As a teenager, the shadow chancellor changed his name from Gideon Osborne to George Osborne. He may need to change it again to Samson to give him strength to cope with the hostility likely to come his way if indeed he gets to impose a pay freeze for public sector workers earning more than £18,000.
Given that the minimum starting salary for a registered nurse in the NHS is currently £20,710, it looks like Osborne will be alienating a substantial part of the labour force of the UK’s biggest employer. And, says the Royal College of Nursing, a recruitment crisis in the profession may be around the corner
After all the hard-won recent improvements to pay and employment in the NHS under Agenda for Change, it would be discouraging, to say the least, if they were mothballed by the incoming Conservatives. Although the annual NHS pay bill in England was an eye-watering £28bn last year, staff costs are well under half of the sector’s annual outgoings. So it’s quite some political gamble to target NHS pay, rather than other areas of expenditure.
In schools, the main pay scale for teachers currently starts at £21,102, so it will be an uphill climb there for David Cameron if he wants to win hearts and minds.
More generally, the tactic of targeting pay will require the Conservatives to deliver on curbing bonuses among high-earning bankers if it is to have any political integrity. If nurses, teachers and others suffering pay pain see bailed out financiers taking home large Christmas bonuses courtesy of the tax-payer, the reaction could be explosive.
And the comments in today’s Financial Times of shadow chief secretary to the Treasury Philip Hammond – that public sector workers understood the need for pay curbs – will sound misplaced indeed. Perhaps the milder tone of the government, talking instead of realism and restraint in pay, and keeping to current multi-year pay deals for teachers and nurses, with pay freezes only for some senior public servants, may yet see Labour improving in the opinion polls.
Stephen Court is senior research officer at the University and College Union
Nobody thinks it’s going to be easy to freeze public sector pay for those earning more than £18k pa for one year. But public sector workers would be quite wrong to believe that the wider public will be sympathetic to any resistance and/or industrial action. There are many within the ranks of the public sector who will acknowledge (maybe privately) that if this is “it”, then “it” is not nearly as bad as it could have been. I know someone who works for Honda. He was laid off on half-pay for 4 months earlier this year, so he’s taken a 16.5% pay CUT – more like a 25% cut when shift working and productivity bonuses are included. Ask the half-million who joined the dole queue this year for their view. What George Osborne announced was a statement of direction, not a solution. It’s what he did not say that may prove more significant. What about public sector pensions? Which third of Whitehall will disappear? No mention of tax changes? I say changes because I suspect there will be a shift from business taxes to consumption (e.g. From Employers NI to VAT) in order to stimulate job creation. And, as for banker’s bonuses, we will ALL be furious if they start taking the mickey all over again, so please don’t fall back on that one as if the public sector is the only victim of their licensed gambling. But remember, at the same time as they were reaping their immoral earnings, their employers were paying massive taxes, which have also dried up. The loss of tax revenues from the private sector is what has exposed the public sector’s over-staffing, poor productivity and ludicrously generous pension, flexi-time and vacation entitlements. Like rising house prices, it was only a matter of time before the bubble was bound to burst. Now that it has, we all have to share the pain. The pain started in the private sector last year and will start in the public sector next year. Nobody wants to see front line staffing reduced. But, there are far too many “spectators” in public service employment and they have to change or leave. Personally, I would not have gone for a pay freeze – I would go for a 3-year cash freeze, so that the public sector can pay itself what it wants, so long as it funds it without any additional expenditure. The impact of that on productivity would be startling and the spectators would soon be rooted out. It’s going to be tough but I’d rather take the medicine and get it done than bequeath this mess to my children.
I think Stephen Court is a bit too quick out of the blocks with his condemnation of a one-year pay freeze. I suggest he waits until September’s RPI, and therefore next year’s pensioners’ increases, if any, is known, before getting too righteous about it.
Assuming the Government sticks to a previous undertaking, I think state pensioners will receive at least 2.5% regardless of how low/negative September RPI is.