The ‘New Winter of Discontent’. The government is facing a wave of public sector strikes this Winter with nurses, border force staff, DWP officials, ambulances workers and more joining rail workers, postal workers and others who have walked out over pay disputes. (For a useful explainer on recent strikes, read Anoosh Chakelian’s myth-busting piece for the New Statesman.)

  • Political row over nurse pay. One key flashpoint is the strike from the Royal College of Nursing (RCN), where nurses taking part in unprecedented industrial action and are demanding pay rises 5% above RPI inflation to compensate for below inflation pay increases in the 2010s. (See the TUC’s analysis of how much NHS staff have lost from a “brutal decade of lost pay”.) The RCN say NHS pay announcements have left nurses 20% worse off in real terms compared to a decade ago. The government is offering pay increases of 4.75% to nurses despite RPI inflation forecast to hit 14% - a huge real pay cut. Conservative backbenchers such as Caroline Nokes and Jake Berry have urged the government to reevaluate their stance and improve their offer on nurses pay. (See Ipsos polling on public support for striking nurses.) The government’s case against the strike action has three main components, with ministers arguing that the pay claims are unaffordable, that they cannot override independent pay review bodies, and that pay rises will fuel further inflation. 
  • Misleading costings. On the first point, the government has been accused of misleading the public, arguing that an inflation-matching pay rise for all public sector workers would cost £28bn - £1,000 per household. The IFS says the cost is actually more like £10-14bn once increased revenue from tax receipts is factored in and because some of the increase has already been promised by the government. Economist James Meadway explains how the actual costs (of around £12bn) are affordable within existing government budgets due to falling borrowing costs, or could be funded through tax increases in his latest Macrodose podcast.
  • Independent PRB? On the second point, the role and ‘independence’ of Pay Review Bodies in the public sector is coming under greater scrutiny, with unions making the point that these bodies operate under a mandate set by central government. PRB’s operate make their recommendation based on two criteria, recruitment and retention needs (more on this later) and affordability, with the second having primacy. The affordability constraint is determined with reference to central government budgets, in this case the 2021 Spending Review which had allowed for pay rises of 2-3% based on inflation running at 2-4%, and PRBs are highly reluctant to recommend unfunded pay rises above these levels. While not directly comparable, central government’s insistence that it has no role on pay, while holding the purse strings, is analogous to their role in the rail dispute and is one of the central barriers to meaningful pay negotiations. (As an aside, the government are now arguing that they will instruct the NHS PRB to take a greater account of staffing pressures and recommend higher rises next year, which rather undermines their point about independence).
  • No risk of wage-price spiral. The final plank of the government’s argument is that pay rises would drive inflation, but this line is also crumbling. David Smith, Economics Editor at the Sunday Times notes: “There is little danger that higher public sector pay settlements would trigger a wage-price spiral. Rather, it would be public sector pay catching up”. According to the IfG, the NHS Pay Review Body essentially concluded that its recommendations were not meaningfully constrained by the government’s inflation target, saying: “As earnings growth remains substantially below inflation, we judge that increases in earnings present a much lower risk to increasing the rate of inflation compared to some of the other fundamental drivers.” (Read the IMF’s recent paper suggesting fears of wage-price spirals are not supported by empirical evidence.)


Public services, recruitment and retention. The primary context for these public sector strikes is clearly high inflation and the cost of living crisis, but it is also impossible to ignore the role that persistent pay constraint has had on public sector recruitment, retention, and morale over recent years. Public services, and the NHS in particular, are suffering from growing vacancies and skills shortages. IPPR’s Parth Patel explains that pay increases are crucial for maintaining NHS performance in an interview with Sky News. For instance, there are currently 47,000 nursing vacancies and around 1 in 3 public sector workers have taken steps to quit their profession or are actively taking steps to do so, with the majority citing low pay as the decisive factor. Without pay increases, public services will deteriorate. (The TUC analysis also found that nearly 1 million children in key worker households are growing up in poverty.)

  • What is the government planning instead? The government is currently working on a workforce plan for the NHS, but it is an open question how they plan to fill growing vacancies without fair pay increases relative to the private sector. TUC analysis shows pay in the public sector has fallen much faster than in the wider economy (£180 in real terms compared to the same month last year, and with pay falling by £76 in the wider economy). Martin Wolf explains why “Letting inflation reduce real wages while expecting services to be maintained is dishonest…The government should keep pay in line with the private sector’s, especially where it has significant recruitment and retention problems. If this means it has to reopen spending plans that no longer make sense in today’s debased pounds, so be it.”
  • Nurses not non-doms. Meanwhile Labour has launched its own NHS campaign, pledging “one of the biggest expansions of the NHS workforce in history”, with thousands of new training places for doctors and nurses, funded by the abolition of the non-dom tax status. (For more on non-doms read this by CAGE’s Arun Advani).
  • Theory of the strike. It is partly for this reason that the FT’s Stephen Bush questions whether the Sunak government has thought through its theory of how to win this industrial dispute. Even if the government manages to grind public sector workers down over this pay offer, it will still be left with huge recruitment and retention issues, a further demoralised and under-funded workforce, and the consequences of this for public service delivery. Without a serious plan for dealing with these issues, and with the public largely taking the side of the workers, it is hard to avoid the impression that the government is locked in a losing battle with no exit strategy.

Strikes expected to become the norm. What does the future hold for industrial action in the public sector? We can answer this partly by looking at the overall spending envelope going forwards. In the Autumn Statement last month, Chancellor Jeremy Hunt committed to the departmental budgets outlined in the 2021 Spending Review (with some exceptions). This was based on outdated inflation predictions, and locks departmental budgets until 2024/25. After this there will be even greater pressure, as departmental budgets are set to be squeezed again. In summary, the Institute for Government concludes that: “the reality is that from this year services are unlikely to see further large budget increases to deal with poor performance and an increasing share of their budgets will need to be spent on higher pay awards to keep services functioning”. 

