Public Sector Pay

Peter Dowd Excerpts

Monday 4th December 2017 Westminster Hall

[Peter Dowd (Bootle) (Lab)]

It is a pleasure to serve under your stewardship, Mr Stringer. Let me welcome Mr Dave Prentis, general secretary of Unison, who is sitting at the back of the room. His blood must be boiling at the complete lack of interest from the Conservative party in this debate. As a trade unionist for many years and someone who worked in the public sector, either in local government or in the NHS, I say that my heart goes out to those people who cannot afford to live despite the amount of work that they put in and their absolute commitment to public services.

I thank my hon. Friend the Member for Warrington North (Helen Jones) for achieving this debate, because we have been able to get a good feel for the situation and how our public sector workers are suffering out there. My hon. Friend the Member for Liverpool, Walton (Dan Carden) mentioned that the Police Federation had said that the Prime Minister was completely out of touch. That goes to the heart of one of the points that I want to make, but first I thank the 150,000 people who signed the petition—who took the time to put their name down. I thank them very much for that, and the trade unions that were backing the petition.

The Prime Minister is indeed out of touch with reality. The Police Federation was spot on about that. I will now ask people to use their imagination; I know it is a big ask for people to use their imagination in relation to the way the Prime Minister operates, but let me try to take them through it. Let us imagine that she is sitting there, with a smile on her face, reading the latest position paper from the Secretary of State for Health. All is well. The public services are well funded and the NHS is in rude health. The staff are all paid well; in fact, some of them are paid too much. There are no waiting lists for operations to speak of, or queues to see a GP. It gets better, in the Prime Minister’s mind. The Secretary of State for Business, Energy and Industrial Strategy reports that virtually everyone is in a secure, well-paid job, that the need for a national living wage is, for all intents and purposes, a thing of the past and that investment in our infrastructure is at historic highs. Of course the Secretary of State for Communities and Local Government, in the mind of the Prime Minister, reports that virtually the final brick for the 400,000th house to be built this year has just been laid.

Sustainable-trend economic growth is well above the OECD average, and productivity levels are going through the roof, as is wage growth. It seems improbable that things could get any better, in the Prime Minister’s mind, and then lo and behold, the Brexit Secretary pops his head around the door and tells her that the EU has agreed to all his demands, including tariff-free access to European markets, unbridled access to the single market and unprecedented immigration controls on EU citizens coming to the UK. He says, with only a scintilla of triumphalism, that the €70 billion divorce settlement cheque will be with the Treasury pretty soon, and the EU will pay the exchange control commission as well. Then he tells her that he is off to the Strangers Bar to have a drink with the Foreign Secretary and the Trade Secretary and she is welcome to join him.

This fantasy goes on. She apologises. She says she cannot go because she is waiting for a phone call from Donald Trump in which she plans to tell him in no uncertain terms that she is cancelling the state visit. She finally finishes off reading an email from the Secretary of State for Scotland informing her that Nicola Sturgeon told him that the SNP is disbanding because their claim for independence was simply a mistake and she is sorry for all the trouble caused. Then, with measured self-satisfaction, the Prime Minister rises from her seat, crosses the room, opens the wardrobe door, steps inside, pushes aside the fur coats and walks back into the world that we live in, the world in Westminster Hall, the world of reality. That is where she now is: the world of reality.

Over the past couple of hours of debate, many hon. Members have rightly paid tribute to the tireless work of our public sector workers, who go above and beyond the call of duty. However, these public sector workers, as has been suggested, do not need tribute from the Government; they need action. That is exactly what the Chancellor refused to do two weeks ago—absolutely no action whatsoever. I believe it is the Chancellor’s birthday today. He will not be getting many happy returns from public sector workers.

Some 5.4 million people work in the public sector, including friends and family members of mine, and of hon. Members across the Chamber, as has been alluded to. I would like to remind the Government what public servants do, because they seem to have forgotten. Public sector workers provide services that are crucial to the good running and order of the country. That has been touched upon. The armed services and the police protect our country and this House every day. My hon. Friend the Member for Warrington North alluded to that as well. They provide services that educate and look after our children, and care for our disabled citizens and our senior citizens. That was alluded to by my hon. Friend the Member for Birmingham, Erdington (Jack Dromey), who said that there is no one as noble as he or she who cares—I think that is more or less the phrase. I have said this before, but it is worth repeating: we rarely hear from and do not see many of the services until something goes terribly wrong, such as traffic accidents, floods, public health emergencies and so much more.

