Win­ter of dis­con­tent looms as min­is­ters face pub­lic sec­tor strikes over pay cap

Last week nurses took to the street to rail against the con­tin­u­ing cap on their pay. As hos­til­ity to aus­ter­ity spreads, theirs is un­likely to be the last protest against the gov­ern­ment’s eco­nomic strat­egy. As an au­tumn of ten­sion looms, Michael Sav­age and

The Observer - - NEWS -

In the weeks that fol­lowed their dis­as­trous elec­tion re­sult, a del­e­ga­tion of Tory MPs marched to Down­ing Street with a clear mes­sage for the prime min­is­ter and her team. Af­ter years of aus­ter­ity, vot­ers’ pa­tience was run­ning out, and some pos­i­tiv­ity was needed.

The MPs went away from the meet­ing con­vinced they had se­cured an end to the pub­lic sec­tor pay cap that would mark a loos­en­ing of spend­ing cuts that they could use to show their con­stituents that the gov­ern­ment was lis­ten­ing.

Yet while Theresa May and her chan­cel­lor, Philip Ham­mond, are prepar­ing to make a ges­ture to selected pub­lic ser­vants, the years of salami slic­ing mean that, quite apart from Brexit, there are now myr­iad is­sues that min­is­ters fear could erupt into full-blown po­lit­i­cal crises.

It is why some Tories are now con­cerned that, far from stag­ing a po­lit­i­cal re­cov­ery in the au­tumn, the party may do well to dodge a win­ter of dis­con­tent that would pro­voke re­newed anger among vot­ers and make the once- dis­tant prospect of prime min­is­ter Jeremy Cor­byn more likely.

The spin­ning plates most in dan­ger of crash­ing to the floor in­clude not just pub­lic sec­tor pay, but forth­com­ing wel­fare cuts, the in­creas­ingly con­tro­ver­sial roll­out of a new ben­e­fits sys­tem, lo­cal gov­ern­ment fund­ing and an NHS head­ing into an early win­ter cri­sis.

“The next three to four months are pos­si­bly go­ing to be the rock­i­est so far – with Brexit un­cer­tainty af­fect­ing some of these do­mes­tic is­sues,” said one min­is­ter. “These are choppy wa­ters to nav­i­gate be­tween now and New Year’s Eve.

“The ques­tion is what con­ces­sions can be made in the bud­get con­sis­tent with our rep­u­ta­tion for sound money and bal­anc­ing the books. The threat of prime min­is­ter Cor­byn is the only glue that is hold­ing the Tory party to­gether.”

The im­me­di­ate threat is com­ing from the unions, some of whom are threat­en­ing strikes should the gov­ern­ment at­tempt to re­ward some pub­lic sec­tor work­ers rather than oth­ers.

Ma­jor unions are al­ready warn­ing min­is­ters not to be se­lec­tive about which pub­lic ser­vants de­serve a raise. A sur­vey by the pub­lic ser­vices union Uni­son of nearly 11,000 em­ploy­ees, in­clud­ing paramedics, teach­ing as­sis­tants, hos­pi­tal porters and po­lice staff, found that more than two in five (43%) de­scribed their stan­dard of liv­ing as worse than a year ago, and a quar­ter (26%) said they owed more money than they did 12 months ago.

“Enough is enough,” said Dave Pren­tis, Uni­son’s gen­eral sec­re­tary. “The pay cap must end, not this au­tumn or next year, but now. The gov­ern­ment can­not pick and choose who should ben­e­fit. Ev­ery­one work­ing in the NHS, schools and higher ed­u­ca­tion, lo­cal gov­ern­ment and the po­lice ser­vice is long over­due a rise.”

Mean­while, a com­ing wel­fare squeeze – com­bined with the new uni­ver­sal credit sys­tem of ad­min­is­ter­ing a se­ries of ben­e­fits – is also threat­en­ing to un­ravel. Some Tories who re­belled over past at­tempts to cut tax cred­its still have con­cerns. “The prob­lem with uni­ver­sal credit is the so- called ta­per rate [the amount of ben­e­fits a claimant loses for each pound they earn] – it is at 63p in the pound, mean­ing some are pay­ing an ef­fec­tive 63% rate of tax on ex­tra money they earn,” said Stephen McPart­land, one of the lead­ing Tory cam­paign­ers on the is­sue. “I would like to see the chan­cel­lor look at this again in the bud­get.”

