be further from the truth. The ‘magic money tree’ does exist, but its branches only extend to those in the Tory inner-circle. The Conservative government had no trouble spending tens of millions outsourcing services to private companies like Serco, but wants us to believe that giving public sector workers a much-needed pay rise would be the source of the country’s financial difficulties.

What does cause financial difficulty is this government’s record in managing public goods. Earlier this year, the government awarded a £252 million contract for faulty PPE equipment to private investment firm Ayanda Capital, which is owned in tax haven Mauritius. The deal was overseen by Andrew Mills who, at the time, served as an advisor both to Ayanda’s board and to Liz Truss and the Department of International Trade. Perhaps if there was more respect for the public sector and its workers, such private sector debacles could be avoided.

If the government had the will to find the money for a public sector pay rise, it would. Politics is about choices. The government could, for instance, choose to clamp down on corporate tax avoidance and save the British economy billions. It speaks ambitiously about its ‘levelling up agenda’ to tackle inequality, but its own statistics show that public sector employment is highly concentrated in post-industrial areas in the North of England. Now it has delivered those areas yet another package of wage suppression.

Public sector workers have already faced a decade of real-term pay losses and have made huge sacrifices during the pandemic to keep the country going. They deserve more than a round of applause: they deserve a pay rise.