Public Sector Pay

Helen Jones Excerpts

Monday 4th December 2017 Westminster Hall

[Helen Jones (Warrington North) (Lab)]

I beg to move,

That this House has considered e-petition 200032 relating to public sector pay.

It is a great pleasure to be here under your chairmanship, Mr Hanson.

When Conservative Members talk about public sector workers, it is common to hear them refer to them as if they were somehow a drain on the economy. They try to make a distinction between public sector workers and taxpayers, as if somehow to be fair to one is unfair to the other. That is nonsense, for two reasons. First, public sector workers, like most of us—or at least those of us who cannot afford obscure offshore tax avoidance schemes—are taxpayers and, secondly, in a modern economy the private sector and the public sector are interdependent. It is not possible to run a 21st-century economy without a healthy, educated workforce. The security that is provided by our armed forces, the police and the fire service is as essential to businesses as to individuals, and the rule of law they maintain, along with the courts and the Prison Service, provides the essential stability that allows businesses to grow and invest.

[Nick Thomas-Symonds (Torfaen) (Lab)]

I congratulate my hon. Friend on the speech she has started to make. Does she agree that one of the great betrayals and causes of instability is the constant promise that the pay cap is temporary, when all the time it has continued, and seven years down the line here we are?

[Helen Jones]

My hon. Friend is right, and I will come to that issue later.

None of us could function day to day without, for instance, the people who sweep our streets and empty our bins. I mention them because their hard and unglamorous jobs—as many public sector jobs still are—often get overlooked when we talk about the public sector. We understandably see documentaries about hospitals and schools, but I would like to mention those people who are now officially refuse disposal operatives, but in my neck of the woods are the binnies. They do a grand job.

[Kevin Brennan (Cardiff West) (Lab)]

I congratulate my hon. Friend on the way in which she is introducing the debate. As Chair of the Petitions Committee, she always introduces these debates with great force and eloquence. In addition to the points she has made, does she agree that public sector workers are also consumers? It is essential that they are appropriately rewarded, as consumers, for their work so that they too can contribute to stimulating the economy, including the private sector.

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[Helen Jones]

My hon. Friend is right and, again, I will come to that matter later.

When we are told that only the private sector generates value in the economy, we should ask, “Yes, but who looks after your workers when they are sick? Who do you call if you are burgled or are the victim of fraud? Who do you call if a fire starts in your building? Who educated the workers you employ?” The answer is, of course, “the public sector”. There is something else about the public sector that cannot be measured so easily: it has contributed more to human improvement and happiness than it is possible to say. Without our teachers and our classroom assistants, for instance, so many hopes and aspirations would be stifled. Having a national health service has freed many families from the fear of being ill and not being able to pay the doctor. The improvements that NHS staff have made in preventing and tackling disease have vastly increased everyone’s quality of life.

Something else about the public sector is that its workers are often ready to go the extra mile, precisely because they believe in the notion of public service. We see that in teachers and classroom assistants, who put on extra classes in their own time to help children who are struggling or to help the very brightest achieve their potential. We see it in an NHS support worker, who will bring in a card or a small gift for an old person on their birthday because they know they have no one else. We see it in a police community support officer who will go around to reassure a victim of crime or antisocial behaviour, even when they are off duty. Nor should we forget that we saw it in this House when Westminster was under attack from terrorists. The staff of St Thomas’s Hospital ran—they ran—across that bridge, heedless of their own safety, to help others, and a very brave man, Police Constable Keith Palmer, lost his life defending us. After such incidents, a lot of gratitude is expressed to public sector workers, and rightly so, but gratitude does not pay the rent or the mortgage, or put food on the table. It does not buy a new uniform for the kids, or a day out.

[Dan Carden (Liverpool, Walton) (Lab)]

I, too, congratulate my hon. Friend. Aintree University Hospital is in my constituency. Nurses have had a 14% pay cut in real terms since 2010 and one in four of them is taking on additional employment to make ends meet. What does that say about the state of our economy?

