One of the Government’s key concerns is to control inflation which, if left unchecked, would lead to a return to the old boom and bust days, when public services, staff and capital were being cut from year-to-year.  Keeping as tight a rein as possible on inflation is also very important to anyone who has, or hopes to have, a mortgage.

One out of every five workers is employed in the public sector, which is almost six million people in total. It is understandable that each group – teachers, police, fireman, health workers, local government workers – can put up a case regarding pay which individually may not have a big impact on the economy. But the Government has to look at the sector as a whole, together with the impact on the taxpayer and the knock on effect which having to raise more tax has on fuelling inflation, putting up mortgages and raising unemployment.

Without such a policy we risk going back to the situation of the 1980s and 1990s where inflation was frequently over 10% and interest rates reached almost 15%.  Unemployment was about 4 million and in Plymouth alone was costing £100 million.  We kept losing out every time boom turned to bust as each time we hoped to secure investment in the City this is what happened. Now we have significant and sustained investment across the public sector, not just in school buildings but also in the medical and dental schools, and in the private sector too. Drakes' Shopping Centre was supposed to happen on at least two previous occasions when boom turned to bust.  

When I was elected in 1997 outside toilets dating from the Victorian era were a common feature of primary schools in Plymouth, children had to share books and the fabric of school buildings was deplorable. Portakabin classrooms with leaking roofs were permanent features which school governors tore their hair out over and were regularly featured on news programmes.

When Labour first came into Government in 1997 there was also a considerable discrepancy between private and public sector pay. Much has been done over the past ten years to narrow this gap: in 1997 the salary of a newly qualified teacher was £14,280, whilst today it is £20,133. This is a cash increase of 41% and in real terms an increase of 10.4%. The increase for those with most experience is greater.

The new three year settlements match the three year departmental public spending settlements, providing the stability necessary for public bodies and individual people to make long term financial decisions.

You can imagine how tempting it is -and much easier in the here and now - for me to say to teachers and other similar groups that I will lobby against it and please everybody. But in the not too distant future there would in my view be a price to pay in terms of lost jobs, uncertainty in the school investment programme and insecurity - not just for you and your colleagues but for many other groups across the public and private sectors.

 25 April 2008