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Chloe Westley is the Campaign Manager of the TaxPayers’ Alliance.

During Theresa May’s final weeks in office, in an attempt to build a legacy which is separate to Brexit, several new policies have been announced. Zero net emissions by 2050, a new quango to tackle injustices, a consultation on paternity leave. And, in what could be one of her final decisions as Prime Minister, the Treasury will announce today that public sector staff will be receiving a pay rise.

Perhaps these are policies that May has always wanted to implement, but never got around to. A sense of urgency and a deadline can often galvanize us into action. Or perhaps – more cynically – she sat down and wrote a list of policies designed to sound virtuous and noble at future panel events, so that she could discuss something other than Brexit. I’m an optimist, and like to think that the Prime Minister really does believe in something, even if I don’t agree with each and every announcement.

But is it reasonable to expect the next leader of the Conservative Party to simply shrug their shoulders and accept all of these new policies? For in addition to building on her legacy, the Prime Minister is backing the next leader into a corner on several issues – including public sector pay.

The £2 billion for this public sector pay increase is expected to be paid out of existing budgets, so it wouldn’t be inconceivable for a new leader to suggest that this money be spent in other areas. However, it would certainly be difficult politically to reverse the decision, and that is perhaps why the Prime Minister has rushed to announce it.

It would of course be preferable to give both public and private sector staff a pay-rise by lowering income tax and allowing everyone to keep more of their money. However, this may be considered too radical by many in the Conservative Party. The modern Party – at least at the parliamentary level – has well and truly shifted away from the free market individualism championed by Margaret Thatcher.

So in lieu of giving every hard-pressed employee a pay rise through tax cuts – both public and private sector alike – it might be nice to think we could target the £2 billion pay rise at frontline staff, not well-remunerated bureaucrats. All too often, those already in well paid positions in the public sector are rewarded with bonuses and pay increases, whilst front-line staff seem to be less of a priority.

For example, the Mayor of London has given pay-rises for top earners in City Hall, with those earning £100,000 salaries up 25 per cent since Khan took office in May 2016. And, in 2017, the TaxPayers’ Alliance revealed that senior managers in the NHS had seen their pay increase three times more than nurses over 7 years.

On the other hand, it must be the case that a handful of teachers are not performing well. At the same time, others will have driven drastic improvements in their classes. Increasing the pay of public sector staff on the lowest incomes might sound desirable, but it also might not be especially fair in terms of performance.

The real culprit here is centralised pay bargaining. It means that pay rises must largely be across the board. Past TPA research showed that ending centralised bargaining can save billions over time.

If the Conservative Party seeks to be the party of law and order, then you might think that it’s essential that some of May’s £2 billion goes towards the retention of police officers with targeted pay rises. In London, we’ve seen that the Mayor can’t be trusted to allocate funds where they are most needed, which has resulted in a failure to tackle crime as effectively as his predecessor. Nationally, you could argue that the government can’t afford to make the same mistake by wasting taxpayers’ money on such unnecessary projects as HS2, on hundreds of quangos and pay-rises for senior bureaucrats – whilst failing to get the basics right.

It’s unlikely that the next Prime Minister will be able to row back on this promise to give public sector staff a pay rise. He may not want to do so, in any case. But,i n the long term, if politicians would like to demand that pay rises go towards those on the frontline, and use them as recruitment and retention for those services or ensure they are based on performance, then centralised pay bargaining will have to be tackled.

More broadly, it’s encouraging that both Jeremy Hunt and Boris Johnson are committed to keeping taxes low, and I hope that in the months ahead Britain will not only be freed from the European Union, but from the 50 year high tax burden as well. Lowering income tax would give every employee in the country a well deserved pay-rise, and be a fantastic way to boost economic growth post-Brexit.

146 comments for: Chloe Westley: Public sector pay – and why centralised bargaining must end

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