Public sector pay rise 'wildly unrealistic' says Clarke
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Rishi Sunak offered help through the tax system for millions of workers as the cost-of-living crisis and war in Ukraine hit the economy. He acknowledged the impact of inflation, which is at a 30-year high, and the global economic uncertainty caused by Vladimir Putin’s invasion of Ukraine. While Chief Secretary to the Treasury Simon Clarke MP said raising public sector pay in line with inflation would be “wildly unrealistic”.
He told ITV’s Peston: “Well we have a wider responsibility to all taxpayers to make sure that we manage the public finances responsibly, and everybody in both the public and the private sector is going to have to pay their full role in helping the country through this crisis.
“It’s really important, clearly, that pay restraint is observed across the public sector.
“We’re not freezing public sector pay – there will be pay increases – but we’re not in a position where we can start paying out eight, ten, 12 percent, and it would be wildly unrealistic to expect us to do that.”
He also told Peston that even a 1.3 percent increase in interest rates would wipe out the government’s surplus.
“We have to be really conscious of the volatility of this situation, the OBR themselves have been clear in their document that this is an almost uniquely uncertain landscape and we have very little margin for error here.
“Roughly speaking, a 1.3 percent rise in the cost of borrowing would wipe out all of that headroom and a 1.3 percent increase in the cost of borrowing really is not unimaginable in the current climate.
“To put it in a different way, we’re going to spend £83 billion in the next financial year on debt interest, that’s four times what we paid last year. Set against that level of risk, we have to be prudent and cautious in what we do here.”
When Peston suggested that since the Tories had been in power since 2010 it was their mess, he said: “It’s not our mess – it’s the result of a pandemic and a European war.”
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Asked why benefits hadn’t been increased, he said: “Well, we’ve had to make decisions about how best to deploy the resources that we have available to us, and it’s our verdict that this is the best possible package that we can put forward.”
It comes as union leaders were quick to criticise the Chancellor for “tinkering around the edges” of the cost-of-living crisis.
Working families will now be “overwhelmed” by rocketing prices, said Unite, which announced it was setting up a commission on profiteering targeting companies which took advantage of Covid-19 and soaring energy costs to make “obscene” profits from the public and the Government and attack workers’ jobs, pay and conditions.
Unite general secretary Sharon Graham said: “With inflation at its highest for 30 years, Rishi Sunak’s spring statement just tinkers around the edges of this shocking cost-of-living crisis.
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“Workers will still be facing sleepless nights worrying about how to make ends meet, overwhelmed by rocketing prices.
“His spring statement does nothing to tackle the corporate elite, the billionaires who stash their loot but sack UK workers by Zoom. Once again, ordinary working people bear the broadest burden while the super-rich get off scot-free.”
Dr Mary Bousted, joint general secretary of the National Education Union, said: “If the Government is serious about protecting living standards and building a strong economy, it must reverse the real terms cuts to teacher pay.
“Instead, with RPI inflation reaching 8.2% and in the midst of the worst cost-of-living crisis in decades, the Government plans yet more real terms pay cuts for teachers.”
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