Public Services

Elizabeth Truss Excerpts

Tuesday 12th September 2017 Written Statements

[The Chief Secretary to the Treasury (Elizabeth Truss)]

Our public sector workers are among the most extraordinarily talented and hardworking people in our society. They, like everyone else, deserve to have fulfilling jobs that are fairly rewarded.

We take a balanced approach to public spending, dealing with our debts to keep our economy strong, while also making sure we invest in our public services.

The Government will continue to ensure that the overall package for public sector workers is fair to them and ensure that we can deliver world class public services, while also being affordable within the public finances and fair to taxpayers as a whole.

The last spending review budgeted for 1% average basic pay awards, in addition to progression pay for specific workforces, and there will still be a need for pay discipline over the coming years, to ensure the affordability of the public services and the sustainability of public sector employment.

However, the Government recognise that in some parts of the public sector, particularly in areas of skill shortage, more flexibility may be required to deliver world class public services including in return for improvements to public sector productivity.

The detail of 2018-19 pay remits for specific pay review bodies will be discussed and agreed as part of the Budget process and set out in due course.

Police and prison officer pay awards

The following sets out the Government’s response to the recommendations in the third annual report of the Police Remuneration Review Body (PRRB) and the sixteenth report of the Prison Service Pay Review Body (PSPRB) which were published today.

My right hon. Friend the Home Secretary (Amber Rudd) has decided to award officers in the PRRB remit group a pay award worth a total of 2% to each officer in 2017-18, consisting of a 1% consolidated pay increase in addition to a one-off 1% non- consolidated payment to officers in that remit group. This award will be funded within existing budgets.

The police pay award will be implemented with effect from 1 September 2017 as follows:

A 1% increase to base pay for all ranks.

An additional one-off non-consolidated payment to officers at federated and superintending ranks.

A 1% increase to the London Weighting payment.

A 1% increase to the Dog Handlers’ Allowance.

The Home Secretary’s full decision on all recommendations will be published alongside the PRRB report, on their website. These awards will be funded within existing budgets.

In addition, the supplement to the 2017 report of the senior salaries review body making recommendations on the pay of chief police officers has also been published today. The Home Secretary has accepted these recommendations.

My right hon. Friend the Justice Secretary (David Lidington) has accepted the PSPRB recommendations, giving all prison staff a pay increase. This pay award will help recruit and retain staff with the right experience and expertise to keep our prisons safe and secure. This is in line with the recommendation of the PSPRB. This award will be funded within existing budgets.

The prison officer pay award is as follows and will be implemented in October’s pay and backdated to 1 April 2017:

All prison officers and operational support grades in bands 2-5 will receive a consolidated increase of at least £400, including those on their pay band maximum.

All uniformed staff on ‘Fair and Sustainable’ terms in bands 2-5 below the maximum will also progress by one pay point.

Managers in bands 7-11 on ‘Fair and Sustainable’ terms will receive pay progression above 1% depending on their performance rating and place in their pay band.

Managers on closed grades will get at least 1%, and those below their pay scale maximum will get more.

I thank all three Chairs and members of the independent Pay Review Bodies for their hard work in producing these recommendations.

Copies of the reports are available in the Vote Office and will be published online.

[HCWS127]

Oral Answers to Questions

Elizabeth Truss Excerpts

Tuesday 18th July 2017 Commons Chamber

[Martyn Day (Linlithgow and East Falkirk) (SNP)]

1. What fiscal steps he is taking to help increase the average level of wages paid by employers.

[The Chief Secretary to the Treasury (Elizabeth Truss)]

The key thing that we can do to increase productivity is to ensure that we invest in education and improve skills. We have more people going to university and doing apprenticeships, and we are investing in our rail and roads.

[Martyn Day]

Unlike the Scottish Government, the UK Government voted for the public sector pay cut. Moreover, this Government’s so-called national living wage is not based on the cost of living. What new measures will this Government bring in to provide people with a wage that they can live on?

[Elizabeth Truss]

We have made sure that basic rate taxpayers are paying £1,000 less tax by raising the personal allowance. We are also introducing the national living wage, bringing in a £1,400 rise in take-home pay for the lowest earners.

[Mr Mark Harper (Forest of Dean) (Con)]

The important thing for ensuring that people get a wage from an employer is to make sure that they have a job. Will the Chief Secretary to the Treasury welcome the record fall in unemployment to a 42-year low, particularly among young people, which is giving them much better opportunities in Britain than those available in most other European Union countries?

[Elizabeth Truss]

My right hon. Friend is right. We now have the lowest levels of unemployment since 1975, thanks to the economic policies pursued by this Government to improve skills and infrastructure, and to take sensible decisions on public sector pay.

[Laura Pidcock (North West Durham) (Lab)]

As has been clearly demonstrated, the Government are celebrating falling unemployment without any critical analysis of the nature of the employment being created. Many residents of North West Durham are in work that exacerbates their financial difficulties because their pay is low, their terms and conditions are poor, and they do not have regular hours. Will the Minister update the House on the number of people who are currently working on zero-hours contracts? Will she also accept that looking at employment figures in a vacuum does nothing to help us to understand whether people are any more secure or any better off?

[Elizabeth Truss]

Fewer than 3% of people are on zero-hours contracts and, as Matthew Taylor recognised, many people want that flexibility so that they can combine their work with the other things in their lives. We need to ensure that people have the skills to get better jobs in the future, and that is exactly what this Government are investing in.

[Charlie Elphicke (Dover) (Con)]

Will the Chief Secretary to the Treasury join me in welcoming the fact that 75% of the 2.8 million jobs created since 2010 are full-time jobs, and that zero-hours contracts account for just 3% of all jobs?

[Elizabeth Truss]

My hon. Friend is absolutely right. Is it not amazing that not one Labour Member has welcomed the fact that we have the lowest unemployment since 1975, or that we have lower youth unemployment? In fact, the Opposition model their policies on countries such as Greece, which has exceptionally high youth unemployment, and they take for granted the progress that we have made over the past seven years.

[John McDonnell (Hayes and Harlington) (Lab)]

First, let me welcome any increase in jobs in our society, but when it comes to commenting on wages, does not the Chief Secretary to the Treasury agree that it ill becomes a multi-millionaire earning £145,000 a year, admittedly in a temporary job, and living in two grace-and-favour properties at the taxpayer’s expense to attack public sector workers—our hospital cleaners, nurses, teachers and firefighters—as being “overpaid”? Public sector workers’ pay has fallen on average by £4,000 in the first six years of this Government. One in five NHS staff are forced to take a second job, and teachers are facing a further cut to their salaries of £3,000 by 2020. Does she not think that the Chancellor should just do the right thing and apologise?

[Elizabeth Truss]

Yet again, the right hon. Gentleman is not giving the House the full picture of what is happening with public sector wages. Last year, teachers’ pay went up by 3.3%. More than half of nurses and other NHS workers saw a pay rise of over 3%, and the armed services saw a pay rise of 2.4%. The cleaner he talked about was employed not by the public sector but by Serco. The right hon. Gentleman needs to get his facts right.

[John McDonnell]

That is true—the Government privatised the jobs.

I note that the Chief Secretary did not dispute the fact that the Chancellor said that staff were overpaid. The Chancellor tried to justify his attack on public sector workers by trying the classic divide and rule between public and private sector workers, citing public sector pensions. Is the Chief Secretary aware that those supposedly generous pensions across several professions pay on average the princely sum of just £5,000 a year, and that low pay has forced many public sector workers to opt out of their pension scheme? Eleven per cent. of those in the NHS have opted out; if that figure continues to rise, the whole scheme could be undermined. Will the Chief Secretary recognise the damage that the Chancellor is causing and lift the pay cap so that public sector staff can have some hope of a fair wage settlement—and, yes, a decent future pension?

[Elizabeth Truss]

The right hon. Gentleman still has not acknowledged the truth of the figures that I cited—the 3% pay rise for over half of nurses and the 3.3% rise for teachers. He simply will not look at the facts. The reality is that public sector workers are, rightly, paid in line with the private sector to allow the public and private sectors to flourish so that we can create wealth in this country. In addition, public sector workers have a 10% premium on their wages in pension contributions, and that is in the Office for Budget Responsibility report.

[James Cartlidge (South Suffolk) (Con)]

2. What progress is being made on reducing the national debt.

--- Later in debate ---

[Diana Johnson (Kingston upon Hull North) (Lab)]

14. What assessment he has made of trends in the level of public sector pay since 2010; and if he will make a statement.

[The Chief Secretary to the Treasury (Elizabeth Truss)]

We hugely value the work of public servants—teachers, police and nurses. That is why they are paid in line with the private sector, and, in addition, receive a 10% increment, on average, for their pensions.