This debate comes as we approach the Christmas holidays, which is a tough time for public sector workers. It is a difficult time for our police officers. Many will brave the elements to ensure we are safe over the holidays. What about them? It is difficult for our dedicated NHS staff, who will work long hours, back-to-back shifts over Christmas into the new year. They do not want our thanks. That is dead easy. They want our support for a pay rise, which they have not had for years. It will be a difficult time for all public sector workers, who now face the lowest pay in comparison to the private sector for 20 years.

Despite claims to the contrary, the public sector pay cap is alive and well. It will continue to be so while the Treasury refuses to offer any new money for public sector pay rises and expects overstretched Departments facing further cuts to find the funding themselves. The Chancellor did not even bother to mention the public sector pay cap in his speech. Instead, he signalled yet another attempt to divide one group of workers against the other by restructuring the NHS. Time after time, he sets workers against one another. Under these plans, the Secretary of State for Health will attempt to manipulate recruitment and retention payments, to deny most NHS workers a decent pay rise, and refuse to lift the cap. It is the classic case of dividing the public sector from the private: the nurse against the manager, the admin worker against the manual worker, the north against the south, or the British worker against the foreign worker. The Tories use the same old method time after time. The Chancellor, the Secretary of State for Health and the other departmental Ministers should think again, because they are defending the indefensible. It is as simple as that.

The pay cap disproportionately affects women, who account for two-thirds of the public sector workforce and are already disproportionately affected by austerity. I ask the Government to think about that. Public sector workers will continue to lose out. As has been indicated today, research conducted by the TUC shows that if the Government keep the cap in place until 2020, midwives, teachers and social workers will all see real losses of over £3,000 a year.

[Mike Amesbury]

Does the hon. Gentleman agree that it is a scandal that one of the few growth industries in constituencies such as mine—Weaver Vale—is food banks? There has been a 30% increase in the use of food banks, and many users are public sector workers and women with young families.

[Peter Dowd]

My hon. Friend is spot on. Yesterday I was at Tesco in Litherland collecting for food banks. I would like to thank every single one of those people—we have all been there—who gave a tin of soup, a tin of beans, some fruit, some cornflakes, washing liquid, all sorts of things for those people. Thanks to those people for the 1.1 million food parcels going through.

[Alex Chalk]

My constituents at GCHQ believe in their national security mission and are immensely dedicated and skilful public servants, but those skills are much sought after in the private sector too. As the Government move away from the 1% national pay cap, does the hon. Gentleman agree that the need to address pressures on recruitment and retention in this vital national security sector should be borne in mind when future improved pay rates are set?

[Peter Dowd]

Any public sector worker, whether somebody in the military, a nurse, a refuse worker, a teacher or social worker, the five-odd million of them all deserve the pay rise. If the hon. Member’s constituents in GCHQ need a pay rise, I will support them—will he? I am not sure he will.

Meanwhile, nurses, firefighters and border guards will face losing more than £2,500. The cap is not working. There is a situation where households will have one partner working in the public sector and somebody else in the private sector. It is typical: divide the public sector from the private sector. Homes do not work like that. As I said, if one person is working in the public and another in the private sector, should one subsidise the other? Should the wife subsidise the husband? Should the brother subsidise the sister? No. It is absolutely iniquitous and it should stop now. The Government’s continued support of the cap is economically nonsensical. The party of economic confidence, of business—the nonsensical party as far as I am concerned.

[Chris Stephens]

Now that the Conservatives have found their voice in this debate, does my hon. Friend agree that we should find the elusive Conservative who agrees that the public sector pay cap should be lifted?

[Peter Dowd]

Trying to find a Conservative who practically believes that—you are more likely to find, if you will excuse the expression, rocking horse dung, quite frankly. There is more chance of finding that.

[Dan Carden]

It seems that the Conservatives want to be seen to be softening the language on austerity and on pay caps, but in truth we see no action. Does my hon. Friend agree?

--- Later in debate ---

[Peter Dowd]

My hon. Friend, as ever, has hit the nail right on the head. It is all talk and no action.

[Luke Graham]

I thank the hon. Gentleman for giving way, he is being too friendly this afternoon. He asks for a Conservative, well there is one stood right here who, along with many Scottish colleagues, supported the pay cap reviews in London and in Edinburgh. It was announced in the Budget that, certainly from a UK Government perspective, according to the pay boards, they will have the flexibility to lift those pay caps. If they want the evidence, we are right here.

