Public Sector Pay Cap

Lord Monks Excerpts

Thursday 13th July 2017 Lords Chamber

[Lord Monks (Lab)]

My Lords, the Prime Minister called it correctly at the Conservative Party conference when she said:

“Our economy should work for everyone, but if your pay has stagnated for several years in a row and fixed items of spending keep going up, it doesn’t feel like it’s working for you”.


She was right then, but she is wrong now, as she and the Chancellor refuse to lift the cap on public sector pay. So I am very grateful to my noble friend Lord Haskel for initiating this debate and highlighting the yawning gap between words and actions. I am just sorry that not more Members of the government party are present to keep the Minister and his Front Bench colleagues company today.

It is not just public sector workers who are affected. It is evident that real earnings for the many have been falling since the financial crash of 2008. It often seems that the implosion of our banks then has led to an explosion of food banks now. British workers, according to the OECD, are languishing at the bottom of the pay increase league, and this is before the effects of Brexit are felt fully. The Government need to listen to the TUC’s campaign that Britain needs a pay rise. A decent living on offer to all public sector workers should be and must be our goal.

There was a time when the Government saw it, as part of their role, to set a good example as a good employer. That no longer seems to be the case. We have seen seven years of pay freezes and caps, meaning that on average the public sector worker is £2,000 worse off in real terms. Nurses, for example, are £3,000 worse off. The effects on morale are obvious, and the effects on recruitment and retention are becoming obvious. Just recently, we have seen plummeting numbers of applications to join the nursing profession, and a rising number of teachers are leaving theirs. A cap of 1% and an inflation rate of 2.7% is a recipe for disaster. Something must give, and it should be the cap.

A recent wide-ranging survey by UNISON found an increased rise in usage of debt advice services, pawn shops, payday loans and food banks. It is very graphic and it is certainly a sorry story. My plea today to the Government is that the cap should be lifted and there should be restoration of collective bargaining and the restoration of autonomous pay review bodies, maybe reformed a little bit—the productivity area is one they could usefully look at more than they do. The Government should also introduce a living wage for public sector workers.

It is not a question of not being able to afford a pay rise for public sector workers; we cannot afford not to give public sector workers a decent pay increase. They certainly deserve it, and we depend on them.