Rishi Sunak has been accused of pitting public and private sector workers against each other after confirming most public servants will get no pay rise next year to ensure “fairness” with falling private wages.
The chancellor confirmed the anticipated pay freeze for civil servants and other public-sector workers for 2021-22, which was briefed out last week, in his Spending Review announcement this afternoon.
NHS workers and public servants who earn below the median wage of £24,000 will be exempt from the freeze.
In comments slammed by unions as "insulting", Sunak said holding back pay rises would "ensure fairness" with people working for private businesses, after the coronavirus pandemic had “deepened the disparity between public and private-sector wages”.
He noted that many people had seen wages and hours cut amid the pandemic as they had been furloughed, while the Office for Budget Responsibility has forecast unemployment will peak in the second quarter of next year with 2.6 million people out of work.
“In such a difficult context for the private sector, especially for those people working in sectors like retail, hospitality and leisure, I cannot justify a significant, across-the-board pay increase for all public-sector workers. Instead, we are targeting our resources at those who need it most,” the chancellor said.
In the six months to September, private sector pay fell by 1%, compared by a nearly 3.9% rise in public-sector wages, he said.
The news comes just three years after the ending of a 1% public-sector pay that had been in place since 2012, which trade unions say has led to a significant real-terms drop in wages that subsequent pay rises have not accounted for.
But the Spending Review document said public servants had “benefitted from several years of pay rises above inflation”.
It said the “disparity in recent wage growth between the public and private sector exacerbates the pre-existing position, where the public sector tended to be paid more than the private sector”.
“Pausing headline pay awards next year for some workforces will allow the government to protect public sector jobs and investment in public services to respond to spending pressures from Covid-19.
“It will also avoid further expansion of the gap between public and private sector reward,” the document said.
Public-sector employees earning less than £24,000 – some 2.1 million – will receive a minimum pay rise of £250.
The review document confirmed “over one million” NHS workers would receive pay rises.
The level of NHS workers’ pay rises for the upcoming year has not yet been set. However, the Spending Review document, published alongside the chancellor’s speech, warned that pay awards would take account of the “challenging fiscal and economic context”.
‘A deep sense of betrayal’
Unions, which have been warning the chancellor that against curbing public-sector wages since he first warned government would need to "exercise restraint" in pay awards when he kicked off the Spending Review in July, have slammed today’s announcement.
PCS general secretary Mark Serwotka warned the move had “intensified long standing anger at a decade of pay restraint and increased the likelihood of industrial unrest”.
"Civil servants and other public-sector staff will feel a deep sense of betrayal at today's pay freeze,” he said.
"Despite keeping the country running during the Covid crisis, supplying Universal Credit and helping businesses access the furlough scheme, the chancellor has justified a pay freeze by pointing to lower wages in the private sector,” he said.
"The answer is to raise wages across the board to increase spending power in the economy, to aid our recovery, not pit public and private-sector workers against one another like crabs in a barrel.”
Mike Clancy, general secretary of the Prospect trade union, said Sunak's comparison of public and private sector wage growth was "insulting".
The chancellor's comments "failed to acknowledge the public servants have just emerged from eight years of draconian pay restraint, and those who suffered the most under that restraint are set to bear the brunt again", he said.
“This freeze will cause huge damage to recruitment and retention in key areas, such as environmental agencies and health and safety, and will be a bitter blow to people who have gone above and beyond to deal with the twin challenges of coronavirus and Brexit," he added.
FDA general secretary Dave Penman said: “To govern is to choose. In a year where the government has wasted millions on botched PPE procurement deals and somehow found the funds to establish a new Space Command, it has chosen to reward the public sector workers who have been at the forefront of the pandemic response with yet another year of frozen pay.
“Public sector pay is still lower in real terms than in 2010, due to a decade of pay freezes and restraint. Despite the prime minister’s proclamation that there would be no return to austerity, that is demonstrably not the case for the majority of the public sector workforce.
“The chancellor has referred to this as a pay ‘pause’ but with absolutely no detail on how or when this will come to an end, our members will have no confidence that this will indeed be a temporary measure.
“Civil servants have gone above and beyond to support the government response to COVID-19, from delivering the furlough scheme to more than nine million workers to processing a 90% increase in Universal Credit claims. This announcement shows just how little the government values their hard work.”