'The erosion of employees’ pay requires bold action from the government. If they do not ensure that pay keeps pace with living costs, the backlash from workers will grow.' 

At the Autumn Budget, the Chancellor Rishi Sunak announced ‘the public sector pay freeze is over’ and that ‘public sector workers will receive a fair and affordable pay rise’ in the coming year. 

However, at the Spring Statement, he had nothing to say on departmental budgets or public sector pay, both of which are now being eroded by growing inflation.

Last autumn, after 18 months of a pandemic with the country dependent more than ever on its public sector key workers, and health workers in particular, and following the imposition of just a 3% pay increase in Summer 2021, Sunak felt bound to present a positive soundbite. 

And he did so as health and public sector workers had begun agitating for a significant pay increase. 

Unite, GMB and the Royal College of Nursing, demanded a 15% increase last year, whilst NHS workers activist group, NHS Workers Say No, organised an online petition that gathered the signatures of over 800,000 people in support of a 15% increase. This policy was endorsed by the Labour Party conference in September. 

So having made positive noises, Sunak is failing to live up to them. Inflation is at its highest rate for 30 years at 6.2% CPI. The Office for Budget Responsibility estimates it will hit almost 9% by the final quarter of the year. And the greatest driver of it, energy bills, is seeing record increases of 54% in the price cap this week, and a forecast of a further 40% in October. 

That inflation is what is eroding pay and is the reason the government must take action to lift it and ensure households can continue to survive. But at the Spring Statement last week, Rishi Sunak had nothing to offer to those on low incomes, whether they be on social security or low pay, or those working in the public sector. 

What makes it more urgent is that it comes on top of a decade of lost pay, which hangs over the public sector, and where pay remains 2.1% below its 2010 levels. Not only was a pay freeze implemented for a year of the pandemic, from October 2020, but it has dominated public sector pay for the past decade of Conservative government, in one form or another. From 2010-12, George Osborne froze public sector pay. Then from 2013-17 the government imposed a real terms cut pay cap of 1% and before restoring it in 2020, paid annual increases of between 2 and 3% which failed to make up the real terms of loss of earlier years. 

And in recent months, it has been increasingly evident that private sector pay awards, driven in particular by finance, are outstripping stagnant public sector pay.

The pay freeze is supposedly now over, yet the establishment’s view is clear. In February, as he announced an interest rate rise to curb inflation, the Governor of the Bank of England urged a restraint in pay demands. In response, Sharon Graham of the Unite union, said. ‘Let’s be clear, pay restraint is nothing more than a call for a national pay cut.‘

So workers need to see a significant increase but after the threadbare Spring Statement, UNISON’s Christine McAnea described it as a ‘slap in the face’, and said, ‘public sector workers could see their gross salaries reduced by about £1,750 in real terms’. 

Sunak has a Budget surplus of £31 billion to make use of and workers are demanding an increase. 

Across the public sector, the government and unions are making submissions to the pay review bodies. In health, a joint union submission has demanded an, ‘inflation-busting’ award, and the Royal College of Nursing have called for ‘RPI inflation plus 5%’. In education, the joint union submission has called for a pay award of ‘significantly more than RPI inflation’ and has called out a divisive differential pay offer by the government.

Elsewhere the PCS union has conducted a consultative ballot of members in support of a 10% pay demand for the civil service and received 97% backing, including 80% for industrial action.

The April increase in energy prices will quickly begin to negatively impact people’s incomes, seeing more slip into relative and absolute poverty at the bottom end of the scale. 

Whilst it is unclear how far unions will be able to mobilise their members into action, we have already seen some inspiring trade union victories in recent months. From Unite bus drivers in Manchester to GMB refuse collectors in Hastings, workers are fighting back. 

Labour must stand solidly behind these workers when they take action. And it’s time Sir Keir Starmer and Rachel Reeves advocated for the policy agreed by our conference – a minimum wage of £15 an hour. 

The erosion of employees’ pay requires bold action from the government. If they do not ensure that pay keeps pace with living costs, the backlash from workers will grow. 

The following Early Day Motion was published overnight:

That this House regrets public sector pay is 2.1% below its 2010 level in real terms reflecting a decade of lost pay; notes the Chancellor’s commitment at the Autumn Budget 2021 that public sector pay awards for 2022-23 would be ‘fair and affordable’; notes the Office for Budget Responsibility’s Economic and Fiscal Outlook March 2022 forecast of CPI inflation reaching 8.7% in the last quarter of 2022; recognises concerns from unions that the NHS risks losing thousands of low-paid staff​ to the private sector unless wages increase significantly; further notes with concern the Government submissions to independent public sector pay review bodies, including of 3% for health workers and 3% for the majority of school teachers; notes the the joint trade union submission calling for an ‘inflation-busting’ award for NHS workers and joint trade union submissions seeking ‘undifferentiated pay increases for all teachers and school leaders that are significantly higher than RPI inflation’; further notes the 800,000 signature petition presented to Parliament of 22 July 2021 supporting a 15% NHS pay rise; also notes the PCS union indicative ballot result of 97% support for a 10% pay award in the civil service; notes the OBR confirmation that ‘the current budget is in surplus by £31.6 billion’ and calls on the government to make good on its commitment to a fair award by informing government departments and pay review body chairs it is making the funds necessary for an inflation-proofed public sector pay award in 2022-23.

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