Chancellor addresses ‘disparity’ between private and public sector pay

NHS frontline staff will not be subjected to the public sector pay freeze announced in today’s spending review.

More than a million nurses and doctors and others in the NHS will receive a pay rise. While other public sector workers will not get a raise at all, something which the chancellor was criticised for ahead of today’s announcement.

Unions have warned that the country could see millions of public sector workers strike as a result of a pay freeze.

Rishi Sunak said the government needs to address the “disparity” between private and public sector wages.

He said: “I cannot justify an across the board pay increase for public sector workers” as the government has had to spend billions of pounds in response to the pandemic.

But he said the government will also protect those on low incomes as he announced a £250 pay rise for the 2.1 million public sector workers who earn less than the median wage of £24,000.

He says the government will accept a recommendation from the Low Pay Commission to increase the National Living Wage next year by 2.2 per cent, to £8.91 an hour – extended to those aged 23 and over.

While he said there will be a “pause” for some public sector wages, he claimed: “The majority of public sector workers will see their pay increase next year.”

Ahead of today’s statement, the NHS in England was guaranteed at least £133bn next year. The chancellor also pledged an extra £3bn to deal with a backlog of non-Covid-related treatment after operations and appointments were delayed during the first lockdown.

Sunak outlined spending plans for public services such as health and education and tried to reassure the public that there will not be a return to austerity.

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But he warned that record government borrowing will have to be paid back eventually.  The cost of paying back the debt will fall on taxpayers for many years.

Schools in England have been allocated £49.8bn in 2021-22 after the chancellor promised an extra £2.2bn for the year.

Sunak said: “Our health emergency is not yet over and our economic emergency has only just begun.”

He said the government’s priority is to “protect lives and livelihoods”.

Speaking at prime minister’s questions ahead of the spending review, prime minister Boris Johnson said the private sector has seen a fall in incomes and it is right for the government to be “responsible in its approach to public spending”.

Spending reviews usually cover three or four years to allow for longer term plans but due to the disruption caused by the pandemic, the government decided this spending review will only cover one year, from April 2021 to April 2022.

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But if you’d like to find out more about the Spending Review and why it’s important, watch our explainer video here: https://t.co/MFfOReYQh2 #SR20 pic.twitter.com/zCW15FiPyn

— Rishi Sunak (@RishiSunak) November 24, 2020

The chancellor also used today as an opportunity to provide more detail on the damage caused to the economy by Covid-19. He said the government has allocated £55bn to tackle coronavirus next year.

And he said the government will have borrowed £394bn by the end of this year. Much of this has been used in response to the virus . This has been in the form of job support schemes, business loans and the purchase of personal protective equipment.

Before the pandemic, government borrowing was expected to be around £55bn for this financial year.

A £4.6bn package to help the unemployed back to work was predicted after analysis suggested the UK economy will be 10 per cent smaller this year thanks to the coronavirus.

Today’s spending review also saw the release of the Office for Budget Responsibilities latest economic and fiscal forecast.

On Monday, prime minister Boris Johnson outlined the government’s winter plan for Covid. He confirmed the national lockdown in England will end on 2 December but he outlined a tougher tiered system for regional Covid restrictions.

In October, the chancellor decided to conduct a one-year spending review on 25 November to prioritise the response to Covid-19 and the government’s focus on supporting jobs.

As well as the setting of department’s resource and capital budgets for 2021-22, today’s spending review also outlined the devolved administration’s block grants for the same period.