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15 December 2022

Rishi Sunak needs to offer striking workers a better deal

It is not the strikes that should worry ministers most, it is that important public sector posts will be left unfilled.

By David Gauke

I am not a natural supporter of the RMT’s current industrial action. Come to that, I am no enthusiast for the action taken by a vast array of public sector workers, including nurses and ambulance drivers. If I was still a minister, my inclination would be to resist caving in to strikes. This, however, is not to say that the government has got it right on public sector pay.

Let us start with the RMT. For large numbers of people wanting to go about their lives in the run-up to Christmas – and the businesses relying on the busy festive period – the recent action has caused great inconvenience and loss. Given that this should have been the first “normal” Christmas since 2019, this is particularly depressing.

The railways have taken a hit from changes in our working patterns post-pandemic, and the taxpayer has already had to support the sector very significantly. This may well be justified economically (although it is one of the least progressive forms of public spending) but there are limits. At the very least, there are working practices that are outdated that should be reformed.

Mick Lynch, the RMT’s general secretary, has become something of a cult figure during this dispute for the relish he has displayed in taking on ministers and broadcast interviewers alike. He argues that he is just protecting his membership. Even if we take that at face value (and the well-established views of Lynch and some of his RMT colleagues suggest that he may have broader anti-Conservative objectives), ministers have a responsibility to protect the interests of taxpayers and the travelling public.

For what it is worth, my sense is that the public mood has shifted against the RMT. The combative media style of Lynch that some found endearing increasingly comes across as arrogant and bullying (taking on Richard Madeley is one thing but having a go at the sainted Mishal Husain is another). Support for the strike among RMT members is falling, the costs for the strikers are increasing, and other unions have reached agreement. Lynch has overreached and Mark Harper, the Transport Secretary, is right to push for reform.

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The situation with the nurses and ambulance drivers is more challenging for the government. The nurses, in particular, are hugely popular and do not have a reputation for militancy. There is a long-standing Treasury suspicion that the unions would always want public sector pay negotiations to start with the nurses who can then set a precedent for other sectors.  

On this occasion, nurses are demanding pay increases that not only keep up with inflation but recover lost ground over a period of time when public sector pay has done badly (falling to its lowest real-terms level since 2004). It is not surprising that the government (and, for that matter, the opposition) is unwilling to go along with it, especially as it would be seen as rewarding a course of action that inevitably puts patient safety at risk.

There is, however, a very legitimate point that the unions are making to which the government does not have an adequate answer. Across many aspects of our public sector, we do not have the staff we need and if pay continues to fall behind that in the private sector, this problem will only get worse. (In the most recent quarter, nominal pay rose by 6.9 per cent in the private sector but by just 2.7 per cent in the public sector.)

The government is leaning heavily on public sector pay review bodies’ recommendations, which were made in the summer. But looked at in the light of current conditions, it is very hard to argue that the proposed pay increases will be sufficient to recruit and retain the staff we need to deliver the public services we want. Without sufficient staff, the quality of our public services will inevitably decline.

The government talks of tackling inflation and preventing wage-price spirals although, as the New Statesman’s Anoosh Chakelian has pointed out, most public services do not involve prices. It is true that borrowing more to fund higher public sector pay would involve an inflationary stimulus but higher pay could be funded by higher taxes (admittedly, not a popular option for many). Increasing public sector pay will have an indirect impact on private sector pay (if public sector workers stop leaving their jobs in droves that will tighten the market for the private sector even further) but we can overstate the impact.  

The reality is that inflation largely has to be addressed by macroeconomic policy, particularly interest rates. A return to a 1970s-style incomes policy for the public sector is neither the most effective nor fairest way of controlling price increases. The issue is really about whether we are prepared to pay the taxes necessary to fund higher public sector pay.

None of the options available to the government are pleasant. We are poorer than we thought we were – the cost of energy and food has gone up, our labour market has shrunk and it is more expensive to trade with our neighbours – and that will mean reduced living standards. Trade unions demanding that pay matches or exceeds inflation will usually be disappointed.

If, however, the government maintains a position that involves public sector pay rising to a level that is still well below private sector pay (after many years in which public sector pay has done relatively badly), the biggest issue will not be workers voting to strike but workers voting with their feet and taking jobs elsewhere. It is not the strikes that should worry ministers most, it is that important public sector posts will be left unfilled, which will result in damage to our public services.

[See also: Is Mick Lynch in trouble?]

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