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Budget 2010: public sector pay freeze

By Channel 4 News

Updated on 22 June 2010

The government is accused of "scandalous" cuts to public services as the Chancellor George Osborne unveils billions of pounds worth of savings to the sector while also freezing pay for two years.

Nurse (Reuters)

In his emergency budget the Chancellor George Osborne announced "tough but fair" cuts aimed at reducing Britain's record budget deficit.

Additional current expenditure reductions of £30bn a year by 2014/15 were announced along with further reductions in departmental spending of £17bn by 2014/15 - with unprotected departments facing an average real cut of around 25 per cent over four years.

Public sector workers will have pay frozen for two years - with the protection of 1.7 million earning less that £21,000 who will receive a £250 increase in both years. 62 per cent of public sector workers, from areas such as health and transport, will be affected by the freeze.

A government commission, led by John Hutton the former Labour defence secretary, will examine the cost of public sector pensions and consider savings with the review to be published in September.

The general secretary of the PCS union told Channel 4 News that budget was a "scandal" and warned that the cuts would provoke anger from workers.

Mark Serwotka said he was "outraged" that the government had targeted the public sector, adding that a shakeup of the welfare system would leave the most vulnerable people affected.

Budget 2010: welfare benefits cut
How will child tax credits, benefits, housing allowances and pensions be affected?
Read more here.

The government is "putting the burden of economic problems at the door of those that cannot afford them," Mr Serwotka told Channel 4 News.

"What horrifies me…is that the cuts are falling on vulnerable and those who can least afford to pay."

Public sector pay
While unveiling his emergency budget the chancellor said public sector workers must "share the burden" of reducing spending and warned that unless action was taken more jobs would be lost.

Casualties of the Chancellor's budget
The battles lines have been drawn in the government’s first budget, and public sector workers, the vital services they provide, and the poor, sick and vulnerable people who depend on them, are in the firing line, writes Dave Prentis, general secretary of UNISON, for Channel 4 News.

Freezing public sector pay, when inflation is running at 5.1 per cent and VAT is going up will mean a real cut in living standards for millions of ordinary workers and their families.

Economic recovery will be another casualty, as the government’s attack on pay for nurses, social workers, paramedics, and PCSOs will hit spending power, and the 25 per cent departmental cuts will have a devastating impact on jobs, driving down much-needed demand in our economy.

The chancellor’s approach is not just damaging, it’s based on a fraud. Cutting back the public sector will not inevitably lead to a rise in private sector activity. And while we wait for the chancellor’s dreams to come true – private sector recovery - the economy will 'bottom out', meaning misery for millions, raising the spectre of breadline Britain.

Read the article in full... 

"Many millions of people in the private sector have in the last couple of years seen their pay frozen, their hours reduced, and their pension benefits restricted," George Osborne told the Commons.

"They have accepted this because they knew that the alternative in many cases was further job losses. The public sector was insulated from these pressures but now faces a similar trade off…they must share the burden as we pay to clean it up."

"If we don't tackle pay and pensions, more jobs will be lost," he added.

Mark Serwotka of the PCS told Channel 4 News that five million people would be affected by the two-year pay freeze. The £250 pay rise for those exempt to the freeze was a "poultry sum", the union boss said. 

"It is important that those on lower wages are exempt [from the pay freeze]," he said.

"But even they will only look forward to £250 pay rise. These people are the most hardest hit by VAT, welfare and child tax cuts. The government are giving crumbs with one hand taking the bread with the other.

"I think we will see a resistance built up to this budget. When we see VAT going up, jobs losses…I think there is going to be an explosion of anger."

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