Public Sector Pay Cap

John McDonnell 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—