[Helen Jones]

My hon. Friend is absolutely right. Gratitude for public sector workers is not enough; they also deserve our respect. Respect involves paying them a decent wage for the job they do but, sadly, under this Government their wages have been continually held down.

[John Spellar (Warley) (Lab)]

Many of the arguments my hon. Friend has made up to now would have been recognised and endorsed by traditional Conservatives. Is it not unfortunate that, having imported the anti-state ideology from the US Republicans, they now see the state and public service as the enemy rather than a key part of the mixed economy?

[Helen Jones]

I could not have put it better myself. The result was that one of the Conservative Government’s first actions was to announce a two-year freeze on public sector pay from 2011-12. They followed that up with an announcement that public sector pay would be capped at 1% for the following four years and, in his 2015 summer Budget, the Chancellor announced a further four years of the cap, saying that he would fund public sector workforces for a pay award of 1%. That did not mean, of course, that everyone would get even 1%: a letter from the right hon. Member for Chelsea and Fulham (Greg Hands), then a Treasury Minister, made it clear that the money was first to be used—as if—to address recruitment and retention pressures in the system: “there should not be an expectation that every worker will receive a 1% award”. What that meant, of course, was that those people in areas where there were retention pressures received less, and those in areas where there were many people on the minimum wage—46,000 in local government alone—who had rightly to receive a pay rise, received less. Even if a public sector worker got the 1% pay rise, their wages were still declining in real terms. A public sector worker on the median income who had their pay determined by the pay cap would, by 2016, have lost £3,875 in real terms. Real-terms losses of between £2,000 and £3,000 are common throughout the public sector.

A midwife on band 6 will have seen a real-terms decline in her wages of 12.1%. Midwives are leaving the profession at a previously unseen rate. They are leaving the register in serious numbers. A teacher outside London will have lost 10.4% and a band 5 nurse will have lost 11.9%. If the pay cap continues until 2020, there will be a further real-terms decline in wages. A social worker will lose £3,533. A border guard—I thought the Government wanted to secure our borders—will lose £2,520. A firefighter will lose £2,766. The reason for those falls is not hard to find: while wages have been stagnant or hardly rising at all, prices have been rising at a much faster rate.

[Gloria De Piero (Ashfield) (Lab)]

My hon. Friend is making an incredible speech, and I thank her for giving way. On the point about rising prices and falling wages, I want to tell her about a police officer who contacted me. He said that after 20 years of service, he never thought he would be in a position where he was struggling to look after his family. He ended with a question:

“Do we really want a police force that is stressed out and humiliated by not being able to look after their family?”

The clear and simple answer to that is no, we do not.

[Helen Jones]

Indeed. The situation my hon. Friend mentioned is true of many people in the public sector. Between 2010 and 2016, food prices went up by 8.5%, electricity went up by 27.7% and gas went up by 24%. These are not things that people can do without; they are essential for a decent life. Note that I am not talking about an extravagant life; I am simply talking about a decent life.

[Ian C. Lucas (Wrexham) (Lab)]

My hon. Friend is making a powerful case. The continuous process since 2010 is taking money out of local economies. All the salaries she is referring to are normally spent on our high streets and in our local businesses. They are being hit hard by the Government’s sustained deflationary approach.

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[Helen Jones]

My hon. Friend is right. I will come to the effect on local economies in a moment. In the meantime, we should note that the costs of going to work have risen since 2010. Bus and coach fares have gone up by 25%. Many low-paid public sector workers are reliant on public transport because they cannot afford to run a car. The cost of a nursery place for a child under two has gone up by 21% on average. In big cities, it has gone up much more. For a child older than two, the cost has gone up by 19.6%.

In addition, public sector workers have seen other attacks on their wages. In many cases, their pension schemes have been changed. They are now having to pay more pension contributions than before. Those on lower pay have been hit by changes to tax credits and will be hit again by the universal credit system. Even when we take into account increases in the minimum wage and changes to the tax threshold, the changes to tax and benefits that the Government have introduced have hit poor working families even harder than those out of work. So much for having a system that makes work pay.

