Public Sector Pay

Luke Graham Excerpts

Monday 4th December 2017 Westminster Hall

[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.

[Luke Graham (Ochil and South Perthshire) (Con)]

Will the hon. Gentleman give way?

[Dan Carden]

No, I will not. We are starting to realise that the race to the bottom is one that we all stand to lose. The sooner Government Members realise that, the better off our and their constituents will be.

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[Chris Stephens (Glasgow South West) (SNP)]

It is a pleasure to see you in the Chair, Mr Stringer. As the Member of Parliament for Glasgow South West, which the House of Commons Library informs me has a bigger percentage of public sector workers in employment than any other constituency in these islands, as a proud member of Unison and former activist and treasurer for the Glasgow city branch, and—I refer to my entry in the Register of Members’ Financial Interests—as chair of the Public and Commercial Services Union parliamentary group, I very much welcome the debate. As someone who was a public sector worker for 25 years, I hope to bring stories of my experience in that field.

It has been an excellent debate, and I want to mention a number of contributions. The debate was led superbly by the hon. Member for Warrington North (Helen Jones), who discussed the plight of public sector workers, the impact of the public sector pay cap on the economy, which I want to come to later, and the fact that all nations and regions of the United Kingdom are affected. She also rightly mentioned the physically taxing nature and environment of public sector work. She referred to binnies, and it may be of interest to her that I found, when doing my research, that refuse collectors have suffered a real-terms pay cut of £2,064 a year, which I believe is a disgrace.

The hon. Member for Merthyr Tydfil and Rhymney (Gerald Jones) mentioned the impact in Wales and the devolved Administrations, which I agree with. The hon. Member for North Tyneside (Mary Glindon), who is vice-chair of the PCS parliamentary group, mentioned quite rightly the PCS ballot and the complete dissatisfaction of civil servants in the UK. I hope to mention that too in my contribution. The hon. Member for Wolverhampton South West (Eleanor Smith), who is a former president of the trade union that I am a proud member of, mentioned the impact of the public sector pay cap on nursing. My hon. Friend the Member for North Ayrshire and Arran (Patricia Gibson), in a typical tour de force, talked about the impact on the teaching profession. The hon. Member for Birmingham, Edgbaston (Preet Kaur Gill) mentioned the impact on nursing.

The hon. Member for York Central (Rachael Maskell) said that this will increase the gender pay gap. I agree with that point and hope to mention it. The hon. Member for Birmingham, Erdington (Jack Dromey) gave another tour de force, with very powerful examples of public sector workers dipping into their own pockets to help users of public services. My hon. Friend the Member for Glasgow East (David Linden) talked about the impact on firefighters. The hon. Member for North West Durham (Laura Pidcock) quite rightly questioned whether the Government are comfortable with making people poorer. The hon. Member for Bedford (Mohammad Yasin) talked about the magic money tree, which I will come to. The hon. Member for Crewe and Nantwich (Laura Smith), a Unison comrade, questioned the idea that the country cannot afford a pay rise. Again, I agree with that and will come to it.

The hon. Member for Leeds North West (Alex Sobel) said that workers’ debt levels are on the rise, which is certainly the case. The hon. Member for Warrington South (Faisal Rashid) talked about the pressure on services. The hon. Member for Blaydon (Liz Twist), another Unison colleague who has replaced my good friend Dave Anderson, talked about recruitment and retention. That theme was picked up by the hon. Members for Enfield, Southgate (Bambos Charalambous) and for Reading East (Matt Rodda). Last, the hon. Member for Liverpool, Walton (Dan Carden) reminded us quite rightly that all of us have family and relatives who work in the public services.

That was in contrast to the lack of voices from the Government Benches, with one notable exception. I think we are all disappointed by that. They are obviously attending to affairs of state and constituency duties. We did not even hear the moderate voices of Conservatives from Scotland—a collection of individuals who have yet to realise that their hero, Alf Garnett, is in actual fact a parody.

[Luke Graham]

Will the hon. Gentleman give way?

[Chris Stephens]

I am more than happy to give way to Conservatives in a moment, but I want to develop this point. Cynics may believe that a political party that introduced in 1823 the Master and Servant Acts—legislation designed to repress working people and punish them for joining trade unions—would not be interested in issues affecting public sector workers, but I cannot believe that that would be the case.

