The last day of the parliamentary term is usually an occasion for the government to get a whole bunch of bad news out of the way all at once. But this summer’s end-of-term announcements were used as a chance to put out some seemingly good news. Teachers, prison officers and members of the military will all receive pay increases of above 1 per cent for the first time in five years. The lifting of the public sector pay cap is another reminder of how politics and the Tories have moved on from the age of austerity that George Osborne announced in his 2009 conference speech.
Much has been written about the 2017 election and how the loss of the Tory majority changed Brexit. But it had almost as big an impact on government spending rules. It persuaded the Tory party that the public sector pay cap was unsustainable. Indeed, Gavin Barwell, the Prime Minister’s chief of staff, thinks that the cap was one of the things that cost him his Croydon seat. He wasn’t alone in thinking that the election showed the public were fed up with ‘austerity’. Philip Hammond’s conclusion was that the public were ‘weary of the long slog’ of getting the deficit down.
The 2017 election changed something else. George Osborne had weaponised the deficit. He set deficit reduction targets (which he never hit) and then attacked Labour for not matching them. Every Labour spending commitment was met with the response: are you going to raise taxes or increase borrowing to pay for that? The Tories stepped away from that approach in 2017; they didn’t even commit to balancing the books within the parliament. Having decommissioned the deficit, the Tories now can’t bring it back as a weapon. Compounding this, they are faced with a Labour party that is promising to spend a lot more on nearly everything.
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