The real effect that those things have on people can be seen clearly in some of the evidence gathered by the trade unions. A Unison survey in 2015 showed that 73% of respondents had had to borrow from family and friends to get by. Some 17% had pawned items and 23% had had to move to a cheaper property or re-mortgage. Some had even used food banks. When those in the public sector—people we collectively employ—are having to use pawn shops and food banks to get by, it shames us all. [Hon. Members: “Hear, hear.”]

Many other staff have real issues, too. In its document on the pay cap, the TUC interviewed a number of people about their experiences. A midwife on £23,000 said she could no longer have a night out or buy gifts for family and friends. An ambulance control worker who works part time—colleagues may have been in an ambulance control room; I can imagine few more stressful jobs—found that his family was £200 a month worse off because of changes to tax credits. A dental nurse had seen her national insurance contributions go up by £28 and her pension go up by £10. That does not seem a lot, but it is a hell of a lot of money for someone on a low wage to lose each month. It is the difference between getting by and not getting by.

[Chris Elmore (Ogmore) (Lab)]

My hon. Friend is making a hugely important and informative speech, as she always does in her role as Chair of the Petitions Committee. On the trade unions point, the Royal College of Nursing has run a campaign in Wales asking the British Government, not the Welsh Government, to fund the public sector pay rise, because the Welsh Government have sustained £1.6 billion of cuts by the British Government to the block grant since 2010. Does she agree that it is not for the devolved Administrations to fund the pay rises? It is for the British Government to step up and increase the funding for our public sector workers to ensure they get the pay rise they deserve.

[Helen Jones]

My hon. Friend is right. This Government have been very good at trying to place the blame elsewhere for a policy they introduced. In fact, so bad have things got that last year the chief executive of NHS Providers told the Health Service Journal that one trust had tracked where its low-paid workers were going when they left. They were leaving to work in supermarkets because the pay was better.

Of course, it is not just pay that has caused problems for public sector workers. While their pay is being held down, they are being asked to do more with fewer resources, and they worry about that because they are committed to their jobs. The TUC report includes interviews with various people. One midwife said:

“The pressures on wards, the size of our caseloads and the level of pressure means we worry about making mistakes.”

Another said:

“I’ve seen people walk away from the profession because they can’t take it anymore. It all affects the continuity of care for the women in our care”.

A firefighter told the TUC:

“My station used to have fifteen firefighters and two vehicles on each day. Now there are only six firefighters and one frontline vehicle.”

That combination of pay restraint leading to real-terms cuts and increased pressure on public sector workers means that in many areas we are now having serious difficulty recruiting and retaining staff.

The school workforce census in 2015 showed that one in 10 teachers had left the profession in the previous year. We now know that one quarter of newly qualified teachers leave within three years. That is the highest since records began, and that is not surprising, because they are under enormous pressure. The Government have tried to deprofessionalise the job. They have taken away the checks and balances that used to ensure that heads did not behave unreasonably. Not all bosses are saints, even in the public sector. Cuts to schools are changing the balance of the workforce. We used to have that balance between young teachers coming in with new ideas and older, more experienced staff who could support them, but that is subtly shifting because schools cannot afford to employ the more experienced staff.

I know of one woman, fluent in two languages, who could not find employment when she wanted to come back into teaching after looking after her children. She can only find a job as a teaching assistant. That is a scandalous waste of her experience and qualifications. The Government got rid of lots of prison officers, and now our jails are at risk of serious violence, yet they are having difficulty recruiting more staff because the pay is poor. The NHS has shortages in various areas—accident and emergency, anaesthetics and psychiatry, for example—and the Government’s response when trusts bring in locums or agency staff is to blame the trusts for spending too much money. In fact, the cure is in the Government’s own hands: recruit staff, train them well and pay them properly. That means not only abandoning policies such as refusing to give trainee nurses a bursary, but stopping treating staff as the enemy, as the Health Secretary did in the case of the junior doctors, and it now seems that he plans to do that again to other staff.

