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Public sector workers facing pay restraint as ministers warn of ‘inflationary spiral’

Public sector workers look set for below-inflation pay rises after Boris Johnson warned a meeting of cabinet that generous settlements could trigger an inflationary spiral.

“Limited” pay restraint was likely to be less damaging to the real value of take-home pay and less likely to drive up household costs such as mortgages, ministers told the meeting.

Recommendations on rises for groups like police, teachers, NHS workers and the armed forces are expected from independent pay bodies before the summer.

But they can be overruled by ministers in relevant departments, who are facing the prospect of hikes of 9 per cent or more if pay is to keep pace with inflation and ease the pressure of the cost-of-living crisis.

Addressing the regular weekly meeting of cabinet 10 Downing Street, Mr Johnson backed a warning from Treasury minister Simon Clarke that awards of this size would risk fuelling inflation further.

The warning came as the head of energy regulator Ofgem said that the cap on combined gas and electricity prices is expected to jump by £800 in October to an annual total of around £2,800 for the average household – up from around £1,300 12 months earlier.

The PM’s official spokesperson refused to say whether ministers will act to rein in recommended rises which are perceived to be too large.

But he said: “The government has already pledged to increase public sector spending and is awaiting decisions by public sector review bodies.

Cost of living: how to get help

The cost of living crisis has touched every corner of the UK, pushing families to the brink with rising food and fuel prices. The Independent has asked experts to explain small ways you can stretch your money, including managing debt and obtaining items for free.

– If you need to access a food bank, find your local council’s website and then use the local authority’s site to locate your nearest centre.

– The Trussell Trust, which runs many foodbanks, has a similar tool.

– Citizens Advice provides free help to people in need. The organisation can help you find grants or benefits, or advise on rent, debt and budgeting.

– If you are experiencing feelings of distress and isolation, or are struggling to cope, The Samaritans offers support; you can speak to someone for free over the phone, in confidence, on 116 123 (UK and ROI), email jo@samaritans.org, or visit the Samaritans website to find details of your nearest branch.

“However ministers made clear the risk of triggering higher inflation must be part of considerations when deciding pay awards this year.”

The spokesperson did not rule out ministers overriding the decisions of the review bodies.

“That wasn’t the suggestion the prime minister said and I don’t want to jump ahead of the independent process,” said the spokesperson. “You’ll know the government has the capability to do that in the purely hypothetical sense.

“The point that ministers were emphasising is that a spiralling inflation will do more to damage people’s take-home pay than limited pay restraint.”

Mr Johnson’s spokesperson denied that the PM was trying to send a signal to the pay review bodies, who arrive at their recommendations independently of government.


Source: UK Politics - www.independent.co.uk


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