At a sparsely attended committee hearing this morning I heard Stephen Timms, Treasury minister, admit that public sector pay might have to be frozen. At least he said that the Treasury had not ruled this out.
“It’s certain the case that our pay policy needs to reflect the wider economic circumstances…we will be deciding on pay policy over the next few weeks, the policy has got to be fair to people who work in the public sector just as we have to be fair to everybody else. The suggestion by Steve Bundred has made is certainly one we will reflect on but the details on that will be made over the next few weeks.”
You may remember that Bundred’s suggestion – made in the Observer on Sunday – was that there should be a freeze in public sector pay or at least severe pay restraint.
There were subsequent suggestions that the Labour government would not reopen existing pay deals.
But what about new ones? Some form of pay restraint is one of the few obvious tools open to minister as they try to tackle a budget deficit heading towards £175bn this year. Over the past five years, the public sector wage bill of £158bn has risen by an average of £7bn a year.
Carl Emmerson, deputy director of the Institute for Fiscal Studies, recently told the FT that since the total accounted for roughly one pound in every four spent by the Treasury, “it would be a bit weird if none [of the planned reductions in public spending] came from remuneration, either on wages or employment“.
For now though no party leader has dared to voice the pay freeze argument (Cameron says the issue should go to independent pay bodies). The political hazards are pretty obvious.
UPDATE
An eagle-eyed reader points out that teachers have been told they will get a 2.3 per cent rise in September and again next year. Ed Balls, schools secretary, has confirmed this today. But that is only one corner of Britain’s vast public sector.
Jim Pickard
Kiran Stacey
