Briefing from the Prime Minister’s Spokesman on: Cabinet/Fire Dispute.
Cabinet/Fire Dispute
The Prime Minister’s Official Spokesman (PMOS) advised journalists that the Prime Minister was currently attending the NATO Summit in Prague. As he understood it, the employers were still in discussion. At this stage we did not know precisely what or when the new proposals might be tabled. However, it seemed likely the employers and the FBU would engage in talks at some point. The Deputy Prime Minister had said that we would have to wait and see what happened during the course of the day and had underlined very clearly once again that extra pay needed to be linked to real modernisation - a point endorsed by the Cabinet as a whole.
The PMOS said the Chancellor had said that, in the absence of genuine reform and modernisation, some of the figures which had been touted around could not be justified. He had talked about the potential contagion into other public sector pay claims and had emphasised that any extra funding had to be tied very firmly to change. He said that, as a country, the UK was enjoying low inflation, rising employment and an increase in standards of living and that this would be put in jeopardy if we were simply to accede to pay awards of this nature without a commitment to reform and modernise. Modernisation meant changes in working practices which would produce productivity gains and efficiency savings. In the FBU’s case that meant changing working practices which had been set in stone for some 25 years. He said that any claim on the reserve would mean an end to any financial discipline and the ability to continue managing the economy successfully.
With regard to London Underground the Transport Secretary, Alistair Darling, had said that although there had been some real disruption last week, it should be noted that it had been caused by a comparatively small number of LU staff. As he had understood it, LU had written to all those who had continued to work throughout the forty-eight-hour fire strike last week to thank them for doing so. LU had also written to those who had expressed concern and had been redeployed - or had been given ‘health and safety classes’ - to say that if the planned eight-day FBU strike were to go ahead tomorrow and they refused to work, they would be sent home without pay. To put the situation into context, the PMOS pointed out that only 355 LU staff had received this warning out of a total of 13,600. The letter explained that if Tube staff refused to work during the impending strike, they would not be paid because their refusal would be seen a breach of contract. This was a decision which had been taken by LU management and we would have to wait and see what happened both in terms of any strike tomorrow and any consequential effect it might have on the Tube. We obviously hoped there would be none. LU had said in their letter that they had carefully considered the consequences of the FBU action and that they, the HSE and Her Majesty’s Railway Inspectorate were content that they were taking adequate measures to ‘mitigate any additional risk that the action may pose to customers and staff’. No disciplinary action had been taken against Tube staff who had refused to work, but this letter had been sent to them. Mr Darling had also made the wider point to colleagues that, as often happened during disruption on the Tube caused by people refusing to work, the anger of the public - which was obviously justified - was displaced and directed towards those members of staff who were working. This was an unfortunate consequence. It was important for people to understand that those who continued to work a time when others were taking action and disrupting services should be praised by the public, although everyone understood the frustrations which could be caused by such a situation.
Asked for a clarification of the Chancellor’s position regarding the FBU’s pay claim, the PMOS said everyone understood the point that modernisation meant actual change to working practices in relation to overtime bans, flexible shift patterns and joint emergency control centres, for example. This could free up money which could then be used for pay. Modernisation did not simply mean new equipment. It meant freeing up resources. The Chancellor, Deputy Prime Minister and the rest of the Cabinet were all absolutely clear that the potential impact of acceding to hyper-inflationary pay claims where there was no intention whatsoever to modernise would have a very damaging impact on the wider economy. It would lead to people losing their jobs, out of control inflation levels and higher interest rates. A 1% overall increase in the pay bill would preclude some billion of pounds of extra money going into our public services which had been under-invested in for some time. As a result we would not see the public service reforms that we wanted to see. We could not allow that to happen.
Asked why the fire-fighters should receive inflation-busting pay rises for refusing to change their working practices over the last twenty five years when nurses and teachers had already introduced change and yet were still comparatively poorly paid, the PMOS pointed out that nurses, teachers and other public sector workers had already received generous pay awards as a result of the ongoing process of the Pay Review Body. Nevertheless, the question was a good one. We had to be fair to other public servants as well as the fire-fighters. As the Prime Minister had underlined on many occasions in the past, this was a Government which governed for the whole country - for public servants, teachers, nurses, business and hard working families. People might think that re-opening the public spending envelope to give fire-fighters more money wouldn’t have an impact on them. On the contrary. It would. It would result in real economic turbulence. Pressed as to why fire-fighters should be offered a 16% pay increase simply for doing something they should have done twenty five years ago, the PMOS said we were making clear that if we could release efficiency savings and make genuine changes to working practices - including addressing issues such as shift systems, overtime bans, part time and full time staff working together, attracting more diverse staff, joint control rooms and training paramedics - there would be a positive impact in terms of improving public safety and developing a more flexible and modern fire-fighting force, which was able perform tasks and could potentially save more lives. What was absolutely clear, however, was that these reforms had to be put in place in order to get any extra funding.
