As part of the 2020 Spending Review, Rishi Sunak explained that with the disparity in wage growth between the public and private sector and against the backdrop of the pandemic, he “cannot justify a significant pay increase across the board”.

Sunak said that in the six months to September, private sector wages fell by nearly 1% compared to the previous year. By comparison, public sector pay rose 3.9% in the same period.

Further, private sector workers are more likely to have been financially impacted by coronavirus via reduced furlough wages, reduced hours and redundancies.

But to protect jobs in the public sector and to ensure ‘fairness’, he outlined three steps:

• Pay rise for over one million NHS workers (doctors and nurses). This will be based on recommendations from the NHS Pay Review Body and Doctor and Dentist’s Review Body in spring 2021.
• Pay rises for the rest of the public sector will be paused next year (2021/22).
• Protect the 2.1 million public sector workers on lower incomes so that those earning below £24,000 a year will see a pay rise of at least £250.

Spending Review documents reveal the three step plan represents around 25% of total government expenditure.

By pausing the headline pay awards next year for some public sector workers, the government said it means it can protect jobs and investment in services as part of its response to spending pressures from Covid.

The restricted public sector pay news doesn’t come as a surprise as reports last week suggested the chancellor was looking to impose a pay freeze to help balance the books amid the coronavirus pandemic.

Trades Union Congress general secretary, Frances O’Grady, said: “For all the government’s talk of levelling up, this spending review will level down Britain, hitting key workers’ pay and breaking the government’s promises to the lowest paid.