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Public Sector Pay

Volume 645: debated on Tuesday 24 July 2018

(Urgent Question): To ask the Chief Secretary to the Treasury if she will make a statement on the public sector pay announcement.

I am delighted to have this opportunity to discuss today’s announcements of public sector pay rises.

Last September, I informed the House that we would scrap the cap, and now we are delivering on that commitment. What we are announcing today amounts to the biggest pay rise in almost 10 years for about 1 million public workers across Britain, including teachers, armed forces personnel, prison officers, police, doctors and dentists. This comes on top of the positive news we were able to announce in March that 1 million nurses, midwives, porters and other NHS staff would receive a 6.5% pay rise over three years. That deal was a benchmark example of where high pay awards are agreed in return for modernisation of terms and conditions.

We were able to announce these pay rises thanks only to the hard work of the British people, which has brought down the deficit by over three quarters and allowed us to reach the point where the debt will begin to fall this year. We did not listen to the siren calls from the Opposition for damaging splurges, and that is why today we are able to scrap the cap and increase public sector pay. These new pay deals represent what this Government are about. They are affordable and responsible, while making sure that we continue to provide the public with world-class public services. They also reward our hard-working public servants.

It is great, on the final day of this Session of Parliament, that we are able to give every person who works in the public sector positive news on which to enjoy their summer.

These uninhabited proposals will do nothing to repair the damage done to our brilliant public sector workers by this Government’s slash-and-burn policy in relation to public sector pay. Over the past seven years, our teachers have lost £2,500, our firefighters £3,000, our prison officers £4,000 and our paramedics £4,000 in real-terms pay cuts. Even the armed forces have been affected by this stingy Government.

Yet the Government think it is enough to announce to the press—to the press, Mr Speaker, yet again—an uncosted proposal that will, at best, leave workers just about breaking even on their austerity-slashed pay, while civil servants and others continue to see their pay cut. This is a mendacious PR exercise. Based on today’s announcement, after eight years of real-terms pay cuts for employees in the public sector, our police officers, junior doctors, some specialist doctors, GPs and dentists are all being offered a further real-terms pay cut.

Will the Minister now confirm what the additional cost of each announcement is to Departments? Will she also confirm that this cost is being siphoned from existing departmental spend, with no new money made available? This will have a disastrous effect on Departments already close to ruin from austerity; they will be forced to cut staffing levels and services to cope. Can she guarantee that there will be no reductions in staffing levels across the public sector because of this unfunded increase in pay? Can she guarantee that public services will not be adversely affected by her failure to provide proper funding? Will she explain why civil servants continue to see real-terms pay cuts? They are always at the back of the queue when it comes to pay. How much additional social security expenditure has resulted from seven years of cuts to public sector workers’ pay? Does she agree that it has been this Conservative Government’s policy for the past seven years to force thousands of public servants on to social security by cutting their income?

The Conservative party should be ashamed. The Government’s announcements today leave public sector workers treading water. These proposals will force threadbare Departments to make further cuts to vital services and to reduce staffing levels, and what for? All so that the Prime Minister can get a cheap PR hit to try to cling on to power. We do not buy it. Labour demands that public sector workers get the pay that they deserve.

Yet again, we hear from a Labour Front Bencher not a positive welcome of the news today, which will mean hundreds of pounds more in the pay packets of public sector workers, but yet more complaints and no solutions.

We have scrapped the cap, and we are making sure that public sector workers get a decent pay rise. Let me tell the House what that will mean for workers in the public sector. For teachers earning under £35,000, it will mean a 3.5% pay rise, earning them an extra £800 a year. Police will see a 2% rise, with the average police constable on a £38,000 salary seeing a £760 pay rise. Prison officers will see a 2% rise and a 0.75% bonus, with extra for those who are new recruits. Junior doctors will get at least a 2% pay rise, and the hard-working people in our armed forces will receive a 2% pay rise and an additional 0.9% bonus, to reflect the brilliant work they do for our country.

The hon. Gentleman asks me how these pay rises are funded. Unlike the profligate Labour party, we have worked to support every Department to ensure that these pay rises are affordable within their budgets. In the case of the Department for Education—[Interruption.] The hon. Gentleman asked me the question. Does he want to hear the answer or not? [Interruption.] He obviously does not.

Order. I think the hon. Member for West Ham (Lyn Brown) is the author of a newly published book entitled “Summer Rage”, but if I may say so, the launch party can wait until after today.

