Rishi Sunak, the UK chancellor, has in effect confirmed that this week’s spending review is likely to feature a pay freeze for many public-sector workers in England, saying it was “entirely reasonable” to consider pay policy in the context of the Covid-hit economy.
The prospect of a return to the pay freeze that ran from 2010 to 2018 has prompted anger among opposition MPs and unions. Frances O’Grady, the TUC secretary general, called it “morally obscene and bad economics”.
Government sources have already raised the prospect of a pay freeze at Wednesday’s spending review, which will cover just one year given the uncertain state of the economy during the coronavirus pandemic.
NHS England doctors and nurses are expected to be exempted.
Asked to confirm the pay freeze, the chancellor told Sky’s Sophy Ridge on Sunday: “I can’t comment on future pay policy in advance of the spending review, but what I would say is, when we launched the spending review, I did say to departments that when we think about settlements it would be entirely reasonable to think about those in the context of the wider economic climate. That’s a reasonable thing to do.
“Secondly, I think it would be fair to also think about what’s happening with wages, with jobs, with hours across the economy, when we think about what the right thing to do in the public sector is.”
Asked if he was therefore not ruling out a pay freeze, Sunak said: “You can ask me any question and say: ‘Are you ruling it out, or ruling it in?’ When we launched the spending review, we said when we think about public sector pay that should be done in the context of the overall economic climate. I think that’s an entirely reasonable thing to do.
“And we’ve also talked about fairness – we need to see what’s going on with wages, with jobs, with employment, with hours, across the economy, when we calibrate and figure out what the best thing to do for the public sector is as well.”
The chancellor denied this amounted to a return of austerity, which the government has said is over.
“You will not see austerity next week,” Sunak said. “What you will see is an increase in the government’s spending on day-to-day public services, quite a significant one, coming on the increase we had last year.
“So there’s absolutely no way in which anyone can say that’s austerity. We’ll be spending more money on public services than we were.”
Sunak also declined to confirm a longer-term extension to an increase in universal credit payments, introduced because of the coronavirus pandemic. The increase is due to end in April.
The chancellor said the change had been made as part of the “acute phase of this crisis”, adding: “We keep everything under review, and will make the decisions that are right for the economy.”
O’Grady said she was “very concerned” at the likelihood of a new public-sector pay freeze.
She said: “Millions of key workers cared for us during the crisis, and continue to care for us, and I think it’s time that we cared for them. We saw ministers join millions of us out on the doorstep, clapping firefighters, refuse collectors, social care workers. I don’t think this would be the time to reward them with a real pay cut.
“The prime minister only in June promised that this was the end of austerity, there would be no more austerity. Surely the government doesn’t think that it can reintroduce austerity for the very people who put their health, and in some cases lives, on the line to help the rest of us?”
She added: “There’s still time for the government to step back, and I would encourage them to think again. This is not smart politics, it’s morally obscene, and it’s bad economics too.”