Cabinet minister Oliver Dowden has clashed with the BBC’s Laura Kuenssberg over the claim that granting public sector pay rises would make households £1,000 worse off.
The government is grappling with industrial action on multiple fronts as rail workers, nurses and postal workers all go on strike to demand better pay and working conditions amid the cost of living crisis.
Ministers have accepted the recommendations of independent pay review bodies — but they fall well short of the unions’ demands.
One of the arguments deployed by ministers is that giving public sector workers the pay rise they want would cost £28 billion — or £1,000 for every UK household.
When approached by the BBC about its calculations, the government said it looked at the total cost of public sector salaries for 2021 to 2022, which came to £233 billion.
It then increased that by around 5% to reflect pay deals for 2022-23, which gives a figure of £245 billion.
The government analysis then takes 11% of that figure reflecting the most recent CPI inflation figure for October.
That brings the total to £27 billion, while another £1 billion comes from “assumptions on pay drift and workforce growth”.
The £28 billion is then divided by the 28 million households in the UK, giving the £1,000 per household.
However, the figures have been described as too high by the BBC and other organisations, including the Institute for Fiscal Studies (IFS).
The BBC’s calculations take the public sector pay bill of £233 billion alongside an inflation rate of 10% for 2022-23, meaning a pay rise in line with inflation would cost about £23 billion.
If you divide £23 billion by the 28 million households in the UK, it equates to about £820 per household — not £1,000.
In an interview with the BBC’s Sunday With Laura Kuenssberg programme, Dowden defended the £1,000 figure, arguing that it was “robust”.
He said nurses’ demands for a pay hike of 5% above the RPI inflation rate — which works out at 19% — are “simply not affordable”.
“If we applied this across the board, that would cost families £1,000 each and it would also add to inflation and make us all poorer in the long run,” he said.
Challenging that figure, Kuenssberg pointed out that the government had used inflation of 11% for the month of October rather than an average figure.
But Dowden said the government may even be “underestimating” the cost.
“What I can tell you is our number is justified on the basis of taking the inflation number, which is what the unions are asking for and projecting it forward to next year,” he said.
He denied the figure was inaccurate, adding: “I spent a lot of yesterday and the day before discussing exactly these numbers. These are robust numbers.”
A Treasury spokesperson stood by the £28 billion figure, saying: “It would cost £28 billion to increase all public sector workers’ pay by inflation – this would illustratively cost each household in the UK around £1,000.”
Elsewhere in the interview, Dowden called on nurses to halt their strike planned for next Tuesday.
Ambulance crews in England are also due to walk out for two days on December 21 and 28 in a row over pay, while border staff represented by the Public and Commercial Services Union will strike for eight days from December 23 until New Year’s Eve.
He said he believed the government had been “reasonable” in its approach to the unions.
“We’re trying to be reasonable, we’re trying to be proportionate and we’re trying to be fair,” he told Kuenssberg.
“But in return, the unions need to be fair and reasonable. They should call off these strikes and give people a break.”
The Cabinet minister later responded to reports that the army will be drafted in to over for striking workers over the festive period.
Asked on Times Radio whether it was fair that some servicemen and women would have to use their downtime to fill in for striking workers, he said: “No, it’s not fair at all.
“And that’s why I would urge the unions to call off those strikes and to give the military a break this Christmas.
“It is of course the case that under different political persuasions, governments have used the army in extremis.
“And it is an extreme situation in relation to having an ambulance strike, for example, and that’s why we’re asking them to do this. And I know the sacrifice that they are making in fulfilment of their duty.”