Keir Starmer and Rachel Reeves were adamant that economic growth would be their first priority in government. It is hard to square that with the decisions the Chancellor has announced this week.
The Chancellor claims to have discovered a £21.9 billion ‘black hole’ in the nation’s finances, yet she has created the largest part of that sum by deciding to spend £9.4 billion on inflation-busting pay settlements for public-sector workers without asking for reforms in return.
This, it seems, is the first Reeves doctrine: pay now to avoid strikes later
Junior doctors are to receive a rise of more than 20 per cent, spread over two years. But it is also the way that Reeves has justified the move that may well cause her trouble in the future. The cost of not awarding these rises is even greater, she argued – her implication being that the unions would impose strikes.
Set aside the fact that the junior doctors are not underpaid once their generous pensions are factored in. The Chancellor is explicitly saying that they are getting more money because of the damage they have inflicted on the NHS and its patients through repeated strike action – and the plausibility of their threat to do more. This, it seems, is the first Reeves doctrine: pay now to avoid strikes later. It shows other unions that strikes work.
If Reeves thinks she has granted a one-off, corrective pay award to the public sector she will be disappointed. Unions will now expect pay rises of well above inflation every year – and without having to agree to any changes in their working practices. The NHS itself has been told to find a
third of the money for the rises, which means that less will be spent on patients. This perpetuates the problem that Labour inherited: a lot more cash spent on the NHS and increasingly poor results.
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