RUTH SUNDERLAND: Reeves and Starmer try to undo Thatcher’s revolution

The pedant in me was provoked when a report arrived the other day from the Left Resolution Foundation “written by” its interim executive director Mike Brewer.

How “writing” a report is different from “writing it” remains a mystery.

Language evolves, and sometimes it does so in ways that some of us find irritating. The important thing is that Mr. Brewer had interesting points to make.

He drew attention to the “big shift” that Chancellor Rachel Reeves will carry out in 2025 towards the public sector, making it a priority above the part of the private economy, which creates wealth and pays for everything.

This, as the Resolution Foundation points out, is a striking change of direction, the likes of which have not been seen in a generation outside of the financial crisis and pandemic.

Anyone listening to Reeves and his boss, Sir Keir Starmer, might imagine that public sector employees are morally superior and underpaid. It is true that many people who work in the NHS, Armed Forces or in teaching, including members of my own family, are driven by a sense of calling. But the assumption that public sector workers are oppressed compared to the private sector is not always correct.

The average public sector wage was 6 percent higher than the private sector in the three months to November, according to the Foundation. To be fair, that is only one period and there have been times when the public sector has fallen behind.

But any supposed disadvantage seems even more questionable once pensions are taken into account.

Around 9 million current and former public sector workers are affiliated with unfunded pension plans. Their retirement income is funded by contributions from members still working, with the shortfall made up by taxpayers. The liabilities of these unfunded schemes are around £1.3bn.

Employees enjoy gold-plated retirement income based on their salaries, something that has largely disappeared in the private sector. On average, they receive a contribution from their employer – the taxpayer – valued by the Government at 23 percent of salary. This is an amount that typical private sector workers can only dream of.

It’s not cheap. The public sector workforce numbers 5.9 million, costing taxpayers £270 billion in 2023-24, around 10 per cent of national income and 22 per cent of total UK government spending .

As private sector businesses reduce hiring and raise wages due to Labour’s employment tax increases, the state will expand further. Greedy public sector unions will demand further wage increases without committing to improving productivity. Reeves risks being trapped in higher spending, higher debt and higher taxes, with no guarantee that services to the public will improve even one iota.

And this is the part of the picture that has been erased by Labour: service. The public sector does not exist to serve its workforce, let alone serve a Labor government. Its purpose is to serve us.

However, this has been turned upside down. Those of us who work in the private sphere are treated as if our only value lies in funding increasingly inadequate public “services” through confiscatory levels of taxation.

Reeves and Starmer intend to undo Thatcher’s revolution, which involved reducing the size of the state and creating conditions for private enterprise to flourish. They think they know how to spend your money better than you do. They are arrogant and wrong.