Public Sector Pay Cap

Lord Cunningham of Felling Excerpts

Wednesday 5th July 2017 Lords Chamber

[Lord Bates]

I am not sure that I agree with my noble friend in that respect because the way that we have raised tax thresholds, particularly for lower-paid workers, has meant that on average they have benefited by an additional £1,005, which is a significant increase to their salary. Further, there is the increase in the living wage, with the equivalent of a 4.2% increase for the lowest paid. Therefore, I think there are other mechanisms by which we can ensure that people’s pay and conditions improve without resorting to raising taxes.

[Lord Cunningham of Felling (Lab)]

My Lords, is it sensible for the Government to continue to put their faith in growth in the economy when today’s abysmal news about productivity demonstrates that it is bound to fail? Our productivity now is lower than it was a decade ago.

[Lord Bates]

That is why we have said that productivity is a key target. But just last year we had the fastest-growing economy in the G7. We have seen incredible growth, otherwise we would not have employment at record levels in this country, with an additional 3 million people in work. Part of the reason is because we have kept a tight grip on the public finances and have seen the deficit reduced by two-thirds. These are important contributions towards maintaining confidence in the economy going forward. However, I accept that we need to work much harder on the area of productivity.