I was diligently trying to answer the hon. Gentleman’s question, and I hope that he will listen to the answer.

We will be allocating a further £500 million from central Department for Education budgets to schools, to make sure they are able to give these pay rises to our hard-working teachers. In every other case, Departments have been able to find savings in their central budgets to make sure those pay rises are affordable. It is a bit rich getting lectures from the Labour party about affordability when its purported policy, along with overthrowing capitalism and making business the enemy, is to create a run on the pound. I do not know whether the hon. Gentleman can explain how his party could afford public sector pay rises with a run on the pound, but I would like to hear his answer.

The pay rises we are announcing today represent the highest pay rises for almost a decade for public sector workers. We have been able to achieve them because of our management of the economy, because we have seen employment reach a record level and because we are spending less in areas such as welfare, whereas people under the Labour Government were left on the scrapheap. Please can the Labour party welcome the fact that public sector workers are getting a pay rise and that we have scrapped the cap, rather than continuing with their usual Eeyorish nonsense?

Like my right hon. Friend, I am rather surprised to hear the noise from the Opposition Benches. If we were to follow the policies of the right hon. Member for Hayes and Harlington (John McDonnell), we would see inflation of 1,000,000%, such as they have in Venezuela—a country that he suggests we all follow the example of. I welcome the pay rises that we will see for teachers in my schools in Redditch. Can my right hon. Friend tell me again how much teachers will receive, and can she emphasise the fact that those on the lowest incomes will receive the most?

My hon. Friend is right; teachers on the lowest incomes will receive the largest rises. All teachers earning less than £35,000 will receive a 3.5% pay rise, and the Secretary of State for Education is making sure that schools have the money to afford that. Teachers in the upper pay range will receive a 2% pay rise.

The key test of whether the public sector pay cap has been removed is how the Government treat their own civil servants. Can the Chief Secretary to the Treasury confirm that each UK Department was given funding for a 1% increase in civil service pay? Can she confirm that the pay remit guidance issued by the Cabinet Office for civil service pay allows pay rises of 1% to 1.5%? Can she tell us what pay rises civil servants who are not covered by a pay review body can expect this year? Finally, will the 220 Ministry of Defence staff in Scotland who are not being paid the living wage finally get £8.75 an hour?

My right hon. Friend the Minister for the Cabinet Office has made the decision to award civil servants a 1.5% pay rise. That represents an increase on previous years, but we need to make sure that all public sector pay awards are affordable within Government budgets and that we are able to recruit and retain the highest possible quality civil servants.

Order. I am keen to accommodate the interests of colleagues, but I remind the House that there is a further urgent question after this and then two ministerial statements and a debate on a motion appertaining to standards, before we get to the summer recess debate, in which no fewer than 30 colleagues wish to take part. I will try to accommodate people now if they pledge in advance to ask a single-sentence question, and preferably a short one, with a commensurately brief reply.

The public sector workers in Morecambe and Lunesdale will welcome this announcement. Can my right hon. Friend confirm that those in the public sector are now getting £30,630 on average compared with £27,977 in the private sector?

The figures that my hon. Friend quotes about public and private sector workers are right. My job as Chief Secretary is to make sure that we are properly rewarding public sector workers and that in areas where we are struggling to recruit and retain, pay rises are commensurate, to retain those people. We are also making sure that those pay rises are affordable within our Government budgets, which I think is what taxpayers expect.

Can the Chief Secretary tell me how much extra funding has been provided for schools, to pay for the increase in teachers’ pay? Will that pay increase be fully funded?

As I mentioned already, £500 million is being provided over two years to put into schools’ budgets. We have been working with the Department for Education. This is affordable for schools, but most importantly, it is fair for teachers, and those who are earning under £35,000 will get a 3.5% pay rise.

Thanks to the decisions that have been made in Essex, we will see 150 new police officers on our streets. Can the Chief Secretary confirm that those new police officers will benefit from today’s announcement?

My hon. Friend is right. I am delighted to hear the news about the police force in Essex. Those police officers will receive a 2% rise and, in addition, they will get increments as they move up the pay scale, so many will see a rise in excess of that.

Cuts to school budgets have meant that some schools have had to make cuts to payments for support staff such as lunchtime assistants, for example, including by removing their holiday pay. How will today’s announcement benefit those lowest paid workers who have already suffered?

