The prime minister’s New Year message is traditionally an upbeat, forward-looking affair. 2008 was no exception. In urgent need of a comeback-kid vision, Gordon Brown focused on security, stability and some eye-catching measures on preventative health.
For almost 6 million public sector employees, however, one of the PM’s ‘decisions for the long-term’ came as less than welcome news.
Chancellor Alistair Darling’s proposed three-year pay deal for public servants – enthusiastically endorsed by Brown – has gone down badly with police officers, council workers and other public sector staff.
Unions are already threatening strike action over job cuts and Treasury attempts to limit this year’s pay rises to 2%. This, at a time of severe financial turbulence and widespread anxiety over personal debt.
Darling’s announcement, hot on the heels of ongoing rows over staged pay rises, is certain to fan the flames of discontent. In the words of one union general secretary, they are ‘heading towards a bit of a punch-up’.
So why, given all its other difficulties, has the government chosen now to pick a fight with public sector staff?
Ministers argue that public sector pay restraint is essential for economic stability – in particular, to hold down inflation. They also claim that three-year pay deals would tie in better with government spending plan cycles.
All this cuts little ice with either the Opposition – who say the three-year policy is a panic measure, the result of economic incompetence – or the unions, who warn of 1970s-style industrial strife.
Either way, the government’s sense of timing is not its strong suit.
With MPs near certain to award themselves an above-inflation pay rise, private sector earnings growth running ahead of the public sector’s – and almost 1 million public sector workers still on little more than the minimum wage – how wise is it to alienate around one fifth of the adult workforce?
At the very least, Number 10 and the Treasury should listen to those who argue that without a decent sum on the table – and an ‘escape clause’ to future-proof pay – any attempt to impose a latter-day incomes policy is likely to fall at the first hurdle.