[Diana Johnson]

We all agree that MPs’ pay recommendations are decided independently and go through automatically. However, other public sector pay review bodies take into account Treasury submissions but then find that their recommendations are vetoed by Ministers. If it is good enough for Members of Parliament, why is it not good enough for nurses, the armed forces, firefighters and teachers?

[Elizabeth Truss]

We do take notice of what the independent pay review bodies say. We have just approved the recommendations of the teachers pay review body and of the nurses pay review body. Listening to their recommendations, the pay review body for the NHS said:

“We do not see significant short-term nationwide recruitment and retention issues that are linked to pay.”

We followed that advice and gave the pay accordingly.

[Alan Mak (Havant) (Con)]

Increases in the tax-free personal allowance since 2010 have put £1,000 into the pocket of each basic rate taxpayer, including those who work across the public sector. Will the Chief Secretary continue to help public sector workers to keep the money they earn, through lower taxes?

[Elizabeth Truss]

My hon. Friend is absolutely right. The worst thing that we could do is to support the Labour party’s policies, which would, according to the Institute for Fiscal Studies, lead to the highest levels of taxation in peacetime history.

[Tommy Sheppard (Edinburgh East) (SNP)]

19. I think the Treasury response today to the questions about the 1% pay cap are profoundly disappointing. This is the single biggest thing ensuring that inflation erodes living standards. It is impoverishing workers, and it is driving up consumer debt. When will the Treasury agree with the Foreign Secretary that the time has come to end this cap?

[Elizabeth Truss]

I point out to the hon. Gentleman that, in fact, teachers have seen a 3% pay rise, many nurses get progression pay and people in the armed forces get an X-factor supplement that is worth 2.4% a year. Their salaries are in line with private sector salaries. It would be wrong to have a significant differential between the public and private sectors, because we need businesses to thrive in addition to having well-funded public services.

[Several hon. Members rose—]

--- Later in debate ---

[Stephen Metcalfe (South Basildon and East Thurrock) (Con)]

T5. Will my right hon. Friend, for the benefit of the House, confirm the cost to the economy of cancelling student debt, say whether that is affordable and explain what effect it would have on the work we have done to reduce the deficit?

[The Chief Secretary to the Treasury (Elizabeth Truss)]

As the Labour party admits, cancelling student debt would cost £100 billion. The Opposition made that reckless promise, which would see the debt soar, during the election campaign, but now they say it is just an “ambition”. Are they going to say sorry to the people they made their promise to, and are they going to say sorry to the British public for threatening to bankrupt the economy?

[Alison McGovern (Wirral South) (Lab)]

Further to the questions asked by my hon. Friends the Members for Wakefield (Mary Creagh) and for Lewisham East (Heidi Alexander), will the Chancellor confirm, as he failed to do before, that the cost to us of Brexit will be as described by my hon. Friends some moments ago?

--- Later in debate ---

[Bill Grant (Ayr, Carrick and Cumnock) (Con)]

T8. Noting that the unemployment rate is at a 42-year low, may I inquire of my right hon. Friend what the effect has been on average personal incomes for workers in Ayr, Carrick and Cumnock—and, indeed, the rest of the UK—of increases in the minimum wage and the national living wage?

[Elizabeth Truss]

The increase in the national living wage to £7.50 an hour means that a full-time worker on minimum wages has had a pay rise of £2,800 since 2010. More than 150,000 low-wage workers in Scotland are benefiting from that extra money.

[Catherine McKinnell (Newcastle upon Tyne North) (Lab)]

The Tyne and Wear Metro is in urgent need of investment if we are to see the new rolling stock rolled out by 2021. What conversations has the Chancellor had with the Transport Secretary about funding that vital piece of infrastructure for the north-east?

--- Later in debate ---

[Margaret Greenwood (Wirral West) (Lab)]

The TUC estimates that nurses, firefighters and border guards face losing more than £2,500 in real terms by 2020. For ambulance drivers, who earn significantly below the UK average wage, the figure is more than £1,800. Does the Minister agree that it is about time that we gave hard-working public sector workers the pay rise they deserve?

[Elizabeth Truss]

The hon. Lady should be aware that more than half of nurses and NHS workers saw a 3% pay rise last year. She needs to check her facts.

[Stephen Hammond (Wimbledon) (Con)]

T10. Last night, I met a major financial institution. Does my hon. Friend agree that for London to retain its place as the leading financial centre we need a regulatory regime based on mutual recognition and an early-agreed transitional phase to provide certainty?

Childcare Services Roll-out

Elizabeth Truss Excerpts

Tuesday 18th July 2017 Written Statements

[The Chief Secretary to the Treasury (Elizabeth Truss)]

We know the cost of childcare is an important issue for working families—that is why we have made childcare more affordable, given parents more choice and raised standards of provision, supporting parents into work and helping them with the costs they face.

In total, the Government will provide over £6 billion of funding per annum in childcare support by 2019-20 to working families and those on low incomes. For parents across the UK, tax-free childcare will cut childcare costs by up to £2,000 per year for each child under 12 years old, or £4,000 per year for disabled children under 17 years old.

We introduced the childcare service on 21 April 2017 by accepting applications from parents of children under four years old (born on or after 1 September 2013). On 14 July the Government extended the service to a cohort of parents with children born on or after 1 April 2013 to ensure that these parents can access the 30 hours offer for their four year old child before the start of the school term in September. This enables even more families to benefit from the Government’s childcare offer and helps busy families with children under five who want to claim a 30 hours free childcare place for September.

The Childcare Choices website brings together all the Government’s childcare schemes in one place for the first time, and eligible parents can apply for tax-free childcare and 30 hours free childcare through a single and simple application.

They can apply for all their children at the same time once their youngest child qualifies, saving time and avoiding the need to provide the same information twice. All eligible parents will be able to apply for tax-free childcare by the end of 2017.

Parents can apply via the childcare service for both 30 hours’ free childcare and tax-free childcare. The application is straightforward and can be accessed via the childcare choices website at: https://www.childcarechoices.gov.uk/.

To date, over 150,000 parents have successfully applied to the service and over 45,000 childcare providers have signed up.

[HCWS68]

ECOFIN

Elizabeth Truss Excerpts

Tuesday 18th July 2017 Written Statements

[The Chief Secretary to the Treasury (Elizabeth Truss)]

A meeting of the Economic and Financial Affairs Council (ECOFIN) was held in Brussels on 11 July 2017. The UK was represented by Sir Tim Barrow (Permanent Representative of the United Kingdom to the European Union). European Finance Ministers discussed the following items:

Early morning session

The Eurogroup President briefed Ministers on the outcomes of the 10 July meeting of the Eurogroup, and Ministers discussed the current economic situation.

Current financial service legislative proposals

The Council presidency provided an update on current legislative proposals in the field of financial services.

Mandatory disclosure rules

The Commission gave a presentation on the proposal for a Council directive amending directive regarding the mandatory automatic exchange of information in the field of taxation in relation to reportable cross-border arrangements.

Presentation of the work programme of the Estonian presidency

The new Estonian presidency of the Council of the European Union presented their work programme for the next six months period.

Commission mid-term review of the capital markets union action plan

The Council endorsed Council conclusions on the mid-term review of the capital markets union action plan.

Non-performing loans

ECOFIN held an exchange of views on policy responses to the non-performing loans situation and endorsed Council conclusions.

[HCWS66]

Fiscal Risks Report

Elizabeth Truss Excerpts

Thursday 13th July 2017 Written Statements

[The Chief Secretary to the Treasury (Elizabeth Truss)]

The Office for Budget Responsibility (OBR) has today published its first fiscal risks report (FRR). The report highlights that although the Government have made significant progress in reducing the deficit, debt remains high leaving the economy and public finances vulnerable in the event of shocks. The FRR fulfils the OBR’s legal obligation to publish a statement setting out the main risks to the public finances at least once every two years. It was laid before Parliament earlier today and copies are available in the Vote Office and Printed Paper Office.

The Government welcome this first FRR which keeps the UK at the frontier of fiscal practice worldwide. The establishment of the OBR has ensured that policy is made on an unbiased view of future prospects, improving confidence in the fiscal forecasts, and the publication of this report represents a significant further step taken by this Government to enhance fiscal transparency and management. This Government’s commitment to fiscal openness was recognised by the IMF in its 2016 fiscal transparency evaluation which found the UK to be “at the forefront of fiscal reporting practices worldwide”. The publication of the FRR today addresses one of the recommendations of that evaluation as well as the findings of recent NAO reports on risks to the public finances. The Government will respond formally to the FRR within the next year, as required under the Charter for Budget Responsibility.

