Budget 2013: George Osborne extends public sector pay freeze

The Chancellor was accused of forcing millions of families into another year of “severely squeezed incomes” after he announced a further cap on public sector pay.

George Osborne said wage rises would be limited to an average of up to 1% in 2015/16, extending the clampdown by a further year.

The cap will affect workers including health staff and civil servants, limiting their pay rises beyond the next general election.

The Chancellor also announced plans to seek "significant" savings through reforming the system of annual rises through pay progression in the public sector, which he said was difficult to justify given that millions of workers had seen their wages frozen or cut.

In the trade off between pay and jobs, Mr Osborne said jobs had to come first.

TUC general secretary Frances O'Grady said: "The Chancellor is either oblivious to the tough time that millions of public sector workers and their families are having or he is deliberately setting out to punish them.

"Public sector workers have seen their pay frozen as the cost of living soars and thousands now find themselves earning less than the living wage.

"Family budgets are at breaking point and millions of nurses, teachers, firefighters, council workers and civil servants will have been hoping the Chancellor might ease their pain today, not add significantly to it.

"The government also seems set on ditching long-established, easy-to-understand pay progression in the public sector based on increased experience and skills over time.

"Reports of a further move towards a messy system of individual performance-related pay will damage morale - already at a low ebb - undermine team working, and do nothing to improve services.

"It would also mean much time and resources wasted on complex local pay negotiations, and it would make inequalities worse."

Dave Prentis, leader of Unison, said: "On top of the three-year public service pay freeze workers will now have their pay pegged to 1% until 2015/16 - what does that say about giving people aspirations?"

Brian Strutton, national officer of the GMB, said: "There is no justification and nothing fair about a further year of public sector pay restraint.

"It is bad enough capping the annual pay rise but now attacking pay progression is outrageous.

"In the private sector people tend to have a rate for the job but in the public sector people start lower and reach the full rate after, typically, five years' service.

"The other effect is that those who would suffer most from a freeze in increments will be low paid women who tend to have shorter service and not to have reached the full rate for the job.

"Freezing progression seems on the face of it to discriminate against women."

Dr Mark Porter, who chairs the BMA Council, said: "We're concerned that the Chancellor is meddling in NHS pay processes.

"As MPs noted this week, pay restraint cannot be seen as a long-term savings strategy for the NHS.

"Efficiency gains will be achieved by focusing on quality, not by suppressing pay.

"Healthcare workers are at the forefront of the drive to improve efficiency in the NHS.

"They have already undergone major changes to their pensions, and many doctors have been subject to real terms pay cuts for several years.

"Pay progression is not automatic for most senior doctors."

Christine Blower, general secretary of the National Union of Teachers, said: "The Government's war on public sector workers is causing serious economic problems.

"Attacks on public sector pay levels and pay progression drain demand from the economy, forcing living standards down even further as the economy stagnates."

PA