Shadow chancellor Chris Leslie at the Progress annual conference in London on May 16, 2015. Photograph: Getty Images.
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Labour backs four-year public sector pay cap

Shadow chancellor Chris Leslie says "difficult decisions have to be made" after Osborne limits pay increases to 1 per cent. 

There were cries of outrage from the Labour benches when George Osborne announced in his Budget that public sector pay increases would be capped at 1 per cent for the next four years But at his press gallery briefing, new shadow chancellor Chris Leslie made it clear that he won't be joining them. 

Asked about the move, he said: "It's difficult, and a lot more than public sector workers were expecting. We don't deny that difficult decisions have to be made and we accept, and we did in the last parliament, that pay restraint is sadly necessary over this period. The only things that we would say is that they do have to be fairer to those on the lowest pay in the public sector and, secondly, I don't think they should just casually disregard the pay review body findings if it says that you need a fairer public sector pay structure across the different levels."

Leslie, who is in line to become shadow chancellor if Yvette Cooper wins the leadership contest, added: "It is very difficult, I think we've got to weigh up some of these changes and be more thoughtful in the way that we don't just literally oppose everything, as Harriet was saying, tempting though it might be to oppose everything. We don't want to see public sector jobs being lost in the way that would happen if you found departments choosing to raise pay but making people redundant. And that is a very difficult and somewhat invidious choice for those departments. Ultimately, I think a level of restraint is probably necessary."

His position is an attempt to frame Labour as a responsible opposition party, rather than merely a repository of protest. But his position will antagonise MPs and affiliated trade unions, such as Unite, who believe that public sector workers have already endured too much pain. 

When I asked about Leslie about Osborne's planned budget surplus law, which would prevent government borrowing in "normal economic times", he told me that Labour was "predisposed" to support the measure but set three conditions. They are: 1.  "We've got to be sure that it can defend our national security, so this business about 2 per cent increase, we've got to check that's something that can be sustained under that new proposal, preparing for emergencies and so forth." 2. "Can it protect the most vulnerable in society? If he signs up to this surplus rule, what's going to be the effect on the automatic stabilisers in terms of helping people through a business cycle." 3. "The third one is the viability of public services".

He added: "We think there's a debate to be had about the conditions on that small print ... If he includes some of those conditions then it's the sort of thing we would obviously want to support, because the stock of debt is so significant following the banking crisis that we've got to begin to get more headway and naturally you would want have more income coming in than expenditure .... It will be interesting if he proposes it as something that is unamendable, if we don't get a chance to debate it, if it's just take it or leave it, that I don't think would be thoughtful politics". 

Leslie's main criticisms of the Budget were that Osborne's planned "National Living Wage" was merely a rebranding of the minimum wage  (which did not account for the cuts to in-work benefits) and that productivity was forecast to fall every year until the end of the parliament. But as his response to several of the Chancellor's measures shows, Labour is determined not to fall into the trap of mere oppositionism.

George Eaton is political editor of the New Statesman.

Photo: Getty
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The big problem for the NHS? Local government cuts

Even a U-Turn on planned cuts to the service itself will still leave the NHS under heavy pressure. 

38Degrees has uncovered a series of grisly plans for the NHS over the coming years. Among the highlights: severe cuts to frontline services at the Midland Metropolitan Hospital, including but limited to the closure of its Accident and Emergency department. Elsewhere, one of three hospitals in Leicester, Leicestershire and Rutland are to be shuttered, while there will be cuts to acute services in Suffolk and North East Essex.

These cuts come despite an additional £8bn annual cash injection into the NHS, characterised as the bare minimum needed by Simon Stevens, the head of NHS England.

The cuts are outlined in draft sustainability and transformation plans (STP) that will be approved in October before kicking off a period of wider consultation.

The problem for the NHS is twofold: although its funding remains ringfenced, healthcare inflation means that in reality, the health service requires above-inflation increases to stand still. But the second, bigger problem aren’t cuts to the NHS but to the rest of government spending, particularly local government cuts.

That has seen more pressure on hospital beds as outpatients who require further non-emergency care have nowhere to go, increasing lifestyle problems as cash-strapped councils either close or increase prices at subsidised local authority gyms, build on green space to make the best out of Britain’s booming property market, and cut other corners to manage the growing backlog of devolved cuts.

All of which means even a bigger supply of cash for the NHS than the £8bn promised at the last election – even the bonanza pledged by Vote Leave in the referendum, in fact – will still find itself disappearing down the cracks left by cuts elsewhere. 

Stephen Bush is special correspondent at the New Statesman. He usually writes about politics.