Public Sector Pay 2024-25

I beg to move,

That this House has considered the public sector pay round for financial year 2024-25.

It is a pleasure to serve under your chairmanship, Sir Robert.

I start today by putting on the record my condolences, which I am sure everybody here will echo, to the family and friends of our dear comrade Tony Lloyd, the Member for Rochdale, after it was just announced—in the last hour or so—that he has very sadly passed away. He was a wonderful parliamentarian. I got to know him a bit and he was very caring, kind and supportive, and I am sure that other Members will have other stories that they wish to share. He was also a strong advocate on behalf of public sector workers. His loss is a very sad one for us.

I will move on to the subject of the debate. I am very pleased to have secured it and to have so many colleagues join me to discuss the process for setting public sector pay for 2024-25. I am also pleased that we are able to do so very early on in the process, because this is a vital issue.

How we pay our 6 million public sector workers, who deliver essential public services, must be taken seriously. Today, the Prime Minister talked up real wages rising for the fifth month in a row, but what he did not refer to is the fact that real wages had fallen for the previous 18 months in a row. That is because the real issue is that the past two years have seen a significant fall in the real-terms value of public sector pay, which has been part of 14 years of brutal real-terms pay reductions that have driven down living standards for working people.

I will use this debate to focus on three points. First, I will set out the need for greater transparency, representation and independence of pay review bodies, while acknowledging the support within the trade union movement for greater collective bargaining arrangements. Secondly, I will make it clear that this year’s pay settlement must deliver at least an inflation-proof pay rise to ensure that it does not worsen the cost of living crisis. Thirdly, after more than a decade of real-terms pay decline for public sector workers under the Tories, I will set out the need for Government to commit to the principle of pay restoration.

To begin, I will comment on the letter that was sent to pay review body chairs to initiate the latest pay round before December and I will make some remarks on the pay review body process. In their letter, the Government stated that

“It is vital that the Pay Review Bodies consider the historic nature of the 2023-24 awards and the Government’s affordability position that will be set out further in written evidence.”

For me, that statement exposes the lack of independence of the pay review bodies. Why did the Government’s letter not say instead that it is vital that the pay review bodies cover the rises in the cost of living and secure staff retention?

The timing of that letter has also been condemned, because 20 December—the date it was sent—was more than a month later than the previous year’s remit letters. The schoolteachers’ remit letter has been condemned by the main education unions for being circulated a month late. NASUWT said the letter was a stunt that will delay publication of recommendations before the general election, while the National Education Union said that it showed contempt for the teaching profession.

With regard to the NHS letter, Unison said that the Secretary of State for Health and Social Care must hold proper pay talks early this year or risk a repeat of disruption, and the Royal College of Nursing said that the Government

“has not honoured its commitment to improve how the process works.”

Where pay review bodies exist, it is clear that there are serious concerns within the trade union movements about how they function, about their effectiveness at delivering fair pay and, related to that, about their independence from the Government. Significant questions remain about who is appointed to sit on pay review bodies, including who appoints them, what they are appointed to represent, who sets the terms of the review processes and what the terms of those review processes are. I was staggered to find that, of the 44 individuals listed on the register of interests of members of the pay bodies, only two declare themselves to be part of a trade union. Should there not be a minimum employer and employee representation on the pay review bodies, and should there not be consultation with trade unions on representation?

The letters from the Government ask the pay review bodies to consider the Government’s affordability position. This year, the TUC agreed that there is a need for review bodies to ensure that they have greater remits that give better weight to all the evidence presented to them, not just to the short-term affordability of Government.

I hope that the Minister can answer a number of questions, including why the remit letters took over a month to go out, why the remit letters want a report in May of this year rather than April, whether the Government will meet with the trade unions early in the process, as unions have requested, and whether the Government will commit to PRB reform in relation to appointments, terms of reference and multi-year deals.

