14th September 2017
In an uncomfortable ten-minute interview on Radio 4’s Today programme this week, Shadow Justice Minister, Richard Burgon, refused no less than five times to clarify Labour’s position on supporting the possibility of illegal public sector strikes. The line of questioning followed a previous interview, where Unite General Secretary, Len McCluskey floated the prospect of exactly that: a ‘winter of discontent’-style coordinated strike in protest at seven years of public sector pay freezes.
The ticking up of inflation figures means that the pay-squeeze is a real and pressing issue for the Government. Nonetheless, the more militant tone coming from the Unite and GMB Unions this week poses not just a policy problem for the Treasury as it seeks to ease the burden on some public sector workers while holding fast on deficit reduction, but a political one for Theresa May’s governing project.
To understand why, it is necessary to cast our minds back to the now much-maligned Conservative election manifesto, in particular, its promise to “govern from the mainstream” and to “reject the ideological templates provided by the socialist left and the libertarian right.” This was “Mayism” laid bare: an attempt to break the Thatcherite consensus that underpinned the Cameron-Osborne regime, and to recapture something of the ‘One Nation’ Tory tradition with a more relaxed approach to economic interventionism.
Progress has already been made on one strand of this new ideological project with the Government’s revitalised industrial strategy, but alongside this, the Conservatives will want to demonstrate that there is more than rhetoric to their efforts to convincingly put themselves on the side of “ordinary working families.” Theresa May has long called for the Tories to address their “nasty party” label, and a large element of her pre-election project focussed on appealing to precisely those voters who rejected the Cameron austerity agenda.
Whether or not there are surviving remnants of this bold project following the election upset in June will likely be confirmed when the Government responds to the public sector pay issue. A leaked Tory ministerial briefing note demonstrated just how cautious Government Ministers are being when it comes to making firm promises on public sector pay, instructing front benchers to emphasise that lifting the pay cap for police and prison officers could only be seen as a “first step”, with “flexibility” the buzzword when it comes to the future of public sector pay across the board.
With this week’s announcement that the Budget has been scheduled for 22 November, all eyes will be on the Government’s fiscal plans. Lifting the cap for police and prison officers is set to be achieved within existing departmental budget allocations, meaning cuts will have to be made elsewhere, but a wider effort across the public sector with a price tag in the billions would force the Government to confront the choice of greater borrowing or increased taxation, a possibility left open by the 2017 manifesto. For its part, Labour has made no secret of ambitions to raise taxes on higher earners to fund a pay rise (among other things), with the Tories as yet offering little in the way of policy substance to make good on Theresa May’s ambition to improve things for the “just about managing.”
In the short term, the Government has plenty of weapons in its economic ‘good news’ arsenal that could be deployed to deflect attention from noisy trade unions and the Opposition, as Theresa May attempted to do at this week’s PMQs. Record employment figures just released will assist the Government’s narrative on the overall health of the British economy and help to set the pay-squeeze in a less alarming context. The Economist also reported this week that business investment continues to hold up well, with the UK’s low corporation tax rate remaining an attractive prospect for foreign investors, regardless of concerns about Brexit.
But after the Repeal Bill clears the Commons later this year, the Government will be looking to shift the focus onto its domestic reform agenda. On living standards, the public sector, and the economy, Theresa May will have fewer places to hide when it comes to the pressing questions of exactly what it is, beyond Brexit, that her Government stands for, what differentiates her from Messrs Cameron and Osborne, and whether “Mayism” lives to fight another day.
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