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Members of the Camden NUT lobby group at the Houses of Parliament this week |
Are inflation figures being fixed at an artifically low rate?
Kevin Courtney says that the spin the government is putting on the economy is flawed, two-faced and laying the foundation for a crisis in the recruitment of new teachers
SEVEN hundred thousand local government workers are currently balloting for strike action over pay.
Their union, Unison, is annoyed with the government for holding pay rises below inflation in an undeclared incomes policy.
Their ballot follows the strike by more than 400,000 teachers and civil servants on April 24. It is part of a general public sector campaign on pay that saw thousands lobbying parliament on June 9.
The unions claim that real inflation is running at over 4 per cent. But the government claims, and even the BBC agreed at one point, that the teachers’ pay settlement of 2.45 per cent was inflation-busting.
So who is right on inflation? The government and the BBC or the unions?
Well, the government has changed the measure of inflation it is using; much like the old Tory government used to continually change the measure of unemployment it used to keep the figures low.
The old measure of inflation, the Retail Price Index (RPI), is officially above 4 per cent. The new measure the government has introduced, the Consumer Prices Index (CPI), has been lower – around 2.5 per cent – although the latest figures on average show it at more than 3 per cent now.
The government prefers the CPI figure because it doesn’t include housing costs and council tax, keeping inflation artificially low.
So the unions are right – public sector pay rises are way below the real inflation level.
The government is just committing its old crime of spin. They’ve introduced a new measure of inflation and are trying to create an impression with the public that greedy workers are threatening the economy.
The government is also saying that pay rises which match inflation would cause inflation. But no serious economists agree with them.
Stephen Nickell, head of Nuffield College in Oxford, told the Financial Times in January that public sector pay rises “have nothing to do with inflation”.
And Martin Weale, director of the National Institute of Economic and Social Research, said: “What I really can’t believe is that, when private sector pay rises are 4 per cent, a rise of 2.5 cent for the public sector is inflationary.”
The two-faced nature of the government on this issue is best showed by their treatment of student teachers. The interest rate on their student loans is currently a massive 4.8 per cent (based on the RPI).
But the pay rise they get is based on the much lower CPI figure.
So a teacher starting work this September with the average amount of student debt would have to make extra interest payments of £368. But the increase in take-home value of the starting salary for a teacher is only £296.
So these young teachers will be £72 worse off in cash terms – and will get absolutely nothing for increases in prices.
It really is no wonder the number of students applying for teacher training is starting to fall again and schools are starting to see problems with getting applicants for jobs. The Government needs to change their policy quickly, before it develops into a crisis bigger than the one over the 10 per cent tax rate.
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