Sunak’s public sector pay boost is not as generous as it looks

The announcement was full of holes, writes James Moore – there’s no extra money to fund them

There’s a lot of devil in the detail beyond favourable headlines (AP)

There are lies and damned lies and then there’s government spin, which, when one considers the pay rises announced for nearly 900,000 public sector workers, has been positively dizzying.

In his public statements, the chancellor has framed them as a reward for the “vital contribution to our country” made over the past few months.

The reality is somewhat different and, as ever with these announcements, there’s a lot of devil in a lot of detail beyond the favourable headlines generated by Rishi Sunak’s spin.

So let’s dig into what’s going on.

First off, this is not an example of Sunak and the Tories rewarding public sector workers for their pandemic related efforts, or anything like it.

It’s simply a case of the government doing what its own pay review bodies have recommended.

These organisations are nominally “independent”, and are billed as such. But their memberships are made up of government appointees and they work to a government remit.

They operate consultation processes with various interested parties (including unions) before they make their recommendations. The government can then either honour these or reject them.

In doing the former, Sunak isn’t so much rewarding public sector workers for their pandemic related efforts as simply giving teachers, doctors, dentists, the police, etc what they were due.

To suggest otherwise is cynical if not actually mendacious.

But that’s not all. Media reports of the pay rises have zeroed in on the headline numbers, as they usually do. Those numbers can be very misleading.

Let’s take teachers, who would appear to be doing the best out of this with a headline number of 3.1 per cent.

A substantial number of them will get considerably less than that.

What the award does is to raise the floor and the ceiling of the various grades. Within them schools have a degree of flexibility, and there’s performance related pay to consider too.

As a result of all this, you may only get 2.5 per cent. Or 2 per cent.

And that’s not all.

The pay rises are unfunded. This is a typically cynical Treasury wheeze in which it announces the rise then tells the various departments concerned to find the money to pay for them from their existing budgets. Needless to say, there isn’t a lot of fat in them. They were cut to the bone over 10 years of austerity.

Police officers and some NHS staff are among those in line for a pay rise (PA)

As a result, they may have to make cutbacks in other areas, which could be quite painful.

Consider too that schools are currently grappling with how to avoid the creation of thousands of mini viral hot zones up and down Britain, while keeping staff safe, especially those at risk of Covid-19 complications, when the kids go back.

This means that they are having to find money for things like, say, hand sanitiser, extra soap, extra cleaning equipment and so on. Where’s that going to come from at a time when the biggest item on their budgets – staff salaries – are supposed to be rising by a headline 3.1 per cent?

One way is to “manage” experienced (and pricey) staff out while replacing them with newly qualified teachers. We can expect to see a lot more of that.

It should also be remembered that even those that get the full rise will still have to face up to the fact that they’re on 15 per cent less in real terms than they were on prior to austerity.

They’d still be substantially down even had the review body adopted the National Education Union’s call for a fully funded September increase of 7 per cent, as part of a package of steps to restore the national teacher pay structure.

The government’s obvious counter to this, which you can expect to hear from its allies in the coming days, is that the boom in public sector borrowing created by the pandemic ties its hands. Coinciding with the announcement of the pay rises was the release of statistics showing that the latter hit a record £127.9bn between April and June, more than double the amount borrowed during the whole of last year.

But it’s a bit rich to plead poverty when, pursuant to Boris Johnson’s economically ruinous hard-line Brexit policy, the government is spending more than £700m just on setting up a vast bureaucracy to cover trade checks at Britain’s borders and has deprived the UK economy of billions pounds, and the exchequer of a huge slug of tax revenue from that.

This argument also ignores the economic benefits of putting cash in the hands of public sector workers and the role that could play in jump starting an economy that remains on life support.

Think that’s the end of it? Think again. There’s also the small matter of the pubic sector workers who were left out.

Nurses, porters, ambulance crews, and other NHS staff are coming to an end of a three-year deal to increase their pay by 6.5 per cent. Unison and other health unions have been calling for the government to get to work on a replacement, and to bring forward a richly deserved pay rise that should be due next spring, so far without success.

Politically it will be very difficult for Sunak to stitch up the nurses and their colleagues. A story that has flown under the radar with the announcement of the pay rises is the beginning of the comprehensive spending review, which will probably see him having to taken on the unfamiliar role of scrooge.

His starry reputation will inevitably take a knock as a result of this. It will go up in smoke if he burns NHS workers because of the overwhelming support among the public for a significant pay rise for the people they clapped for weeks on end.

Perhaps he’s keeping something in reserve here to sweeten the pill of some hard decisions he’s going to have to take.

Council workers have also been left out out of the announcement. Unions are consulting with their members over an offer from their employers. However, wherever these end up, Sunak is going to have to funding if he wants to avoid the threat of bankruptcies hanging over cash strapped councils, many of which have seen sources of income evaporating through the course of the lockdown.

Ditto social care staff, whose employers are usually to be found in the private sector despite their delivery of vital public services.

The more you look at the pay announcement the more holes there are in it. It’s Sunak’s slab of Swiss cheese.