Policy Exchange is wrong on public-sector pay

It is misleading to compare private- with public-sector pay -- it’s not a like-for-like comparison.

Policy Exchange has a new report out today on the public sector, and while it has tidied up its stats a little -- given the hammering that dodgy stats on the public sector have got in the past -- what the report says is still pretty misleading.

For Policy Exchange and the shrink-the-state right, every nurse, every doctor, every teacher is a drag on the economy. The rest of us know that they all play a vital role -- as do countless other public servants. Far from holding back the private sector, the public sector educates and trains its workforce, buys many of its goods and services, keeps its staff healthy and provides the infrastructure without which the UK would travel back to the 19th century.

Policy Exchange wants people to believe that public-sector wages have overtaken those in the private sector. This is simply not the case. In every year since 1984 -- the earliest year for which official statistics are available -- average hourly pay in the public sector has been higher than in the private sector. But this is because the public sector has a much greater proportion of skilled and professional workers such as teachers and doctors than the private sector.

In recent years this trend has intensified. Lower-paid jobs such as cleaners and care assistants have been privatised, while the big growth in public-sector employment under the last government was among professionals such as teachers and doctors.

To compare pay properly, you have to look at people doing similar jobs, but this is impossible, as jobs differ too much. However, you can compare the pay of people with similar qualifications. This shows that graduates earn somewhat less in the public sector while those with no qualifications earn a bit more. This is because the gap between those at the bottom and those at the top in the public sector is smaller than in the private sector. Most people would think this is a good thing.

Of course, they cannot resist citing higher levels of absence in the public sector, even though public-sector staff are more likely to work when they are ill.

And it takes chutzpah to report accurately the collapse in private-sector pension provision for most private-sector workers -- despite the retention of diamond-encrusted, platinum-plated pensions in Britain's top boardrooms -- as a reason for attacking public-sector pensions.

It would be equally logical to say that if public-sector workplaces were more dangerous than those in the private sector, this should be evened up until as many people were killed at work each year in the public sector.

Under the guise of all-round fairness, Policy Exchange seems to want to bring the worst kind of vulnerable, low-paid, no-rights employment into the public sector. We think that is a very strange notion of fairness.

Nigel Stanley is the TUC's head of campaigns and communications.

This blog is cross-posted from Touchstone.

Nigel Stanley is the head of communications at the TUC. He blogs at ToUChstone.

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Why relations between Theresa May and Philip Hammond became tense so quickly

The political imperative of controlling immigration is clashing with the economic imperative of maintaining growth. 

There is no relationship in government more important than that between the prime minister and the chancellor. When Theresa May entered No.10, she chose Philip Hammond, a dependable technocrat and long-standing ally who she had known since Oxford University. 

But relations between the pair have proved far tenser than anticipated. On Wednesday, Hammond suggested that students could be excluded from the net migration target. "We are having conversations within government about the most appropriate way to record and address net migration," he told the Treasury select committee. The Chancellor, in common with many others, has long regarded the inclusion of students as an obstacle to growth. 

The following day Hammond was publicly rebuked by No.10. "Our position on who is included in the figures has not changed, and we are categorically not reviewing whether or not students are included," a spokesman said (as I reported in advance, May believes that the public would see this move as "a fix"). 

This is not the only clash in May's first 100 days. Hammond was aggrieved by the Prime Minister's criticisms of loose monetary policy (which forced No.10 to state that it "respects the independence of the Bank of England") and is resisting tougher controls on foreign takeovers. The Chancellor has also struck a more sceptical tone on the UK's economic prospects. "It is clear to me that the British people did not vote on June 23 to become poorer," he declared in his conference speech, a signal that national prosperity must come before control of immigration. 

May and Hammond's relationship was never going to match the remarkable bond between David Cameron and George Osborne. But should relations worsen it risks becoming closer to that beween Gordon Brown and Alistair Darling. Like Hammond, Darling entered the Treasury as a calm technocrat and an ally of the PM. But the extraordinary circumstances of the financial crisis transformed him into a far more assertive figure.

In times of turmoil, there is an inevitable clash between political and economic priorities. As prime minister, Brown resisted talk of cuts for fear of the electoral consequences. But as chancellor, Darling was more concerned with the bottom line (backing a rise in VAT). By analogy, May is focused on the political imperative of controlling immigration, while Hammond is focused on the economic imperative of maintaining growth. If their relationship is to endure far tougher times they will soon need to find a middle way. 

George Eaton is political editor of the New Statesman.