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Latest NewsPay & benefitsPay structures

Chancellor calls for 2% limit on public sector pay rises

by Personnel Today 24 Nov 2005
by Personnel Today 24 Nov 2005


Chancellor Gordon Brown has called for a 2% limit on public sector review body pay awards, to avoid exerting upward inflationary pressure on the economy.


In a letter to the pay review body chairs, who set annual pay rises for thousands of public sector workers, Brown said that settlements should be based on “the achievement of the inflation target of 2%, rather than on the recent temporary rise in the rate of inflation”.


He acknowledged that recent fluctuations in oil prices have resulted in increases to the consumer prices index (CPI) inflation rate.


But he argued that these effects are temporary, as indicated by the decline in CPI inflation recorded in October (to 2.3%, down from 2.5% one month previously). The latest Bank of England report forecasts a fall back to just below the 2% target in 2006.


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Brown’s letter calls for restraint in settlements so as not to “risk converting a temporary increase in inflation into a permanent increase”.

 

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Personnel Today articles are written by an expert team of award-winning journalists who have been covering HR and L&D for many years. Some of our content is attributed to "Personnel Today" for a number of reasons, including: when numerous authors are associated with writing or editing a piece; or when the author is unknown (particularly for older articles).

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