[Luke Graham]

I thank the hon. Gentleman for giving way. He will appreciate that it was also Conservatives who introduced some of the first health insurance schemes and comprehensive education schemes in the last century. My specific point is that the pay cap was not an ideological point by the Conservative party; it was due to financial constraint at the time. As he knows, the pay cap was devolved in Scotland for a great number of years, so the criticism that he is levelling against the Westminster Government today should also be applied to the Administration in Edinburgh, who have held that pay cap, even though they have the power and the money to change it.

[Chris Stephens]

If the hon. Gentleman does not believe that the public sector pay cap was ideological, I really do fear for him and for his political analysis. Of course it was designed to be ideological. It was part of the cuts programme in the Budget. They kept boasting about the number—

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[Chris Stephens]

My hon. Friend is right. The facts speak for themselves.

I am reminded of the speech I made in the Chamber less than two weeks ago on the Budget, in which I said:

“The only difference between this Chancellor and the previous one is that of style, not substance. Where George Osborne could best be described as a tin of gloss, superficially painting over the cracks in our broken economy, the current Chancellor is the tin of matt, hoping to hide the worst lumps and bumps with repeated applications of more of the same. Either way, they are both the same shade of Tory austerity blue”.—[Official Report, 23 November 2017; Vol. 631, c. 1255.]

As a former treasurer of Glasgow city Unison, I know all too well that trade unions have a welfare fund, which is an important aspect of membership and the recruiting of public sector workers. That branch’s accounts show that from 2010 to 2015, there was a year-on-year increase in spending of that welfare fund. Is that because the pay did not quite match the increases in food, housing and fuel costs? Of course it is.

Today, the average household has lost £7.74 per week due to higher prices for goods, including bread, milk and cheese. The Trussell Trust statistics tell us that in 2010, it delivered 61,400 emergency food parcels to hungry people. Today’s figure, which the Trussell Trust released last month, is 1,182,594 food parcels. All the evidence suggests that many of those going to food banks are, in actual fact, public sector workers.

Despite all the hints, the Budget failed to lift the public sector pay cap. With inflation at a five-year high of 3%, the value of public sector wages has collapsed. In 2017, the civil service people survey, referred to by the hon. Member for North Tyneside, has shown that satisfaction with pay and conditions has fallen and now stands at 30%.

The Government’s solution is to park the issue with pay review bodies. The problem with that approach is that 55% of public sector workers in the UK are not covered by a pay review body. They include jobcentre workers, who administer our social security and pensions system; those who staff our borders, working in immigration and asylum services; civilians in the Ministry of Defence, providing equipment and support to our armed services; and, of course, workers in the national health service and local government.

In November 2015, I secured an Adjournment debate to demonstrate the low pay in the Department for Work and Pensions. Over 40% of its employees were receiving tax credits. As a result of that debate, the Government had no option but to negotiate with the PCS a wage rise for staff in that Department.

Of course, there is the Treasury pay remit, which covers about 400,000 workers. This is the so-called delegated pay system—a notional arrangement whereby Departments and agencies are individual employers responsible for negotiating pay and conditions. Although the remit is “guidance” for civil service departmental employers and other bargaining units, it does set a pay cap framework.

That was not always the case. In fact, national pay bargaining was first introduced in the civil service in 1919, and that position held for more than 70 years until the then Conservative Government, over a period between 1994 and 1996, broke it up and delegated responsibility to individual departmental employers. The reality is not only that it is incredibly wasteful and time consuming to hold hundreds of sets of negotiations about an issue decided and controlled centrally, but that that has led to inequalities whereby staff at similar grades across Departments, and even across agencies within the same sponsor Department, are paid vastly different salaries.

A real danger of the Government’s current approach is that it will increase the gender pay gap, because it is clear that so far the Government have announced the ending of the pay cap for those services that are male dominated, and those Departments that are female dominated do not yet see evidence that the public sector pay cap will be lifted. That is a very dangerous route for the Government to go down.

[Luke Graham]

Will my hon. Friend give way?

[Chris Stephens]

I am not your friend, but I will give way.

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[Luke Graham]

I thought we got on so well! I thank the hon. Gentleman for giving way to me a second time. I supported the pay cap review, both in London and in Edinburgh, as did many Government Members, and my right hon. Friend the Chief Secretary to the Treasury has announced the lifting of the pay cap to allow flexibility. My question to the hon. Gentleman—perhaps he is coming to this—is: what should the percentage actually be, and can he give us a trailer of what will be announced in the forthcoming Budget at Holyrood?