Over the past seven years, the Government have taken important steps to reduce the UK’s exposure to fiscal risks. The 2008 crisis was a dramatic illustration of the danger of ignoring potential threats to the public finances. Since 2010, the Government have reduced the country’s exposure to fiscal risks through cutting the deficit by three-quarters from its post-war high of 9.9% of GDP, while protecting public services and delivering improved outcomes across health, education and policing and overseen record levels of employment, with over 2.9 million more people into work. The Government have also delivered far reaching reforms to financial supervision which has significantly reduced the likelihood and impact of financial instability. Today, the Government are announcing a new approval regime for Government guarantees and other contingent liabilities representing a further enhancement to the UK’s public expenditure control framework which the IMF and other international commentators recognise as being one of the strongest in the world.

Despite this progress, the OBR’s report shows that the UK’s fiscal position remains vulnerable. The legacy of the great recession remains, with debt forecast to peak this year at almost 90% of GDP—its highest level in 50 years. The unprecedented deficit that the Government inherited in 2010, which the Government have been cutting since 2010, and which saw us spend £4 for every £3 we raised in tax, is the cause of the rapid increase in debt. This report examines a broad spectrum of risks, and illustrates the potential impact on the public finances of a number of these risks materialising at the same time through an innovative “fiscal stress test”. Failing to have a credible plan to get the debt down would expose the UK to greater risk, which could have devastating consequences for our public services in the event of a new shock. The report also highlights risks from an ageing society and the erosion of tax bases.

That is why the Government remain determined to learn the lessons of the past and bolster the UK’s fiscal resilience. The Government’s fiscal rules are designed to guide the public finances back to balance at a pace sensitive to the needs of the economy. The structural deficit must be below 2% of GDP and debt must be falling as a share of GDP by 2020-21. The OBR forecasts that the Government are on track to meet both of their fiscal targets and that debt will start falling as a share of GDP before the end of the decade. It is vitally important that we continue with our plan to get the debt to GDP ratio down to improve our resilience and address the risks highlighted by the report.

The Government are also working to ensure fiscal sustainability over the long term. The Government are taking important steps to enhance the UK’s long-run productivity. Since 2010 there has been over a quarter of a trillion pounds of public and private investment in infrastructure. Looking ahead, the Government are investing more in economic infrastructure, innovation and housing through the £23 billion national productivity investment fund by 2021-22. They are also transforming technical education for 16 to 19-year-olds through the introduction of T-levels, increasing by over 50% the number of hours of training, and including a high-quality three-month work placement for every student, giving young people the technical skills they need to succeed in the world of work, and businesses the edge they need to compete in the global economy. Stronger growth through raising productivity is the only sustainable way to deliver economic resilience, higher real wages and increased living standards in the long run.

[HCWS46]

ECOFIN: 11 July 2017

Elizabeth Truss Excerpts

Tuesday 11th July 2017 Written Statements

[The Chief Secretary to the Treasury (Elizabeth Truss)]

A meeting of the Economic and Financial Affairs Council (ECOFIN) will be held in Brussels on 11 July 2017. The UK will be represented by Sir Tim Barrow, Permanent Representative of the United Kingdom to the European Union. European Finance Ministers will discuss the following items:

Early morning session

The Eurogroup President will brief Ministers on the outcomes of the 10 July meeting of the Eurogroup, and Ministers will discuss the current economic situation.

Current financial service legislative proposals

The Council presidency will provide an update on current legislative proposals in the field of financial services.

Mandatory disclosure rules

The Commission will give a presentation on the proposal for a Council directive amending directive regarding the mandatory automatic exchange of information in the field of taxation in relation to reportable cross-border arrangements.

Presentation of the work programme of the Estonian presidency

The new Estonian presidency of the Council of the European Union will present its work programme for the next six-month period. The Council will exchange views on the work programme.

Commission mid-term review of the capital markets union action plan

The Council will be asked to endorse Council conclusions on the mid-term review of the capital markets union action plan.

Non-performing loans

ECOFIN will hold an exchange of views on policy responses to the non-performing loans situation. The Council will also be asked to endorse Council conclusions.

[HCWS36]

Public Sector Pay Cap

Elizabeth Truss Excerpts

Wednesday 5th July 2017 Commons Chamber

[John McDonnell (Hayes and Harlington) (Lab)]

(Urgent Question): To ask the Chancellor of the Exchequer if he will make a statement outlining the Government’s policies with regard to the public sector pay cap.

[The Chief Secretary to the Treasury (Elizabeth Truss)]

We all recognise that public sector workers do a fantastic job. Over the past seven years, we have seen major improvements in our public services. Crime is down, with a greater proportion of police on the frontline. More children are achieving higher standards at school and going on to apprenticeships and university. Our NHS is looking after more people than at any time in its history.

Government pay policy is designed to be fair to public sector workers, who work so hard to deliver these strong public services, but we must also ensure that we are able to provide those public services on a sustainable basis for the future. In many services, workers have received pay additional to the 1% national increase. Teachers had an average pay rise of 3.3% in 2015-16. More than half of nurses and other NHS staff had an average increase of over 3% in 2016. Military service personnel also saw an average additional increase of 2.4%. Salaries in the public sector remain comparable to those in the private sector. In addition, many people benefit from higher pension entitlements. They also benefit from the rise in the personal allowance, worth £1,000 to a basic-rate taxpayer.

We are currently completing the pay review process for 2017-18. We have accepted the pay review body recommendations made for doctors, the NHS and the armed forces. We will be looking very carefully at the recommendations on the remainder and making determinations in the usual way. As the Chancellor said on Monday, our policy on public sector pay has always been designed to strike the right balance of being fair to our public sector workers and fair to those who pay for them. That approach has not changed, and the Government will continually assess that balance.

[John McDonnell]

I welcome the right hon. Lady to her post, but when we ask a question of the Chancellor, we would expect the Chancellor to respond to that question. We simply wanted clarity on whether the pay cap is still in force. That is all we asked for.

The response that we have seen today confirmed what most commentators are now saying: this is not a Government; it is a Cabinet of absolute chaos. Let me explain that the existing Government policy, as set out in the comprehensive spending review 2015, due to be ratified today in the Supply and Appropriation (Main Estimates) Bill, is still a 1% pay cap, and this is the diktat to which the various pay review bodies are still working. In fact, they are written to and told that their proposals have to reflect

“the Government’s policy on public sector pay awards”.

Yet over the last week we have seen, to be frank, absolute confusion in government—total disarray. The question we are posing is, “Who actually speaks for the Government on this issue?” On the day of the Queen’s Speech, No. 10 was briefing out the end of austerity and the relaxing of the pay cap, only to be contradicted by an incandescent briefing from No. 11. Daily fearful of a putsch, No. 10 then backs down. For the Prime Minister it must be tough, living next to a disruptive neighbour you can’t stand, you try to get rid of, and you can’t get on with.

We then receive in the press the wisdom of the right hon. Member for Uxbridge and South Ruislip (Boris Johnson), who, according to a spokesperson,

“supports the idea of public sector workers getting a better pay deal”.

This is followed by his past campaign manager turned political assassin, the new Environment Secretary, who supports the putsch against the Chancellor. Then the whole process degenerates into farce when we have David Cameron, earning £100,000 a speech, telling us that the people who want more than 1% are “selfish”. The Chancellor has called for a grown-up debate. I agree. What we have seen are Cabinet Ministers scrapping in the school playground. Cut off from the real world that most people live in, the Chancellor has no understanding of why our public sector workers are so angry. They are angry because they have had enough of seeing tax cuts to the rich and corporations while their pay is being cut.

Can the Chief Secretary to the Treasury clarify how the Government’s estimates 2017-18, as per the Supply and Appropriation (Main Estimates) Bill on the Order Paper today, will accommodate the reported offer to the fire and rescue services, which, we are told, is subject still to Government funding? Moreover, if we are to see another Government U-turn, which in the case of public sector pay we would welcome, can the Government confirm how they will fund the £5 billion needed that they say would be saved by the 1% pay cap? Or are we being confronted with yet another uncosted commitment within weeks of a Parliament commencing? It’s the magic money tree again.

The Government’s own report on Monday showed how much doctors’ and nurses’ pay had fallen. Does the Chancellor think that is fair? Given that 20% more nurses left the nursing register than joined it this year, does the Chancellor agree with the chief executive of the Royal College of Nursing that

“For every day…the cap remains in place”

the profession is “haemorrhaging”?

Finally, given the chaos on the Government Benches over this policy, can the Chief Secretary tell us when an actual decision will be made about the future of the pay cap? Will public sector workers have to wait until the next Budget before finding out whether they will have decent pay for the next two years? Should not the Chancellor now write formally to the pay review bodies to say that they are free to do what is right by public servants and pay them a fair pay award this year?