There is an even more press­ing is­sue emerg­ing over the way uni­ver­sal credit is Philip Ham­mond and Theresa May are prepar­ing to make a ges­ture on pay to selected groups of civil ser­vants. be­ing ad­min­is­tered. From Oc­to­ber, the num­ber of job cen­tres in­tro­duc­ing the new ben­e­fit is set to in­crease from five to 50 a month. How­ever, highly re­spected Cit­i­zens Ad­vice has taken the ex­treme move of call­ing for a pause of the roll­out amid signs that de­layed pay­ments are push­ing re­cip­i­ents into debt. In an anal­y­sis of more than 50,000 cases pub­lished last Mon­day, it found that claimants are 14% more likely to have prob­lems with press­ing debts if they are on uni­ver­sal credit com­pared with the ben­e­fits it is re­plac­ing. A fifth of re­cip­i­ents on uni­ver­sal credit are not be­ing paid in full within six weeks. Frank Field, the chair­man of the work and pen­sions se­lect com­mit­tee, said: “The idea of mak­ing peo­ple wait six weeks, and some­times longer, for their ben­e­fit to be paid is made to look in­creas­ingly ques­tion­able by each bleak new piece of ev­i­dence on uni­ver­sal credit. Peo­ple who are al­ready hard up sim­ply can­not cope that long with­out an in­come. “I’ve pleaded with the gov­ern­ment for a Christ­mas truce – a post­pone­ment of the full roll­out of uni­ver­sal credit in Birken­head [the Labour MP’s con­stituency] – oth­er­wise the sys­tem will push fam­i­lies into des­ti­tu­tion over the fes­tive pe­riod.” Gil­lian Guy, chief ex­ec­u­tive of Cit­i­zens Ad­vice, said uni­ver­sal credit re­mained “deeply flawed”, adding: “If gov­ern­ment doesn’t fix these prob­lems, its ex­pan­sion is a disaster wait­ing to hap­pen.” A spokes­woman for the De­part­ment for Work and Pen­sions said the or­gan­i­sa­tion’s anal­y­sis was not rep­re­sen­ta­tive. “The vast ma­jor­ity of claimants are com­fort­able man­ag­ing their money, and for any­one who needs ex­tra help we have bud­get­ing ad­vice and ben­e­fit ad­vances,” she said. Also in the pre­car­i­ous pol­icy mix is ev­i­dence that the NHS may face an early win­ter cri­sis. Last week , NHS Providers, which rep­re­sents 229 of the 233 NHS trusts in Eng­land, said that the health ser­vice was on course for disaster un­less an ex­tra £350m was found for ex­tra beds and staff. It all adds up to a very long queue out­side the chan­cel­lor’s door as he draws up one of the most chal­leng­ing bud­gets in re­cent years. While the un­cer­tainty over Brexit means he in­stinc­tively wants to take a con­ser­va­tive ap­proach, po­lit­i­cal pres­sures to turn on the spend­ing taps are grow­ing. End­ing aus­ter­ity comes with a hefty price tag of £33bn a year, ac­cord­ing to the re­spected In­sti­tute for Fis­cal Stud­ies. It says that, among other things, al­low­ing pub­lic sec­tor pay to rise in line with pay in the pri­vate sec­tor un­til 2020 would cost £9.7bn by 2021-22. Un­freez­ing ben­e­fits would cost £3.6bn, while re­vers­ing the cuts to work al­lowances in uni­ver­sal credit would cost about £3.2bn. Al­low­ing de­part­men­tal spend­ing to rise in line with eco­nomic growth would cost £12.3bn. “Ham­mond has in­di­cated that he has lis­tened to the mes­sage in the elec­tion, but has also in­di­cated he re­mains wed­ded to the idea of bal­anc­ing the books by the mid­dle of the next decade,” said Howard Archer, chief eco­nomic ad­viser to the EY Item Club. “At the moment he is on course to slightly un­der­shoot his pub­lic fi­nance tar­get for 2017-18. That could give him some wig­gle room, but not much.”

Ham­mond is still said to be in cau­tious mode, but sym­pa­thetic to aim­ing any bud­get help at the young. Can­celling the forth­com­ing rise in stu­dent debt in­ter­est is one op­tion.

Some se­nior Tories see the mount­ing threats as part of a wider lack of vi­sion from their party that needs to be ad­dressed ur­gently. Grant Shapps, the for­mer party chair­man, said: “Winning elec­tions in­volves hav­ing both pos­i­tive achieve­ments and a pos­i­tive mes­sage. It is vi­tal that in this party con­fer­ence and bud­get sea­son we grasp the op­por­tu­nity to show that there is no party in Bri­tain more as­pi­ra­tional for the fu­ture of the Bri­tish peo­ple than Con­ser­va­tives.”

‘The idea of mak­ing peo­ple wait six weeks for ben­e­fits is made to look ques­tion­able by each bleak new piece of ev­i­dence’ Frank Field, Labour MP

Pho­to­graph by Jack Tay­lor/Getty

Thou­sands of nurses and sup­port­ers marched on Par­lia­ment Square in London last week call­ing on the gov­ern­ment to end the 1% cap on pub­lic sec­tor pay.

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