MINISTERS agreed to take a five per cent pay cut at their first cabinet meeting yesterday, suggesting the public sector is in for a round of tough pay settlements.
David Cameron told his ministers, who will not receive a pay rise for the duration of the parliament, that he wanted them to lead by example and show willing when it comes to reducing the £163bn deficit.
The pay cut and subsequent freeze are expected to save the taxpayer approximately £300,000 this year, with savings totalling £3m over the five-year lifetime of the parliament.
Cameron will take a £7,500 pay cut, taking his salary down to £142,500, while Cabinet Ministers will see their pay fall by £7,082 to £134,565.
But all ministers will continue to receive their £64,766 MPs salary on top of that, as well as generous expenses allowances and a gold-plated pension.
Chancellor George Osborne confirmed plans to reduce £6bn of public spending this year, and most cabinet ministers have been told to expect swingeing cuts to their departmental budgets.
An emergency Budget has been scheduled for the end of June, while a comprehensive spending review will take place in the autumn.
Meanwhile, the government confirmed a handful of Treasury appointments. Mark Hoban will become financial secretary, Justine Greening is economic secretary and David Gauke is to become exchequer secretary.
Elsewhere, Nick Herbert is going to the Home Office as police minister while Damian Green will be immigration minister.