[Elizabeth Truss]

I do not know whether to be disappointed or delighted that the shadow Chancellor does not want to see me at the Dispatch Box, but I am here today to answer his questions because I am responsible for this policy area, and I think that is entirely appropriate.

As has been outlined by the Prime Minister and the Chancellor already, our policy on public sector pay remains in place, because it is the responsible thing to do. It is the responsible thing to balance the importance of recruiting and retaining high-quality people in our public services with making sure that our public finances remain sustainable so that we can continue to see the improvements in our public services that we have seen under this Government.

Some of the shadow Chancellor’s comments were disingenuous. He did not reflect the fact—

[Hon. Members]

Withdraw!

[Mr Speaker]

Order. I know these matters pretty well by now. The right hon. Lady must resume her seat. I am sure that she has got a very versatile vocabulary, and she must deploy some other term. She cannot accuse a Member of being disingenuous; that is an imputation of dishonour. She has been in the House long enough to know that she should not say that. It is very simple, no debate required—a simple withdrawal. Thank you.

[Elizabeth Truss]

I do withdraw that, Mr Speaker, and apologise for it.

Perhaps the right hon. Gentleman was mistaken in what he said, because in 2015-16 we saw teachers get 3.3% worth of progression pay, we saw more than half of nurses and NHS workers get over 3%, and we saw military service personnel receive 2.4%. I therefore suggest that he include those facts in the figures next time he speaks. As for the fire service, he knows perfectly well that those pay policies are set independently and are covered within the local government budget.

I think it is wrong that we are hearing the Opposition talk down our public services when we are seeing huge improvements, we are seeing more people attracted into our public services, and we are seeing the best performance ever in our education system and our health system. As for uncosted commitments, the right hon. Gentleman has £60 billion worth.

The right hon. Gentleman asked about the pay review process. Well, the process is very simple. We have received recommendations from pay review bodies already this year. They make decisions based on the individual circumstances within those sectors. We have followed all of their recommendations. We will look at the further recommendations we need to make decisions on, and we will look at the balance between affordability and making sure that we retain and recruit high-quality public sector workers. This is the right approach. It is not saying that we are going to open up the cheque book, bankrupt our public services and see people lose their jobs, which is exactly what has happened in countries like Greece that took that approach and took their eye off the public finances. The right hon. Gentleman needs to take a more balanced approach in the way that he looks at this issue.

[Mr Speaker]

During the rather fractious proceedings to date, one Member has been the embodiment of calm and serenity. That Member should be imitated by others, and will now be called to contribute—Mr Kenneth Clarke.

[Mr Kenneth Clarke (Rushcliffe) (Con)]

Those are not adjectives that have been applied to me throughout my political career, Mr Speaker, but I am grateful to you for that credit. May I congratulate my right hon. Friend the Chief Secretary to the Treasury on straightforwardly restating the Government’s sensible policy on this issue? It is necessary as part of our ensuring, in this post-Brexit world, that we keep the economy on track; that steady, sustainable growth continues; and that we steadily eliminate the problem of debt and deficit that we inherited.

Does my right hon. Friend agree that if she were to give way to this week’s lobbying on the subject it would be a political disaster, because the Government would be accused of a U-turn and a surrender? It would set off a wave of pay claims across the entire public sector, which the Opposition are obviously looking forward to taking part in if they can provoke them. It might also be an economic disaster, and it would not be in the interests of the many people in the public and private sectors who are having economic difficulties in these times, and who want to look forward to a much more prosperous future as we get our economy back to health.

[Elizabeth Truss]

My right hon. and learned Friend has a huge amount of experience in this area. He is correct to say that we need to take account of the sustainable, long-term financing of public services. We need to look at the specific issues in each sector where we need to recruit and retain staff, and we also need to look at fairness with the private sector. At the moment, public sector and private sector salaries are roughly comparable. As a country, we need to improve our productivity and our growth rate. That is the way to ensure that everybody benefits. The Government have a fantastic record when it comes to getting people into work, and unemployment is at its lowest level since 1975. We need to make sure that we continue with that.

[Neil Gray (Airdrie and Shotts) (SNP)]

I welcome the Chief Secretary to her place. We had all hoped that today would bring some commitment and certainty from the Government on public sector pay. Instead, our public sector workers continue to be stonewalled from the Dispatch Box, while members of the Cabinet have apparently abandoned collective responsibility to brief for an end to the cap. Perhaps that says more about those Ministers’ desire to undermine the Chancellor and the Prime Minister than it does their commitment to public sector workers. According to The Times, the Prime Minister wanted to announce something today but could not get her Ministers to agree a line.

This week, a report by academics from University College London was published quietly by the UK Government’s own Office of Manpower Economics. The report showed that average hourly public sector wages fell in real terms by 6%—or, for some, by up to £3 an hour—in the past decade. That is perhaps part of the reason why the past decade has been the worst for wage growth in 200 years, and why in-work poverty continues to rise. With that in mind, can the Chief Secretary advise our dedicated police, firefighters, nurses and others—who put their lives on the line and make great sacrifices for us—what they have to do to earn a fair pay rise, as they will do in Scotland? Or does the Chief Secretary support former Prime Minister David Cameron’s comments from Seoul yesterday, when he said that it was “selfish” to campaign for an end to the pay cap?

[Elizabeth Truss]

As I have outlined, pay is determined by a very clear process. Independent pay review bodies make recommendations on areas such as pay for the police and nurses. We will look very carefully at those recommendations to balance fairness for public sector workers, and recruitment and retention of the best possible people, with affordability for the public finances. That is a responsible approach to take, and it will ensure that our economy grows and unemployment continues to move in a positive direction.

[Helen Whately (Faversham and Mid Kent) (Con)]

Since 2010, 13,000 more nurses have been employed in the NHS. I am worried that the Labour party’s unfunded proposals for public sector workers could lead to a cut in the number of nurses, given the £68 billion black hole in the financing of the party’s manifesto. Will my right hon. Friend assure me that when she looks at pay for nurses, she will not only consider what is a fair level of pay, but ensure that we remain able to afford to employ more nurses in the NHS? Will she also ensure that we continue to focus on sound finances and a strong economy to pay for our public services?

[Elizabeth Truss]

My hon. Friend is right to point out that, by having this balanced policy, we have protected jobs in the public sector and we have protected important services. The Office for Budget Responsibility outlined in its report that our policy protects the jobs of 200,000 public sector workers. That is important for those people, but it is also important for our constituents who receive those public services and who are seeing improvements in our schools and hospitals, and a reduction in crime. It is important that we take that balanced approach.

[Sir Vince Cable (Twickenham) (LD)]

Does the Chief Secretary not accept that there was a fundamental difference between the economic conditions when the 1% cap was introduced, when there was a fear of large-scale unemployment and deflation, and the economic conditions of the present day, when there are chronic labour shortages throughout the public sector and salaries have been eroded by rising inflation? Will she not lift the cap to reflect basic economic reality?

[Elizabeth Truss]

First of all, public sector pay is comparable with private sector pay. In addition, public sector pensions are set at a higher level, on average, than private sector pensions. The pay review bodies have a remit to look at retention and recruitment when they make their independent decisions. Of course, I will look at all their recommendations when they come out. The right hon. Gentleman has made an omission that was also made earlier; a lot of those roles have pay increments independent of the 1% cap. Teachers’ pay increased by 3.3% in the last year for which we have records, so it is not right to talk solely about the 1% cap. In fact, public sector workers are rewarded in a number of different ways.

[John Redwood (Wokingham) (Con)]

A recent Office for National Statistics study shows that public sector productivity fell by 5.7% in the long period from 1997 to 2014. Is not the way forward better pay for smarter working? Do we not want pay awards that give something for something, so that the taxpayer wins, the service user wins and the employee wins?

[Elizabeth Truss]

My right hon. Friend is correct to say that we want improvement in our public services. I have highlighted education, where more children are going to good and outstanding schools; and I have highlighted our health service, which is dealing with more patients than ever before. School pay policy is set by individual academies, for example, so we are giving more freedom over pay and pay determination. It is important to look at the public finances as a whole, and to ensure that, overall, we are living within our means as a country.

[Gloria De Piero (Ashfield) (Lab)]

Right now, 130 workers at Annesley Department for Work and Pensions office are being told that their place of work will be closed and their jobs relocated up to an hour’s drive away. Have these public sector workers not suffered enough from the seven-year pay cap? Is not the last thing that they need to be told that they need to find more money to pay for their travel to and from work?

[Elizabeth Truss]

The hon. Lady refers to a specific issue with a jobcentre in her constituency. I am sure that the DWP is looking at how those people can be assisted, and it is certainly something that I am happy to raise with the Work and Pensions Secretary on her behalf.

