Financial Reward for Government Workers and Key Workers

Kemi Badenoch Excerpts

Monday 14th December 2020 Westminster Hall

[The Exchequer Secretary to the Treasury (Kemi Badenoch)]

Thank you, Mr Stringer. It is a tradition on occasions such as this to congratulate the hon. Member for Gower (Tonia Antoniazzi) on securing a debate on the issue of the day. Today, however, we should also congratulate the thousands of people who secured the debate by taking the time to express their support for key workers. On hundreds of occasions, Government Ministers have, in public and in private, expressed their gratitude and respect for what our millions of key workers have done, and I would like to do so again.

I would also like to express my condolences to the hon. Member for Bootle (Peter Dowd) and his family on the death of his daughter. As a mother of three, I cannot even begin to imagine such as loss. We are divided by politics but united in our passion for public service, and I pay tribute both to him and to her for all her service.

We tend to think of key workers as nurses, teachers and police officers, whose efforts, as ever, have been invaluable. In the context of the pandemic, however, our understanding of who is key has rightly stretched far more widely, which is pertinent for the subject of the debate. Understanding who is key extends to local government, national Government, transport, utilities and communications. Importantly, many of the people on whom we have relied are in the public sector. The right hon. Member for Hayes and Harlington (John McDonnell) said they are the people who kept the country going, but it is not just the public sector. Food retail workers, train conductors, farmers and lorry drivers—every one of them is a crucial link in the chain and deserves our thanks.

The substance of today’s debate is asking why we choose restraint when it comes to the way in which some of those in the public sector are financially rewarded. Hon. Members will know the answer. Many, in fact, have referenced fiscal policy since 2010. They should all know—if not, I am happy to remind them—that it was the difficult decisions we made during that period that have enabled us to borrow to fund such a significant package of support. Members have repeatedly said today, “We should borrow.” We are borrowing. A year ago, who would have believed that we would have spent £43 billion on people to be furloughed, £13.7 billion on the self-employed, and over £280 billion in total, in the space of eight months, on an unexpected pandemic?

[Chris Stephens]

Will the Minister give way?

[Kemi Badenoch]

No, I am afraid I am not giving way.

I am also happy to remind hon. Members that almost exactly a year ago, after nine years of Conservatives in Government and the very same fiscal policies that hon. Members have criticised today, the public chose to renew their faith and trust in this Government—not just with an increased share of the vote, but with a much increased majority. Since 2010, they had heard these arguments about what we were doing on fiscal policy over and over again, from many colleagues on the Opposition Benches who are not in the House today. We all believe in fair pay, but we disagree on where it is sent. However, I remind hon. Members that the public also want fiscal responsibility.

Good government is about making the right choices. To paraphrase the Chancellor, our health emergency is not yet over, while our economic emergency has only just begun. At a time like this, it is the responsibility—in fact, the duty—of Government to prioritise and target support where it is most needed, in a way that is fair and sustainable, that protects jobs and businesses, and that limits long-term damage to the economy. The hon. Member for Gower referenced many previous responses the Government have given on this topic. She may not like the answer, but the facts have not changed, and I am happy to repeat them here. Fairness has been a guiding principle.

[Mary Kelly Foy]

Will the Minister give way?

[Kemi Badenoch]

I am not giving way. I have already said I am not; please stop asking.

As the Chancellor pointed out in his statement on the spending review, in the six months to September, private sector wages fell by nearly 1% compared with last year. Over the same period, public sector wages rose by nearly 4%. Workers in the private sector have lost jobs, been furloughed, and seen their wages cut and their hours reduced, while those in the public sector have not. [Interruption.]

[Graham Stringer (in the Chair)]

Order. Carry on.

[Kemi Badenoch]

Thank you, Mr Stringer. For that reason, the Chancellor announced a temporary pause to pay awards for some public sector workers for the year 2021-22. Disappointing though I know this will be, this approach allows us to protect public sector jobs at this time of crisis and ensure fairness between the private and public sectors. Crucially, as I have said, we are targeting our resources at those who need them most. First, taking account of the NHS Pay Review Body’s advice, we are providing a pay rise to over 1 million nurses, doctors and others working in the NHS. Secondly, we are protecting those on lower incomes. The 2.1 million public sector workers who earn below the median wage of £24,000 will be guaranteed a pay rise of at least—and I emphasise “at least”—£250.

In the spending review, we also accepted in full the recommendations of the Low Pay Commission—to increase the national living wage by 2.2% to £8.91 an hour, to extend that rate to those aged 23 and over, and to increase the national minimum wage. According to the commission, those rates will give low-paid workers a real-terms pay rise and protect their standards of living without significant risks to their job prospects. A full-time worker on the national living wage will also see their annual earnings increase by £345 next year. That is a pay rise of over £4,000 compared with 2016, the year in which the policy was first introduced. Taken together, these minimum wage increases will likely benefit around 2 million people and help make real progress towards ending low pay in the UK.

The risk with broader-brush measures, including income tax or national insurance policies—this particular point was not made today, but it is an important one to reiterate—is that it is difficult to define and limit who should benefit. The result could merely be to reward the better paid, at a time when the Government have already been forecast to be borrowing at record peacetime levels.

As a Government, we are committed to keeping taxes low in order that working people, including key workers, are able to keep more of what they earn. In April 2019, the Government increased the personal tax allowance to £12,500, meaning that the personal allowance is up by more than 90% in less than a decade, ensuring that more of the lowest earners do not pay any income tax at all. In April this year, we also increased the national insurance contributions primary threshold and lower profits limit to £9,500—a move that will benefit 31 million people. Add all that together, and changes to income tax and national insurance contributions between 2010-11 and 2020-21 mean that a typical basic rate employee in England, Wales or Northern Ireland is more than £1,600 better off a year.

[Mary Kelly Foy]

Will the Minister give way, with 15 minutes to go?

[Kemi Badenoch]

I will conclude by saying that this Government and all the people of this country are grateful for everything that our key workers in both the public and the private sector have done and continue to do, but in the choices we make, we must chart a way ahead that is fair and sustainable and that gives us the best chance of a strong economic recovery. That is the thinking behind what we have done and it will remain the thinking behind what we do in the challenging months and years ahead, as I believe it should.

[Chris Stephens]

On a point of order, Mr Stringer. If I heard the Minister correctly, it was suggested that there were to be no job losses in the public sector, yet a number of us in the debate mentioned that there were 2,000 redundancies in HMRC. Mr Stringer, can you tell me how the record can be corrected—or has the Minister just cancelled the redundancy notices of 2,000 workers in HMRC?