· A 15% reduction in real pay value since 2010
· NJC pay now worth over 10% less than it was in 1996
· No prospect, under current Government policy, of closing the gap in the rate of earnings growth until 2023
· Half of the 1.6 million local government workforce earn under £21,000 per annum and a quarter earn less than the Living Wage
· The bottom NJC pay rate is now just 11p above the Minimum Wage
For those who may try to argue, or even misguidedly hold the view, that keeping the collective head in the sand over pay is the best way to preserve jobs and services then the facts speak otherwise. Over 260,000 council jobs have gone since the coalition took office. We are now seeing Council budgets being approved this month that preface wholesale service cuts, with many pared to the raw bone and others due to cease altogether.
The “Four Year Plan” to wipe out the deficit is now so wildly off track that Government announcements already made will prolong the public sector cuts until at least 2018 (and probably beyond). The 28% funding cut that was bombed on to local government is already surpassed and will be closer to 40% for many councils by the end of this Comprehensive Spending Review period in 2015 – and that’s before the next one kicks in, which will be at least as bad.
So we already face thousands more job cuts and a demolition of services, and the notion that in this climate we can ‘trade’ accepting poor pay for job security is a myth that needs to be nailed.
Sometimes lost in the current mist is the impact of severe pay restraint on future pensions of local government workers. Because pension value in retirement is linked to pay built up in work then every worker who retires during or after this period will have their pension reduced - for the rest of their lives.
The NJC Employers ‘two-option’ offer is insulting viewed in isolation with inflation running way above. But in the context of just how far local government pay has sunk, and the pressures faced by a dwindling band of local government workers every day, the offer is shown up as blatant kick in the teeth. And a kick in the teeth when the victim is already down.
The NJC Employers have, once again, turned on their own employees rather than stand up for them and the services they provide. They may say it is “with regret” and “with understanding” but platitudes don’t pay the bills and platitudes don’t put food on the table.
This offer - or any permutation of an offer around 1% - on top of the pay freeze, on top of previous years of below inflation settlements, will simply push more and more low to middle-earning local government workers into further debt, into fuel poverty and into reliance on in-work benefits and tax credits. Those many thousands of members further up the pay spine who don’t qualify for benefits and tax credits will see another tight constriction around their ‘squeezed middles’.
So what the CLG and the Treasury, through the NJC Employers, take away – the DWP partly puts back through welfare. Such is the madhouse of government fiscal austerity when applied to pay and social policy.
The strings and roundabouts attached to the NJC Employers offer are a sideshow and we should not allow them to distract us from the core issue. Even an offer of 1% applied to all NJC pay points without any strings is simply not enough and is simply not acceptable.
And so to the next question – where will the money come from?
For one answer we can do a little compare and contrast.
Compare this:
The Government has now cut the rate of Corporation Tax 4 times since it came to power. It argues that lower rates of Corporation Tax will attract businesses to the UK and result in overall higher tax revenues.
As a result the rate of Corporation Tax has fallen from 27% (2010/11) to 23% (2013/14) and it will fall to 21% in 2014/15. Treasury estimates put the cost of cutting Corporation Tax this year (2013/14) at £3.75 Billion and next year (2014/15) at £4.935 Billion.
In June 2010 the Office of Budget Responsibility (OBR) projected there would be £54.1 Billion income from Corporation Tax in 2013/14. In the Autumn Statement 2012 the OBR reduced this forecast to just £38.9 Billion income from Corporation Tax in 2013/14. That’s a projected drop of some £15.2 Billion in income – which is £11.45 Billion more that will be lost on top of what has already been knowingly lost as a result of cutting the Corporation Tax rate!
And contrast it to this:
£1 Billion provided to local government for pay could fund a 4% pay increase for all local government workers.
£560 million of that would immediately be recouped by the Government through Income Tax, National Insurance and VAT. More of it would be recovered by Government through reduced spending on in-work benefits and Tax Credits (Under Universal Credit the Government plans to claw back 65p of every extra £1 people earn).
The balance would be spent by workers in their local economy. Thereby maintaining current private sector jobs and helping to create new jobs. This would see a further consequential increase in tax revenues to Government and a decrease in benefit costs. This is a function of the economic multiplier effect (the money-go-round) which can normally be calculated at between 3 and 6 times the initial outlay.
In other words, successive cuts in Corporation Tax have done nothing to stimulate growth or raise overall tax revenues - whereas a decent pay rise for local government workers would be guaranteed to reduce in-work poverty, contribute to economic growth and the Government would recover most of the cost. And that’s comparing and contrasting £1 Billion invested in local government pay to £3.75 Billion knowingly cut from Corporation Tax income this year (2013/14).
In simpler words – Government has the money to provide for a decent pay increase for all local government workers which will a) be largely and directly self-financing for Government, and b) will have consequential benefits for private sector employment and the sustainability of businesses. But Government chooses instead to cut income from Corporation Tax and will then see that loss compounded fourfold!
For a shorter compare and contrast we can note that local authorities already opted out of the NJC machinery are generally offering more than 1% this year.
The NJC Employers are relying on a sense that local government workers are now so brow-beaten, demoralised and stupefied that they will shuffle silently and compliantly in line to take more and more cuts to their earnings and living standards, as well as to their jobs and to the services they provide with pride and care.
It is surely therefore up to us to provide some hope and confidence and strength to give voice that “ENOUGH IS ENOUGH”.
At its core, trade unionism is about facing up to the hard things and doing the hard things in the hard times.
The dismissive and uncaring attitude of the NJC Employers has actually made it easier for UNISON’s NJC Committee to reach the only logical conclusion it can on Wednesday – the offer of a 1% pay increase (with or without any strings) has to be unequivocally recommended for rejection.
With most opted-out councils offering more than 1% as a starting point this year, it is not too dramatic to say the future of functioning sector-wide collective bargaining in local government hangs in the balance otherwise.