26 October 2021

The pay rises promised by Rishi Sunak don’t mean the end of austerity

Spending cuts will continue to weaken large parts of the state.

Public sector workers are set for a pay rise: at least, that’s the headline that the Treasury wants this morning. Rishi Sunak will announce an end to the public sector pay freeze, but we don’t yet have any detail on how much public sector pay will go up by, whether it will be more than inflation, and whether or not the Treasury will be making additional money available to departments to make those new pay awards with.

(I say “we don’t yet have any detail”: because of Sunak’s fiscal rules, we can make a pretty good guess that departments will not be given extra money to make new pay awards with.)

But combined with the continuing rise in the national minimum wage (from £8.91 to £9.50) to meet the target of the statutory pay floor reaching two-thirds of median earnings by 2024, it means that the morning bulletins are full of stories about looming pay rises.

Sunak is hardly the first Chancellor to engage in dodgy double-counting and other ruses to make his Budget seem more generous than it is, and one reason why his last fiscal event was such a success, politically speaking, is that his team carefully managed the press in the run-up.

If I were a Conservative in a marginal seat, I would be worried how the Budget run-up has been full of stories about wages going up, public spending going up and all manner of feel-good news stories, because, despite spending going up for parts of the British state, the reality is continuing austerity for large swathes of it.

It’s possible that we look back on these budgets as triumphs of political strategy, which allowed the Conservatives to have it both ways: fighting Labour both as the party of tight budgets and the party giving more money to “our NHS” and other favoured departments of government.

But it’s equally possible that we look back on these budgets as ones that locked the Conservatives into fighting the next election as the party of high tax, high inflation and cuts to pay and public spending.