Public sector pay freeze set to be announced

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Millions of public sector workers in England are likely to see their pay frozen next year, but NHS staff are set to be exempt from the freeze.

According to the BBC, chancellor Rishi Sunak is expected to restrict public sector pay in his Spending Review next week, which will set out the how much money will be allocated to different government departments in 2020-21.

It estimated that 5.5 million workers would be affected by the proposed pay freeze, including police, teachers, civil servants and the armed forces.

Pay increases will still be applied in the NHS, Sunak is expetced to announce, to reflect the efforts made by health workers during the Covid-19 pandemic.

The news comes as the Centre for Policy Studies think tank suggested the government would save £23 billion if public sector pay was frozen for three years.

Its report, Public sector pay: the case for restraint, argues that private sector workers have suffered far more than public sector staff since the pandemic began, and that freezing public sector pay for three years would ensure the labour market is not ‘unfairly weighted’ towards the public sector.

Pension provision, for example, is vastly more generous in the public sector, with 86% of public sector workers receiving employer pension contributions worth 10% of earnings or more, compared to just 10% of private sector workers.

The total public sector wage bill, including the cost of employer pension contributions, is around £190 billion, the report says.

“The economic impact of the Covid-19 pandemic has been severe, but the pain has not been shared equally. Some businesses are folding under the strain, public finances have been decimated, while the public sector has escaped relatively unscathed,” said Robert Colvile, director of the Centre for Policy Studies.

“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 chancellor should redress this imbalance by showing restraint when it comes to pay and pensions in the public sector.”

More than a fifth of all salary reviews for the quarter up to the end of October 2020 led to a salary freeze, according to XpertHR. The median basic pay award across both the public and private sectors was 2%, compared to 2.5% a year ago.

The Treasury has declined to comment on the reports, but pointed to a letter about the Spending Review in July that said: “we must exercise restraint in future public sector pay awards, ensuring that across this year and the spending review period, public sector pay levels retain parity with the private sector.”

The news that the chancellor could be considering a public sector wage freeze has been widely criticised by unions.

Mike Clancy, general secretary at civil servants’ union Prospect, said: “After a decade of pay austerity in the public sector which has seen pay increases lag behind inflation and the private sector, a further pay freeze across the public sector will be seen as an insult and have a devastating impact.

“At a time when the economy urgently needs demand and a level of confidence, to arbitrarily rule out even modest increases is economically illiterate. Whether it is responding to the pandemic or dealing with the challenges of Brexit, our members’ work in the public sector has never been more important.

“The government needs to rethink. If they want fairness across the economy they should heed our call for an independent pay review body and stop public sector pay being a political football.”

Restraining the pay of other health, care and public service employees who do not work within the NHS would be “cruel”, said Unison general secretary Dave Prentis.

“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. Anything less risks destroying morale when the entire country is counting on them.”

Unite assistant general secretary Gail Cartmail said: “If Boris Johnson’s much-vaunted ‘levelling up’ agenda means anything, he should be telling Rishi Sunak to loosen the purse strings on public sector pay for those workers, many of whom have lost up to £3,000-a-year in real terms during the austerity decade.

“We call for a generous financial settlement for the more than five million employees in the public sector and we know that such pay increases will be spent in the local economies boosting the hospitality sector and the country’s beleaguered high streets once the national lockdown restrictions are eased next month.”

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