Comment Blog 3 July, 2017

Higher public sector pay – or better public services?

Following in the footsteps of Douglas Adams, this blog will have to be the fourth in a three-part series. The last three editions dealt with the last time that the UK “ended austerity”. In fact this one will run and run. The debate has moved on into the specific issue of public sector pay.

A friend at university, the comedian Chris Waitt (most famous I think for A complete history of my sexual failures), once told me that repetition of a word or an idea is a great way to get a laugh. For this reason, the statements by senior figure after senior figure calling for an end to the public sector pay cap are beginning to be a little comic. I have noticed Nick HurdMichael Gove, Gavin Barwell, Robert Halfon, Michael Fallon, Chris Grayling, Dan Poulter, Boris Johnson and reportedly Jeremy Hunt and Justine Greening, and there may well be more.  As the Opposition has pointed out, it is surprising that Ministers are making the case having voted against higher public sector pay in a Queens Speech debate last week.

Various people, from the weekly Reform email to the IFS to the former Treasury Permanent Secretary, are pointing out that any increase would have to be paid for. Stewart Wood has rightly said that these Ministers are happy to argue for a spending increase but not to advocate the tax rises that would  pay for them. It greatly lessens their credibility and has ironic echoes of the “magic money tree” wheeled out during the General Election campaign.

Just as importantly, these Ministers may be arguing for the wrong thing. What has the real public disquiet revealed during the Election? Is it the level of public sector pay? Clearly some public sector unions are framing the debate in that way. The TUC General Secretary went so far as to say that, “in many, many cases … public servants are the [public service]”. In fact public services should be accountable to their users rather than their staff.

My own view is that the Election raised the question of how public services can deliver good standards during times of fiscal scarcity. This explains why Theresa May was confronted by concerns over public service budgets, and why headteachers wrote to parents complaining about projected budget cuts.

If this is right, Boris Johnson et al won’t assuage voters’ concerns by introducing a higher-than-expected uplift in public sector pay. Instead they need a whole series of policies explaining how they will save health reform from the morass that the STP process threatens to be; open up a debate on value for money in education; reinvigorate police reform; and so on. This continues to be the focus of our work at Reform, and as a happy consequence, higher public sector productivity would justify higher pay.

In 2011, the Government made two mistakes: to introduce flawed NHS reforms, and then much worse, to retreat from those reforms in such an abject fashion that the whole idea of NHS change became toxic for years. Ministers are in danger of doing something similar now. The sooner they can refocus their efforts onto the improvement of services themselves, the better.