Public Sector Pay Policy

Dan Poulter Excerpts

Tuesday 5th June 2018 Westminster Hall

[Luke Graham]

Yes, that is the point I am making. Recommendations will be forthcoming as part of the delegated pay reviews. I will come to the NHS shortly, but some of the NHS pay increases that were put forward have been funded. I am sure that the Minister will talk about funding in further detail.

[Dr Dan Poulter (Central Suffolk and North Ipswich) (Con)]

I am sympathetic to the points my hon. Friend raises, and I congratulate the hon. Member for Glasgow South West (Chris Stephens) on securing the debate. The pay review bodies historically have had their hands tied by the Government’s 1% pay cap. Is it time that the Government listened to those independent pay review bodies and implemented the meaningful increases they recommend, given that they have regard to recruitment and retention issues throughout the public sector and particularly in the sectors in which they recommend increases?

[Luke Graham]

I am a Back Bencher, not a Minister, so I am wary of committing the Government, but yes. My point is that where pay increases are recommended, the Government should fund them. Given that inflation is now increasing after a period in which people had to make sacrifices and we had to have more financial control, it is only fair that we ensure that there are sustainable pay increases across Departments and the different sectors of public life to reflect the increases in the private sector.

As real wages grow across the United Kingdom—much like the economy as a whole—I am glad that some hard-working public sector staff are reaping the benefits of the UK Government’s new, more flexible approach. For example, the pay rises of between 6.5% and 29% over the next three years in the NHS in England represent great progress. I welcome the fact that pay increases will be larger for lower-paid staff and smaller for those on the highest salaries. The hon. Member for Glasgow South West mentioned that those increases compare with increases of 3% plus 1% in Scotland.

We should be really clear, because sometimes we do not get the full story on Scottish issues. We speak in favour of some of the pay increases, but it is clear that the increases have been between 6.5% and 29% in the NHS in England, and 3% plus 1% in Scotland, as the hon. Gentleman said. We all face challenges—I just wish the Scottish National party would be more honest about those challenges.

--- Later in debate ---

[Dr Poulter]

The hon. Gentleman makes a fair point. I draw attention to my declaration in the Register of Members’ Financial Interests in making this intervention, but there has been great reliance on agency and temporary staff in both the education sector and the NHS as a result of the failure to retain and recruit staff in many areas. Does he agree that improving the terms and conditions and the pay of NHS staff would help to address that and would improve NHS finances overall, and that it is a short-sighted Treasury that does not take note of that point?

[Christian Matheson]

The hon. Gentleman is very experienced in matters of health and the NHS, and I suspect that what he says has real merit. Frankly, there are private companies offering bank staff across the NHS and making a large amount of money that would be better spent on frontline services and on paying staff more than the 1% pay cap. I thank him for his contribution.

We have all heard the heart-wrenching stories of public sector staff having to work two jobs to pay their bills or having to use food banks just to eat. This is modern Britain, where our greatest national treasure and our most valuable assets are treated with the same contempt and disregard that tax-dodging conglomerates have for our country. The Chancellor agreed to a below-inflation pay increase for NHS staff of 6.5% over three years on the condition,

“that the pay award enables improved productivity in the NHS”.

In real terms, that means forfeiting a day’s holiday each year for less money. Public sector workers have been cheated out of thousands, have had their pensions negatively affected and have now had their workload increased for less money.

If hon. Members visit any hospital, such as the Countess of Chester hospital in my constituency, they will see the NHS running on the goodwill of its staff. I know of health care assistants on wards who will work a 12-hour shift with barely a 10-minute break. They do that because they believe in what they are doing, but they are already working to maximum capacity and productivity, yet the Government still demand more to earn a pay rise that they have, in reality, already earned several times over. If hon. Members visit any school, where cuts still bite despite Government promises of more cash, they will find headteachers worried that any pay rise granted by the Government will have to be found from existing school budgets—the usual Conservative tactic of passing the responsibility on to someone else.

The hon. Member for Glasgow South West and my hon. Friend the Member for Easington referred to the study by the Centre for Labour and Social Studies on the terms of civil service pay rises. It is the same tactic. We have heard that the pay rise would have to come out of resource departmental expenditure limits for current spending; yet, as we have also heard, Departments as a whole will continue to suffer real-terms cuts to their RDELs up to 2020 and, of the principal Departments covered, only the Ministry of Defence will see an increase in this area of its budget. They made that point clearly, and it calls into question whether the Departments will be able to award pay rises of more than 1%; in fact, they might not even be able to raise that 1%.

