Public sector pay will be squeezed until 2015 and cuts to services will continue until 2017, chancellor George Osborne announced today in his Autumn Statement.
The pay freeze from 2011-13 will be followed by pay rises capped at 1% from 2013-15, which entails a real terms cut in pay for public servants.
While Local Government Employers, the employers’ body for councils, is free to negotiate its own pay rates with unions, it has followed the government’s stipulation of a pay freeze from 2011-13, and would be expected to observe the 1% pay caps from 2013-15.
He also forecast that public spending cuts would have to fall by 0.9% a year in real terms from 2015-17, beyond the end of the current round of cuts, implying more pain for social care and other services.
Osborne also announced plans to move towards regional pay negotiations, allowing lower rates to be set in less costly areas.
The chancellor also confirmed that benefits for disabled people would be uprated by 5.2%, in line with inflation, though other families will face a squeeze, with a freeze on working tax credits next year.
Responding to the statement, Unison general secretary Dave Prentis said: “We desperately need to get Britain spending. A bad situation will only be made worse by imposing a £3.6billion tax on public sector pensions, by holding down public sector pay, and by throwing hundreds of thousands of public service workers onto the dole. It’s time to drop the public sector pensions tax, and take steps to put money back into peoples pockets. This will boost growth and get Britain hiring – as it is, the private sector is in no position to dig the country out of trouble.
Special report on the comprehensive spending review