Friday, 9 April 2010

Cameron backs pay ceiling in public sector ... but will his overall manifesto fail the equality test?

A significant shift in British politics since 1997 is that the leaders of all the major parties will say that they think government should seek to reduce inequality.

In his pitch to Guardian readers, David Cameron suggests something close to a maximum wage in the public sector, picking up a policy more associated with left-wing think-tanks like Compass and the Fabian Society:

In his Guardian article, Cameron writes: "We will ask the [fair pay] review to consider how to introduce a pay multiple so that no public sector worker can earn over 20 times more than the lowest-paid person in their organisation. There are many complex questions that the review will need to address, but I am confident it will not only help tackle unfair pay policies, it will improve cohesion and morale in the public sector too."

Leave aside the vagueness and let out clauses about whether it would happen, the politics of the move are quite smart - in that it makes an egalitarian pitch to the left, an anti-public sector pitch to the right, suggesting that fiscal belt-tightening and fairness might even be combined, on this particular issue at least.

Labour will have to decide how to respond.

It could choose to nitpick the details or question whether it would happen in practice.

I think it would make more sense to make common cause over the principle being advocated.


The rest of the cross-dressing Cameron pitch to the Guardianistas is rather less convincing.

His claim that Brown has "piled taxes on the poor" again suggest that he has not been reading the IFS' studies about Labour's pro-redistribution impact.

Indeed Cameron has consistently failed independent fact-checks in his claims about Labour's poverty and inequality record.

But what about what the Conservatives themselves propose?

The new issue of Renewal contains one of the most detailed analyses of the Conservatives' arguments and policies on inequality. It is a must read for Guardian readers who might want to dig further into Cameron's appeal to them. (The article can be read in full online - pdf file, though "for a limited period only").

Ruth Lister and Fran Bennett - among the most respected poverty academics in Britain, and both former directors of the Child Poverty Action Group - very much welcome the break with past Conservative policy to place a new emphasis on poverty and accept that inequality matters, but conclude their detailed analysis by finding that the parties analysis and policy proposals fail to live up to egalitarian scrutiny:

"Whatever the poltical complexion of the next government, poverty will be high on the agenda. This has to be welcome ... Moreover, while many of the party's policies for supporting families and encouraging work remain unclear and under-developed, what is clear is that families with children will be early victims of cuts while a boost for couples will have to wait and tax changes will be at best poorly targetted and at worst unambiguously regressive.

So overall despite the Tories newfound concern about poverty and inequality, our argument has been that their diagnosis of the problem and prescription for its solution should make anybody living in poverty, or committed to its eradication, think twice before voting for them


One interesting question may be whether implementing something like the Cameron pay ceiling in the public sector would do anything to affect norms about what fair pay means in society more broadly, including the private sector.

Cameron offers the vaguest nod at "fair pay whether in the private or public sector" but says nothing about what he means. And yet the significant shift in pay gaps within private organisations was, at least in part, a response to changing social norms.

As Next Left has noted before, the Blairite MP and Fabian Executive member Denis MacShane presented a private members' bill in 1994 to apply a similar scheme to Cameron's in the private sector, unless there was an employees' vote

That leave be given to bring in a Bill to fix the emoluments of chairpersons, chief executives and senior managers of private limited companies and public bodies so that their combined annual earnings do not exceed twenty times the average take-home pay of their non-managerial employees save if the said employees agree through a ballot of their non-managerial employees or through their union to permit salaries of their chairpersons, chief executives and senior managers to exceed a 20:1 ratio.

As MacShane told last year's Fabian New Year Conference, "But then New Labour came along and the rest is history".

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