Public Sector Pay Policy

Debate between Luke Graham and Chris Stephens

Tuesday 5th June 2018 Westminster Hall

[Luke Graham]

Thank you, Mr Owen. I always welcome a lively debate.

To be clear, that pay rise will not come from the devolved Administration that imposed the tax; it will come from the UK Government, who will have to cough up to bridge the gap. It was not me who said that Scotland has the highest rate of tax for armed forces personnel; it was Lieutenant General Nugee at a hearing of the Public Accounts Committee just yesterday. That is fact. It is clear that it will be left to Her Majesty’s Treasury to try to bridge the gap and ensure that people are not disadvantaged.

Scotland was already the most taxed part of the United Kingdom, and nurses, teachers and other public sector staff have been forced to pay, at least in part, for the pay rises they have been given. Money that they have been given through pay rises has been taken away through more tax. That is happening at a time when Scotland badly needs to attract more public sector workers to deal with the horrendous staffing shortages that have developed in the NHS and schools in the past 10 years. The UK Government and the devolved Administration should do as much as possible about that.

Let me make one more point about tax, which is a topic that generates lively conversation across the Chamber and will—and should—continue to be debated during this Parliament. The tax increases in Scotland, which were meant to be a progressive move, deliver only 38p more per week for those on the lowest incomes. That is not progressive; it is pathetic. It shows the contrast between the UK Administration and the SNP Administration in Edinburgh: the SNP does not have a grip on our public services in this day and age, and plenty of people in Scotland are being disadvantaged as a result. The UK Government have shown that it is possible, through a strong economy, to give public sector workers a sustainable pay rise without them having to pay for it through increased taxes.

[Chris Stephens]

Can I bring the hon. Gentleman back to reality? Each and every UK Government Department has budgeted for a civil service pay rise of 1%. The Scottish Government have taken a different approach. Does he not acknowledge that in reality the public sector pay cap is still in place for employees who work for the UK Government?

[Luke Graham]

I will not speak for the Minister, who I am sure will cover this, but the pay rises of 6.5%-plus in the NHS are being fully funded. I am sure that as recommendations from other pay review bodies come through, they will be funded, too.

[Chris Stephens]

rose—

Finance (No. 2) Bill

Debate between Luke Graham and Chris Stephens

2nd reading: House of Commons
Monday 11th December 2017 Commons Chamber

[Luke Graham]

I could not disagree more. More money is going directly to frontline services, and we are lowering taxes for the working families who are most in need, so the hon. Lady will see that Charlie and Grandpa are on the Government side tonight, not the SNP side.

As we look ahead to the Scottish Budget on Thursday, colleagues in this House and in Holyrood will be waiting with bated breath to learn precisely how the SNP plans to pass the additional money to local authorities for the roll-out of broadband and other key areas of investment that it has thus far undermined. To see how contradictory some of the SNP’s behaviour is, it is worth looking at how the party misuses the powers it has, refusing to pass some of the increases in the block grant to education and health funding—matters that are explicitly devolved. As we heard in the Budget, the block grant has increased to more than £31.1 billion, which is a real-terms increase over the spending review period and up from £27 billion in 2011-12. What does that mean for our constituents? Well, we have a breakdown of how devolved spending is carried out in public services, thanks to Jim Gallagher. Under the SNP, NHS Scotland is underfunded and understaffed. Health spending in Scotland has increased more slowly than in England over the past 10 years, growing by 34% compared with 50%. Per head, that translates to spending growth of 39% in England but only 28% in Scotland.

SNP Members may complain about Tory austerity, but their argument does not stack up. Her Majesty’s Treasury figures show that total health spending increased by 9% in England between 2011-12 and 2015-16, but only by 3.4% in Scotland over the same period. After 20 years of devolution and 10 years of an SNP Administration, people living in Scotland still have the lowest life expectancy in the United Kingdom. That is a damning indictment of the financial choices the SNP has taken in Holyrood with funding from this place. I could go on, but I am conscious of time.

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

Please do.

[Luke Graham]

Well, education is another area that I could touch on. Reading scores and mathematics and science results are down in Scotland since 2006. England and Northern Ireland now outperform Scotland in every category.

Public Sector Pay

Debate between Luke Graham and Chris Stephens

Monday 4th December 2017 Westminster Hall

[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—

--- Later in debate ---

[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.

--- Later in debate ---

[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.

HMRC Closures

Debate between Luke Graham and Chris Stephens

Thursday 2nd November 2017 Westminster Hall

[Chris Stephens]

I do, and I think it has been driven by cost. One other area is that while I and my hon. Friends were campaigning in our constituencies to get re-elected, HMRC, during purdah, was signing contracts, and it did not wait until after the election to inform the House of those changes. I sympathise with the point that the hon. Gentleman made. Of course, during the process, we had the Concentrix disaster. HMRC had to terminate its contract early because Members of Parliament from right across the House had major complaints about how Concentrix was dealing with its business.

In the National Audit Office’s report, the key findings stated that:

“it will be longer until HMRC starts to realise savings. In the long term, it still expects its new estate to reduce its running costs. It now estimates cumulative efficiency savings by 2025-26 of £212 million, reduced from the £499 million estimated in its strategic outline case in November 2015. By 2025-26, HMRC expects its annual running costs to be £83 million lower than they are now”.

Whether it is £83 million, £212 million or even £499 million, those are drops in the ocean compared with the Government’s own accepted figure for the tax gap of £36 billion. The figure researched by the Tax Justice Network and PCS puts the tax gap at £119 billion. A major reorganisation and rationalisation of the most vital Government Department, putting at risk the very ability to carry out the tax collecting function for savings that are not properly costed, is irresponsible management and governance.

The Scottish Government are consulting today on the Scottish approach to taxation, to accompany gradual increases in its taxation powers. HMRC’s plans could well result in the severe limiting of HMRC expertise based in Scotland, which will become even more important as the Scottish Parliament debates increases in taxation.

[Luke Graham]

Does the hon. Gentleman agree that recent figures show that unpaid tax is at a record low, so some of HMRC’s performance has improved and it is actually doing quite well? Will he join me in asking the Minister to give assurances that that performance will continue, even with the closures and movements going forward?

[Chris Stephens]

I will meet the hon. Gentleman halfway. I do not believe that unpaid taxes are at a new low. In fact, I think the report I referred to earlier, published by Tax Justice Network and PCS, showed a gap of £119 billion. That certainly suggests to me that one of the major focuses of HMRC should be collecting tax and going after the rogues who are registered in the Cayman Islands and other places, shuffling money. I will meet the hon. Gentleman halfway on that.

HMRC faces a number of challenges requiring investment in offices and infrastructure, and no one from HMRC or from the Treasury has so far explained what changes they will make in the “Building our Future” programme to meet these challenges. I will not avoid saying, “We told you so,” because we did, time after time, in this place and elsewhere. We know that UK overseas territories are used to avoid billions of pounds of tax. We know that the uncollected tax avoided by these high-rolling spivs runs into tens or even hundreds of billions of pounds. It beggars belief that, at a time when there is more focus than ever on tax dodgers and their theft from public services, HMRC are shuttering dozens of offices across the country, losing staff and skills that could otherwise be used to target the high rollers who cost our hospitals, infrastructure and schools billions each year.

It is therefore somewhat ironic that Mapeley, to which HMRC’s office estate has been outsourced, is based in Guernsey, a notorious tax avoidance hub overseen by the UK Government. Downing Street confirmed yesterday that HMRC will need up to 5,000 new staff as a direct consequence of Brexit and the UK leaving the customs union.