MPs got a 2.3% pay rise this year. Local Government workers have been offered 0.5%. Already, that doesn’t look terribly good given the headlines of recent months. I appreciate many private sector workers are suffering badly from the recession and high public sector pay increases would anger them. At the same time, public sector pay is obviously less likely to be cyclical, and indeed so it should be. When inflation was roaring up towards 5% at the end of the boom, we were told to accept 2.8% and shut up about it, to help the economy control inflation. I did wonder at the time whether if deflation materialised we would get a huge pay boost to help crank it back up. I rather assumed not and have been proved right – you have to be a banker for the Government to accept that logic.
Steve Bundred at the Audit Commission, who was the first to float the pay freeze as a ‘pain-free’ way of tackling the deficit, is 67th on the Taxpayers’ Alliance list of public sector fat cats, with a salary of £245,000. If you want to freeze my salary at £245,000, Steve, I’m more than happy for you to do that. You would have to double it and then triple it and then add a bit more first, though. Even so, a pay freeze might annoy me at a time when everything I buy is getting more expensive, but it wouldn’t cause me any real hardship – I’m fairly well paid and very frugal. But it makes you look a bit silly, I think, when you are proposing a real terms cut in the income of people earning about 5% of your wedge. Less, in fact, than it costs to live. That’s why it’s often called a ‘cost of living’ increase, Steve.
Alistair Darling, who says that “Public sector pay has obviously got to reflect prevailing conditions and in particular inflation has come way down“, seems not to have noticed that inflation has been above target for 20 months in a row, and indeed for those of us who don’t have mortgages it is still around 3% (slightly more or less depending whether you think the VAT cut is a real fall – I bet wages aren’t increased to compensate when it goes back up!). Alistair Darling earns around £150,000, plus expenses and a small income from a flat he owns in London and rents out since he has a free house in Downing Street. Claiming inflation is low makes you look like a bit of an idiot, Alistair, like when MPs are asked the price of things like a loaf of bread or a pint of milk and turn out not to have the faintest idea. £250 a week, isn’t it?
Of course none of them really mean any of this. Alistair means “Look at me, I’m independent from Gordon and I can prove it. You should vote for me because I’ll be tough on public spending without cutting services”, and Steve means “I know you want to abolish my organisation Mr Cameron, and I know most of your party thinks I’m a Labour stooge, but look at all these helpful things I’m saying, I’m sure we can come to some arrangement”.