Secondly, on the importance of inflation-proofed pay rises this year, the Government letters that were issued last month included a reference to the fact that, in 2023-24, the pay review bodies recommended historically high pay awards. The most historic issue to set out with regards to public sector pay, however, is the scale of the fall in value over the past two years. That is compounded; it has been a sustained fall over the past 14 years. Month on month, annual inflation ranged between 6% and 11%. Those were the consumer price index calculations for 2022 and most of 2023. If we were to use the retail price index—there is merit in doing that, and the trade union movement advocate for its use—inflation for the past two years is higher: between 8% and 14% for the past two years. Again, that is before the recent dip. There has been a month-on-month increase in food and beverage prices of between 5% and 20% since 2022, which remains at over 9% in the most recent statistics; if we take that into account as well, then people will inevitably be suffering.

That is why the TUC routinely refers to the longest pay crisis in the past 200 years. Last year, below-inflation pay was delivered by the pay review bodies of between 5% and 7%.

The impact of the staffing crisis in the Department for Work and Pensions is creating an

“epidemic of mental ill health”.

That is according to emails received by the Public and Commercial Services Union, which represents civil servants. Does my hon. Friend agree that the situation requires urgent interventions from the Government and that one of those urgent interventions needs to be to raise the pay of the 25% of PCS union members in the DWP who are currently paid below the real living wage?

I totally agree. The PCS union has produced a number of very comprehensive reports outlining the devastating impact that the cost of living crisis is having on the mental health and wellbeing of its staff. I recommend that the Minister and those on the Benches opposite read those reports.

This comes after a two-year pay freeze between 2011 and 2013 and the four-year pay cap of 1% from 2013 to 2017, which preceded the obliteration of pay awards by inflation over the past two years. The TUC has estimated that the average public sector worker is earning £177 a month less in real terms compared with 2010. That is based on ONS pay statistics. Unison and the NEU have briefed me on the real-terms reduction in the value of wages for their members. Teachers are getting £12,000 less in real terms since 2010; social workers £15,000 less; and paramedics £16,000 less. The key workers that keep this country going are being driven into poverty by this Government. Putting money in workers’ pockets is the way out of the cost of living crisis.

The Governor of the Bank of England repeatedly warned last year that pay rises were inflationary, but provided no evidence. Some organisations have challenged that statement. For instance, the Institute for Public Policy Research said,

“Tax-funded…public sector pay restoration…is not significantly inflationary”—

again, I recommend that the Government Minister reads the documents. That is why in the past two years we have seen the most significant period of industrial action in 40 years.

The ONS states that over 5 million days of work have been lost to industrial action since the start of the current cost of living crisis. The Government’s response has been not to address the retention and recruitment crisis, but to curtail trade union freedoms by bringing in the Strikes (Minimum Service Levels) Act 2023. In Wales we have seen junior doctors on strike this week because of public sector pay cuts. Yes, they are administered by the Welsh Government, but the purse strings remain here in Westminster, which is responsible. I joined those junior doctors this week, as I have joined all public sector workers, as have all Labour Members here. Our solidarity remains strong with those workers.

I wish to declare an interest as a practising NHS doctor. I gently remind the hon. Lady that it is beholden on the devolved parts of the United Kingdom—Scotland and Wales—to come to their own pay settlements with the trade unions. In Scotland, under the SNP, a settlement was put in place, which averted a strike by doctors. Why does she believe that things are different in Wales, and why could the Welsh Government not have averted a strike had they wished to do so?

I do not think the situation is different in Wales compared with Scotland. Both devolved nations have been starved of funds from the UK Government over the past 14 years. The Barnett formula does not work and we are owed in excess of £1 billion in Wales—I am sure it is far more in Scotland. I therefore beg to differ.

Just to answer that particular point, we are still waiting in Wales for the consequentials from the English settlements with junior doctors. Until we know how much money we are getting, it is difficult for us to decide on the rates of pay that we will award.

I fully agree. I will conclude because I am conscious that lots of people want to speak today.

My final point regards pay restoration. The TUC’s position is clear. As agreed by its affiliated unions, it wishes to see a commitment to funding pay increases for public sector workers that at least match inflation. More than that, it wishes to see above inflation pay rises that provide for pay restoration, and the Welsh Government have committed to that if they have the funds to do so.

My hon. Friend is making an incredibly important speech on the need to pay our public sector workers properly. Does she agree that the crisis in our public services will not and cannot be solved unless the people who work in our public services are paid properly? For example, band 2 NHS staff—including nurses—outside London are paid less than the real living wage. While that continues, how can our public services deliver the kind of service that people across this country need and deserve?