Weekly Updates


English Housing Survey. The Department for Levelling Up, Housing and Communities has published the headline report of its annual English Housing Survey. It finds that the private rented sector has nearly doubled in size since the early 2000s and is the tenure with the highest proportion of “non-decent dwellings, with nearly a quarter of dwellings failing to meet the Decent Homes Standard”. 

  • Private rental crisis. The rental crisis is “woefully under-discussed” and “reaching breaking point”, argues Michael Walker in the New Statesman. The growing “Yimby” (“yes in my backyard”) movement, which argues that planning reform is the answer to the housing crisis, focuses on the wrong issue, argues Walker. Instead, he proposes that state intervention is the answer: a Vienna-style model in which people “from all class backgrounds” live in social housing that is “considered beautiful, sustainable and affordable”. 

Talking about homes. Homes are seen primarily as “a source of investment and wealth” rather than “an essential foundation from which to build a decent life”, according to a new research by FrameWorks written in partnership with the Joseph Rowntree Foundation and the Nationwide Foundation. The report, which involved interviews and focus groups with “a nationally representative sample of the UK population”, also finds a general belief that “inequalities in the current housing system are the result of ‘natural’ forces that are beyond anyone’s control”.


Platform worker protests. The Leeds Index of Platform Labour Protest, run by the University of Leeds, has launched a new bulletin highlighting trends in platform worker protest across the world. The first bulletin focuses on Mexico, with author Carlos Montaño explaining how “Mexican platform workers have found in informal means of organisation the seeds for collective bargaining”. In August this year, 25 worker collectives presented labour reform proposals in the form of a 10-point “Minimum Floor Manifesto” to the Ministry of Labour and Social Welfare

Strike watch. Workers at the Rolls-Royce Motor Cars’ Goodwood factory will no doubt act as inspiration to the many other workers taking industrial action this winter as they secure a 17.6% pay rise. Unite general secretary Sharon Graham called the deal “top notch” and said that the win was “a testament to the organising efforts of the Unite reps at Goodwood”.

Inequality and Welfare

Billionaire Britain. There has been a 20% increase in the number of UK billionaires since the start of the Covid-19 pandemic, according to a new report by the Equality Trust. It also finds that there has been a 1000% increase in UK billionaire wealth since 1990, with the number of billionaires increasing from 15 to 177 over the 32 year period. 

  • Increasing inequality. The wealth of the richest 10% of households has grown 574 times faster than that of the poorest 10%, according to calculations by the New Economics Foundation (NEF). In a Twitter thread explaining the “8 reasons to rebalance the economy and share the wealth we all create”, NEF also explains how “wealth of the UK’s billionaires dwarfs the cost of some of our most vital public services and infrastructure”. For example, the total wealth of UK billionaires (£653 billion) is over 64 times higher than the cost of eradicating the NHS repairs backlog in England. 

Eradicating poverty. “A significant cut in poverty is possible”, argues inequality writer and academic Stewart Lansley, but requires “a fundamental shift in the way society works to ensure a much more equal sharing of the cake through an end to extraction”. He proposes that setting a “guaranteed, no questions-asked, non-means-tested income floor” would be a “powerful anti-poverty measure” that would create a “‘Plimsoll Line’ for incomes, below which no-one would fall”. 

  • Universal basic income. The introduction of a universal basic income (UBI) would be “fiscally neutral”, involving “no additional calls on the public finances and no net increase in taxation”, according to a new report by Basic Income Conversation and Compass. The report argues that UBI “has the capacity to cut child poverty to an historic low below the low point achieved in the late 1970s”. 
  • A national living income. Lansley’s suggestion echoes NEF’s proposal for a national living income in a report launched last week and covered by New Economy Brief. The coalition campaign Stop the Squeeze also calls for a living income along with an affordable, clean energy guarantee and wealth tax reforms. 

Monetary policy

Interest rate hikes. The Bank of England has once again raised interest rates, this time to 3.5% (the highest level in 14 years). Six of the nine Monetary Policy Committee members voted for the 0.5% rise while one favoured a 0.75% rise.

Climate change and environment

Climate and the Labour Party. The Labour Party will enjoy more electoral success if it talks about the climate, according to research by the Labour Climate and Environment Forum: a new, independent organisation “working to strengthen climate and environmental ambition across the labour movement”. The report finds that climate and the environment remain top concerns for voters and that people’s perceptions of Labour Leader Keir Starmer and Shadow Chancellor Rachel Reeves improve when they hear them talking about climate policy. It also finds that “action on nature is just as important as action on climate” with 80% of people identifying cleaning up our water as a major or moderate priority. 

Green investment for prosperity. A new paper by the Institute for Public Policy Research (IPPR) sets out how the UK can drastically reduce carbon emissions and address biodiversity loss while simultaneously tackling its macroeconomic challenges. It argues that there are a number of reasons why policymakers still have significant room for green investment. These include the fact that, according to IPPR calculations, the government will have £42 billion of fiscal headroom in 2023, the fact that these green investments can drive growth and therefore achieve a falling debt-to-GDP ratio, and the fact that the indirect benefits of green investment will lead to better health outcomes, therefore lowering the burden on public services. The paper also argues that macroeconomic modelling currently fails to account for the costs of climate inaction and that “better modelling will inform better policy”. 

Cop15. Governments have reached an “historic deal” to halt biodiversity loss by 2030 after four years of negotiations culminated in late night talks in Montreal on Sunday. The agreement, which is signed by nearly 200 countries (excluding the US and the Vatican), includes a target to protect 30% of the planet for nature by the end of the decade.