It appears that in the Cabinet meeting on Tuesday, the debate around public sector pay which appears to have centered around the words and views of Philip Hammond is some distance away from the thinking behind the Queens speech which was presented to Parliament and the country less than a month ago. Bearing in mind that the Queens speech had emanated from the same place as the meeting on Tuesday there are some real concerns in my mind at least. The Queen was asked to say: My government will continue to work to ensure that every child has the opportunity to attend a good school and that all schools are fairly funded. My ministers will work to ensure people have the skills they need for the high-skilled, high-wage jobs of the future, including through a major reform of technical education.
Now of course the difference could be that somehow in the UK we have missed the boat when it comes to the high-skilled, high-wage jobs of the present, but it is clear from the exchange by Ministers on Tuesday that the UK is missing high-wage jobs in both the public and private sector if the words reported in this news report are to be believed. To be arguing the relative differences and ensuring that the public sector pay is restricted to ensure it matches the private sector pay speaks of a very different world to the words of the Queens Speech.
The following comes from this article in todays Sunday Times “At a heated cabinet meeting on Tuesday, the chancellor refused to lift the 1% cap on wages for public-sector workers on the grounds that they earn more than those in the private sector, along with generous taxpayer-funded pensions. But Hammond left his colleagues thunderstruck at the language he used. “Public-sector workers are overpaid when you take into account pensions,” he declared. The chancellor then described train drivers as “ludicrously overpaid”.”
As one of the readers comments in the Times pointed out, many of the outsourced public sector roles that are now technically part of the private sector such as cleaners and refuse collectors are paid very low rates. These have created a disparity between which sector actually got its wages suppressed the most. I work for a private sector company that works hard to secure public sector contracts as part of our balanced range of clients, such competition is very fierce which of course drives down costs and wages, but sometimes leads to very false economies which cost all of us much more in the long term. We know that there is waste in the public sector but that rarely translates into rewards for staff or suppliers. Sadly the nature of procurement relationships means that it is very difficult to recommend efficiencies at a large scale without being disadvantaged in the process of winning the contract. If people like Philip Hammond wants to ensure that we pay people high wages, and also keep the public sector pay bill limited, they need to begin from a very different place to that which led to the debate on Tuesday.