The Prime Minister has pledged there will be no return to austerity, after the government today faced a backlash over plans to freeze public pay in a bid to shore up cash for the Covid-ravaged economy.
“Both the Prime Minister and the chancellor have been clear that we will not return to the austerity of the past,” Boris Johnson’s official spokesperson said today.
“Departmental spending will increase above inflation on both day to day spending and longer term investment,” they added.
It comes after plans emerged overnight that nearly 4m public sector workers may face a pay freeze next year, including soldiers, police officers, teachers and civil servants.
Chancellor Rishi Sunak is set to announce the public sector pay freeze in his 25 November mini-Budget, as part of plans to launch a Whitehall savings drive.
The chancellor is expected to announce that public sector earnings should move in line with the private sector, where many face significant pay cuts and job losses.
Nurses, doctors and NHS workers are to be exempt from the pay freeze, as a recognition of the role they played during the pandemic.
Figures from the Institute of Fiscal Studies (IFS) suggested the plans would mean a pay freeze for 3.7m people, in a move that could save as much as £3.4bn.
The IFS also showed public sector pay is 1.5 per cent lower this year than it was in 2010, after inflation.
The Office for Budget Responsibility has predicted Britain is set face the largest downgrade in its public finances since WWII, despite Sunak insisting there must be no return to austerity.
The chancellor is expected to make it clear that any pay freeze would be temporary.
Sunak will announce the measures as part of a wider plan to mitigate the impact of the pandemic on the British economy, with government spending soaring.
More than £40bn has been spent through the furlough scheme subsiding the wages of 9.6m workers.