£2bn public sector pay rise to have limited impact

19 Jul 19

The government is expected to confirm today details of a £2bn pay rise for public sector workers such as teachers, police and soldiers.

While some two million workers are set to benefit from a real terms wage increase, there will be a price to pay as the salary hike is to be funded from existing budgets, The Times reported today.

The above inflation wage increases of 2.75% for teachers, 2.9% for armed forces, 2.5% for police and 2% for senior civil servants will be one of Theresa May’s final announcements as prime minister, according to the newspaper.

But economists and unions have highlighted concerns that the rises will be funded by existing budgets and will exclude local government workers and nurses. 

Gail Cartmail, assistant general secretary of Unite the union, said: “Read the small print and there is no new money from the government for these below inflation [compared to RPI] pay rises which exclude nearly two thirds of public sector workers, including health and those in local government, who have endured years of pay freezes and real terms pay cuts.”

Jonathan Cribb, senior research economist at the Institute for Fiscal Studies, said the planned salary hike represents the highest nominal pay increase since the coalition government introduced a public sector pay freeze in 2010.

He added: “But these increases are still slower than pay rises that are happening on average in the private sector. With the partial exception of schools, there seems to be no new money to fund these pay rises, meaning savings will have to be made elsewhere.”

Shadow chancellor John McDonnell called the offer “insulting” in the light of “overall wage growth at 3.4 per cent.”

He said: “After years of holding back the pay for our dedicated public sector workers, it is shameful for the government to pay for ending the public sector pay cap with more cuts.”

The public sector pay freeze capped increases at 1% but was scrapped last year when teachers, armed forces and prison officers all got pay rises above 2%.

Boris Johnson, the likely successor to Theresa May, is thought to have ruled out any reintroduction of a public sector pay freeze if he takes the top job.

The Treasury refused to comment on what one official described as “a leak.”

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