Many people have written to me regarding the public sector wage cap and the Government's position. It's a complex issue, and there are many considerations which I'd like to address below.
I can understand why the defeat of Labour's Queen's Speech amendment may have concerned many people, and how the subsequent reaction of Conservative MPs may have led to confusion. What is important to establish is that the cheers following the defeat of Labour were not because an amendment regarding a public sector wage rise was defeated, but because if the amendment had been passed then it would have been seen as a 'vote of no confidence' in the Government - so bringing it down. The cheer was therefore to demonstrate support for the Government that it has won this confidence vote.
We have had three pay review bodies in the public sector reporting in March 2017. They covered doctors and dentists, NHS staff including nurses and the Armed Forces. The Government accepted the recommendations in all three of those cases. The firefighters' award however is not a matter that is determined by Government, it is determined by the employers and it is not subject to a pay review body. There are outstanding pay review body reports which will publish in the next few weeks, those cover prison officers and police officers.
It is worth noting that whilst the 1% cap is a limit on entire public wage spending, it does not determine many individuals' pay rises. For example 54% of NHS workers received a 3 to 4 percent pay rise in 2016/17. This highlights how the whole public sector pay cap saga has been confused and the full facts had not been revealed.
I, and all Conservative MPs, wholeheartedly support those in the public sector and would warmly welcome a wage rise. However, it is not as simple as just lifting the wage cap, as the reality is everything is a matter of money and affordability, and the proposed rise must be properly costed. If something cannot be financed then it is unlikely to be sustained.
It is worth noting that one quarter of the workforce is classified as a public sector employee. Hence a rise does not come cheap. For example every 1% rise in public sector pay would cost in the region of an extra £1.8 billion per year. This rise would have to be carefully costed so as not to drive up the deficit and affect taxes and public sector spending in other areas.
We have worked hard to reduce the deficit from paying a record £3 billion per week more than we earn in 2010, to £1 billion per week at present. But there is further to go. And we must continue to chip away at the deficit. Households have to do balance their books and so does any government.
There are a number of ways in which the funds could be raised other than through increased borrowing, yet none are without issue. Funding could be cut in other areas of the public sector, such as education or prisons or benefits, and then reallocated to wages; the number of workers in the public sector could also be cut and their wages be allocated to the remaining workforce; or taxes could be raised, so as to directly raise the amount of capital available to the Government, however this would also reduce the amount of money in these same workers' pockets.
None of these, or other options, are easy and most are unfavourable, which is why the way in which the funds needed to facilitate a wage rise have to be costed and considered carefully. We could of course just borrow like Labour's manifesto stated, which according to the Institute for Fiscal Studies would cost a further £54 billion - money we just do not have.
I appreciate the concerns from residents, however, a blanket pay increase across the board has to be costed, considered and scrutinised. The more debt there is on the Government, and the taxpayer, the bigger the bill future generations will have to pick up. This would have an enormous impact on people not just now, but it is also selfish as it places and enormous burden on our children and grandchildren. This Government appreciates the immense work which our public sector workers undertake, but a disciplined and responsible Government looks at each issue individually and its impact on the country's revenues, and must not succumb to political posturing.