My hon. Friend makes a very strong point. I wholeheartedly agree. Pay restoration is the right thing to do. Last year’s IPPR report argued that restoring pay to 2010 levels would cost an additional £22 billion per year. How would we pay that? By increasing taxes. There was a debate earlier this afternoon on wealth tax. We have the funds to provide pay restoration and above-inflation pay awards if we choose to.

Before I wrap up, I have a few questions. Will the Government please commit to above-inflation pay rises for public sector workers? Will they commit to providing pay restoration over the long term? If not, how can they justify the permanent devaluation of the work carried out by public servants? Thank you very much—diolch yn fawr.

Order. I remind hon. Members that they should bob if they wish to be called in the debate. I think they are on about three minutes each.

I thank my hon. Friend the Member for Cynon Valley (Beth Winter) for securing this very important debate.

It is interesting, isn’t it, that there are people who claim to work in the public interest and can make millions of pounds of profit while the Government do not bat an eyelid, but public sector workers who have asked for a pay rise in line with inflation are called greedy or unreasonable? ONS figures show that the average public sector worker is earning £177 less a month, in real terms, than in 2010.

This Government consistently and constantly vilify trade unions. Why? Because they are the aspirational vehicle for the working class. I proudly stand on the picket lines to support workers who are fighting for fair pay and better working conditions. It is strange, isn’t it, that the Government do not want unions fighting for their members, but are more than okay with creating VIP lanes, through which Ministers can recommend mates and Tory donors, so they can fill their pockets with public cash?

Every day, people are finding it hard to live. In the past two years, workers have faced the steepest rise in the cost of living for more than 40 years. Since 2010, the cost of living has risen by 73.2%, and over the past year, mortgage interest rates have risen by 48.5%. The Resolution Foundation says that annual repayments for those who are re-mortgaging are set to rise by £2,900. Rents have gone up as a percentage of wages. Food prices have risen by 23%, electricity by 39.4%, gas by 58.7%—I could go on. The value of an average public sector worker’s wages has declined by 25%. We should all be ashamed that that is happening on our doorstep and people cannot afford to live.

In contrast, dividend payments to shareholders have increased by 8% to £94.3 billion. We are living in a topsy-turvy Alice in Wonderland world. I remember what it said on the wall of the trade union where I used to work: “To make the rich work harder, you pay them more. To make the poor work harder, you pay them less.” It is about time we turned the tables and started appreciating public sector workers.

I thank my hon. Friend the Member for Cynon Valley (Beth Winter) for securing this debate. It is always brilliant to hear her talking about the important issue of low pay. I echo her comments about Tony Lloyd. He was a very principled public servant, not only as an MP for many years, but as a police and crime commissioner. My thoughts are with his family. He will be sadly missed.

The statistics on public sector pay and the associated graphs and figures all starkly outline the dire state of pay for those who dutifully work to serve our communities, but nothing paints a better picture than the experience of frontline workers themselves. I want to read an anonymised quote from a DWP worker. When they were asked about the conditions in their workplace, they said:

“Every day felt like drowning, getting upwards of 60 messages from claimants to deal with, on top of all the other work. I’ve been in my role for several years and this was the worst it has gotten. It worsened my mental health to the point of severe burnout, with constant headaches when I am at work and bad anxiety. At its worst, it pushed me to self–harm and heavy contemplation of suicide.”

That worker is not alone in those feelings. PCS recently published first-hand testimony from the workforce in the DWP. The reports in that document are shocking, and they almost all point to low pay as the source of the recruitment crisis in the DWP. No one wants to work for an employer that they feel undervalues them and the skilled job they do. It is ironic that we hear a lot about competition in the private sector, and yet do not see competitive pay in the public sector.

The link between poor recruitment and pay is also abundantly clear in the health service. Nursing, which has already been mentioned, has a vacancy rate of 10.36%. The number of district nurses has decreased by 44.4%. School nurses are down by 32.6%, learning disability nurses by 46%, and health visitors by 31.1%. Just the other day, I was in the Chamber debating provision and funding for special educational needs and disabilities. All the nursing staff I have listed are critical to delivering that service, so it is no wonder that SEND provision in the UK is broken. Pay is at the core of a lot of these recruitment crises.