[Vicky Ford (Chelmsford) (Con)]

In Chelmsford, we are very proud to be home to one of the places where nurses are trained—the great Anglia Ruskin University, which I visited just last week. It is good to hear my right hon. Friend speaking about how nurses have benefited from pay progression, and also from lower taxes, through the increment.

Part of increasing the prosperity of public sector workers is the provision of an increasing number of training opportunities. There is great excitement in my constituency not only about the introduction of degree apprenticeships and being one of the first places in the country to build a new medical school, but about affordable housing and people having more money in their pockets. Can the Chief Secretary confirm that increasing prosperity is not just about pay, but about having a strong economy to deliver more houses, more training and more skilled opportunities?

[Elizabeth Truss]

My hon. Friend is right that we need to look at what is included in the wider package that people receive, whether that is support for their pension, additional flexibilities or additional elements of pay and training, because training and progression are extremely important. I remember visiting Chelmsford prison in her constituency, which was looking at training opportunities for prison officers. We are looking at that throughout the public sector, because job satisfaction derives from many things, and although pay is of course important—I would not deny that—job satisfaction is also about working conditions and about people on the frontline feeling empowered to do their jobs well and knowing that they are making a contribution. Being a public servant is incredibly important, and we need to show that we are giving people on the frontline the ability to make decisions and really improve people’s lives for the better.

[John Mann (Bassetlaw) (Lab)]

As a public sector worker, how much has the right hon. Lady’s own pay increased since 2010 and how much has her productivity increased since 2010? Can the country afford her pay increase, and if so, does she agree with me that Britain deserves a pay increase?

[Elizabeth Truss]

I would answer the hon. Gentleman by saying that my pay has gone both up and down since 2010, but my pay is set independently. The important point is that the pay of public sector workers is determined by the pay review bodies, whose recommendations I take very seriously, and that is how we should approach this issue. Rather than trying to politicise the issue and saying that we should have a blanket approach, we have set public sector pay review bodies the remit to make such decisions themselves.

[Mr Christopher Chope (Christchurch) (Con)]

When will the Government introduce the £95,000 cap on exit payments for public sector workers? The legislation is on the statute book, but it has not been implemented. Will it be implemented soon so that we do not have any more payments such as the £390,000 paid earlier this year to the chief executive of Bournemouth Borough Council to leave?

[Elizabeth Truss]

I would be very happy to discuss that issue with my hon. Friend later.

[Sammy Wilson (East Antrim) (DUP)]

The rise in inflation, the recommendations of pay review bodies and the closing of the gap between private sector and public sector pay have quite rightly focused attention on the whole issue of the current pay policy. Does the Chief Secretary agree that rhetoric about austerity and uncosted and unfinanced amendments to the Queen’s Speech in this House are no substitute for looking at the tax and borrowing implications and the implications for other parts of the public sector of a review of pay policy?

[Elizabeth Truss]

We need to look not only at the important issue of fairness for public sector workers and the issue of recruitment and retention, but at the overall health of the British economy, so that we can make sure we carry on having low unemployment rates and growth in our economy and carry on dealing with the debt that is a result of the great depression that we suffered as a country. We need to pay down the debt and get the deficit further down so that we can continue to enjoy high-quality public services.

[Maria Caulfield (Lewes) (Con)]

As someone who has worked as a nurse during the period of the pay cap and pay freeze, may I just say that that is very difficult to do as a public sector worker? The issue is greater than just a pay rise; it is also about the pay structure. When Labour introduced the “Agenda for Change” system, it created an increment system under which people have to wait five, six or seven years to get the pay they actually deserve. The increment system is not working, and it also gives trusts the opportunity to downgrade people, with a sister in one hospital on band 7 while another somewhere else is on band 5. The pay structure is not working, and that needs to be looked at as urgently as the pay cap.

--- Later in debate ---

[Elizabeth Truss]

My hon. Friend’s great expertise as a former nurse is shown by the detailed question she has asked. We need to make sure that we reform public services and give people the opportunity to progress and be trained in the roles they fill. One of the roles of the pay review body is to look at such structures, as well as at rates of pay. During the processes they go through, those bodies certainly take evidence from frontline workers, unions and experts in the area, and I hope that they will take such issues into consideration.

[Tony Lloyd (Rochdale) (Lab)]

The Chief Secretary referred to productivity increases in the public sector. We recently saw firefighters racing into Grenfell Tower, paramedics and police racing into the Manchester Arena after the bomb, and doctors, nurses and other medical professionals working around the clock to save people’s lives. What advice would she give to her hon. Friends on the Government Benches about productivity increases by those people, who have served the people of this country?

[Elizabeth Truss]

Those firefighters, police and others in the emergency services have done a tremendous job, and I am sure we are all extremely grateful to them for regularly putting themselves on the line of danger. The hon. Gentleman is right to point that out.

What does productivity mean? I talked earlier about empowering people on the frontline to be able to make decisions and do things more quickly. When I talk to nurses and teachers, they sometimes say that they want less bureaucracy so that they can get on with the real jobs that they have been employed to do, and that is why more police are spending more time on the frontline. Productivity means giving people more job satisfaction—spending more of their time doing the job that they have come in to public services to do—and that is why we are reforming public services and seeing improvements.

[Stephen Kerr (Stirling) (Con)]

Does my right hon. Friend agree that it is vital that the Government should continue to balance fairness for public servants and fairness for taxpayers who pay for public services?

[Elizabeth Truss]

We need to ensure a continual balance in being fair to the people working in public services—giving them the training and opportunities they deserve, and paying them fairly—while at the same time making sure that they will be able to continue to work in those public services in the future. If we look at what happened in Greece when the deficit got out of control, we can see that there was a 36% reduction in spending on the health service. [Interruption.] Members on the Opposition Front Bench may groan, but they should look at the facts about what happens when unfunded spending commitments are made. Let us be clear: the Institute for Fiscal Studies has said that Labour’s spending plans would lead to the highest levels of taxation we have ever seen in peacetime Britain. Theirs are not moderate but extreme proposals that would lead to people losing their jobs.

[Jim McMahon (Oldham West and Royton) (Lab/Co-op)]

The Chief Secretary quite rightly outlined that there is more to the package offered to public sector workers, including pensions, but will she confirm that the average pension for a local government worker is less than £80 week? What message does it send when, on top of that, their wages are supressed and their workloads have increased twofold? Is not the truth that this Government know the cost of everything and the value of absolutely nothing?

[Elizabeth Truss]

We care about how well our public services are serving the public, and we want to have highly motivated people working in our public services who feel valued and properly remunerated. That is why such decisions are made by independent bodies.

[Neil O’Brien (Harborough) (Con)]

Members on both side of the House want strong wage increases for those at the bottom end, whatever sector they are in. Will the Chief Secretary tell us what our new national living wage will do to the incomes of those at the bottom end, and will she confirm that it will give us one of the strongest minimum wages in the world?

[Elizabeth Truss]

My hon. Friend is right and I congratulate him on the role he had in that policy. We are raising wages for those on the lowest incomes and taking more people out of tax. Basic rate taxpayers have seen a £1,000 reduction in their tax bill. That is important in dealing with the cost of living and in making sure that it always pays for people to go into work.

[Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)]

In a very readable book, “Austerity: The History of a Dangerous Idea”, Professor Mark Blyth charts the fact that austerity always fails, either at the ballot box or with people waking up to the failing nonsense that is austerity. If the Government instead concentrated on growth, the deficit would take care of itself. Is it not time that public sector workers, who pay taxes, are given the money to spend in the economy and create that growth?

[Elizabeth Truss]

I understand that the hon. Gentleman’s party voted to support our pay policy earlier this year.

[Lucy Frazer (South East Cambridgeshire) (Con)]

The Institute for Fiscal Studies estimated that Labour’s proposal would cost £9 billion a year, which is more than double the amount the party estimated in its manifesto. That would involve significant borrowing. Our interest bill is £50 billion a year. Does the Chief Secretary to the Treasury agree that that is £50 billion less to invest in our public services?

[Elizabeth Truss]

That is right. Future generations will pay for the services that we are enjoying today, and that is wrong. We need to live within our means and make sure that people are properly rewarded. We need to make sure that things are fair between the public and private sectors. That is what the Government’s balanced policy is achieving.

[Bambos Charalambous (Enfield, Southgate) (Lab)]

My union Unison represents workers across the public sector. The hard-working nurses, teaching assistants, cleaners and local government workers in my constituency of Enfield, Southgate who are not subject to increments have been asking me when they will get fair pay for the hard work they do for all of us. Does the Chief Secretary agree with me and some of her colleagues that in the light of the increases in inflation and the cost of living, the public sector pay cap must end now?

