The Daily Telegraph - Saturday
Self-entitled public servants are playing taxpayers for fools
A Labour administration would prioritise rewarding its party membership and base of supporters ‘Output is left to decline relentlessly, with demands for extra spending to plug the gaps in services’
Many enjoy inflation-protected pay rises. Their pension rights are too often gold-plated. Annual holidays are generous, there is extra leave for every event imaginable, and the right to work from home as often as you want seems to be completely sacrosanct. The public sector was already entitled and over-privileged. And yet, it may be about to get much, much worse. The public sector and its political cheerleaders in the Labour Party are playing the taxpaying public for fools – and it is getting to the point where it is hard to understand why anyone would bother working in the private, competitive economy any more.
We already know that they won’t be spending £28bn a year on the “green energy transition”, that they won’t raise corporation tax, and that they won’t embark on wholesale nationalisation of industry. With so many pledges getting ditched, it comes as a slight surprise to learn that there is something that the Labour leader Sir Keir Starmer and his shadow chancellor Rachel Reeves actually might like to do.
It emerged this week that Labour may be planning to carve out an exemption on its tax raid on pensions, with “public sector leaders” potentially protected from any reintroduction of the lifetime allowance. In effect, senior civil servants could soon be on an even better deal than everyone else in the country. And it probably won’t stop there. The party has been looking at a pensions exemption for senior doctors to stop them from retiring early from the NHS, while Sir Keir himself famously has his own special tax legislation that dates from his time as Director of Public Prosecutions.
In other words, the Starmer/Reeves government will make sure that officials and other public sector vested interests do very well, while taxpayers pay the price.
If this does come to pass, Labour would only be continuing a trend that has been well-established since Tony Blair took office in 1997. Whatever happens to the economy, the public sector seems to do far better than everyone else. Salaries are routinely uprated for inflation, regardless of whether the country can afford it. Pensions are effectively guaranteed. Trade unions enjoy a privileged status to make sure that staff are well-treated. Working from home has been built into the system. And, of course, while private sector workers are expected to improve their productivity year in and year out, in the public sector output per person is left to decline relentlessly, with demands for extra spending to plug the gaps in services that are the inevitable result.
The situation isn’t quite as extreme as that enjoyed by the Eurocrats and other members of the international bureaucratic elite. Officials toiling away for the European Union are personally exempted from paying any national taxes, even while they cheerfully argue for their imposition on everyone else. At the International Monetary Fund headquarters in Washington, meanwhile, non-American staff don’t have to pay taxes on their generous salaries, which may help explain why they are always outraged by any plans to cut them for anyone else. Likewise, at the OECD offices in Paris, staff salaries can be tax exempt, even though they spend most of their time planning initiatives to increase the amount the state extracts from less fortunate people, with plans such as the new minimum global corporate tax.
At one level, it even has a certain twisted logic to it. After all, at present, taxes on public sector salaries are recycled back to the Treasury, where they are then used to help pay those same salaries, so perhaps it might be more efficient not to collect them in the first place. And of course, some might argue that it would make it a lot easier for the state to “compete” for “top talent”. It could easily start with senior medical staff to “protect the NHS”, and then be extended to the permanent civil service as well.
But Britain would not have to go as far as this to create an elite technocratic class that is increasingly cut off from the rest of society. The public sector is already feather-bedded, and protected from the harsh cycles of the real economy.
We have seen that with constant pay rises that are unrelated to performance. We have seen it with the extension of employment rights, and with attending the office optional. We have seen it with bumper pension entitlements that are far more generous than anything that is now available in the private sector.
In fairness, much of that has happened under a Conservative government that has extended more and more generous privileges to an already pampered civil service while demanding virtually nothing in the way of productivity or performance in return. But it will be far worse under a Starmer-Reeves administration, intent on rewarding its mainly public sector party membership and electoral base.
The UK has created an economy that now works brilliantly for a cosseted public sector elite but which is terrible for everyone else. The private sector is being treated like fools, forced to pay for an increasingly parasitic class of over-entitled public sector workers.
The only real question is whether they will put up with it – or make the only rational choice left and give up working.