Public sector pay rises will come from existing budgets

The austerity belt has been further loosened with the announcement of public sector pay rises above the rate of inflation, the largest in six years.

But finance experts, unions and the Labour party have criticised the government for taking the money from existing budgets.

Hospital directors will receive £1,500 extra a year (2.5%), police constables £978 (2.5%), soldiers at corporal level £995 (average of 2.9% for armed forces) and classroom teachers £1,000 (2.75%). Prison officers will enjoy a 2.2% rise and senior civil servants and military staff will recieve 2%.

All six deals hand pay rises higher than the current 2% rate of inflation (CPI June 2019, ONS) for the 2019-20 financial year and will be backdated to the start of each sector’s financial year.

Theresa May, within two days of leaving the post of prime minister, referred back to the ending of the public sector pay cap last year: “In 2017 we ended the public sector pay cap and I’m pleased that we can build on this today by giving almost a million of our dedicated public servants an above inflation salary increase.”

Chancellor Philip Hammond, who has announced he will leave his post if, as expected, Boris Johnson becomes prime minister, said: “We are able to afford these pay rises because our balanced approach means we have reduced our debt while investing in public services, including pay.”

Inflation is currently at 2% and the modest pay rises are still lower than average increases in the private sector, according to think tank the Institute for Fiscal Studies, which also drew attention to the rises being funded from existing budgets.

TUC general secretary Frances O’Grady was also critical of this: “This mustn’t come from existing budgets. Public services are at breaking point. They don’t have spare cash lying around.

“Our public services need extra funding to deliver real pay increases for hard-working public servants. This can’t be another case of robbing Peter to pay Paul.”

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Labour was unimpressed by the rises, with shadow chief secretary to the Treasury Peter Dowd MP, highlighting the possibility of more cuts to public services: “The Tory chancellor is refusing to cover the cost, meaning up to £2bn in further cuts to frontline services. The Prime Minister once pledged an ‘end to austerity’, but her final act is to break that promise.

“Labour will invest in our public services and their dedicated staff, ending years of austerity and eliminating in-work poverty.”