--- Later in debate ---

[Elizabeth Truss]

I have already said that our policy balances the need to make sure that people are remunerated properly—that is what the pay review bodies look at—and the need to make sure that public services are sustainable in the long term, because as well as making sure that people are paid properly and that the wider package is as good as possible, we need to make sure that those jobs are protected and secure in the long term.

[Rachel Maclean (Redditch) (Con)]

Does the Chief Secretary agree that as a result of Labour’s economic mismanagement in 2008 to 2009, average wages—[Interruption.]

[Rachel Maclean]

Thank you, Mr Speaker. As a result of Labour’s economic mismanagement in 2008 to 2009, average private sector pay fell significantly, while public sector pay remained stable. Does the Chief Secretary agree that it is important, when we look at the pay review bodies’ recommendations, to recognise the challenges faced by small businesses when they are outpaced by public sector earnings? Given that small businesses, as employers, create the majority of the jobs in this country, will she ensure that the pay review bodies take into account the views of small business people?

[Elizabeth Truss]

We have got to the position where public sector pay is comparable with private sector pay, and public sector workers often have pension entitlements on top of that. It is fair to get to a position where pay is comparable, for the skills people have. That is fair for the businesses that we need to create wealth in our country, so that we can fund public services. It is fair for workers in both the private sector and the public sector. Nothing is more important than getting people into work and giving them a sense of pride and responsibility, and the ability to earn for themselves and their family that come with it. The Government should be proud of what we have achieved: the lowest level of unemployment since 1975. The idea that we should put that at risk by making our public finances unsustainable or by pricing small businesses out of the market is very dangerous.

[Mr Speaker]

I see that the Father of the House is leaving the Chamber, but I hope that the calm and serenity that he brought to the Chamber will linger with us for some time to come.

[Rosie Cooper (West Lancashire) (Lab)]

This issue is also about fairness—a word I have heard repeatedly. Liverpool clinical commissioning group paid themselves increases of between 15% and 81%, with a non-executive getting £105,000. An NHS investigation has confirmed that that is far outside the rules, yet the accountable officer and governing body have not been held to account. Does that send a message from the Government to the NHS that people can do what they want, that anarchy rules and that the pay cap will be applied selectively and is not fair?

[Elizabeth Truss]

It is very important that all public sector bodies stick within the rules.

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

I draw the House’s attention to my declaration of interest as a working NHS doctor. My right hon. Friend has talked rightly about the effect that increments have on progression pay, and the staff affected have received an increase in their pay. However, in the NHS half a million staff are at the top of their pay scale and have received a real-terms pay cut over the past few years. They work incredibly hard, above and beyond the call of duty. They are the people who gave up their days off to go in when the terrorist attacks happened in London and Manchester. Those people do need a pay rise. Does she recognise that many of those staff are now turning to agency work? The locum and agency bill in the NHS is £4 billion and rising. Does she recognise that part of dealing with the cost of locum and agency staff must be to increase the pay of permanent staff?

[Elizabeth Truss]

I completely agree with my hon. Friend that doctors and other medical staff do a vital job and have faced real challenges. We are reducing the agency spend in the NHS over time. It is important that we look overall at the affordability for the public sector. That is the remit of the independent pay review bodies. They hear evidence from the experts on the frontline and make their recommendations. We accepted the recommendation for doctors that was put to us. We accepted the recommendation for nurses and other NHS workers as well. We respect that pay review body process.

[David Hanson (Delyn) (Lab)]

Put simply, does the Chief Secretary think it fair that the public sector workers who face a cap also face a rise of around 5% to 7% in energy prices when the chief executive of SSE this year had a 72% increase in his pay, taking it to £2.9 million?

[Elizabeth Truss]

The Government are taking action on energy costs. We are also making sure that public sector workers receive increments in addition to the 1% that the right hon. Gentleman mentioned. We are taking action as a Government to raise the tax threshold, so that people on the basic rate are now paying £1,000 less tax. He needs to take account of the whole package; I think that he is cherry-picking some bits.

[Ross Thomson (Aberdeen South) (Con)]

Is the Chief Secretary to the Treasury aware that the Scottish Government set pay for 485,000 public sector workers, which is close to 90% of all public sector workers in Scotland? Does she agree with the statement by the Cabinet Secretary for Health and Sport on 10 May in the Scottish Parliament, when the Scottish Government voted against a pay increase for NHS staff, that

“we believe that there can continue to be value in the independent pay review process”?

Is my right hon. Friend aware of the Nuffield Trust report that highlights that the Scottish National party’s deep cuts to the health budget in Scotland are seriously harming the NHS?

[Elizabeth Truss]

It is great to have one of my Scottish colleagues pointing out the facts about what is happening in Scotland. The Scottish National party has failed to deliver. We see worse performance in the Scottish NHS, and school standards in Scotland are falling, which is a huge shame. [Interruption.]

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

rose—

--- Later in debate ---

[Liz McInnes (Heywood and Middleton) (Lab)]

The Labour Government brought in Agenda for Change for NHS staff, which finally put us—I was one of those NHS staff—on a fair rate of pay with an independent pay review body, but since 2010 the coalition Government and the Tory Government have systematically undermined Agenda for Change pay rates by capping and freezing wages. The Government are all too ready to describe NHS workers as fantastic, but giving them a fair pay award is just that—fantasy. Is it not time that the Government put their money where their mouth is?

[Elizabeth Truss]

The hon. Lady is not acknowledging the fact that more than half of those people on Agenda for Change are receiving average incremental pay of 3.3%.

[Sir Oliver Heald (North East Hertfordshire) (Con)]

My right hon. Friend will be aware that the NHS has attracted workers from across the EU, particularly in nursing. When she looks at how we set public sector pay, will she look at international comparisons across the EU to ensure that pay is set in such a way as to continue to attract those very much needed staff to Britain? Does she have data on that that she can consider?

[Elizabeth Truss]

I thank my right hon. and learned Friend for his question. The pay review bodies are responsible for gathering the data on how we ensure that we retain and recruit the high-quality staff that we need in our NHS. I know they have looked at that in their reports this year, as I am sure they will do in future.

[Clive Lewis (Norwich South) (Lab)]

In the exceedingly fine city of Norwich, we have three NHS trusts, two local authorities and a teaching hospital—thousands of public sector workers who contribute to our economy, and who are struggling to make ends meet. Surely the Government must understand that austerity is dying on its feet. They should invest in those people. If they lift the public sector pay cap, they will invest in Norwich’s local economy. It is a win-win for everyone.

[Elizabeth Truss]

I should say to my fellow Norfolk MP that we are seeing improved public services in Norfolk, both in the health service and in our local schools. That is a result of the Government reforming services and investing in them, and ensuring that people receive pay that helps to retain and recruit the best possible staff.

[Heidi Allen (South Cambridgeshire) (Con)]

I understand that pay bodies are independent—it is important that they remain so—but will the Chief Secretary explain who sets the context for those pay bodies? When they undertake their reviews, will they take into account not only historical pay rises and the cost of living, but extra influences such as the influence of Brexit on our difficulty in recruiting nurses?

--- Later in debate ---

[Elizabeth Truss]

The answer is that the Government set the remit for the pay bodies last year. Those reports have all been submitted. We have responded to some of them, and we will respond to others in due course. Later this year, we will set the remit for the 2018-19 pay bodies.

[Caroline Lucas (Brighton, Pavilion) (Green)]

No Opposition Member is talking down our public services in the way that the Chief Secretary to the Treasury claims. We are talking up the incredible commitment of the people who work in them, despite the contempt with which her Government treat them. She talks about job satisfaction. Does she accept that what contributes to job satisfaction for nurses is having the time they need to spend with patients? When the NHS is under such strain, nurses simply do not have the time to spend with patients because there are so many staff vacancies. The NHS is in crisis. Lifting the pay cap is a crucial way of addressing it. Why will she not do it?

[Elizabeth Truss]

With respect, the hon. Lady talks the NHS down in her question. The fact is that the NHS is doing a tremendous job. We are reducing the bureaucracy so that nurses can spend more of their time with patients. My right hon. Friend the Health Secretary is driving an agenda of reform that is delivering better public services.

[James Cartlidge (South Suffolk) (Con)]

It is worth remembering what would have happened had the Labour party won the first general election after the great recession: its 2010 manifesto committed to tough action on pay, including a 1% cap on public sector pay. Does my right hon. Friend think that that was because Labour does not value public sector workers, or because it understood the reality of the country’s position as a result of its mismanagement of public borrowing and bank regulation?

[Elizabeth Truss]

There is rather an issue of false consciousness on the Opposition Front Bench.

