If you were looking for a quote to sum up the predicament the new Labour government finds itself in, you need look no further than the musical Hamilton. In act two, Hamilton, still giddy with victory after the brutal war of independence, quickly gets frustrated with how hard it is to get things done in his new role as Washington’s Treasury Secretary. Washington warns him: “Ah, winning was easy, young man, governing’s harder.”
It is a bit unfair to suggest winning was easy for Keir Starmer, given the state the Labour Party was in five years ago and the amount of work that went into making it electable again. Still, by the time the election was actually called a Labour victory seemed pretty inevitable – given the death spiral the Conservatives found themselves in, all Labour had to do was sit tight and repeat their message of “not being the Tories”.
Governing is, as the Washington of Lin Manuel Miranda’s imagination predicted, obviously harder. And we got the first big insight into just how quickly “not being the Tories” would prove an insufficient proposition this week, with the junior doctors pay dispute.
First, the good news: in his first three weeks in the job, health secretary Wes Streeting has managed to bring an end to the devastating industrial action (lasting over a year) and reset relations with the British Medical Association. He has done this by offering junior doctors a pay rise of 22 per cent over two years, as recommended by the independent review bodies. Those independent bodies also recommended pay increase of 5-6 per cent for other public sector workers, which the government has agreed to as well. All in all, that amounts to a bill of £9.4bn.
That’s a hefty price tag, but you can see the government’s logic. Strikes, particularly in the health sector, have been extremely damaging to both the economy and to public confidence in the last government. Cancelled hospital appointments and knock-on effects on waiting lists were a major factor in the Conservatives’ devastating defeat – as Stephen Bush has noted, at the time of the election at least 8 per cent of the population were waiting for an NHS operation. Long-term sickness is one of the key drivers of Britain’s abysmally low productivity. It is also the single biggest reason for people being out of the workforce entirely, or “economically inactive”. The next biggest reason that people are unable to work is because they are studying, or because they are caring for children or older family members – something to keep in mind when politicians refer to this group of 9.4 million people as an untapped labour source.
The cost of the pay deal for junior doctors specifically is estimated at about £1bn. The cost of industrial action in the NHS last year alone was £1.7bn. You can see how Streeting might have been able to convince Rachel Reeves, who is keeping a tight hold on the purse strings, that ending the dispute quickly right at the start of parliament was good value for money. The chancellor used exactly this justification when announcing the pay deal. You can even see why the wider price tag for other public sector workers was accepted to avoid the inevitable antagonism of going ahead with one independent recommendation but ignoring others.
The challenge is that it may not stop here. Junior doctors were agitating for a 35 per cent pay rise. That increase that looks excessive when viewed through the lens of average wage growth (6.2 per cent in 2023). And, Reeves says she has uncovered a £22bn black hole in the public finances – this might mean making “tough” decisions about things like infrastructure spending, the winter fuel allowance and future tax rises.
Junior doctors, however, say this is the amount needed for “pay restoration”, in other words to make up for lost earnings and bring their pay up to where it would have been had it kept up with inflation rather than being essentially frozen by the Conservatives since 2010. You can see their point. You can also see their frustration, along with that of other healthcare workers, in the NHS retention figures and vacancy rates. In September 2023 the vacancy rate in the NHS was 8.4 per cent (equivalent to 121,000 full-time workers), with 10.7 per cent of the workforce leaving that year.
These very worrying figures are a big part of why the health service, along with the social care sector, is in crisis. It’s also why Sunak’s brash attempt to essentially ban strikes by setting minimum service requirements was always doomed to fail – you can stop doctors and nurses striking, but you can’t force them to work in the NHS if they don’t feel the pay and conditions are worth it. It is very obvious many don’t. They are voting with their feet, taking more lucrative jobs abroad or quitting the sector entirely. It’s why Streeting has prioritised a “reset” with the unions right from the get-go, and why Reeves was able to find this cash while refusing (at least for the moment) to address other pressing issues like the two-child benefit cap.
But it also means that the pressure to raise junior doctor pay further isn’t going away, even with this offer that to most of the public looks very generous. Indeed, WhatsApp messages have already emerged of the co-chair of the junior doctors committee of the BMA suggesting more strikes in a year’s time, when Labour’s “honeymoon” period would have ended and there would be another “window of opportunity”. And now that Reeves has publicly made the case that giving in to union demands is a cost-effective way to avoid the disruption of strikes, those agitating for pay will be emboldened. Things could get very bitter – and very expensive – very quickly.
Simply “not being the Tories” was enough to win Labour the election, and it was enough for Streeting to get an early win on the board. But the WhatsApp messages show Starmer’s government will not be given an easy ride by the junior doctors’ union just because they aren’t Conservatives. That’s a theme that will quickly become apparent elsewhere. Governing’s harder.
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