Public Sector Pay

Chris Stephens Excerpts

Monday 4th December 2017 Westminster Hall

[Chris Stephens (Glasgow South West) (SNP)]

It is a pleasure to see you in the Chair, Mr Stringer. As the Member of Parliament for Glasgow South West, which the House of Commons Library informs me has a bigger percentage of public sector workers in employment than any other constituency in these islands, as a proud member of Unison and former activist and treasurer for the Glasgow city branch, and—I refer to my entry in the Register of Members’ Financial Interests—as chair of the Public and Commercial Services Union parliamentary group, I very much welcome the debate. As someone who was a public sector worker for 25 years, I hope to bring stories of my experience in that field.

It has been an excellent debate, and I want to mention a number of contributions. The debate was led superbly by the hon. Member for Warrington North (Helen Jones), who discussed the plight of public sector workers, the impact of the public sector pay cap on the economy, which I want to come to later, and the fact that all nations and regions of the United Kingdom are affected. She also rightly mentioned the physically taxing nature and environment of public sector work. She referred to binnies, and it may be of interest to her that I found, when doing my research, that refuse collectors have suffered a real-terms pay cut of £2,064 a year, which I believe is a disgrace.

The hon. Member for Merthyr Tydfil and Rhymney (Gerald Jones) mentioned the impact in Wales and the devolved Administrations, which I agree with. The hon. Member for North Tyneside (Mary Glindon), who is vice-chair of the PCS parliamentary group, mentioned quite rightly the PCS ballot and the complete dissatisfaction of civil servants in the UK. I hope to mention that too in my contribution. The hon. Member for Wolverhampton South West (Eleanor Smith), who is a former president of the trade union that I am a proud member of, mentioned the impact of the public sector pay cap on nursing. My hon. Friend the Member for North Ayrshire and Arran (Patricia Gibson), in a typical tour de force, talked about the impact on the teaching profession. The hon. Member for Birmingham, Edgbaston (Preet Kaur Gill) mentioned the impact on nursing.

The hon. Member for York Central (Rachael Maskell) said that this will increase the gender pay gap. I agree with that point and hope to mention it. The hon. Member for Birmingham, Erdington (Jack Dromey) gave another tour de force, with very powerful examples of public sector workers dipping into their own pockets to help users of public services. My hon. Friend the Member for Glasgow East (David Linden) talked about the impact on firefighters. The hon. Member for North West Durham (Laura Pidcock) quite rightly questioned whether the Government are comfortable with making people poorer. The hon. Member for Bedford (Mohammad Yasin) talked about the magic money tree, which I will come to. The hon. Member for Crewe and Nantwich (Laura Smith), a Unison comrade, questioned the idea that the country cannot afford a pay rise. Again, I agree with that and will come to it.

The hon. Member for Leeds North West (Alex Sobel) said that workers’ debt levels are on the rise, which is certainly the case. The hon. Member for Warrington South (Faisal Rashid) talked about the pressure on services. The hon. Member for Blaydon (Liz Twist), another Unison colleague who has replaced my good friend Dave Anderson, talked about recruitment and retention. That theme was picked up by the hon. Members for Enfield, Southgate (Bambos Charalambous) and for Reading East (Matt Rodda). Last, the hon. Member for Liverpool, Walton (Dan Carden) reminded us quite rightly that all of us have family and relatives who work in the public services.

That was in contrast to the lack of voices from the Government Benches, with one notable exception. I think we are all disappointed by that. They are obviously attending to affairs of state and constituency duties. We did not even hear the moderate voices of Conservatives from Scotland—a collection of individuals who have yet to realise that their hero, Alf Garnett, is in actual fact a parody.

[Luke Graham]

Will the hon. Gentleman give way?

[Chris Stephens]

I am more than happy to give way to Conservatives in a moment, but I want to develop this point. Cynics may believe that a political party that introduced in 1823 the Master and Servant Acts—legislation designed to repress working people and punish them for joining trade unions—would not be interested in issues affecting public sector workers, but I cannot believe that that would be the case.

[Luke Graham]

I thank the hon. Gentleman for giving way. He will appreciate that it was also Conservatives who introduced some of the first health insurance schemes and comprehensive education schemes in the last century. My specific point is that the pay cap was not an ideological point by the Conservative party; it was due to financial constraint at the time. As he knows, the pay cap was devolved in Scotland for a great number of years, so the criticism that he is levelling against the Westminster Government today should also be applied to the Administration in Edinburgh, who have held that pay cap, even though they have the power and the money to change it.

