The public sector pay cap will be extended into 2015-16, limiting pay increases to an average of one per cent per year. “It will be for departments and pay review bodies to determine the level of award based on affordability and individual recruitment and retention needs,” the Budget said.
It also said that “although the majority of the public sector has been subject to pay restraint, some have continued to receive annual pay increases of seven per cent or more due to progression pay arrangements. In some workforces reforms are already under way. The government will seek significant further savings through reforms to progression pay in the spending round.”
Osborne said that annual pay increases are “difficult to justify when others in the public sector, and millions more in the private sector, have seen pay frozen or even cut. I know that is tough but it is fair. In difficult times with the inevitable trade-off between paying people more and saving jobs, we should put jobs first.”
The chancellor also announced that departments will be expected to save a further £5bn in efficiency and administration costs in 2015-16. In the wider public sector, the Department for Education will look for potential efficiency savings in the schools system, and will report back alongside the 2015-16 spending round. Meanwhile, the government will publish an action plan this May with measures to improve the efficiency and effectiveness of the criminal justice system, the Budget notes.