[Karin Smyth (Bristol South) (Lab)]

May I help the Chief Secretary? The pay review bodies operate within a budget that is set by the Government. It is a political decision not to accept their recommendations, which she can do something about. Before entering Parliament, I was proud to serve as an NHS manager. Managers in the NHS play a crucial role in both patient care and patient safety. Does she agree that equity of treatment on pay is crucial for senior and all levels of management in the health service, to ensure the recruitment and retention of the very best?

[Elizabeth Truss]

The hon. Lady talks about the recommendations of the pay review bodies. We have accepted all of the recommendations that we have reported on so far this year. They are able to make the recommendations they see fit. The Government set a remit, but the bodies are independent in what they advise us, and they have to take account of areas such as retention and recruitment.

[Antoinette Sandbach (Eddisbury) (Con)]

Unemployment has fallen by 63% in my constituency since 2010. I have many nurses and teachers working in my constituency, but I also have careworkers, all of whom have benefited from tax changes introduced by the Government that mean they have an extra £1,000 in their pockets and in their take-home pay. Does the Chief Secretary agree that tax changes do not discriminate between private and public sector workers?

[Elizabeth Truss]

Both private and public sector workers have a vital part to play in the economy of this country. By taking people out of tax, we have reduced the tax bills of basic rate taxpayers by £1,000. The Opposition propose the highest levels of taxation in this country’s peacetime history. Who would that fall on? It would fall on precisely the people whom we have been talking about in today’s debate.

[Several hon. Members rose—]

[Lilian Greenwood (Nottingham South) (Lab)]

Fifty-five per cent. of public sector workers are not covered by review bodies, including most of our civil servants and some of those on the very lowest incomes. Will the Chief Secretary give any hope that real pay rises will be considered for the 3 million public sector employees without a review body, and what will be the mechanism for doing so?

[Elizabeth Truss]

As with people who are under the purview of the pay review bodies, we need to ensure that we retain and recruit the best possible civil servants. At the same time, we need to ensure that that is affordable for the public purse.

[Robert Jenrick (Newark) (Con)]

As the shadow Chancellor knows perfectly well, the former Prime Minister did not say that it was selfish for dedicated public sector workers to ask for a pay rise. He argued—I would agree—that it is selfish and immoral for politicians to offer benefits to the voters of today to be paid for by the voters of tomorrow. Does my right hon. Friend agree that, for her children and mine, it is important to balance fair treatment of the public sector with handing on a strong country not saddled by excess debt?

[Elizabeth Truss]

My hon. Friend makes an excellent point. We need to ensure that our public finances are properly sustainable, so that we can fund those public services in future, and so that we do not burden the next generation.

[Rachael Maskell (York Central) (Lab/Co-op)]

Will the Chief Secretary write to the chairs of all the pay review bodies—those serving on them are incredibly frustrated—and ask them to set out the true cost of a nurse, a teacher and a soldier, and to report back to Parliament, so we can assess the independence of their research?

[Elizabeth Truss]

I am sure the hon. Lady is aware that all documentation from this year’s pay process will be published. She will be able to see the research the bodies have looked at and the people they have interviewed in coming to their determination. In due course, I will be writing to the pay review bodies for their remit for the following year.

[Robert Halfon (Harlow) (Con)]

Public sector workers are the guardians of our nation in terms of our security, health, education and infrastructure, so we clearly have to do something, in particular for the lower paid. May I suggest to my right hon. Friend that, given revenue from corporation tax receipts increased by 21% in the past year, can we not have a special redistribution fund to use that increased revenue to at least help the lowest paid public sector workers?

[Elizabeth Truss]

My right hon. Friend will be aware that the flexibility we give to pay review bodies is such that they can decide to give higher rises to those on the lowest incomes in the public sector. I would also point out that those on the lowest incomes have benefited most from the raising of the personal allowance. There are various ways of ensuring support for those on the lowest levels of pay.

[Liz Saville Roberts (Dwyfor Meirionnydd) (PC)]

It will interest the House, I am sure, to know that the Scottish Government announced last week that they are lifting the pay cap. The Labour Welsh Government have the ability to do exactly the same thing, but in reality Labour in Wales is the Conservative Government’s gwas bach, taking their lead from Westminster. Thirty thousand Welsh nurses are having their pay cut in real terms. I ask those on both the Government and Opposition Front Benches to explain to thousands of Welsh workers why Wales remains the poorest paid country in the United Kingdom.

[Elizabeth Truss]

The hon. Lady will be aware that that is a devolved issue and a decision for the Welsh Government.

[Bill Grant (Ayr, Carrick and Cumnock) (Con)]

I am quite close to this debate. I served Strathclyde fire and rescue service for 31 years, so I am familiar with the good work that my colleagues continue to do; and I have two daughters in nursing. One is a nursing sister, or a senior charge nurse as she is determined today, and one is an auxiliary nurse and a single parent. I do not hear from them what I am hearing from Opposition Members, who are painting a dark picture. My daughters seem to enjoy their work. They work very, very hard, and there is no doubt that my colleagues in the fire and rescue service work very hard, too. My fear, if we continue to increase wages in the public sector, is the risk of a spiral, with inflation and mortgages going up. The point is the value of the take-home pay in your pay packet and what influences the buying power of public workers’ take-home pay.

[Elizabeth Truss]

My hon. Friend points out the impact on the overall economy of unsustainable increases. We need to look at the overall package for public sector workers, including the reduced taxes that most public sector workers are paying and improvements in areas such as training, and we need to ensure that any pay raises are sustainable.

[Ruth Smeeth (Stoke-on-Trent North) (Lab)]

I am sure the Chief Secretary agrees that public services are the backbone of our country, but the average full-time public sector employee will have lost £4,073 in real terms by 2020 because of this Government’s decisions. Does she think that that is fair?

--- Later in debate ---

[Elizabeth Truss]

I do not recognise that figure. I outlined the increments we have seen in areas such as teaching, nursing and the armed forces. We need to make sure we have a balance between fairness and affordability, and I outlined that earlier, too. That is what we have been doing and that is why we have been able to sustain high-quality public services at the same time as reducing the deficit and seeing the lowest unemployment for 40 years. The fact is that unsustainable increases in public spending would lead to higher taxes, higher interest rates and a much worse outcome for working people.

[Mr Simon Clarke (Middlesbrough South and East Cleveland) (Con)]

Does my right hon. Friend agree that the fact we are spending more on debt interest than on our schools perfectly encapsulates the reason why we need to be fair across the generations when it comes to setting public sector pay? Does she agree that there is nothing right or moral in making cheap promises based on money we do not have?

[Elizabeth Truss]

The Labour Government left us with a huge deficit and a huge debt, which we have had to deal with over the last Parliament. It continues to hang over us, which is why the only path is the sustainable path of making sure we grow our economy, so we can enjoy even better public services and see people’s pay rise across the board.

[Mr Speaker]

Now that the hon. Member for Glasgow South West (Chris Stephens) has been sitting in a state of almost Buddha-like repose for some minutes, I think it is safe for the Chamber to hear from him.

[Chris Stephens]

Mr Speaker, as a passionate trade unionist for 20 years sometimes my emotions get the better of me.

Will the Chief Secretary confirm that pay is so low in some Government Departments that 40% of employees in those Departments are in receipt of tax credits? Will she publish, for each UK Government Department, how many employees are in receipt of tax credits?

[Elizabeth Truss]

We have good rates of pay across the civil service. We need to make sure that that is sustainable, so we can carry on making sure that we have good services in both the civil service and the wider public sector.

[Ms Nusrat Ghani (Wealden) (Con)]

The public are rightly fed up with politicians playing politics with the NHS, so let us listen to what the NHS pay review body has evidenced and said. Is my right hon. Friend aware that the NHS pay review body stated:

“We do not see significant short-term nationwide recruitment and retention issues that are linked to pay”?

[Elizabeth Truss]

That is exactly why we have independent pay review bodies: they give us impartial advice and make recommendations. We accepted in full the recommendation of that body.

[Margaret Greenwood (Wirral West) (Lab)]

NHS consultants in my constituency tell me that morale in the NHS is at an all-time low and that this is leading to real problems for recruitment and retention. Having voted against doing so only last week, I understand that certain members of the Cabinet are now in favour of ending the public sector pay cap. Will the Government now heed their calls and give public sector workers the pay rise they deserve?

[Elizabeth Truss]

I am not sure the hon. Lady has heard the last hour of our discussion. We need to maintain sustainable public finances at the same time as being fair to workers in the public sector.

[Ben Bradley (Mansfield) (Con)]

In my constituency, the local NHS trust has been crippled by Labour’s disastrous PFI deal, a £350 million building project that has now cost £2 billion in interest payments that could have otherwise been used for pay rises. Does the Chief Secretary agree that this proves absolutely that sound economic planning in the health service is the best way to provide fair pay in the future?