[Peter Dowd]

The voice of the lonely. That is what I would say: the voice of the lonely.

The IPPR and Unison have both provided research that demonstrates that lifting the cap would bring higher tax receipts and lower welfare payments. That has been suggested and indicated by other Members, and they are absolutely right. It would bring real money into the economy. We know that. Why do the Tories not accept it? Let me be clear, on cutting public sector pay, the Chancellor virtually stands alone. Ten years on from the international banking crisis, countries that instituted public sector pay freezes or pay cuts have all reversed them, including the likes of Germany and the United States. Once again, the Conservatives are left behind.

In their written response to the petitioners who triggered this debate, the Government said:

“We still need to deal with our country’s debts…to enable us to invest in our public services.”

They are not even doing that. Hon. Members should look at the Red Book: that is not being delivered. Again, they are the all talk, no action Government. They have not only borrowed more money than any other Government before, but have failed to invest in our public services and those who work in them. We all know it. The country will not run a surplus until 2030—batted off again—at the earliest, a full 15 years after the former Chancellor said the deficit would be eradicated.

So where are we? We cannot afford any rise for our public sector workers but, as has been alluded to, we can afford to relax the bank levy to the tune of the best part of £2 billion a year by 2022. We can also afford to relax corporation tax and other taxes for corporations worth the best part of £70 billion over the next five years. As has also been alluded to, we can afford to pay £3 billion for a botched EU Brexit that should have been sorted out months ago. That has cost the country because of the useless way the Government have dealt with it. We can afford, as we have found in the last two or three days, to pay out £2 billion to east coast line companies. We can afford that; just pick that up, it is no problem at all. We can afford to sell off the Royal Bank of Scotland at a loss of billions upon billions of pounds. The taxpayer picked up the bill for that, and it is the bank putting straight back into the hands of those who caused the problem in the first place. That is the reality, and as we come to the end of another miserable, cold, dark year under the Tories, we cannot afford to pay our public sector workers a decent wage.

I simply say, as I have said time after time and will continue to say: the sooner this Government get their marching orders, the better for all of us. I suspect the Government are in that position themselves, but I am not interested in the Government: I am interested in public sector workers.

--- Later in debate ---

[Andrew Jones]

I think that perhaps the hon. Lady is getting a bit carried away. We have no idea what the motives are for people being or not being at this debate. I have certainly been here in debates where there has been no Labour Member of Parliament, but I have not sought to make some kind of cheap political point off the back of it, because that is simply not appropriate and not reasonable.

To recap, the Government are acutely aware of how public sector workers form the backbone of our society and again I join Members in paying tribute to them. We have also had some questions about the reasons for pay policy. It is fair to remind the House that in 2010 we inherited the biggest deficit in our peacetime history. There was an urgent need to get public spending under some control, and that has been a key ingredient in returning our economy to health. The coalition Government implemented a two-year pay freeze, which has been mentioned several times by Members during the debate, but I remind the Labour party gently that it supported that policy at the time. The pay freeze was followed by a series of 1% pay awards for public sector workers. In the autumn Budget the Chancellor—he did mention this, I point out to the hon. Member for Bootle (Peter Dowd)—reconfirmed that under this Conservative Government the policy would end. It was a reconfirmation because that had been previously announced by the Chief Secretary to the Treasury in a statement on 12 September.

What does that mean? That means that for 2018-19 the Secretaries of State will have much greater flexibility in how they consider pay awards for public servants. I will return to the substance of the Chancellor’s announcement in a few moments, but first I will highlight the scale of the challenge. Public sector workers account for roughly £1 in every £4 that the Government spend, so we are dealing with some enormous sums of money here. The public sector pay bill in 2016-17 was £179.41 billion. That was an increase of 3.6% on the previous year, when it was £173.2 billion. There is a ginormous scale to the amount of money that has to be found. That leads me to one of the factors in determining pay policy: getting the right balance between finding the money and rewarding public servants for their vital work, while being fair to all taxpayers and ensuring that we return our public finances to balance.

[Peter Dowd]

In line 11 on page 4 of “Funding Britain’s Future”, Labour shows exactly how it would fund lifting the pay cap. Can the Minister be as explicit and comprehensive as Labour has been on this matter?