The government needs to rethink its approach to public services strikes

A few weeks ago it looked like the government might finally have brought an end to widespread public sector strikes after a breakthrough on NHS and teachers pay. However, the glow of success has quickly faded.

Teachers resoundingly rejected the government’s pay offer and are back on strike. Head teachers’ unions are also now balloting their members for the first time. Unison – the union that represents the largest number of NHS employees – accepted the government’s pay deal, but the Royal College of Nurses (RCN) did not and their members will go back on strike at the end of this month. Junior doctors just concluded their longest ever walkout and look set to continue with industrial action, while unions will soon ballot consultants; initial polling indicates that senior doctors might also vote to go on strike. Finally, Dave Penman, the general secretary of the FDA, the union which represents senior civil servants, described the government’s pay offer as “unconscionable” and civil service unions are now re-balloting members about more industrial action.

The only conclusion to draw is that the government’s approach to strikes is not working.

The government’s strike strategy has not worked – a higher pay offer would quickly end the dispute

The government’s current approach to dealing with industrial action is to pick off staff groups one by one, putting pressure on remaining groups to accept settlements. There also seems to be a direct correlation between the generosity of offers and public support for that group; the government offered NHS staff the largest deal, teachers the next largest, and the civil service the least, mirroring relative public support for those groups.

But this approach only works if ministers manage to end industrial action by some staff groups, and the government is making little progress on this front. The quickest way to end this disruption would be to make a substantially higher pay offer, with large differences in the cost of settling disputes with teachers, NHS staff excluding doctors – known as Agenda for Change (AfC) staff – and junior doctors. Pay uplifts for AfC staff are the most expensive due to the sheer size of the workforce, with every additional 1% pay increase costing the service approximately £700m per year. In contrast, a 1% increase would cost £250m per year for teachers ²⁵ https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1137933/Government_evidence_to_the_STRB.pdf and approximately £50m ²⁶ https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1056644/Written_evidence_to_the_DDRB_2022_to_2023.pdf p.21 for junior doctors.* For civil servants, the same increase would require additional spending of approximately £167m. The government has said any higher pay offers are unacceptable. Is that actually the case?

Higher pay offers are possible but would require trade-offs

The government could offer NHS staff and teachers consolidated pay rises equivalent to the average private sector pay increase in 2022/23 and 2023/24, forgoing the one-off payments that government has offered for 2022/23. It would be harder for union members to reject that offer, not least because doing so might see a drop in public support. That offer would cost £7.2bn more across 2022/23 and 2023/24 than is currently budgeted for in the pay review process, and £1bn more than the current offer the government has made to staff. While £1bn may sound like a lot, it only represents 0.2% of total planned resource spending in the NHS and schools in 2022/23 and 2023/24 combined. ²⁷ https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1144441/Web_accessible_Budget_2023.pdf p.33
 

It would, however, incur a larger ongoing cost for the government, as the higher consolidated increase in 2022/23 is included in staff’s future base pay – though the government could find the money for this through either spending cuts across public services, raising taxes, or increasing borrowing. The first of these looks the most difficult. Funding higher pay offers out of existing schools and NHS budgets would require cuts of a further 5% to non-staff spending. This would have an inevitable adverse effect on the performance of these services, given existing budgets are already tight. ²⁸ https://www.instituteforgovernment.org.uk/publication/report/performance-tracker-2022-0 This is further complicated by tighter planned spending growth from 2025/26 onwards. ²⁹ https://www.instituteforgovernment.org.uk/publication/autumn-statement-2022-public-services

Alternatively, raising the additional money through tax is equivalent to increasing the basic rate of income tax from 20% to 20.62%. ³⁰ https://www.gov.uk/government/statistics/direct-effects-of-illustrative-tax-changes/direct-effects-of-illustrative-tax-changes-bulletin-january-2023 Or, it could increase borrowing by 2.6% more than planned in 2023/24. ³¹ https://obr.uk/efo/economic-and-fiscal-outlook-march-2023/   All options involve trade-offs; but all options are available to the government should it want to fund higher pay offers.

Cost of different wage scenarios, compared to pay review body recommendations, for teachers, AfC staff, and junior doctors ³² Institute for Government analysis of Department of Health and Social Care, ‘Government and health unions agree pay deal paving way for an end to strike action’, press release, 16 March 2023; Department for Education, ‘Teacher strikes: Everything you need to know about the teacher pay offer’, blog, 28 March 2023; Department of Health and Social Care, ‘Evidence to the Doctors’ and Dentists’ Remuneration Body (DDRB) for the pay round 2023 to 2024’, 21 February 2023; Department of Health and Social Care, ‘Evidence to the NHS Pay Review Body (NHSPRB): 2023 to 2024 pay round’, 21 February 2023; Department for Education, ‘Evidence to the STRB: 2023 pay award for teachers and leaders’, 21 February 2023; Office for National Statistics, ‘Average weekly earnings in Great Britain: February 2023’, 14 February 2023; Bank of England Monetary Policy Committee, ‘Monetary policy report’ February 2023; HM Revenue & Customs, ‘Direct effect of illustrative tax changes’, 31 January 2023; HM Treasury, ‘Spring budget 2023’, 21 March 2023; and Office for Budget Responsibility. ‘March 2023 Economic and fiscal outlook – supplementary fiscal tables: receipts and other’, 15 March 2023

The government has previously argued that higher pay awards would contribute to inflation, but the sums of money we have outlined here are very small in the context of the entire economy. It also seems unlikely that matching private sector pay would have many knock-on effects on other workers’ wages.

While the easily quantifiable costs of settling strikes in schools and the NHS are relatively low, the government should also consider the much-harder-to-quantify costs of not settling on staff retention, which in turn will have an impact on public service performance and the government’s electoral prospects.

The government should get on the front foot in junior doctor negotiations

Months of refusing to engage with either NHS or teaching unions has not resolved the disputes but has increased acrimony on both sides and arguably contributed to employees’ decisions to reject the current pay offers. With battle lines drawn, the threshold for agreement is undoubtedly higher – workers will want more to show for their strikes.

Indeed, there is a good chance that unions would have accepted the current offer if the government had made it in the summer or autumn of last year, meaning the government could have secured a cheaper deal than it now faces, as well as avoiding the disruption and reduced activity that have followed. The government has so far refused to engage with junior doctors. And the BMA, their lead union, is more combative than unions representing nurses, ambulance workers and teachers. But the government should go on the front foot in this negotiation and demonstrate the value it places on the workforce, in the hope that it will increase the chances that its offer to junior doctors – when it inevitably comes – is accepted. This is particularly true given the relatively low price tag for a settlement with junior doctors, and the risk that their more senior colleagues may choose to join them on the picket line.

The government’s approach to industrial action across public services is not working. Rishi Sunak now has an opportunity to change his government’s tone with striking staff and put this wave of industrial action behind him so that he can concentrate on delivering on his pledges in the relatively short time left before the next election.