Wednesday, 25 Nov 2020

COVID-19: Public sector workers face pay freeze to plug gap left by virus spending

Around five million public sector workers are set to be hit with a pay cap as Rishi Sunak looks to rebuild the public finances, according to reports.

The chancellor is expected to use next week’s spending review to limit pay rises in the public sector to at or below inflation.

Only frontline NHS doctors and nurses will be exempt from the cap in recognition of their work during the coronavirus pandemic, The Times said.

However, teachers, police, members of the armed forces as well as NHS managers will all be affected.

The move is likely to be met with fury by public sector unions who say their members bore the brunt of Conservative austerity cuts following the global financial crisis.

The chancellor is already under fire over widespread reports he is preparing to set aside the commitment to spend 0.7% of national income on overseas aid as he looks for savings.

Launching the spending review in July, Mr Sunak warned of the need for “restraint” in future public sector pay settlements.

He said awards made in the review period would have to take account of the “wider economic context” and stressed that while public sector pay was rising, wages in the private sector had fallen back during the coronavirus pandemic.

That argument was backed by a new report by the Centre for Policy Studies (CPS) which said private sector workers had suffered far more from the economic impact of the disease.

It said that a three-year pay freeze across the public sector could save up to £23bn, helping to plug the hole in the public finances opened up by the pandemic.

If the NHS was excluded, the CPS said that it could still save £15.3bn over the three years.

Director Robert Colvile said: “Healthcare workers aside, it is difficult to justify generous pay rises in the public sector when private sector wages are actually falling.

“At the same time, there is a need to control public spending and reduce the structural deficit which the pandemic is likely to have opened up.”

The Unite trade union said it appeared the CPS was being used as an “outrider” ahead of Mr Sunak’s statement next week.

Assistant general secretary Gail Cartmail said: “In the spring, the prime minister was praising NHS staff for saving his life.

“Now, in the autumn, he needs to ensure that his chancellor turns those warm words into hard cash for those that ensure the efficient running of the NHS, schools and colleges, and the myriad of services provided on a daily basis by local councils.”

Unison general secretary Dave Prentis said a new pay cap would be a “cruel body blow” to NHS staff not on the frontline.

“Key workers across all public services remain at the heart of the fight against COVID,” he said.

“The government must do what’s right next week and announce the wage rise all staff have more than earned.”

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