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It is not just the public sector 'fat cats' who will feel the pain of pay freeze

Economics Editor,Sean O'Grady
Tuesday 22 June 2010 00:00 BST

According to the Chancellor, the public sector has put the nation on "the road to ruin". The Prime Minister insists that it is "fair" that public workers on £18,000 should have their pay frozen when inflation is running at 5 per cent. The Deputy Prime Minister argues that public sector pensions are "unfair and unaffordable".

The choreographed process of softening up for today's Budget has been skilful; barely a day goes by without another grim warning about the dangers to the nation from the build-up of debt, and with it a new round of cuts. Britain is the new Greece, we are told. We need to act, and now.

Yet even if ministers are correct in this analysis – and there are plenty of respected economists who doubt it – it inevitably leaves public servants feeling demonised, scapegoated and abused, despite routine declarations about their hard work and devotion.

True, there are well-documented cases of public sector staff who are paid obscene amounts – local authority chief executives and BBC bureaucrats are egregious examples. Three public servants now earn more than £1m, and 171 are paid in excess of £150,000 a year, more than the Prime Minister. Yet these lucky few have to be set in a context of 6 million public sector workers, the vast majority on unenviable "packages" – the man who empties the bins on £12,000 a year; the nurse auxiliary on £13,000; the classroom assistant on £14,000. Their pensions, when they arrive, will be a few thousand pounds a year, and taxable.

Average regular pay in the public sector, excluding financial services, was £454 per week in April 2010. By comparison, average regular pay on the same basis in the private sector was £419 per week. That is not such an enormous gulf. Public sector pay did catch up with the private sector under Labour, although the gap has not narrowed much in more recent years. But much of that was in response to public shame about the poverty pay that nurses, for example, received. Politicians and parents agreed that gifted headteachers should be rewarded well. Our armed forces remain underpaid by most standards.

Video: Osborne to set out 'tough budget'

The money that goes into the public sector is not uniformly wasted on fat cattery, an obvious point that is worth repeating in the present feverish climate. Most of the core functions of the public sector need to be done, and the state cannot be suddenly cut back without any harmful effects. Students will still need to be taught by lecturers, rotten teeth extracted by dentists, babies delivered by midwives, a war to be fought in Afghanistan, drunks to be arrested on a Saturday night, children to be protected from harm. Less emotively, we will still need stats to be gathered, weather forecasts to be made. We may soon discover just how difficult it is to find real waste in the public sector, and how meanly in reality we look after those who help us with extraordinary dedication. Or is all this more ideologically driven?

Britain is not Greece. We have our own currency, so we are not trapped in a currency zone unable to devalue; our debt has a much longer maturity, so we don't have to roll it over so often and risk a crisis; our national debt will peak at about 75 per cent of GDP – better than most of Europe, and where it was in the 1960s. At the end of the Second World War it stood at 262 per cent of GDP, and we went ahead and built a welfare state. Most of it is owed within the UK. It is not "out of control".

Even Mr Osborne's much-vaunted Office for Budget Responsibility admitted that public borrowing was about £11bn less than anticipated last year, and would be £8bn better this year even if Mr Osborne left Alistair Darling's plans untouched.

The Liberal Democrats have now apparently undergone a Damascene conversion to Tory fiscal principles. Yet, in a world that seems impossibly remote now, the general election campaign, Vince Cable and Nick Clegg were warning time and again about the dangers of cutting too early, of the panic cuts that could undermine the recovery, of taking risks with people's jobs and homes. It is odd indeed to hear them sound more Tory than the Tories. The National Institute of Economic and Social Research says a full-blown Tory attack on the deficit would push us into a double dip recession.

There has been some unfortunate briefing too about ministers actually enjoying "throwing the axe around", taking some sort of sadistic joy in it. And was it not David Cameron who told us not so very long ago that cutting down on waste was the oldest trick in the political book?

To turn the Prime Minister's soundbite around, the suspicion is that the Government is cutting as heavily as it is not because it has to, but because it wants to.

Case studies: 'People don't know how hard we work'

Steve Holman, 50, bus driver in east London. Earns around £29,000 a year

I've worked for the same bus company in east London for 26 years, but I'm massively worried about the impact of the Budget on Transport for London.

It's quite simple – either they pass the cuts on to passengers, which they won't do, or on to services without affecting passengers, through cuts to wages.

I work anything from a 38-hour week to a 60-hour week. I've worked for 26 years, on an average of six days a week – sometimes seven – in order to live in London.

When you speak with the general public they don't understand how hard we work. We develop an affinity with them though.

I earn £29,000 a year, which is one of the better positions, but we're not in an enviable position. We take home £350 a week and in London that's not a king's ransom, is it?

I'm massively against any cuts in services to London passengers. We've spent years building the network up. It will have an effect on passengers travelling on buses.

Bob Sutcliffe, 58, grave digger for Warrington Borough Council. Earns £20,500

I first started working for the council 15 years ago. I enjoy it, but it's hard work. You never know how much work there's going to be, and it's not like you can say, "No, we'll do it tomorrow." This week we did nine graves, but it's a year-round job, and you get more in winter.

We've got a mini-digger, but it can't get to all the plots. If we can use the machine it takes two-and-a-half hours per grave. If we're doing it by hand it takes all day. There's five of us, working across four cemeteries, 8 'til 5.

I don't think we could be stretched any further, especially as we have to do other jobs too.

Denise Boyce, 26, nurse. Earns £22,663

I qualified in April and work in the neonatal unit at St George's in Tooting, where I'm doing intensive care training. I work mainly with premature babies on life-support machines, and I help new mums with breast-feeding. It's hard work but very rewarding – although not financially. We're the leading neonatal unit for south-west London, but we're pretty stretched. We've got 140 nurses for 36 cots. It might seem like a lot, but that's on a 24-hour system, and most of the babies require one-to-one care.

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