[Elizabeth Truss]

PFI is yet another example of how the Labour party spent money it did not have and left future public service organisations, schools and hospitals with debts that they are now having to deal with. That is why we should not heed its irresponsible calls.

[Gareth Snell (Stoke-on-Trent Central) (Lab/Co-op)]

The Chief Secretary earlier tried to draw a distinction between taxpayers and public servants. Public servants are taxpayers, so she cannot continue to draw that unfair distinction. I would like to introduce an element of maths. Will she acknowledge that when RPI is running at 3.2% and CPI is running at 2.8% but pay is capped at 1%, that is a real-terms squeeze on disposable incomes, which is hitting the living standards of public sector workers? In the general election, when the Prime Minister was challenged on why nurses were having to use food banks she replied by saying it was a complex issue. How much does the Chief Secretary attribute the pay cap to that “complex issue”?

[Elizabeth Truss]

As I have said before, there is the 1%, but there is also incremental pay in many public service professions. There is the 2.4% for the armed forces, and there is the 3.3% that was received by teachers in 2015-16. Labour Members should tell people about the whole picture, rather than cherry-picking specific numbers.

[Kevin Foster (Torbay) (Con)]

I am sure the Chief Secretary agrees with me—and with the hon. Member for Stoke-on-Trent Central (Gareth Snell)—that public sector workers are taxpayers. When it comes to public sector pay, we should indeed look at the whole picture, including the major tax cuts that have been made since 2010 for those on the lowest wages.

[Elizabeth Truss]

Absolutely. It seems to me that Labour Members want to count some things in their sums but not others, and that they are picking numbers rather than looking at the big picture.

[Robert Courts (Witney) (Con)]

Will the Chief Secretary confirm that new Government 10-year gilts are paid at 1%, and will she confirm that if the markets lose confidence in our deficit reduction plan the interest rate is likely to rise, as is the cost to the country, which will mean less money for our public services?

[Elizabeth Truss]

My hon. Friend is right to draw attention to the macroeconomic picture, and to point out that if we do not have a confident deficit reduction plan such as the one that the Government have pursued for the last seven years, the financial markets will lose confidence, and the effect on working people will be a rise in interest rates, a rise in housing costs, and problems for the Government in respect of our borrowing.

[Mike Wood (Dudley South) (Con)]

I declare an interest: my wife is a primary school teacher who is currently working as a teaching assistant.

Will the Chief Secretary ensure that both the rising cost of living and recommendations of the independent pay review bodies are properly taken into consideration in the setting of public pay policy for next year’s settlements?

[Elizabeth Truss]

That is one of the factors that the pay review bodies consider, along with issues such as recruitment and retention and ensuring that the pay settlement is affordable. They have the responsibility of speaking to people like my hon. Friend’s wife who work in the public services, hearing what they have to say, and making a determination. There are different issues in different public services, and I think it wrong to suggest that there is a “one size fits all” solution.

[Michael Tomlinson (Mid Dorset and North Poole) (Con)]

The shadow Chancellor mentioned inequality. In fact, income inequality has fallen since 2010, and now the top 1% will pay 27% of all income tax, a higher proportion than was ever paid under Labour. Does that not show that the Labour party tries to talk tough when it comes to inequality, but it is left to the Conservatives to deliver?

[Elizabeth Truss]

The shadow Chancellor does not like facts to get in the way of his rants.

[Neil Gray]

On a point of order, Mr Speaker. At the start of these proceedings I failed to declare the fact that my wife is a primary school teacher, which I did when I asked a similar question during Cabinet Office questions. I apologise, and I thank you for allowing me to correct the record now.

Professional Standards in the Banking Industry

Elizabeth Truss Excerpts

Thursday 5th July 2012 Commons Chamber

[Ed Balls]

We return to the smears of the Chancellor and his aides. We have had answers to that question from the City Minister at the time, the Chancellor and Shriti Vadera. I have asked the Chancellor to provide the evidence or withdraw and apologise, and he cannot. That says quite a lot about the Treasury team that he leads.

It is our view that a comprehensive review of the whole culture of banking must start with the conduct of bankers and traders, look at the institutions in which they operate, and cascade outwards into the rules, corporate governance, industry approaches and regulatory and legal frameworks in which banks have done business in past decades. There are many important, searching questions that we need to answer, and the only way to answer them—I have them here, but for reasons of time I will not go through them all—is through the broad-based inquiry that we need, not a narrow, LIBOR-based inquiry.

[Elizabeth Truss (South West Norfolk) (Con)]

Does the right hon. Gentleman think it was a mistake to set up the tripartite regulatory structure, in which everyone and no one seems to have been responsible? He does not seem to know which part of his Government was doing what.

[Ed Balls]

When the Conservatives gave reasons in Parliament at the time for opposing the establishment of the new regulator, did they talk about the tripartite system? The shadow Chief Secretary to the Treasury, who was the lead on this issue at the time, said in 1999:

“Our concerns about the Bill may be said to fall into two general areas. The first is the very wide power still vested in the FSA and the danger that any concentrated executive power can lead to abuse.”

We know all about that from this Chancellor and his reforms.

“The second is the danger of over-regulation, with consequential damage to the United Kingdom’s position.” —[Official Report, 28 June 1999; Vol.334, c. 44.]

Perhaps the hon. Member for South West Norfolk (Elizabeth Truss) needs to go back and read the Hansard of the time.

The Government’s second objection to a full judicial inquiry is one of speed. As the Prime Minister said on Monday—

--- Later in debate ---

[Mr Osborne]

My hon. Friend makes a good point, and I agree absolutely with his instinct. We need to look at giving more criminal powers to our prosecuting bodies. One thing that Lord Turner has said is that, unfortunately, the FSA does not have the criminal powers it needs—[Interruption.] While the hon. Member for Islington South and Finsbury (Emily Thornberry) interrupts me from a sedentary position, let me say this: Lord Turner has said that it is a matter of regret that the FSA does not have those criminal powers available to it. That is precisely one of the things we need to look at this year to see whether we can amend the law this year. The second point I would make to address the point she makes from a sedentary position is that the SFO is completely independent of the Government of the day. It is actively looking at what criminal powers are available to it. The director of the SFO has said that he will be able to tell us how he will proceed by the end of the month. The hon. Lady wants to persuade me that the law unfortunately does not give us all the criminal sanctions we need to deal with financial crime in the way that we deal with crime on our high street, but I absolutely agree with her. The people responsible for that situation are Labour Members.

[Elizabeth Truss]

All hon. Members want wrongdoers in both the authorities and the banks rooted out, but does the Chancellor agree that we need swift action so we can attract investors to this country and start to build up our economy? Is not that what our constituents want to hear about?

[Mr Osborne]

My hon. Friend is absolutely right. This is not just about assuaging public anger; it is also about restoring any damage that has been done to the reputation of the City of London and ensuring that London remains the pre-eminent financial centre in the world.

Oral Answers to Questions

Elizabeth Truss Excerpts

Tuesday 26th June 2012 Commons Chamber

[Danny Alexander]

The hon. Gentleman is wrong to say that the national infrastructure plan, which we published last November, is behind schedule, but of course he is right to say that there are problems in the construction sector. That is why we have taken a number of steps to support the house building sector, but we will make further announcements in that area later this summer.

[Elizabeth Truss (South West Norfolk) (Con)]

Over the past four years, footfall on the Norwich-Cambridge line and the Fen line has increased by 20%. In the Government’s infrastructure plan, will they bring forward the upgrading of the Ely North junction, which will enable half-hourly services on both those lines?

[Danny Alexander]

I do not know the details of the Ely North junction project but I shall certainly raise the matter with the Secretary of State for Transport. However, that is precisely the sort of project we have been bringing forward over the past two years to support economic growth across the whole of the United Kingdom, rather than having a model of growth based solely on receipts from the City of London, which was basically the policy of the Labour party.

Oral Answers to Questions

Elizabeth Truss Excerpts

Tuesday 24th April 2012 Commons Chamber

[Mr Gauke]

It is important to point out that there is already VAT on mobile caravans, camper vans, narrowboats and a range of products. We are listening to the concerns of businesses and tourists to ensure that we can implement the measure fairly.

[Elizabeth Truss (South West Norfolk) (Con)]

T8. In 2005, Germany exempted businesses with fewer than 10 workers from unfair dismissal regulations and created flexible mini and midi-jobs. Since that date, youth unemployment in Germany has halved. What steps are the Government taking to improve flexibility and to get more young people into jobs?

[Mr George Osborne]

We need to reform the labour market, which is why, as my hon. Friend will know, we have this month extended the qualifying period for unfair dismissal cases from one to two years. That has been welcomed and will encourage people to take on new employees. We also have a call for evidence on compensated no-fault dismissal. I have no doubt that she will make a submission to that call for evidence.