Last year we announced that we were putting £1.3 billion more into schools’ budgets to help them to cope with the issues they were facing. That represents a real-terms increase from 2015. Today we have announced an additional £500 million to support these pay rises for teachers. I say to the hon. Lady: let us look at the school results, such as the fact that our nine-year-olds are now among the best in Europe at reading. It is because of this Government’s reforms that we are seeing better results.

I strongly welcome the extra money for lower-paid teachers. May I ask my right hon. Friend where the £500 million will come from within the Department? The Department has already had to make efficiency savings, given the extra £1.3 billion that has gone to schools.

It is important that schools receive the extra money so they are able to afford those pay rises. The money is coming from central DFE budgets—underspends in central DFE budgets—and it will be allocated to schools. My right hon. Friend the Education Secretary will talk about the allocation in due course.

The Chief Secretary says that our armed forces will receive a 0.9% one-off payment, but there is no clear timeframe. Will she tell us exactly when armed forces personnel will receive that payment?

Personnel will receive that payment alongside their 2% pay rise this year. Many armed forces personnel will also receive pay increments—we saw an average of 1.3% last year—on top of the bonus and the pay rise.

What assessment has my right hon. Friend made of the announcement’s impact on the recruitment and retention of prison officers?

My hon. Friend makes a very important point. Prison officers will receive a 2% rise and a 0.75% bonus. Prison officers who were newly recruited on fair and sustainable terms will receive additional progression pay to make sure that we retain those really important workers.

Why have the Government announced that school leaders’ pay will continue to be cut in real terms, given that the School Teachers Review Body said that a 3.5% increase was needed across all pay ranges to prevent “deteriorating” trends in teacher retention?

It is very important that we focus the pay rises on the lowest-earning teachers, which I think would be supported across the education system. Where there are specific shortages in education or in schools, there is of course the flexibility to increase pay, and I know that that happens for a number of headteachers.

I welcome the news of the 3.5% pay rise for lower-paid teachers in Torbay. Will the Chief Secretary commit to work with the DFE to publish how the funding will be broken down by local authority so that we can clearly see how this is being funded?

I thank my hon. Friend for his question. How the additional funding will be allocated will certainly be announced in due course by my right hon. Friend the Education Secretary. I welcome my hon. Friend’s welcoming of the good news, unlike Labour Members, who are still looking extremely gloomy.

I am delighted that the Chief Secretary and the Government have finally seen sense and dropped the cap. However, there is already a £20 billion black hole in the MOD budget. How exactly is it going to pay for this?

The hon. Lady is the first Opposition Member to welcome the pay rise, so I thank her for her support for public sector workers and for the pay rise we are giving them. I am working very closely with the Justice Secretary to make sure the pay rise is affordable within the Ministry of Justice budget. [Hon. Members: “Defence!”]

The budgets of West Sussex schools are hugely under pressure and will be completely shot unless this pay award is completely funded centrally. Will the Chief Secretary guarantee that it will be completely funded centrally? What assessment has she made of the impact on the DFE’s budget for children’s social care, which is already facing a predicted shortfall of £2 billion by 2020?

My hon. Friend mentions the funding for teachers’ pay rises. Beyond the 1%, the pay rise will be fully funded centrally, as will be announced by my right hon. Friend the Education Secretary.

I thought the hon. Member for Stoke-on-Trent North (Ruth Smeeth) referred to the MOJ, but apparently she was talking about the Ministry of Defence. The modernising defence review is going on at the moment, and I am working on that very closely with my Defence colleagues to make sure that this remains affordable.

The Chief Secretary talks about putting more money into people’s pay packets, so will she tell us when under-25s will be paid the national living wage?

This Government have achieved some of the lowest levels of youth unemployment for years. Under the Labour party, people were left on the scrapheap and we had rising youth unemployment, with up to 20% of our young people unemployed in 2010. What is important is that while people are training and gaining skills, it remains affordable for companies to take them on.

I very much welcome these pay awards. Will the Chief Secretary say a little about the difference that taking millions of people out of income tax altogether will make in tandem with these pay awards?

My hon. Friend makes a very good point. We have seen disposable incomes—the money people have to spend—increasing under this Government because we have cut tax for basic rate taxpayers by £1,000 a year. We know that the Labour party wants to raise tax to the highest peacetime levels, and the reality of that would be less money for hard-working public and private sector workers.

