The Guardian view on public sector pay: higher taxes on the rich are needed to fix broke Britannia | Editorial

Whoever wins the next election will have to spend money to repair the damage done after 13 years of Conservative party rule

It is unlikely that champagne corks will be popping in government offices, school classrooms and NHS hospitals. But they probably are in the City. While the public sector is offered a below inflation pay hike of 6%, wage growth in finance and business services is running at 9%. The private sector can raise its prices to pay for higher salaries or just to make more money. The public sector cannot. Instead Rishi Sunak argues that the state’s wage bill must be paid for by cuts to the services that workers deliver. Mr Sunak’s decision means that pupils will have fewer books and patients are left sicker because teachers and doctors need extra pay. Rising interest rates mean austerity for public services and pain for mortgage-holders, but they make for good business in the Square Mile as UK gilt yields become more attractive to investors.

“It was the best of times, it was the worst of times,” begins Charles Dickens’s A Tale of Two Cities, a cautionary story about widening divisions in the run up to the French Revolution. Britain is, thankfully, in a far less feverish moment. The economist Olivier Blanchard has noted that inflation is “fundamentally the outcome of the distributional conflict, between firms, workers, and taxpayers”. Some unions have rightly fought and won an acceptable deal. But wider tensions are not being adequately managed to allow for broader, sensible negotiations in which the pain is shared. Instead Mr Sunak, and the Bank of England, tilt the scales in favour of private business interests and a recession by relying solely on interest rates. Ongoing strikes are a symptom of such a strategy.