In the Budget the Chancellor announced the Government would fund a pay rise for nurses. It applies to all the “Agenda for Change” staff, although we are used to the Government forgetting that cleaners, porters, lab technicians, support workers and a whole load of other staff work in hospitals, and without them our doctors and nurses could not do their jobs. However, the Health Secretary immediately announced that he wanted to change the conditions of work for staff, particularly their unsocial hours payments, so the Government are giving with one hand and taking away with another.

A very wise old headteacher once said to me—in the days when headteachers stayed around a long time, rather than getting burnt out and leaving—“People say the most important thing in school is that the children are happy, but I think the most important thing is that the staff are happy, because if the staff are happy the children will be happy and well taught.” That needs to be applied in other areas as well. Public sector pay has dropped 15% from its peak, and has lagged behind growth in the economy as a whole since 2016. It is now at its lowest level relative to the private sector since the 1990s, when, funnily enough, there was also a Conservative Government in power. As my hon. Friend the Member for Wrexham (Ian C. Lucas) has said, that has had a huge effect on regional economies.

If we take average public sector pay and look at the number of full-time equivalent workers in a region, we can estimate the loss. The north-west has lost £3.7 billion from its economy; the midlands £3 billion; and London a whopping £9.1 billion. That is all money that would have been spent in local businesses, protecting local jobs. Most of the people we are talking about are low paid and the extra money they get is spent on essentials, but the Government choose to ignore that. They have several excuses, or explanations, depending on one’s point of view. First, they try to say that public sector workers have better terms and conditions than the private sector. Well, they no longer have better pensions—although most of them never did—as their pensions have been changed. Estimates of private sector pay are always depressed by the fact that some areas of the private sector have very low pay indeed. The Government know that, because their statistics authority told them so in 2016 and showed that on a like for like comparison public sector workers are on average paid 5.5% less than in the private sector, not more.

The second attempted explanation usually implies that public sector workers have cushy jobs and have it easy. Tell that to a police officer in the inner city, a nurse in A&E, someone who cleans in a hospital, or the bin men working out in the rain and snow this winter. Cushy? Most Conservative Members here would not last a week. In fact, I do not think many of us would last a week. The jobs are hard.

The third explanation says that all this is dreadfully, terribly regrettable, but necessary to get down the debt. We need to say that that is simply and absolutely wrong because during the time of the public sector pay cap, debt has increased, not diminished. It has increased by £496 billion. So if the answer to debt is a public sector pay cap, someone is asking the wrong question. The Government fail to take into account the tax that the public sector generates. It has been estimated that for every 1% increase in public sector pay, at least £710 million worth of tax receipts are generated, possibly as high as £800 million, cutting the amount that is spent on tax credits and benefits. That reduces the total cost of a 1% increase to around £600 million. Opposition Members will say, “That is a lot of money”, which it is, but it is a drop in the ocean compared with what the Government have spent on reductions in corporation tax.

The total of the reductions in the main rate of corporation tax, the small profits rate and the combined rate costs the country £16.5 billion a year on current prices. So there we have it: tax cuts for big companies and pay restraint for public sector workers. Nothing could tell us more about the Government’s priorities. They also ignore the fact that public sector pay increases generate more jobs in the wider economy and at least £470 million in the wider economy, probably nearer £800 million, and that supports at least 10,000 full-time equivalent jobs in hospitality, transport and retail. The truth is that the policy is based on a failed economic model.

[Mr George Howarth (Knowsley) (Lab)]

My hon. Friend is typically making a powerful and eloquent case, which I agree with. Does she agree that another excuse the Government frequently use is that it is not down to them, but down to pay review bodies? The difficulty with pay review bodies, which are generally a good thing, is that they are not required to close the gap that already exists, but to consider relativities as they stand at the moment. Is it not time we had a proper review that looked at all the issues my hon. Friend has mentioned and that accepted that public sector workers are important to our economy, our safety and our everyday existence?

