Rishi Sunak sees himself as heir to Margaret Thatcher – but in dealing with December’s strikes, which version of the former prime minister does he want to be? Mrs Thatcher was an ideologue who claimed the backlash against the “winter of discontent” in 1978-79 represented a “sea change” in public opinion and a mandate to “clip the wings” of trade unions. But she was also a pragmatist who in 1979 gave public sector workers a 25% pay rise – roughly double the rate of inflation and more than the 19% received by private sector workers – to avert a second successive “winter of discontent”. Mr Sunak’s tribute act prefers ideological posturing to practical solutions: proposing new anti-strike laws that the Lords won’t pass as he has no electoral mandate to enact them; and doubling down on pay restraint for key workers.
This strategy is disastrous for the public sector – leading to falling recruitment, worsening services and escalating industrial strife. The prime minister is out of touch with a nation growing restive over the unreliability and increasing dereliction of state-financed services. Millions of underpaid Britons struggling with a growing cost of living crisis seem, for now, empathetic towards rolling strikes from NHS, post and rail workers, as well as planned action by teachers and border force staff.
When ministers scupper a railway deal the unions might accept, they cannot claim to be neutral. It is disingenuous to say, as the government does, that state employees’ pay is a matter for independent review bodies – when their remit is set by ministers who effectively rig the outcome by casting awards on their terms. The result is that the biggest falls in real wages are those of public sector workers, and those in sectors where the government sits behind employers, such as the railways.
It would be unsustainable in normal times for private sector pay to grow by almost 7% a year while in the public sector pay is rising by just 2%. It is indefensible when inflation is in double figures. Allowing public sector pay to catch up is not inflationary, nor will it spark a wage-price spiral. In Scotland, an offer of a 7.5% rise to nurses, some way below that sought by the unions, was enough to avoid strike action. Ministers settled the criminal barristers’ strike with a 15% fee increase. Negotiations can end disputes but ministers won’t sit down with unions to talk money, preferring to call up the army – and let strikes go ahead so that workers can be blamed by those inconvenienced.
Public sector workers are demanding pay rises to match inflation, arguing that they’re seeing real-terms pay cuts after more than a decade of restraint. Ben Zaranko from the Institute for Fiscal Studies thinks this would cost the Treasury about £15bn. Mr Sunak won’t spend the cash. This is not because of adverse market reaction or because the country can’t afford it. It’s because the prime minister’s most notable achievement is to make austerity respectable in his party again, even if the electorate is unconvinced. His sleight of hand is to defend his book-balancing policies to voters by claiming public expenditure has been kept level in cash terms while shrinking the state by 10% in real terms to appease Conservative MPs.
Mr Sunak’s policies have either been irrelevant to the needs of the country, or harmful to its economy. It is dishonest to claim public services won’t be damaged by using rising prices to squeeze budgets and erode staff wages. Mr Sunak should emulate Mrs Thatcher’s realism and offer inflation-proof pay awards to bring industrial action to an end. Otherwise, the country will hold him responsible for what is likely to be not just a winter but a year of discontent.