How Osborne's public sector pay cuts could harm services

The IFS warns that further cuts to pay could make it "increasingly difficult" for public sector employers to "retain and recruit high quality workers".

While average wages are forecast to finally rise faster than inflation next year, there'll be no end to the squeeze for public sector workers, who have had their pay increases capped at 1% until at least 2015-16 (a real-terms cut). The average worker is already £2,000 a year worse off compared with 2010 after the two-year pay freeze. (In the most recent quarter, their pay fell in nominal terms by 0.4%.) 

Based on current trends, the OBR forecasts that public sector will fall by 8% relative to private sector pay between 2012-13 and 2018-19. In a new analysis today, the IFS warns that, as a result, "some public sector employers may well find it increasingly difficult to retain and recruit high quality workers". it adds: "both the government and pay-review bodies need to pay great attention to indicators of whether the public sector is facing any difficulties in recruiting and retaining high-quality staff, and decide on settlements in light of any such evidence." 

Alternative, it says, the government could increase the level of public sector job cuts beyond the (remarkable) 1.1 million planned by 2018-19. But this, too, would risk harming services. The longer austerity continues, the clearer the consequences for public services (and those most reliant on them) will become. The IFS has forecast that merely to maintain the current level of cuts, taxes or welfare cuts will need to increase by £12bn. If Labour and the Lib Dems intend to avoid sticking to Osborne's plans, the urgent question is how they will fill this fiscal gap. 

For Osborne, public sector pay restraint is an essential component of his deficit reduction programme (which, even after recent improvements, remains £51bn offtrack) but if the Tories want to expand their support, they would be wise to offer some relief. As Renewal, the Conservative group aimed at broadening the party's appeal among working class, northern and ethnic minority voters, has noted, the majority of Tory target seats have a higher than average share of public sector workers, including 60% of Labour-held targets and half of the top 20 Lib Dem-held targets. While the Tories are likely to pledge to cut taxes for all workers, in the form of a £12,500 personal allowance, they should also consider easing the squeeze on the public sector.

George Osborne and Danny Alexander leave the Treasury for the House of Commons on December 5, 2013. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

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The problems with ending encryption to fight terrorism

Forcing tech firms to create a "backdoor" to access messages would be a gift to cyber-hackers.

The UK has endured its worst terrorist atrocity since 7 July 2005 and the threat level has been raised to "critical" for the first time in a decade. Though election campaigning has been suspended, the debate over potential new powers has already begun.

Today's Sun reports that the Conservatives will seek to force technology companies to hand over encrypted messages to the police and security services. The new Technical Capability Notices were proposed by Amber Rudd following the Westminster terrorist attack and a month-long consultation closed last week. A Tory minister told the Sun: "We will do this as soon as we can after the election, as long as we get back in. The level of threat clearly proves there is no more time to waste now. The social media companies have been laughing in our faces for too long."

Put that way, the plan sounds reasonable (orders would be approved by the home secretary and a senior judge). But there are irrefutable problems. Encryption means tech firms such as WhatsApp and Apple can't simply "hand over" suspect messages - they can't access them at all. The technology is designed precisely so that conversations are genuinely private (unless a suspect's device is obtained or hacked into). Were companies to create an encryption "backdoor", as the government proposes, they would also create new opportunities for criminals and cyberhackers (as in the case of the recent NHS attack).

Ian Levy, the technical director of the National Cyber Security, told the New Statesman's Will Dunn earlier this year: "Nobody in this organisation or our parent organisation will ever ask for a 'back door' in a large-scale encryption system, because it's dumb."

But there is a more profound problem: once created, a technology cannot be uninvented. Should large tech firms end encryption, terrorists will merely turn to other, lesser-known platforms. The only means of barring UK citizens from using the service would be a Chinese-style "great firewall", cutting Britain off from the rest of the internet. In 2015, before entering the cabinet, Brexit Secretary David Davis warned of ending encryption: "Such a move would have had devastating consequences for all financial transactions and online commerce, not to mention the security of all personal data. Its consequences for the City do not bear thinking about."

Labour's manifesto pledged to "provide our security agencies with the resources and the powers they need to protect our country and keep us all safe." But added: "We will also ensure that such powers do not weaken our individual rights or civil liberties". The Liberal Democrats have vowed to "oppose Conservative attempts to undermine encryption."

But with a large Conservative majority inevitable, according to polls, ministers will be confident of winning parliamentary support for the plan. Only a rebellion led by Davis-esque liberals is likely to stop them.

George Eaton is political editor of the New Statesman.

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