Those employed by the public sector knew this Budget was going to be particularly tough on them. Some commentators suggested that the private sector has had its recession and now it’s time for the public sector to go through its own downturn.
So it won’t have come as too much of a surprise that the Chancellor announced a two-year pay freeze for public sector workers earning more than £21,000 a year. When you factor in inflation, it is a real-terms cut to the salaries of many public servants.
However, the 1.7million earning £21,000 or less will receive a flat pay increase of £250 a year – meaning those on the very lowest salaries receive a proportionally higher rise than those closer to the £21,000 mark.
Pensions, of course, are the other big cost to the public purse. By 2015/16, the OBR forecasts the country will be spending more than £10billion a year meeting the gap between pension’s contributions and payments.
John Hutton, former work and pension’s secretary in the Labor government, has been asked to carry out a review and present an interim report in September.