Several people have written to me questioning why I voted against a Labour amendment in the Queen’s Speech debate yesterday appearing to give a pay rise to public sector workers. It did no such thing.
Labour’s amendment was a blatant and opportunistic attempt to derail the Queen's Speech and bring down the Government. Public sector pay rises are set by independent pay review bodies, not the government. However the government has effectively imposed a 1% cap on pay rises since 2011. Both the Coalition and Conservative governments have maintained this cap because the public sector pay bill makes up over half of departmental resource spending, and continued pay restraint remains central to deficit reduction strategy to get us back on a financial even keel from the disastrous deficit we inherited in 2010 . Whilst we have cut that deficit by 75% we are still have a deficit of 2.6% which is running at £52bn a year. This is not sustainable and will saddle all our children and grandchildren with debt that will need to be paid in high taxes or spending cuts. We have taken tough decisions in the national interest over the last few years and we are close to achieving a budget surplus and paying down our debt, we cannot allow political expediency to get in the way of that.
It is also worth remembering that the public sector pay restraint has already helped protect thousands of jobs and frontline services. If wages had been allowed to continue to rise in the public sector we would have had fewer people on the frontlines and that could have been a terrible decision. Overall, levels of pay in the public sector are now, on average, comparable to those in the private sector. However, public sector workers continue to benefit from a significant premium once employer pension contributions are taken into account.
There are signs that the Government is now looking at ways of removing the cap and enabling real terms wage increases for are hardworking public servants who continue to face very challenging jobs, and I certainly support that. But it needs to be done in a responsible and sustainable way where the Government can show where the money is coming from and how it can be paid for. The time for that therefore is in the Budget rather than in a wish list attached to the Queen’s Speech where the Labour Opposition offer no means of paying for it on top of the huge uncosted spending pledges made in the recent election campaign.
The lesson of recent boom and bust economies and the dire financial conditions which many European countries now find themselves in should remind us once and for all that you cannot spend money you don’t have forever. Someone must and always will pay, whether it is higher taxes for the many, lower spending or higher interest rates and these costs will always fall disproportionately on the poorest in society.
The Chancellor will therefore have my support to come forward with properly costed and thought through measures to increase pay in the Autumn Budget when it can be done in a sustainable way that does not cause untold financial damage elsewhere and I trust I will have your support in that.