Public Sector Pay Policy

Grahame Morris Excerpts

Tuesday 5th June 2018 Westminster Hall

[Grahame Morris (Easington) (Lab)]

Thank you for your courtesy, Mr Owen. It is a pleasure to serve under your chairmanship. I thank my good friend the hon. Member for Glasgow South West (Chris Stephens) for securing this timely and important debate and for setting out with such clarity the arguments on public sector pay and properly funding the Departments. He did a fantastic job.

During the Whit recess I visited my local HMRC tax office in Peterlee. I thank Linda Hughes, the full-time officer, and the Public and Commercial Services Union local branch reps and local management for facilitating my instructive visit. Valuable work is done at the office in Peterlee, but it is threatened with closure. Almost 500 workers will be relocated, some temporarily to the Washington office, and some will face a considerable additional commute to Newcastle, where jobs are to be centralised, if they want to maintain their employment.

The purpose of my visit was to listen to the concerns of PCS members—the employees—but I saw in the office on the PCS noticeboard a sample of the figures for workers who had lost income because of Government pay restraint. On average, they had lost about £3,000 a year directly as a result of the imposition of the civil service pay cap. Perhaps if the Minister were to visit my constituency and meet some of the workers, he might understand the value of public sector workers and consider paying them properly.

Since the economic crash in 2008, public sector workers have been subject to unjustifiable pay constraint policies designed to make them pay for a financial crisis not of their making. A Government Back Bencher said earlier that that had made a substantial contribution to deficit reduction, but surely if we properly funded Departments—HMRC in particular—we could have achieved that deficit reduction through many other avenues, not least closing tax loopholes and making individuals and corporations who are avoiding their taxes pay their fair share.

[Chris Stephens]

Does the hon. Gentleman share my frustration that there are 4,000-plus employees chasing DWP social security fraud, estimated at £1.2 billion, and in HMRC’s wealth unit there are fewer than 500 employees chasing tax avoidance of £70 billion?

--- Later in debate ---

[Grahame Morris]

The hon. Gentleman is correct. I hope the Minister reflects on that and applies resources appropriately so that we can recover for the Treasury the maximum revenue from those who are avoiding paying their fair share of tax.

[Luke Graham]

Will the hon. Gentleman give way?

[Grahame Morris]

I will. I cannot refuse the hon. Gentleman as he gave way so many times.

[Luke Graham]

I thank the hon. Gentleman. I acknowledge that there is still work to be done on our tax code, but does he recognise that since 2010 a number of measures have been brought in to close tax loopholes, which have yielded some £5 billion in extra tax returns and tax revenue?

[Grahame Morris]

I recognise that efforts have been made to close the tax gap, but the publication of the Panama papers and various revelations indicate that it is much larger than had been previously estimated. In my humble opinion, it is counterproductive to get rid of skilled and experienced tax collectors employed at offices such as Peterlee in my constituency who have expertise in this field. We would be better off retaining that expertise and allowing those collectors to get on with the job we have trained them to do.

The imposition of pay restraint has compounded issues raised by the hon. Member for Glasgow South West and my hon. Friend the Member for Liverpool, Walton (Dan Carden) such as the generational pay gap and equal pay. The system includes discriminatory practices nearly 50 years after the Equal Pay Act 1970 and any Government should be ashamed that such problems are still evident.

It is clear from independent research undertaken by the Centre for Labour and Social Studies on behalf of the PCS that any increases in public sector pay would have to come from the resource departmental expenditure limits—the departmental budgets for current spending. It is disingenuous of Government to suggest that pay claims—even those recommended by independent pay review bodies—will be funded when the departmental expenditure limits do not reflect those awards. Departments as a whole will therefore suffer real-terms cuts to their resource departmental expenditure limits up to 2020. That falls way short of what is needed for a 5% nominal pay rise in the current year, and it fails to accommodate annual pay rises of 1%.

Given current projections of departmental expenditure, the research concludes clearly that any pay rise for public sector workers across listed Departments would have to come from cuts to jobs or to public services. It is a great deception. We must be careful with our language in terms of deliberately misleading anybody, but we should be straight about this. It is a cause of instability to promise constantly that the public sector pay cap is temporary when it is applied year on year. Eight years down the line, we still have effectively a public sector pay cap. In that time, prices have risen by 22%, but public sector pay has risen by just 4.4%. Wage freezes and the Government’s pay cap have lasted throughout that time, bringing financial misery to public service workers and their families and causing huge damage to services.

[Rachael Maskell]

Will my hon. Friend give way?

[Grahame Morris]

One last time, and then I will draw my remarks to a close.

[Rachael Maskell]

Does my hon. Friend recognise that many public servants have been down-banded and as a result given up more money and experienced even more detriment than that from the increases of only 1%?

[Albert Owen (in the Chair)]

I call Grahame Morris to wind up.

[Grahame Morris]

I will be quick, Mr Owen. I agree with my hon. Friend the Member for York Central (Rachael Maskell). There have been numerous surveys. A recent one by Unison showed that almost 73% of respondents have had to borrow money from family and friends to get by. We know anecdotally about civil servants using food banks, and workers in my constituency are struggling to support themselves and their families. I do not think we can run public services on the backs of poorly paid public sector workers. Something must be done to lift the cap and properly fund Government Departments.