Jim Callaghan’s memoirs of the way in which his 5% pay increase limit came about (courtesy of Andy Beckett’s excellent When The Lights Went Out) are fascinating:

At the Cabinet Meeting on 22 December, I threw out the idea that from August 1978, we should aim to get pay settlements down to 5%…As far as I can recall, because no formal proposal was before the Cabinet, there was no discussion…Ministers probably assumed that I was thinking aloud – as indeed I was. However, when I made my New Year Broadcast…the 5% idea hardened and popped out when the interviewer tempted me…

Inflation was at around 8% at the time. However average earnings between August 1977 and August 1978 rose by 14% and this was the anchor for future pay deals. In September 1978, 50,000 workers at Ford went on strike in response to a 5% pay offer and went on strike (“Stuff the 5%” was on some of the placards). Two months later, the strikers accepted an offer of 17% from Ford.

CPI was at 10.1% to January 2023 and CPIH (the one that includes housing costs) at 8.8%. However the anchor now appears to be working in the opposite direction due to years of low inflation: a recent CIPD survey indicated that planned pay settlements in the public sector fell to 2% from 3% in the quarter before, compared to a median of 5% in the private sector.

This may be changing. Another recent survey of 181 large private firms had 29% of firms expecting to award pay increases between 5% and 5.99% in 2023 and 24% increases of 6% or higher.

This therefore seems like an odd time for the UCEA (the Universities and Colleges Employers Association) to refuse to negotiate with the University and College Union, particularly after agreeing a two week “period of calm” without strike action specifically so that further negotiations could take place. Instead they are unilaterally implementing their arbitrary number.

Needless to say, the strikes are now back on!