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Thu, 21 January 2021

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Public Sector Workers Have Been Hit With A Pay Freeze As Rishi Sunak Laid Out The Cost Of The Pandemic

Public Sector Workers Have Been Hit With A Pay Freeze As Rishi Sunak Laid Out The Cost Of The Pandemic

Rishi Sunak delivered his 2020 Spending Review on Wednesday

3 min read

Rishi Sunak told MPs public sector workers would have their wages frozen this year, as he set out the cost of the coronavirus pandemic on the UK economy.

Speaking during his autumn Spending Review, the Chancellor said that frontline NHS workers would see their wages increased in 2021. 

But he said other public sector workers — such as police, teachers, armed forces and civil servants — would not see their pay increased.

He told the Commons: “Our health emergency is not yet over. And our economic emergency has only just begun.”

Those earning less than the media wage of £24,000 would be guaranteed a pay rise of at least £250, however, meaning at least 2.1m workers would still get a pay rise. 

The move was taken to “ensure fairness between the private and public sectors”, he added, claiming he could not “ justify a significant, across-the-board pay increase for all public sector workers” at such a “difficult” time for workers in the private sector. 

Unions have previously condemned such a move, with TUC general secretary Frances O’Grady describing the policy as “morally obscene” earlier this week.

Responding to the statement, shadow chancellor Anneieise Dodds described the pay freeze as a “sledgehammer to consumer confidence” and accused the government of “waste and mismanagement during the pandemic”.

She said public sector workers are "now being forced to tighten their belts" while the pandemic has been a "bonanza for those who have won contracts with political connections".

“The Chancellor says the economic emergency has only just begun. Try telling that to people who have been out of work since March,” Ms Dodds continued. 

Mr Sunak’s announcement followed a grim economic forecast from the Office of Budget Responsibility (OBR), which said the UK economy was set to contract by 11.3% in 2020 — the worst fall in output in 300 years.

Unemployment is also expected to peak next year at 7.7%, meaning 2.6m people could be out of work.

Setting out government spending, the Chancellor reiterated previous commitments including £3bn to support the NHS’ recovery from the pandemic, £2bn for transport networks, £4.6bn for the unemployed, £275m for the criminal justice system and a huge boost in defence spending.

Other cash promised includes £55bn in the next year to help tackle the ongoing coronavirus pandemic, as well as a new £4bn ‘Levelling Up Fund’ to help finance local projects. 

He also announced that a new UK infrastructure bank to be headquartered in the north of England, which will work with the private sector to finance major new investment projects.

Government spending on infrastructure is set to total £100bn next year, the Chancellor said, which represents the “highest sustained levels of public investment in more than 40 years”. 

The total departmental spending for next year is set to hit £540bn, representing a rise of 3.8%, of which £4.6bn would be divided between the devolved administrations as part of the Barnett formula. 

Elsewhere, the Chancellor also confirmed that the UK’s overseas aid budget would be cut from 0.7% of GDP to 0.5%.

“During a domestic fiscal emergency, when we need to prioritise our limited resources on jobs and public services. 

“Sticking rigidly to spending 0.7% of our national income on overseas aid, is difficult to justify to the British people, especially when we’re seeing the highest peacetime levels of borrowing on record,” he said.

The intention was that the UK would resume committing 0.7% of GDP to international aid once the economy improved, the chancellor said.

The move is expected to attract anger from many backbench MPs, with former international development secretary Andrew Mitchell understood to be rallying backbenchers to vote down any reduction to the 0.7% overseas aid budget.

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