Our police and prison service staff were offered a 1% increase and a 1% bonus, which will leave them with, yet again, a below-inflation increase. The chairman of the Police Federation said that staff had been left “angry and deflated” and had experienced a 15% decrease in real spending terms compared to seven years ago. Prisoner numbers are up and are increasing by an average of 3.5% per year, while the number of frontline prison officers, who have been offered a below-inflation 1.7% increase, has remained static.

The pay cap may have been verbally ended, but there is no evidence of its ending in the real world. Take-home pay, in real terms, has not increased. The quite shocking reality is that less than 4% of public sector workers will benefit from the Government’s decisions last September, and no further spending or new money has been made available in the autumn or spring Budgets. What makes one part of the public sector more worthy of being paid fairly than another? Even if the pay cap was genuinely lifted, it would not make up for the loss of thousands of pounds in the past—and indeed in the future, as a knock-on of the pay freeze now. One advantage of the pay cap is that, by keeping wages low, it makes it easier for parts of the public sector to be privatised, and for the privateers to make bigger profits off the back of low-paid but hard-working employees.

I will finish on a point also made by the hon. Member for Glasgow South West, first about pay in the private sector. For many positions in the private sector, public sector roles and pay increases are used as a comparator. Squashing public sector workers’ pay keeps some private sector pay deals flat as well. By crushing the pay of several million public sector workers, billions of pounds of spending power is taken from the private sector, as the hon. Gentleman said. I imagine that very few civil servants, school dinner ladies or police officers salt away their money in offshore tax havens. They spend it here in the UK in the private sector, which then pays the taxes to support public services. The pay freeze is therefore not just unfair—it is bad economics.

For the record, I will wind up by suggesting that the next Labour Government will lift the public sector pay cap for all public sector workers. We demand nothing less from this Government. In “Funding Britain’s Future”, Labour set aside a costed £4 billion to ensure that every public sector worker will get an above-inflation pay rise. The pay review bodies have been operating under the constraint of a Tory 1% cap for eight years. The Government must now lift the pay cap across the whole public sector, rather than playing one group of workers off against another.

--- Later in debate ---

[Oliver Dowden]

Forgive me; I thought I made that very clear at the beginning. When we inherited such an enormous deficit, we had to constrain public expenditure. Given that public sector pay accounts for a quarter of public expenditure, public sector pay had to play its part. That is why we initially introduced a freeze, followed by a 1% cap from 2013 to 2017.

Those were difficult decisions, and I genuinely pay tribute to all our civil servants who had to live within that constrained pay deal. However, it is worth making a few points in relation to that. The first is that the median civil service salary has increased by 15% since 2010, which is actually the same as in the private sector. Indeed, it is greater than other parts of the public sector.

Many hon. Members also raised the gender pay gap, which is important. Clearly, more progress needs to be made, but again it is worth looking at the figures. The pay gap for full-time employee civil servant salaries is 7.2% for the mean salary and 11% for the median. That compares with 13% and 15.4% in 2008, so we are making progress, but I do not deny that we need to progress further.

[Dr Poulter]

Adjusted for age, sex and other determinants, the pay gap is actually about 3%. I am sure my hon. Friend will want to clarify that point.

[Oliver Dowden]

I thank my hon. Friend for that helpful intervention; I am absolutely sure that he is correct.

Inequality was also raised, but again let us look at the actual figures. Income inequality is down since 2010, and is lower than at any point under the last Labour Government, so let us start with the facts of the situation. Not only that, but we have helped the lowest paid. For example, when the freeze was introduced, we ensured that anyone earning under £21,000 received at least a £250 increase in their pay.

In addition, as many of my hon. Friends have mentioned, we introduced the national living wage, the effect of which has been to benefit more than 2 million people, leaving them more than £2,000 better off since its introduction. As a result, figures from the last two years show that the lowest paid in our labour market received pay rises almost 7% above inflation, and many of those who benefited were our lowest-paid civil servants. Indeed, the overall picture shows the salaries for junior grades of civil servants remaining comparable to private or public sector equivalents, and in total remuneration both administrative assistants and administrative officers—the lowest paid in the civil service—are paid more than their private and public sector equivalents in London.