Rishi Sunak has failed to rule out a public sector pay freeze for millions of workers across the country ahead of his planned economic statement – just moments after a union boss described the move “morally obscene”.
The chancellor also declined to quash speculation the government could slash the foreign aid budget to save billions despite the Conservatives’ manifesto pledge to maintain spending at 0.7 per cent of national income.
It follows reports that Mr Sunak is expected to announce a pay freeze in the one-year spending review on Wednesday alongside the publication of forecasts showing “the enormous strain and stress” the economy is facing due to the pandemic.
Any freeze would prove highly controversial and bears the hallmarks of former chancellor’s George Osborne’s attempts to bring down spending on public sector wages as part of the Conservative government’s austerity approach over the last decade.
While any details on the new policy remain to be seen, the Treasury has not rejected suggestions millions of teachers, police officers and civil servants could see their salaries frozen next year. Doctors, nurses and other NHS staff are expected to exempt.
Questioned on whether the government is planning to freeze public sector pay, Mr Sunak repeatedly said he could not comment on future policy in advance of the economic statement.
“What I would say is when we launched the spending review, I did say to departments that when we think about public settlements it would be entirely reasonable to think about those in the context of the wider economic climate,” he told Sky News’s Sophy Ridge on Sunday.
“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.”
He added: “You will not see austerity next week. 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.
“There’s absolutely no way in which anyone can say that’s austerity – we’re spending more money on public services.”
Frances O’Grady, the general secretary of the Trades Union Congress (TUC), also told the programme: “We saw ministers join millions of us clapping firefighters, refuse collectors, social care workers – I don’t think this would be the time to reward them with a real pay cut.”
Quoting the prime minister’s promise in the summer that there would be no return to austerity, she added: “Surely the government doesn’t think it can reintroduce austerity for the people who put their health, and in some cases their lives, on the line to help the rest of us?
“If you want to motivate a workforce when we are still facing a second wave of a pandemic, and we’re going to have a tough winter – we all know that – the last thing you do is threaten to cut their pay.”
Labour also described the potential freeze as an “absolute kick in the teeth” for frontline workers as the shadow business minister said it would be “morally” wrong to freeze the pay of those who supported the country throughout the pandemic.
On speculation the Treasury is also planning to scale back the foreign aid budget from 0.7 per cent to 0.5 per cent of national income – amounting to a saving of around £4bn a year – Mr Sunak again refused to rule out the cut, despite the Conservatives’ 2019 manifesto pledge to maintain the current level of spending.
He said: “We’ve got a spending review on Wednesday when we’ll talk about all the budgets.
“I am proud of our commitment and I think we’ve seen that in the last few months – we’ve played a leading role in helping to combat this pandemic not just at home but also abroad as well.”
His remarks came after the Archbishop of Canterbury, Justin Welby, intervened, urging the government not to cut the overseas aid budget, and send a “strong signal that the UK is a reliable partner for long-term economic, social, environmental and educational advancement across the globe”.
In an article over the weekend two former prime ministers – David Cameron and Tony Blair – also warned Mr Johnson it would be a “strategic mistake” to cut the budget.