The strikes are a baleful legacy of a 12-year obsession with tax cuts and a small state

David Cameron first took aim at public sector workers in 2010. Continued Conservative policies have brought them to their knees.

“Contemporary Tory governments are singularly bad and unsympathetic employers”

Will Hutton 

The anger, despair, hardship and sense of being trapped that drove last week’s nurses’ strike, the first in the history of the Royal College of Nursing, with ambulance workers and other large parts of the NHS joining them this Wednesday, did not come out of a clear blue sky. They have been years in the making, as has the industrial action blighting rail, the tube and the post office and those planned in schools and the civil service early in the new year.

For contemporary Tory governments are singularly bad and unsympathetic employers. Although Liz Truss and Kwasi Kwarteng have been dispatched, their libertarian hostility to the state, to taxes and to the very concept of public endeavour is shared, if less moronically, by Rishi Sunak and Jeremy Hunt.

In their terms, the public sector workforce is an unfortunate evil, whose claim on the public purse is a residual one once prior ambitions to lower taxes and debt have been met – a far nobler and more moral aim for them than strong public services operated by motivated and reasonably paid staff. So it was in 2010, when David Cameron assumed office. It is the case today, too, but the capacity to run an undeclared pay policy that keeps public sector wages under continuous downward pressure has come apart with inflation running above 10%. The nurses are castigated for striking for an inflation increase plus 5%, which is seen as ”unreasonable”. But were it offered, their starting salaries in real terms would still be lower than they were in 2010. It is a similar story across the public sector.

It is a pay policy not openly acknowledged by ministers. Future public spending plans are set out in successive comprehensive spending reviews: public sector wages are budgeted to rise in cash terms for the next three years by never more than the assumed inflation rate. Varying parts of the public sector – there are eight pay review bodies, ranging from the NHS to education – may choose to offer more than the cash cap reflecting circumstances but, if so, the resources will have to be earned by “efficiency savings”. In the case of the NHS, those are assumed to be 2.2% a year.

In the immediate wake of the financial crisis, with economic activity depressed and inflation virtually nonexistent, public and private sector pay in real terms fell broadly in sync, but since 2015 the system has delivered an increasingly unfair and unbridgeable gap. In 2021, private sector pay finally climbed above its 2010 levels in real terms. Meanwhile, since 2015 public sector pay has risen a little, but not at the same pace – and from 2021 that widening has accelerated. In September, private sector pay in real terms (including bonuses) had grown cumulatively 5.5% since 2010, while in the public sector it had declined by 5.9%, with nearly half of that formidable 11.4% gulf opening up since January 2021. The government’s projected cash increases for wages have been eaten away by far higher than expected inflation. It’s been a hard time for everyone, but especially for those in the public sector. The core problem has been the productivity calamity, made worse in the public sector by even lower investment than in the resource-starved business sector. The figures are a disgrace. Since 2010, British capital spending on healthcare has consistently been the lowest of nine comparable European countries, plus the US and Canada; our stock of MRI and CT scanners per million people is the lowest, as are beds per 1,000 people. Worse, since Covid, one in seven of those hospital beds is occupied by a patient who could be discharged, but lack of care home capacity and social and community care has meant they are blocked in hospital. So despite more doctors, nurses and ambulance staff since 2019, the NHS is treating 12% fewer people from waiting lists and 14% fewer emergency admissions. These are not just barren statistics: accounts of patients needing emergency treatment but not receiving it because of system blockages are commonplace.

These are not acts of God. They are the results of policy choices. The coalition government took over an NHS in pretty good shape. But as the Institute of Government’s Giles Wilkes, sometime economic adviser to both Vince Cable and then Theresa May, candidly observed last week, its great error was not only to squeeze NHS spending too hard; it was obsessed with tax cuts – increasing personal allowances, cutting corporation tax, freezing fuel duties and capping council tax. As a result, he says, crucial “fiscal firepower for public services in future” was squandered. Then add Brexit, without which GDP would now be £120bn higher and tax revenues up some £50bn. Far from the £350m a week more for the NHS, we have £1bn a week less.

There is no honesty about any of this. Instead, the government twists and turns, making outlandish claims about the unaffordability of the pay claims and their contestable impact on inflation. It is one of the baleful results of post-Brexit Tory politics that Johnsonian half-truths and misrepresentation are now increasingly the currency of public life. The reality is that the government faces the consequences of the sins of its predecessors. Had successive generations of Tory ministers avoided stupid policies, there would have been the fiscal firepower to maintain public sector wages at levels that did not provoke strikes and by raising investment levels allow workers to do better jobs. Unions may need to accept that jobs and systems have to change to reflect technological change, but to work in public service should be properly rewarded.

In a sense, it is a civilisational battle. An NHS that cannot do its job properly means that more than half-a-million workers can’t enrol for work because they can’t get medical treatment. Worse gaps, delays, endemic shortages and bottlenecks are literally killing people. The vast majority of the electorate do not share the mania for state shrinking and tax cuts that animates the government. It wants properly resourced public services. The nurses are fighting to protect minimal living standards – but also for a stronger NHS, for better policy and, to an extent, for our civilisation itself. It is a cause we must support.