[Chris Stephens]

If the hon. Gentleman does not believe that the public sector pay cap was ideological, I really do fear for him and for his political analysis. Of course it was designed to be ideological. It was part of the cuts programme in the Budget. They kept boasting about the number—

[Alex Chalk (Cheltenham) (Con)]

Will the hon. Gentleman give way?

[Chris Stephens]

In a second; I will just finish answering that point before we have a jack-in-the-box routine. It is good we have finally woken Conservative Members up.

Of course it was ideological—the Government kept talking about the savings it would bring to the Exchequer by imposing a public sector pay cap. I will talk about the effects on the devolved Administrations later on, but it might be very well for Conservative Members to read the petition itself. It says that the UK Government should be providing additional funding to fund the ending of the public sector pay cap and not allow local authorities and devolved Administrations to have to pick up the tab.

[Alex Chalk]

It is well known that Scotland now has tax-raising powers. If the Scottish Government want to pay their public sector workers more, why do they not just go on and do it?

[Chris Stephens]

Well, I would have thought a Conservative would know that the Scottish Budget follows the UK Budget. On 14 December, the Scottish Government—[Interruption.] The hon. Member for Cheltenham (Alex Chalk) can shout people down and follow the lead of the Scottish Conservatives that we have seen in the last six months, but he obviously has not read the petition. We are debating a petition that says additional funding should be made available by the UK Government for this. As I said, a local authority, a health board or a devolved Administration should not be clearing up the mess of this Government, who continue to impose poor wages on public sector workers.

[Patricia Gibson]

Does my hon. Friend, like me, despair at the fact that there has been a £3.1 billion cut to Scotland’s budget since 2010? It is appalling that people representing Scotland in the Chamber today are attempting to ignore that.

[Chris Stephens]

My hon. Friend is right. The facts speak for themselves.

I am reminded of the speech I made in the Chamber less than two weeks ago on the Budget, in which I said:

“The only difference between this Chancellor and the previous one is that of style, not substance. Where George Osborne could best be described as a tin of gloss, superficially painting over the cracks in our broken economy, the current Chancellor is the tin of matt, hoping to hide the worst lumps and bumps with repeated applications of more of the same. Either way, they are both the same shade of Tory austerity blue”.—[Official Report, 23 November 2017; Vol. 631, c. 1255.]

As a former treasurer of Glasgow city Unison, I know all too well that trade unions have a welfare fund, which is an important aspect of membership and the recruiting of public sector workers. That branch’s accounts show that from 2010 to 2015, there was a year-on-year increase in spending of that welfare fund. Is that because the pay did not quite match the increases in food, housing and fuel costs? Of course it is.

Today, the average household has lost £7.74 per week due to higher prices for goods, including bread, milk and cheese. The Trussell Trust statistics tell us that in 2010, it delivered 61,400 emergency food parcels to hungry people. Today’s figure, which the Trussell Trust released last month, is 1,182,594 food parcels. All the evidence suggests that many of those going to food banks are, in actual fact, public sector workers.

Despite all the hints, the Budget failed to lift the public sector pay cap. With inflation at a five-year high of 3%, the value of public sector wages has collapsed. In 2017, the civil service people survey, referred to by the hon. Member for North Tyneside, has shown that satisfaction with pay and conditions has fallen and now stands at 30%.

The Government’s solution is to park the issue with pay review bodies. The problem with that approach is that 55% of public sector workers in the UK are not covered by a pay review body. They include jobcentre workers, who administer our social security and pensions system; those who staff our borders, working in immigration and asylum services; civilians in the Ministry of Defence, providing equipment and support to our armed services; and, of course, workers in the national health service and local government.

In November 2015, I secured an Adjournment debate to demonstrate the low pay in the Department for Work and Pensions. Over 40% of its employees were receiving tax credits. As a result of that debate, the Government had no option but to negotiate with the PCS a wage rise for staff in that Department.

Of course, there is the Treasury pay remit, which covers about 400,000 workers. This is the so-called delegated pay system—a notional arrangement whereby Departments and agencies are individual employers responsible for negotiating pay and conditions. Although the remit is “guidance” for civil service departmental employers and other bargaining units, it does set a pay cap framework.

That was not always the case. In fact, national pay bargaining was first introduced in the civil service in 1919, and that position held for more than 70 years until the then Conservative Government, over a period between 1994 and 1996, broke it up and delegated responsibility to individual departmental employers. The reality is not only that it is incredibly wasteful and time consuming to hold hundreds of sets of negotiations about an issue decided and controlled centrally, but that that has led to inequalities whereby staff at similar grades across Departments, and even across agencies within the same sponsor Department, are paid vastly different salaries.