Not one of the examples that the Chief Secretary announced is above the consumer prices index inflation rate of 2.4%. This is a real-terms cut for public sector workers. The secretary of the Unison branch at my town hall wants to know the Chief Secretary’s message for his branch members. How are they meant to survive when they are facing yet again—as they have year on year, for the past eight years—a real-terms pay cut?

The vast majority of the numbers that I announced are above inflation, but the hon. Gentleman clearly did not hear that. I would point out that these pay awards are for the period 2018-19. We are seeing inflation fall, and many of the awards represent increases significantly above that.

I asked the Chief Secretary and the Secretary of State for Education to ensure that the well-deserved pay rises for teachers did not come from the existing budget increases, so may I thank them both for ensuring that? My teachers deserve a pay rise, but they do not want school classrooms to suffer. May I also ask whether headteachers will be in receipt of the 2% increase mentioned for higher-rate teachers?

As we have said, pay rises above the 1% that was previously budgeted for will be funded from central DFE budgets. [Interruption.] To the hon. Member for Wythenshawe and Sale East (Mike Kane), who is shouting from a sedentary position, I say that the funding will be not from schools budgets, but from central DFE budgets. We are moving this money to the frontline to make sure that teachers are properly supported. The rate for headteachers is 1.5% but, as I have already said in answer to the hon. Member for Bath (Wera Hobhouse), there is flexibility where there are recruitment issues.

If these pay rises are from departmental cuts, this will mean no new money, which will result in further public services being lost and redundancies to follow. Does the Chief Secretary agree?

I think that the fastest way to have redundancies is to create a run on the pound and overthrow capitalism.

This pay award comes on the back of 10 years of pay freezes, which are fundamentally cuts. What can the Minister say to reassure people that, under this pay award, they will not actually see a pay decrease in the years to come?

We have gone through a tough period in the aftermath of the financial crash, and the public sector has made a contribution. We are now at a turning point, with debt falling as a proportion of GDP. It is because of the hard work that has been done that we are now able to afford these pay rises, which are well deserved.

The Chief Secretary talks about this alleged increase, yet she fails to discuss where it is coming from. What guarantee can she give to my constituents, who expect two new schools to be built in Reading East, that those schools will not be raided to pay for the pay rise?

Our programme of spending £23 billion on schools capital will continue. This is about finding efficiencies in our central Government budgets. I know the Labour party does not understand value for money, but that is what we are doing, so that we can put more money into schools and teachers’ pay.

The Minister will be aware that an aspect of our confidence and supply discussions with the Government involved raising the pay cap; we welcome the statement that she has made. However, given the fact that there is no Assembly functioning in Northern Ireland, what discussions has she had with the Secretary of State for Northern Ireland to ensure that the money is made available from departmental budgets and, secondly, that the decision is made to award these payments to teachers and nurses?

As usual, the money for this pay will be allocated through the Barnett formula, but the money is coming from the central DFE budget.

The hon. Lady will understand that we are conducting a review of further and higher education, and that is among the issues that we will be looking at.

Teachers’ pay is not devolved to Wales until September 2019, so can the Chief Secretary confirm that the British Government will make the appropriate transfers to Welsh local education authorities to pay for the increase?

I understand from my colleagues in the Department for Education that this will also apply to Wales.

Past announcements on school budgets have unravelled within days, so is the Chief Secretary guaranteeing that every single penny to fund the teachers’ pay increase will come out of central budgets, with not one single penny falling on school budgets? Does the Chief Secretary accept that this does not change the grim reality of 351 out of 354 Birmingham schools facing real-terms pay cuts and budget cuts over the next two years?

I have been very clear that the additional £500 million over two years will be coming from central DFE budgets. It will be allocated to schools. My right hon. Friend the Secretary of State for Education will be announcing exactly how that allocation will work in due course.

Last week I was speaking to headteachers in my constituency who were very frustrated that they were breaking up for the summer unable to finalise their budgets. Now that they are able to do so, can the Chief Secretary guarantee today—I think that she has dodged this question a little bit today—that they will not have to find a penny from their existing budgets to fund the pay award?

I think that many Opposition Members are missing the point that headteachers have significant flexibility in terms of paying their staff. Last year there was an average rise of 4.6%, including promotions. The point I am making is that above the 1% pay award that was already baked in, the DFE is providing extra funding to the tune of £500 million. My right hon. Friend the Secretary of State will be announcing the allocations in due course.