[Chris Stephens]

The last point is well above my pay grade, but I will say this to the hon. Gentleman. It is not for me to determine what the percentage is. That should be negotiated. But the Government should not impose a cap of 1% and then say to individuals, “It’s either that or hit the cobblestones and take industrial action,” particularly given that they passed anti-trade union legislation—the Trade Union Act 2016—making industrial action even more difficult on a national scale.

There is a clear and sustained argument about the clear economic benefits of lifting the public sector pay cap. There would be a positive stimulus in the economy through increased household consumer spending. That would be likely to increase GDP and tax receipts, reducing the overall cost to Government still further. Estimates show that the effect of increased public sector pay would be similar to that of a decrease in income tax. The findings by the TUC and the Institute for Public Policy Research show that the significant portion of funding required to lift the public sector pay cap would in fact be returned to the Treasury almost immediately in the form of higher tax receipts and lower welfare payments. The initial cost per year in 2019-20 of uprating public sector pay in line with the consumer prices index for two years would be £5.8 billion compared with the cost had the cap remained in place. However, that drops to £3.55 billion once higher receipts from income tax and national insurance and lower welfare payments for means-tested benefits are taken into account.

It will be left to the devolved Administrations to take a different path. The Scottish Government have said that they will remove the 1% pay cap. This petition calls for the UK Government to fully fund a pay rise. I say again that it should not be left to a Department, a devolved Administration, a local authority or a health board to find the money from its own resources. Should the Government not look positively on this petition, I can guarantee the Minister that Scottish National party MPs will put pressure on the Government to ensure that they do that, and we will continue to campaign for public sector workers, not just in Scotland but across these islands.

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[Peter Dowd]

My hon. Friend, as ever, has hit the nail right on the head. It is all talk and no action.

[Luke Graham]

I thank the hon. Gentleman for giving way, he is being too friendly this afternoon. He asks for a Conservative, well there is one stood right here who, along with many Scottish colleagues, supported the pay cap reviews in London and in Edinburgh. It was announced in the Budget that, certainly from a UK Government perspective, according to the pay boards, they will have the flexibility to lift those pay caps. If they want the evidence, we are right here.

[Peter Dowd]

The voice of the lonely. That is what I would say: the voice of the lonely.

The IPPR and Unison have both provided research that demonstrates that lifting the cap would bring higher tax receipts and lower welfare payments. That has been suggested and indicated by other Members, and they are absolutely right. It would bring real money into the economy. We know that. Why do the Tories not accept it? Let me be clear, on cutting public sector pay, the Chancellor virtually stands alone. Ten years on from the international banking crisis, countries that instituted public sector pay freezes or pay cuts have all reversed them, including the likes of Germany and the United States. Once again, the Conservatives are left behind.

In their written response to the petitioners who triggered this debate, the Government said:

“We still need to deal with our country’s debts…to enable us to invest in our public services.”

They are not even doing that. Hon. Members should look at the Red Book: that is not being delivered. Again, they are the all talk, no action Government. They have not only borrowed more money than any other Government before, but have failed to invest in our public services and those who work in them. We all know it. The country will not run a surplus until 2030—batted off again—at the earliest, a full 15 years after the former Chancellor said the deficit would be eradicated.

So where are we? We cannot afford any rise for our public sector workers but, as has been alluded to, we can afford to relax the bank levy to the tune of the best part of £2 billion a year by 2022. We can also afford to relax corporation tax and other taxes for corporations worth the best part of £70 billion over the next five years. As has also been alluded to, we can afford to pay £3 billion for a botched EU Brexit that should have been sorted out months ago. That has cost the country because of the useless way the Government have dealt with it. We can afford, as we have found in the last two or three days, to pay out £2 billion to east coast line companies. We can afford that; just pick that up, it is no problem at all. We can afford to sell off the Royal Bank of Scotland at a loss of billions upon billions of pounds. The taxpayer picked up the bill for that, and it is the bank putting straight back into the hands of those who caused the problem in the first place. That is the reality, and as we come to the end of another miserable, cold, dark year under the Tories, we cannot afford to pay our public sector workers a decent wage.

I simply say, as I have said time after time and will continue to say: the sooner this Government get their marching orders, the better for all of us. I suspect the Government are in that position themselves, but I am not interested in the Government: I am interested in public sector workers.