In September 1931, 1,000 sailors in the British Atlantic fleet engaged in open revolt, refusing to put to sea from the port of Invergordon – one of the very few mutinies in our naval history. Sailors from all ranks were protesting against proposed general pay cuts of 10%, but also at the unfair decision to cut by 25% the wages of junior ratings and those joining after 1925 – part of the then National Government’s doomed attempt to deal with the Depression, balance the national budget and stay on the gold standard.
That attempt backfired spectacularly. The 25% cut might have been rescinded to get the fleet back to sea – even the admirals conceded that it was unfair – but international investors concluded that, after a decade of government efforts to force down real wages to make British business competitive, the limit had been reached. Britain could not compel its workforce into the financial straitjacket of ever lower real wages, imposed by trying to tie sterling to the price of gold. The run on the pound proved unstoppable. Five days later, Britain gave in to reality and was forced off the gold standard.
The sailors proved what today’s behavioural psychologists now recognise. Human beings have an innate aversion to inequity. Society is founded on the proposition – at the core of all the world’s major religions and philosophies – that you should do as you would be done by. My actions warrant a proportional, fair, reciprocal response from you and you expect no less from me. Babies a few months old will cry or smile to the extent they feel that their carers’ response to what they have done is fair and proportional. Every parent knows their child’s exclamation, “It’s not fair!” The sailors on the flagship Hood and the other battle cruisers in 1931 had loyally served their country – but they were not being done as they would be done by. They mutinied.
In 2023, our Tory leaders should mark and learn. More than 40 years of drinking the free market Kool-Aid have drained the Tory party of all concerns about fairness, reciprocity, proportionality or justice. The words do not enter its lexicon or inform its economic and social policies. Its language is grounded in either the nebulous threats of ballooning national debt or self-feeding inflation, or appeals to boost individual freedom and entrepreneurship through tax cuts or cutting regulation and red tape. Public agency is a last resort. Tax cutting has been raised to sacred status, like sacrificing a goat on the altar in a Celtic stone circle, in response to which the economic gods will deliver growth. In the 1920s, Britain’s public services and public sector workers were locked in a financial straitjacket to support the gold standard, which culminated in naval mutiny. In the 2010s and early 2020s, public services have been locked in a self-defeating straitjacket to support the quest for tax cuts, which never arrive because they are impossible.
Thus the current wave of public sector strikes. It was good news last week that consumer price inflation fell for the second month running to 10.5%. With the gas price following the oil price downwards, there is every prospect that inflation has peaked. Core inflation though – stripping out volatile energy, food, alcohol and tobacco prices – stuck at 6.3%. Yet look at the pattern of pay. Pay in the private sector has been rising at 7.2% (excluding bonuses), while pay in the bonus-free public sector grew at 3.3%. In other words, the long squeeze on real wages – that is, pay adjusted for inflation to reflect what the money can buy – which began after the financial crisis is continuing. But the disparity between the public and private sectors is becoming acute. It is reflected in record unfilled public sector vacancies and the current wave of strikes. It is the Invergordon effect.
The government dissimulates to the point of lying over the affordability of offering wages to public sector workers at least in line with core inflation of 6.3%. To deny it is fiscal sleight of hand. In a period of inflation, tax revenues automatically rise. Public expenditure will rise by inflation too, including on wages. The arguments that offering to lift the wages of the fifth of the workforce in the public sector to compensate for core inflation risks igniting a wage price spiral and is unaffordable are spurious. There is the cash – and the pay of that fifth of the workforce, none of whose output is sold in the marketplace, cannot trigger a wage price spiral. The money is being hoarded to appease the druids in their rightwing stone circle before the next election.
In A Theory of Justice, the philosopher John Rawls argued that the good society is one in which every citizen can freely exercise whatever gifts they have been given to the very best of their ability in whatever circumstance they find themselves, so nobody could care where and to whom they were born. He took the injunction to do as we would be done by to its logical conclusion. Education, housing, pensions, access to health and opportunity and everything that makes a life worth living would be the same for the least advantaged as it was for the advantaged – what he called the difference principle. The impact of sheer good and bad luck should be engineered out of our lives as far as possible.
Taxation should serve these ends, argued Rawls, to level everyone up, especially through providing high-quality public services. Inherited wealth should be taxed heavily – family dynasties built on inherited wealth transgressed his theory of justice – and the proceeds should be deployed to raise the quality of the public infrastructure and public services, especially to whom it was most needed.
Utopian? Maybe, but I would argue it is nearer the heartbeat of British values than the barren vision of today’s Tory cabinet. Instead of imposing minimum public service obligations on public sector trade unions if they strike, Rawls would insist that the government accept its obligation to create a just society through providing high-quality public services. In those terms, he would have understood and supported the strikes. So should we. Let’s do as we would be done by.
• Will Hutton is an Observer columnist