“We need to focus on pay”. These weren’t the words of a grizzled trade unionist but of the chancellor Philip Hammond as he delivered his Budget on Monday afternoon. It won’t surprise you to know that I think he was absolutely right.
Wages across the economy have stagnated for a decade, and the public sector has fared worst of all after suffering under the crushing weight of the public sector pay cap.
A bit of focus on pay is long overdue, but it looks like we will have to keep waiting to see it. Because what followed this declaration from the chancellor can only be described as utter complacency. Hammond simply pointed out that wage growth looked solid this year at 3.1% on average and left it at that. If that was focus then I’d hate to see the opposite.
While Hammond is right that we have finally seen some wage growth figures this year, he was curiously silent about one group he has the power to help right now: Britain’s civil service. These dedicated public servants have played a huge part in keeping the country going through nearly a decade of austerity and are dealing with the consequences of the government’s mismanagement of Brexit, and the thanks they have got is to be routinely derided and denounced by senior political figures, including government ministers.
They have also been landed with the worst pay deal in the entire public sector, meaning that even if all civil servants got the maximum 1.5% allowed within the new remit guidance it would still be less than half of the average pay growth across the economy. Within inflation up around 2%, this means that civil servants are facing yet another real terms pay cut. Prospect research based on the figures released by the OBR yesterday show that the median civil servant will have seen the real value of the wage fall by around £5,000 since 2010 as a result of Treasury pay policy. The chancellor could have eased this pressure by using the £420m he spent on potholes in the Budget to give civil servants a decent pay rise of 3.5% for next year.
There may have been no news on civil service pay but the chancellor did at least give away his plans for the spending power of departments in the coming years. Hammond set out an “indicative path” of 1.2% per annum departmental spending growth over the next five years, contrasting this with the cuts that previous spending. While modest growth is indeed better than more cuts it is important to see this in perspective. A Treasury spokesperson confirmed to the Guardian shortly after the Budget that what this means is the most departments will see their spending power remain flat in real terms over the next five year, with only the NHS seeing a significant boost. This announcement turns out to have been more trick than treat.
Overall then it is hard to escape the impression that the chancellor has missed an opportunity to ease the burden on civil servants and government departments. Despite the rhetoric of the ‘end of austerity’ finances will continue to be tight and pay will continue to lag behind the private sector and even the rest of the public sector. Yet, aside from their trade unions, there seems to be nobody standing up for civil servants. Ministers and permanent secretaries have been silent for too long, it is time for them to step up to the plate and join us in demanding a fair deal for civil servants.