[Helen Jones]

My right hon. Friend is right. The cap has depressed the wider economy. It is now starting to depress wages in the private sector, and it is seriously depressing public sector workers. It has failed all round. The Government need to accept that they have failed and should stop trying to put the blame elsewhere. They announced, for instance, that the police can have a rise, but they will not fund police authorities to pay for it. Council workers can have a rise, but they are cutting the money available to local authorities. Health service workers can have a rise, but they will take it back from somewhere else. The Government must stop making excuses and recognise that the policy has failed.

Two things need to happen: first, all of our public sector workers should at least get a proper living wage: not the spurious national minimum wage, but a real living wage. We cannot run public services on the backs of poorly paid workers any longer. Secondly, the Government need to let proper negotiations begin in the various pay review bodies. My right hon. Friend is right: at the very least they should look at the discrepancies that have been created and how far public sector workers have fallen behind. Then they need to fund those pay rises. That would be good for public sector workers, the wider economy and our regions, and in the end it would be good for our country. It is time to abandon the policy and give people a decent wage.

[Several hon. Members rose—]

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[Dan Carden (Liverpool, Walton) (Lab)]

It is a pleasure to speak in the debate. I had not intended to speak, but having listened to all the contributions from my colleagues, I felt it was worth making some remarks and perhaps focusing on some of the services in my constituency that have been most affected by public sector pay restraint. It is a pleasure to follow my hon. Friend the Member for Warrington North (Helen Jones), who opened the debate with facts and figures and opposed the ideological drive behind so much of what the Government have done in their seven years in office—not least holding down public sector pay.

I declare an interest as a proud member of Unite the union, and I am grateful for its support before the recent general election. I am especially privileged to speak in the debate as someone whose mother has served our national health service on the frontline for more than 40 years. That is something I am incredibly proud of. It is an honour to meet people who my family and relatives, who work in our public services, have spent their lives helping and supporting. That is some of the most valuable work done across our society.

I do not have great facts and figures, but I will mention a few services in my constituency. Merseyside police has lost 1,000 police officers and £100 million from its budget. The effects of that can be read in the pages of the Liverpool Echo¸ which show rising crime, criminals developing in confidence and ordinary people feeling insecure in their homes and on the streets. The Prime Minister had the audacity to claim that police budgets have been untouched and that police pay has increased, which led the Police Federation to say she has

“lost touch with reality”.

I could not agree more. The Police Federation puts the pay cut at 16% for our police officers. There have been cases in my constituency and across Merseyside of some of the worst violent attacks on our frontline police officers. To think that we cannot even afford these people a decent standard of living in 2017 is absolutely outrageous.

I recently visited Walton Prison, which is in my constituency. Under this Government, 7,000 prison officers have been cut—one in four—and the ensuing crisis in our prisons has led the Government to look to recruit 2,500 new prison officers across our prison network. This year, prison officers have been awarded a 1.7% pay rise. That is still a cut of £980 in real terms; they have faced such cuts every year since 2010. The evening before I visited Walton Prison, three new recruits had been violently attacked. One reason we cannot maintain safe standards and retain new staff in our prisons is because prison officers’ pay has been depleted and the worth and value of the job is not recognised by the Government. It is time for change.

[Helen Jones]

I know from staff at Risley Prison in my constituency that prison staff are now unable to take time off when necessary and that whole wings are locked up for half a day, meaning that prisoners cannot access education or work. Does my hon. Friend agree that, as well as that being unfair to the staff, it does not help us to reform prisoners—it makes it more likely that they will reoffend?

[Dan Carden]

Having seen that at first hand, I could not agree more. It is worth noting that the Prison Officers Association is lobbying Parliament tomorrow; I hope many colleagues can get along to that.

I must touch on Aintree Hospital, which is also in my constituency. Nurses there have faced a 14% pay cut since 2010, and one in four are taking jobs outside their employment as nurses to make ends meet and to pay the bills. The effect of the pay cap on our hospitals is to cost us more, as hospitals are having to recruit nurses through agencies at a much higher rate than if they were recruited through the hospital itself. The economics of this fall apart as soon as we put them under any scrutiny.

