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Chancellor urged to allow more generous rises at bottom of income scale by reining in increases at top
The shadow chancellor, Ed Balls, has challenged George Osborne to boost the income of the lowest-paid public sector workers by ensuring that executives on high salaries bear the brunt of his 1% cap on pay rises.
Balls has written to the chancellor, calling on him to allow more generous rises at the bottom of the income scale while remaining within his 1% average settlement cap by reining in increases at the top.
Unions responded with fury at the weekend when Balls said Labour would not oppose the coalition's plans for a two-year pay cap in the public sector, with the Unite general secretary, Len McCluskey, denouncing it as "a victory for discredited Blairism at the expense of the party's core supporters".
On Thursday, Balls played down the prospect that Unite, or any other union, would withhold funding from Labour or break historic links with the party in response.
"I don't think any trade unions are going to disaffiliate," Balls told a Westminster lunch. "I don't think they should, but that's their decision."
He insisted that trade unionists he had spoken to accepted his argument that "jobs must take priority over pay" in an economic situation in which austerity measures have failed to deliver growth and unemployment is rising.
But he said Osborne could do more to share the pain of the cap more fairly. In his letter to the chancellor, he pointed out that two years of 1% pay rises were worth more than £3,800 to a council chief executive on £190,000, but only £300 to a teaching assistant on £15,000.
Instead of applying a blanket 1% cap to all workers, Osborne should tell pay review bodies and local government employers to weight rises in favour of the low-paid, he said.
Balls accused Osborne of failing to deliver on a promise to public sector workers in 2010 when he imposed a two-year pay freeze, but said there would be a £250-a-year "uplift" for 1.7 million of the lowest paid.
Evidence from the House of Commons library suggests that around 1 million low-paid workers – mainly in local government – have not received that uplift, he said.
"Our challenge to George Osborne is that we will back him on continued pay restraint. Given his failure on the economy and given rising unemployment, jobs have got to come before pay and pay restraint is needed, but it's got to be done in a fair way," Balls said.
"A flat rate 1% isn't fair and the right thing for him to do, to do this in a fairer way, and a guaranteed way, is to make sure that 1% on average means more pay for the low-paid workers and more restraint at the top."
