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The Tories are on the run over the public sector pay cap. So why is Don Brind frustrated by Labour’s campaign?

July 10th, 2017

There was no doubting the passion and conviction that Jeremy Corbyn brought to the Commons as he challenged the Prime Minister  over the pay cap which, he said, “causes real shortages in nursing, teaching and many other professions, as well as real hardship.” He added, “this pay cap is recklessly exploiting the good will of public servants.”

Many Tories agree, including Dr Dan Poulter MP, who is a practising doctor.  He says claims of a huge extra cost ignore the soaring bill for paying agencies to plug the gaps left by shortages of permanent staff. He fears that doctors, nurses and other staff are “properly rewarded”, they will flee the NHS in growing numbers.

So Jeremy Corbyn is winning the argument but what worries me he is deploying only part of the case for scrapping the cap. Apart from the observation that “The low-pay epidemic is a threat to our economic stability,” the Corbyn challenge to Theresa was essentially a moral one, an assertion that what the Tories was doing was unfair.

What was missing was the positive argument that pay rises for public sector workers make sound economic sense; that what’s good for public servants is good for the country as a whole.

This matters for two reasons. Firstly, Labour’s approach is easily caricatured as not being interested in workers outside the public sector, as Shadow Justice secretary Richard Burgon found when he appeared on BBC Question Time. He was harangued by a small businessman for “living in a bubble”.

Secondly, it means that Labour are missing an opportunity to deal with a long standing problem – the persistent polling leads that the Tories enjoy on economic competence.

Labour List reported last week that Labour have moved into the lead in the polls and Jeremy Corbyn’s personal score had jumped  “But May and Hammond as a team are still more trusted on the economy than Jeremy Corbyn and John McDonnell.” The deficit is around a third of what it was at the end of last year – but the party still have some way to go to establish economic credibility.

Labour need a two-pronged attack . First of all, The current Tory disarray offers the chance to show that the Conservative claim to have created a “strong economy” ia Big Lie. The reality is that after seven years with the Tories at the helm the British economy is weak and shaky.

In a strong economy living standards rise and there are high skilled well paid jobs. Today, living standards are falling and too many are in low paid and insecure work that makes it hard for families to make ends meet. In a strong economy the NHS and education get the funds needed to cover rising costs. In this shaky economy the NHS and schools are being squeezed.

The economy is shaky because there are fundamental weaknesses which the Conservatives have failed to fix. Top of the list is the productivity gap – we lag the Germans and American by 30% in what is produced by the average worker. And new figures the Office for National Statistics (ONS) show UK productivity is back below the level it was pre-crash. We’re heading for an entire decade of stalled growth.

On top of that we don’t pay our way in the world. We have a persistent deficit of around £100 billion a year with more money flowing out than we earn from our trade. Thirdly, the Bank of England is worried about the level of household debt.

During the election around a hundred economists wrote to the Guardian supporting Labour plans to strengthen and develop the economy and ensure that its benefits are more fairly shared and sustainable, as well as being fiscally responsible and based on sound estimations.”

One of the signatories Ann Pettifor argues that a modest 3% pay rise for five million workers is easily affordable, especially since around 40% of the money would eventually find its way back to the Treasury from the workers themselves and from the enterprises where they spend their extra cash.

Kam Gill of the TUC says suppressing public sector pay has already pulled £1.8bn of spending power out of the economy and this is driving the consumer debt bubble. “Allowing wages to fall in relation to the cost of living is becoming fiscally irresponsible.”

What Tory austerity has proved is that you can’t cut your way to prosperity. You have to build it through investment in infrastructure and skills which are where the jobs of the future come from. Not only is inequality the root of many social evils it is also the enemy of innovation and economic advance. Rising inequality has caused economic instability and hampered growth.

Scrapping the pay cap is both socially just and economically sound. Over to you Jeremy

Don Brind