Government needs to make work worth the while

Mar 23 2009 by Kevin Rowan, The Journal

THERE are clearly very divergent views about the role of the public sector and specifically public spending during this recession.

Trade unions have supported the Labour Government agenda of accelerating and increasing public spending now on infrastructure projects, keeping the economy working, a move welcomed by the private sector too.

Local authorities similarly are increasingly pump-priming or ‘gap filling’ investment, often borrowing significant amounts, to keep the wheels of the economy turning. The Conservative Party has questioned this approach, suggesting ‘the market’ should be the determinant of winners and losers in the economy.

Just a few months into this process, as we approach the next Budget, we are witnessing the lobbying activities which seek to place workers, in particular public sector workers, at the heart of the economic crisis. This carefully calculated dynamic manifests in ridiculous accusations of public sector workers are enjoying “gilt-edged” terms and conditions, including generous pensions.

The average local government pension is worth just £4,000 per year and hundreds of thousands of public sector workers earn less than £10,000 per year. Hardly bank-busting.

It is galling too to hear calls for a freeze in the national minimum wage – some are even calling for a temporary suspension.

These attacks on public sector workers and the low paid are, of course, coming from individuals on huge salaries and bonus schemes with golden pension pots – enjoyed even when they fail, apparently – and are all the more appalling as a result.

Whatever the cause of this recession, it is absolutely nothing to do with low paid or public sector workers. This line of attack is both crass and opportunistic.

We do, however, need to look at public spending. It is the case that the public sector has been investing strategically and intelligently to lever in private cash in large capital projects across the region and this is a smart way of doing business in an area like ours which can struggle to attract that investment.

These large schemes can innovate and inspire fantastic place-making initiatives that build a new future for the region. You only have to look at Newcastle and Gateshead quaysides to see what is possible.

There is a case, now firmly on the agenda, for finding better ways to align public sector capital spend across different public sector agencies.

The Government remains reluctant to pursue short-term wage subsidies, its arguments including difficulties in quantifying duration and determining a ‘viable’ employer.

This seems bizarre when it is a fact the state has been subsidising low paying employers for years. The benefits system, through tax credits and family income support, effectively supplements wages paid by low paying employers.

Far from freezing the national minimum wage the Government should consider raising it to a level that takes workers out of poverty, out of the benefits system and ensures that employment really does work for workers – as well as removing the need for state subsidy. That could save a significant amount of public spending.

Kevin Rowan is Regional Secretary of Northern TUC