The two main arguments that the government is making against providing health workers with a reasonable pay settlement are that the issue has been looked into by an independent pay review board which has recommended an award of £1,400 a year and that the public purse cannot afford any more. Both are deeply flawed.
Providing health workers with a reasonable pay settlement
The pay review board carried out its review based on evidence it collected early in 2022. At that time inflation was much lower than it is now and so the recommended pay rise was low. Since then the cost of living has spiralled. The headline rate of inflation is now 10.7% whilst food prices are rising at 16.5% a year. Any independent review of pay conducted now would result in a much higher pay award than is being offered. The government has refused to even discuss that fact.
The government’s own data shows that pay is going up much slower than prices. In the year to October pay in the private sector increased by 6.9% excluding bonuses. Pay rises in the public sector rose by only 2.7%. Nurses almost never get bonuses. That means that the average public sector worker has experienced a real terms pay cut of 8% over the past year. Clearly it is not excessive pay rises in the public sector that are driving inflation.
What has caused inflation to spiral?
According to the government that is down to global forces which are outside its control. This is only partly true. There have been genuine global pressures on prices and Putin’s war really is hitting everyone in the pocket. There have also been huge mistakes made by the British government which have contributed to the inflation rate.
The biggest of these was Brexit which is still having an impact on British inflation rates. A shortage of labour is one of the key reasons why pay rates in the private sector have gone up and that shortage of labour has been significantly worsened by forcing European workers to leave the country.
That inflationary pressure has been worsened by government decisions that have influenced fuel costs. Rishi Sunak consistently refused to provide effective subsidies to help people insulate their homes and stuck doggedly by David Cameron’s decision to “cut the green crap”. The consequence was a £150 increase in the average household fuel bill.
Then there is the small matter of the incompetence of Liz Truss. Her reckless pursuit of daft far-right political theory has put mortgages up for millions of people, and interest rates up for businesses. Both of those are hugely inflationary.
Are pay rises affordable?
Whilst the government carries heavy responsibility for the problems in the economy, nurses carry none. All they have done is to put their lives on the line during the pandemic and to work under immense daily pressure as their service has been pushed to the limits.
That leaves only one remaining argument from the government which is affordability. Ministers are quite right to say that at a time of inflation it is not wise to just print money to provide a pay rise. That would just trigger another collapse in the value of the pound and another round of interest rate rises that would wipe out much of the benefit.
There are, however, some relatively easy ways of funding pay rises. The first way of saving a lot of money would be to scrap silly ideological tax breaks which achieve nothing, such as the recent reduction in stamp duty on house purchases. This doesn’t actually help house buyers, it simply subsidies high house prices.
Then the government could look at the way that support is being provided to pay for energy bills. Giving more to the richest people in the country than to the poorest costs an enormous amount of money. Effectively the government has chosen to subsidise the gas bills of the wealthy whilst leaving nurses unable to turn their heating on.
It might then wish to look again at the size of the tax break it is providing to the likes of Shell and BP, giving them incentives to retain their enormous windfall profits and use them for so called investment in drilling for oil and gas to sell on the international markets for decades.
Government is about making choices
This government is making the wrong ones. It has clearly realised that it is down in the depths of unpopularity and decided to pick a fight over pay, in the hope that the public will get frustrated by endless strikes, place the blame on the workers in question and ignore the role of the government.
Instead of sitting down and seeking a reasonable compromise with the rail workers it deliberately chose to scupper the deal that was being reached and instructed the employers to pull back from offering a settlement that looked like being accepted. Instead of talking with nurses about pay and striking the same below inflation deal that was agreed in Scotland it chose to give nurses a lecture about the pay review award process and refused to even discuss the prime reason for their strike.
It remains to be seen who the public will blame for the consequences of this disruption. Some will indeed turn on the people they applauded throughout Covid and blame them for not accepting a big enough pay cut. Many more will not be fooled as they realise that an incompetent and desperate government is searching for a scapegoat to cover up the consequences of its own bad decisions.