Asked for a reaction to Sir Jeremy Beecham’s comment that it was up to the Government to bridge any funding gap because the cost savings and cost benefits of modernisation would not be enough, the PMOS said that at this stage we had no further information about the offer that might be tabled later today. We were not clear how some of the figures which had been floating around could be funded. Nor was it clear what the actual modernisation proposals meant and whether extra funding could be released from them. If people were talking about negotiating a deal where real reform was linked to pay, then obviously that was a step forward. As Nick Raynsford had said today, the issues of pay and reform had to be sequenced together. Ultimately, however, these were matters that were for the employers and the FBU to negotiate, not the Government. Put to him that the employers had been making the point that they would need extra money from the Government to bridge the gap even if the FBU agreed to put in place modernisation measures, the PMOS said that the Chancellor could not have been clearer this morning in insisting that any claim on the reserve would mean an end to any financial discipline and the ability to continue managing the economy successfully. As we had underlined yesterday, there was also no question of transferring money from one Departmental budget to another because that would be deeply unfair to teachers, school children nurses, patients and armed forces.
Questioned as to whether the Chancellor’s point that any pay rise would have to be ‘linked’ to modernisation could include loaning the employers the money to fill the pay gap while waiting for the more longer term changes in the fire service which could take place in years 8, 9, or 10 for example, the PMOS said that the issue had not been raised this morning. The focus had been on the need to maintain economic stability and for the public spending limits to be honoured. No doubt a huge number of other people working in the public sector could present a special case as to why the reserve should be opened. However, as the Bain report - due to be published in three weeks’ time - had made absolutely clear, significant efficiency savings could be released over a period of two years to fund a 4% and 7% deal. The PMOS underlined once again - as he had on Monday and Wednesday - for the benefit of anyone who might not have heard it, that the public spending envelope was sealed. Asked if he would rule out the possibility of transferring money from the budget of the Office of the Deputy Prime Minister to help fund the fire-fighters’ pay claim, the PMOS said that hadn’t been suggested.
Asked if we were surprised that the employers hadn’t briefed us on their new proposals and whether we would be prepared to veto them if we weren’t satisfied with the content, the PMOS said that it was important for people to be patient and wait and see what happened during the course of the day. He reiterated the fact that this was a negotiation between the employers and the FBU. The Government had acknowledged its responsibility to exhort and encourage and had done all it could in that regard. When there had been an impasse, we had commissioned an independent review which had already reported back on a number of relevant issues. Ultimately, however, it was not up to us to participate in the actual negotiations. Nevertheless, we did have an overall responsibility for public spending limits, which was why we were emphasising how important it was that they were not breached. Asked why we were saying one thing and the employers were saying another and if we thought it strange that they were coming up with a variety of different formulae which we seemed to know little about, the PMOS pointed out that we were not the local authority negotiators. As the Government, we could encourage people to talk and had helped the process by commissioning a report which had demonstrated how significant savings could be made to fund an 11% pay rise over two years. As the Chancellor had said, figures being mooted could not be justified unless they were linked to real modernisation. Put to him that the Chancellor’s declaration that he would not dip into the reserve and that other figures floating around could not be justified all amounted to a veto of the latest proposals, the PMOS said that we were talking about pay awards which, over a period of time, could be funded from productivity and efficiency savings and changes in working practices. The 4% and 7% pay awards, as recommended by Professor Bain, were ultimately self-financing. We had made clear that modernisation was integral to the whole issue. No one was paying lip service to it. It was real and had to happen.
Asked if we had now received adequate assurances from the FBU regarding the provision of emergency cover, the PMOS said that the FBU had certainly been approaching the issue more constructively in recent days. Yesterday they had said that they wanted to consider one or two legal issues and had promised to come back to us when they had done so.
Questioned as to whether the Government was of the opinion that the fire service’s outdated working practices had to go whatever happened, the PMOS said that the interim Bain report contained ingredients which were beneficial to the operation of a modern fire service. Whether training up a fire-fighter as a paramedic would, of itself, release efficiency savings, was questionable, but it would deliver other benefits. However, what was clear was that we had to address issues such as the shift system if the fire service was to receive the funding necessary to underpin an 11% pay increase. Some of the reforms were desirable and, as the Prime Minister had said yesterday, not unreasonable. Other measures were necessary if we were to fund a 11% pay rise. It was important to understand the distinction. Asked if the Government had reached the point where it would not settle for anything less than the wholesale modernisation of the fire service, the PMOS said that the reason why the reforms were so important in any settlement was because they were not only desirable of themselves to improve the service, but were also necessary in order to free up the money to fund the extra pay. Questioned as to whether the Government considered the list to be essential, the PMOS said that a discussion was ongoing between the employers and the FBU. Modernisation was essential. The Bain recommendations were the basis for that. As the Prime Minister had said yesterday, the list of reforms were certainly not unreasonable, and, in relation to shift patterns for example, would free up money. We would not keep repeating the ‘menu’ if we did not think the reforms were integral to the negotiation process.
Asked if the Deputy Prime Minister had spoken to the employers to discuss their latest proposals, the PMOS said that there had been contact at official level. Questioned as to whether Mr Prescott had expressed a view on the draft proposals, the PMOS said he had underlined again that there had to be real modernisation. However, it was not clear from what was being proposed exactly where the savings would come from. Asked whether Mr Prescott would be making a Statement later this afternoon to update people on developments, the PMOS said we would let people know should there be one.
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