Britain's workers are being bled dry to nourish a new elite class
Last week, the Government relaxed rules around civil servants' severance pay. This means civil servants can now receive up to £100,000 in a 'golden goodbye', even if they leave by choice, which previously would have required Treasury approval.
Earlier in July, Labour removed the need for ministers to approve salaries above £150,000, abandoning an important layer of democratic oversight from the process. Only earnings above £174,000 and bonuses more than £25,000 must now be signed off, rising from previous thresholds of £150,000 and £17,500 respectively.
Sir Keir Starmer's administration has brought in a host of policies which puts into stark contrast the Government's treatment of public and private sector employees. From salaries to pensions, the difference is becoming worryingly pronounced.
In one of her first actions since taking office, 'the Chancellor accepted the independent Pay Review Body recommendations and confirm[ed] pay uplifts averaging 5.5pc for public sector workers'. This, we were told, would 'provide certainty for public sector workers and help put an end to devastating strikes costing billions of pounds'.
But all this early inflation-busting pay rise achieved was to send out a signal that going on strike pays in Rachel Reeves' Britain.
The Government appears to have been on the back foot ever since negotiating with public sector workers over pay disputes and industrial action. Train drivers, junior doctors and teachers have all secured above-inflation pay rises.
It will not have escaped readers' notice that the strikes have continued despite these deals. Those familiar with Anglo-Saxon history might have even foreseen this predictable consequence of the Government's negotiation tactics. What makes Labour's stance even more ill-advised and short-sighted than that of Æthelred the Unready, is the fact that, while bending over backwards to accommodate the demands of public sector employees, they appear to be squeezing the life out of the private sector.
With the impact of increases in national minimum wage and National Insurance contributions hitting businesses hard, bosses are at their most pessimistic since 2016. They feel worse than during the Covid lockdowns, fraught Brexit negotiations and the aftermath of Liz Truss's mini-Budget, according to a survey published by the Institute of Directors last week.
The majority – 85pc – of business leaders think that government policy so far will be unsuccessful in driving up desperately-needed economic growth.
According to a House of Commons Library paper on public sector pay, in April 2024, median weekly earnings for full-time employees were £765 in the public sector compared to £714 in the private sector, 'making earnings 7pc higher in the public sector'. This was the case before Labour took power; adding pensions to the mix makes the disparity even more stark. Last year alone, taxpayers were hit with a record £47bn bill to fund public sector pensions.
HM Revenue and Customs data showed pension contributions from public sector employers such as schools and hospitals (ultimately paid for by taxpayers) hit a record high in 2024, eclipsing those made by businesses in the private sector.
This is despite the private sector employing four times more people than the public sector. While the average employee in the public sector enjoyed an average increase of £9,320 on the value of their future pensions, a private sector employee only managed £3,230.
This yawning gap between the two sectors is unsustainable both economically and societally.
The Government needs to act before even the most resilient of businesses fail and resentment sets in towards a system that has created an elite class at the expense of a once-thriving private sector.
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