This was a perfect moment to start public sector reform, but he blew it

Their wages have been protected. Their pensions are still goldplated. There have been no meaningful redundancies, job insecurity is not something anyone has to worry about, and no one has been furloughed.

In his public spending review yesterday Rishi Sunak, the Chancellor, was, to his credit, willing to make the argument that the Government’s army of employees have had a far easier crisis than the rest of the country and could not expect to be spared some of the economic pain. The trouble is that, while the language was gutsy, he didn’t follow it up with any meaningful reforms.

“Coronavirus has deepened the disparity between public and private sector wages,” the Chancellor told us. “In the six months to September, private sector wages fell by nearly 1 per cent compared with last year.

Over the same period, public sector wages rose by nearly 4 per cent. And unlike workers in the private sector, who have lost jobs, been furloughed, seen wages cut, and hours reduced, the public sector has not.”

In a country that is often besotted with its noble public sector, that is brave talk, even if Covid-19 has painfully exposed how poorly much of the state performs. Overmanned, inefficient, and kicking back against any form of change, this was a moment that could have been seized to tackle some of the chronic issues afflicting the public sector and ensure it is finally fit for purpose. Early in the election cycle and with the Covid upheaval calling for a radical rethink of much that we do, it is difficult to think of a better opportunity. If we can’t reform the state now, when can we?

However, the Chancellor yesterday offered us precious little. Sure, he did announce a “freeze” on public sector pay, but once you got into the details it turned out not to mean very much. For a start, the health service will be exempt, which is a million people. So too will the low paid, who will benefit from the increase in the National Living Wage, which is another two million. Ultimately a few well-paid town planners or tax officials won’t get a pay rise this year – but that is about it. A sector that accounts for 40 per cent of GDP, and employs more than 16 million people, will sail through the worst economic crisis in a century completely unscathed.

That is impossible to justify. The epidemic has once again brutally exposed the failings of the government machine. The country has had to be locked down repeatedly to protect a state-run health service that was unprepared for a lethal virus, and was unable to cope with a surge in demand. While much of the private sector responded magnificently, reinventing itself at lightning speed, and treating obstacles as challenges to be overcome, the public sector mostly decided it was all too difficult and simply shut itself down.

Exams have been left un-sat, universities have been turned into prison camps, and the courts have built up a backlog that may take years to unwind. If the supermarkets had been that hopeless, we would all have starved. And without Netflix, Zoom and Amazon, the economy would have come to a complete standstill.

Almost a year on, it will only be the heroic work of Big Pharma in creating vaccines at record speed that will get us out of the crisis. The public sector showed none of that spirit.

With the public finances on an unsustainable path, and with the deficit hitting 19 per cent of GDP, the Chancellor should have insisted that this was the moment for reform. National pay bargaining could have been scrapped, so that wages reflected local labour markets and living costs.

Pensions could have been bought into line with the private sector.

More radically, services could be reorientated towards the consumer, with genuine penalties for failing to deliver.

After the financial crisis of 2008 we at least made some reforms to schools, in England. This time? So far there has been nothing.

A half-hearted, tokenistic freeze on pay isn’t enough. The Chancellor has made a start by talking tougher – but he needs to set about making some reforms that can match the rhetoric.