Public sector workers would be in line to receive a 5% boost to their pay packets from next year if Labour wins the general election, the party’s manifesto has revealed.
The move, which would cost £5.3bn, is aimed at bringing the salaries of nurses, teachers and police officers up to where they should have been if George Osborne had not introduced a pay freeze in 2010.
The plan was a key plank of Labour's election manifesto, published yesterday, which also set out plans to create four new departments if it gains power next month, with a pledge to scrap the Department for Work and Pensions from “day one”.
Under the pay plan, departments would receive a boost in their budgets equivalent to 5% of their salary costs, which would then be used to fund pay agreements reached with the independent pay review bodies that cover a host of public sector workforces includes senior civil servants, although not officials below the SCS.
Public sector pay was frozen for two years in 2010, with annual rises from 2012 until 2018 limited to 1%. This year, Cabinet Office guidance for departments said civil servants could receive a 2% increase.
Earlier this week, the Institute for Fiscal Studies found that there was a case for ‘targeted’ increases in public sector pay to ensure wages for civil servants and other public employees do not fall too far behind the private sector in some parts of England.
The party’s policy costing document stated that “Labour’s policy is not to impose pay deals but to respect the independent bodies and collective bargaining mechanisms, so the figures in this document do not represent guaranteed pay deals but the additional money to be provided to departments to meet the cost of pay deals negotiated individually”.
However, the assumption of a 5% increase in the total pay bill in 2020 plus an allowance of 0.5% for pay drift would increase in line with March 2019 OBR forecasts for wages thereafter.
According to Labour, if the 5% paybill increase was translated directly to a 5% wage rise, this would be enough for a newly-qualified nurses receive an extra £1,200 every year, with firefighters getting a rise of £1,800, and school teachers earning £2,000 more.
Junior doctors would make almost £1,400 more, police constables would get an extra £2,000, and Army sergeants £1,700. Civil servants earnings would go up by £1,300 and council workers would get a boost of £1,200.
Speaking at the launch of the manifesto, Labour leader Jeremy Corbyn said of the proposals: “Our most valuable assets are the dedicated people who work in our public services, but they have been treated appallingly over the last decade of cuts and neglect under the Conservatives.
“Labour will give our nurses, teachers, doctors, firefighters, police and others a pay rise to begin to undo the damage caused by the Tories and Lib Dems and reward the people who do so much for us all.”
The party also announced that it would enforce a maximum pay ratio in the public sector of 20:1, meaning that senior officials in departments and government agencies could only be paid a maximum of 20 times more than the lowest paid employee.
This would seem unlikely to affect many public sector organisations – 2010 public sector pay review by Will Hutton found that the average pay ratio between the lead executive of most public sector organisations and the lowest paid member of staff is below 12:1, with the range for departmental permanent secretaries around 10:1.
Departments are currently required to publish the pay ratio between their highest paid official and the department’s median pay level, rather than the lowest salary. Based on this measure, in its latest annual report, the Treasury pay multiple was 4.4:1, while the Cabinet Office was 7.32:1, HMRC’s was 9.42:1, and the Department for Work and Pension’s was 6.78:1
Elsewhere, Labour’s 107-page document laid out plans to hit oil and gas companies with an £11bn one-off “windfall tax” that would help boost the transition towards low-carbon jobs.
The party’s manifesto also confirmed its plans for Whitehall reform, with a host of departmental changes promised. A new Department for Social Security would replace the DWP, which the document said had become a “symbol of fear” over the past nine years, while it also promises to create a Ministry for Employment Rights that would be tasked defending workers’ rights and protections. Additionally, the manifesto pledges to turn the Government Equalities Office – which currently sits within the Cabinet Office – into a department in its own right, with a full-time secretary of state, and set up a new standalone Department for Housing.