Teachers and nurses win big bonuses

TOP-PERFORMING teachers and nurses could get pay increases nearly double the norm next year in a move that overturns existing public-sector pay scales.

The move is believed to be aimed at rewarding those such as career nurses and teachers working in demanding conditions in the inner cities who take on extra duties. Heads called in to help turn around failing schools are also likely candidates.

The plans, likely to be implemented from next spring, could see such individuals getting rises of about 4 to 5 per cent compared with the 2 to 3 per cent at which public-sector pay deals have been allowed to run. This is likely to cause anger among unions reluctant to see national scales changed.

The Treasury's comprehensive spending review due next month recognises that a public-sector pay catch-up is inevitable now private-sector wage growth has pulled so far ahead. But with big rises across the board out of the question because of limits on public expenditure, higher settlements will be concentrated on front-line staff who take on additional responsibilities.

However, Treasury officials are seriously concerned that earnings in the private sector might be pulling far enough ahead to torpedo the Chancellor's attempt to balance tough overall spending control with pay awards for key departments.

This uncertainty means it is not yet clear how many front-line staff will enjoy the bigger increases. Nor are details of how these will be implemented likely to emerge until after next month's announcement of the broad outlines. Also, in Whitehall's existing "performance pay" scheme for top-flight civil servants, individual awards remain confidential, to avoid exciting the jealousy of colleagues.

Latest figures show that private-sector earnings are rising twice as fast as those in the public sector. In the 12 months to March, average private- sector pay rose by 6 per cent compared with just under 3 per cent for public-sector employees.

The Chancellor will use the announcement to make clear his rules for prudent public finances: a commitment to a small surplus of revenues over spending for the next three financial years, consistent with the "golden rule" that the Government's borrowing must not exceed its investment spending.

Confirmation by the Prime Minister's spokesman that the "Iron Chancellor" would maintain his disciplined line on spending, borrowing and debt repayment through to the next election prompted protests from unions and Liberal Democrats.

Rodney Bickerstaffe, general secretary of the public services union Unison, said: "We were given the clear impression that for two years, and two years only, the straitjacket of the last Government's public spending limits would be followed.

"This year public-service pay increased by only 2.6 per cent compared to 5.6 per cent in private companies. They don't want massive pay levels or huge numbers of extra jobs created for the sake of it. They want a decent day's pay for a decent day's work and the means to be able to carry on providing quality services to the public."

Mr Blair's spokesman dismissed a Liberal Democrat charge that the Chancellor was building a pounds 50bn war chest to finance a spending spree in advance of the next election.

But David Laws, the Liberal Democrats' economics adviser, said: "This seems like fiscal flagellation, bringing us surpluses for the sake of it." He said that if Mr Brown got his plans wrong, Labour's reputation for caring public services could be irreparably damaged.