Some 70% of the public—or more, I believe—support the calling of the debate, and the reasons for that are clear. We have seen the worst squeeze in living standards for generations, the worst wage growth since the steam engine was created and the worst decade for productivity since the Napoleonic war. The damning statistics on wages and productivity point us towards the truth: we cannot cut our way to productivity and we cannot reduce workers’ rights and pay to increase productivity. We need to respect workers, give them decent standards of living and actually create decent places of work. We can do that, first and foremost, in our public sector.

Since the 1970s, the percentage of GDP taken as profits and not paid as wages has risen through the roof; the paradise papers showed examples of profits being extracted from our economy and the money vanishing. When we talk about what money we have to share around for our constituents—in their pay and in benefits—we are talking about a smaller and smaller amount every year.

I remind the House of where the Government started back in 2010. This is not a new problem, and the Government were warned about where we would get to. It was this Government who talked about strivers versus skivers. It was this Government who sought to pit public sector workers against private sector workers, telling them that they were against each other in the race for decent wages and decent living standards. It was this Government who sought to pit unionised workers against non-unionised workers.

We are getting towards the end of the race to the bottom that the Government have started us on.

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[Andrew Jones]

I will come on to the process ahead. Despite the difficult economic circumstances from 2010, the Government have continued to invest in our public servants. We are helping them, alongside all others, to keep more of their money by increasing the personal allowance. That is a significant change. In 2010, the personal allowance stood at £6,475, but in the Budget only a few days ago, the Chancellor announced that in April 2018, the allowance will rise to £11,850. That means that public sector workers on a basic rate of tax will be £1,075 a year better off compared with 2010.

[Helen Jones]

Does the Minister accept, first, that most of the money spent on raising the tax threshold actually benefits the better-off? Secondly, does he accept that the combined effects of the Government’s tax and benefit changes, even when raising the tax threshold is taken into account, has been to hit low-paid families in work hardest?

[Andrew Jones]

I do not accept that. I have looked at the distribution analysis and what the hon. Lady said is simply not the case.

We have not just helped through the personal allowance. We have invested a further £100 million to recruit 2,500 extra police officers, and in July, my right hon. Friend the Education Secretary announced an additional £1.3 billion for schools to support the transition to the national funding formula. Let us go back to the NHS; in the Budget, the Government announced an additional £6.3 billion of new funding for the NHS. As I mentioned, we reconfirmed in the Budget the ending of the 1% public sector pay policy. That means that the Government are no longer pursuing a one-size-fits-all policy on pay for public servants.

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[Helen Jones]

It has been a great pleasure to listen to this debate. I thank all hon. Members on this side who have spoken. I feel sorry for the Minister, who is normally a reasonable soul, because he has been sent here to defend the indefensible. As hon. Members on the Government side have slipped away, I thought at one point that he would be left solely with his Parliamentary Private Secretary, chuntering from a sedentary position behind him. The hon. Member for Croydon South (Chris Philp) ought to learn that PPS’s are supposed to be, like Victorian children, seen and not heard.

We have heard from the Minister, once again, the same warm words for our public sector workers: hard-working, talented and committed. What we did not hear from him, significantly, was an agreement to fund a decent pay rise for them. Once again, the Government are deflecting blame. They say, “Yes, you can have a pay rise. Go away and negotiate it; we’re just not giving you the money for it.” That is the problem; that is what they have done all along. I say again that our public sector workers deserve better than that. They deserve far more than warm words. No one is asking for them to be paid an extravagant salary, merely a salary that enables them to live decently. That should not be too much to ask in 21st-century Britain, but it appears that it is too much to ask from this Government.

It is significant that no Conservative Members made a speech during this debate. They too must know that the policy is indefensible. They have public sector workers in their constituencies; they must have seen what is happening to them. They should not be complicit in this policy. They need to tell their Government and their Whips Office that this situation cannot continue. We on this side are clear that public sector workers ought to be able to negotiate a decent pay rise and have it funded; it is time for those on the Government side to realise that as well. Otherwise, their warm words about people in the public sector will be seen as so much hot air.

Question put and agreed to.

Resolved,

That this House has considered e-petition 200032 relating to public sector pay.