A real danger of the Government’s current approach is that it will increase the gender pay gap, because it is clear that so far the Government have announced the ending of the pay cap for those services that are male dominated, and those Departments that are female dominated do not yet see evidence that the public sector pay cap will be lifted. That is a very dangerous route for the Government to go down.

[Luke Graham]

Will my hon. Friend give way?

[Chris Stephens]

I am not your friend, but I will give way.

[Luke Graham]

I thought we got on so well! I thank the hon. Gentleman for giving way to me a second time. I supported the pay cap review, both in London and in Edinburgh, as did many Government Members, and my right hon. Friend the Chief Secretary to the Treasury has announced the lifting of the pay cap to allow flexibility. My question to the hon. Gentleman—perhaps he is coming to this—is: what should the percentage actually be, and can he give us a trailer of what will be announced in the forthcoming Budget at Holyrood?

[Chris Stephens]

The last point is well above my pay grade, but I will say this to the hon. Gentleman. It is not for me to determine what the percentage is. That should be negotiated. But the Government should not impose a cap of 1% and then say to individuals, “It’s either that or hit the cobblestones and take industrial action,” particularly given that they passed anti-trade union legislation—the Trade Union Act 2016—making industrial action even more difficult on a national scale.

There is a clear and sustained argument about the clear economic benefits of lifting the public sector pay cap. There would be a positive stimulus in the economy through increased household consumer spending. That would be likely to increase GDP and tax receipts, reducing the overall cost to Government still further. Estimates show that the effect of increased public sector pay would be similar to that of a decrease in income tax. The findings by the TUC and the Institute for Public Policy Research show that the significant portion of funding required to lift the public sector pay cap would in fact be returned to the Treasury almost immediately in the form of higher tax receipts and lower welfare payments. The initial cost per year in 2019-20 of uprating public sector pay in line with the consumer prices index for two years would be £5.8 billion compared with the cost had the cap remained in place. However, that drops to £3.55 billion once higher receipts from income tax and national insurance and lower welfare payments for means-tested benefits are taken into account.

It will be left to the devolved Administrations to take a different path. The Scottish Government have said that they will remove the 1% pay cap. This petition calls for the UK Government to fully fund a pay rise. I say again that it should not be left to a Department, a devolved Administration, a local authority or a health board to find the money from its own resources. Should the Government not look positively on this petition, I can guarantee the Minister that Scottish National party MPs will put pressure on the Government to ensure that they do that, and we will continue to campaign for public sector workers, not just in Scotland but across these islands.

--- Later in debate ---

[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.

--- Later in debate ---

[Andrew Jones]

I will get going first, and then I will come back to the hon. Gentleman.

Members also raised the paradise papers—the tax evasion papers. We have not actually seen those papers yet, because they would not be provided to Her Majesty’s Revenue and Customs, but the point remains. Should we be bearing down on anybody who is not paying their fair share of taxes? Absolutely, and that is why this Government have taken more action to do so than any other Government in history and have raised £160 billion from it since 2010.

Many Members have paid tribute to those in our public services, and I would simply agree. Within our society, public sector workers are among the most hard-working, talented and committed people. There are more than 5 million public sector workers right now, right across the UK. They carry out essential roles: they keep our streets safe; they teach our children; and they work day and night in our hospitals. At Christmas time in particular, they will be working when many others are enjoying time off with their families, and we should pay tribute to them for that and recognise their contribution. We should also recognise the contribution of those working overseas, who see their families even less frequently. The hon. Member for Warrington North (Helen Jones) said that they go the extra mile and deserve respect, and I entirely agree. But the right hon. Member for Warley (John Spellar), who I do not think is still in his seat, said that those on the Government side of the House see them as the enemy, and I am afraid that is just wrong. I do not think that anybody sees our public servants as the enemy.

[Chris Stephens]

Does the Minister believe that when a Government pay their own workforce decently the whole country benefits from the increased tax revenue generated and the increased spending it allows?

--- Later in debate ---

[Andrew Jones]

I am not entirely sure that the Labour election manifesto, which claimed that their policies were fully funded, was 100% accurate. Perhaps we could go back to some of the rather awkward interviews that the shadow Chancellor gave in the media over the weekend.

[Chris Stephens]

The Minister talked about the size of the pay bill. Have the Government done any research on its size and how much activity that has generated in the wider economy?

[Andrew Jones]

The hon. Gentleman asked whether the Government have done research on the size of the pay bill; I have just detailed the numbers. We are acutely aware of how public spending has an impact across the country. Any expenditure has an impact on the local economy as money recirculates, so of course that point is understood.