Up to five million public sector workers are reportedly facing a pay freeze as Chancellor Rishi Sunak looks for ways to pay for the pandemic.
Soldiers, police officers, teachers and civil servants are just some of the people set to foot the bill for the Government’s spending.
However, nurses, doctors and other NHS workers are expected to be exempt from the pay cap measure which Mr Sunak will apparently announce next week.
It is believed the chancellor will argue it is not fair for public sector workers to receive a pay rise when private sector employees are losing their jobs or enduring pay cuts, according to reports.
The Institute for Fiscal Studies is said to believe a pay freeze for 3.7 million people would save the Government £3.4 billion, but the number of workers affected could be even higher.
The Times reports almost four million workers could be hit by a freeze, while the Daily Mail reported five million could be affected.
Either way it would go some way towards plugging the black hole in Britain’s finances, although it is still short of the more than £200 billion spent fighting the pandemic so far.
Mr Sunak is expected to announce the need for ‘pay restraint’ in the public sector at his comprehensive spending review next Wednesday.
The Chancellor originally sparked fears of a raid on public sector pay in July when he launched the spending review.
At the time, he warned public sector pay would need to keep “parity” with private sector wages – which were feared to have tumbled in the pandemic.
The Chancellor wrote at the time: “In the interest of fairness 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 threatened pay cuts comes after the Centre for Policy Studies said freezing the wages of 5.5 million public sector employees for the next three years would slash £23billion from the Treasury bill.
Failing to hike salaries would in effect be a real-terms pay cut because wages would not keep pace with inflation, which is currently 0.5%.
Up to £11.7bn could be “saved” if increases were limited to 1 per cent, analysts said.
The CPS – which was set up by Margaret Thatcher and is led by Robert Colvile, who helped write last year’s Conservative election manifesto – claims private sector workers have “suffered far more than those in the public sector”.
Unveiling its report, ‘Public Sector Pay: The Case for Restraint’, director Mr Colvile said: “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.
“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.”
Public sector pay was capped for two years in 2010 – prompting outrage among workers. It was followed by rises limited to 1 per cent, with the cap lifted in 2018.
The CPS claims public sector staff enjoy advantages over private sector counterparts, “in terms of higher pay, greater job security and significantly better pension provision”.
But National Education Union joint general secretary Kevin Courtney said a public sector pay freeze “is the very last thing the economy needs as it tries to recover”.
He added: “Key workers have kept this country on its feet throughout the pandemic.
“A pay freeze would in effect be yet another real-terms pay cut and would mean there is less money to be spent in our struggling retail and hospitality sectors.”
Police Federation chairman John Apter said: “I completely understand the financial pressures the country faces because of the Covid crisis.
“However, it should not be public sector workers – who have been on the frontline, keeping essential services running and protecting the public – to be the ones to suffer as a consequence.
“During the pandemic, the Government has thanked and celebrated members of the public sector; to freeze their pay and penalise these same workers would be morally bankrupt, unforgivable and a betrayal.”