Cruel pay freeze for teachers and police will save 1% the amount spent on Covid
(Image: Getty Images)
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The Tories’ cruel pay freeze for teachers and police next year will save less than 1% of the amount spent on coronavirus, analysts have revealed.
Chancellor Rishi Sunak yesterday announced around 1.3million public sector workers will get no pay rise in April – with NHS staff and low-earners exempt.
But the respected Institute for Fiscal Studies today reveals the move will “probably save only between £1bn and £2bn next year”.
That compares to £280bn which the government has committed so far to responding to the pandemic. It’s also less than a tenth of the £22bn allotted to Test and Trace. It could save more money over future years but that level is not confirmed.
IFS director Paul Johnson said: “The chancellor has perhaps picked a big fight over not very much money.
“In the public sector the decisions look driven by politics not by economics or the need to spend money either equitably or efficiently.
Boris Johnson has "perhaps picked a big fight over not very much money"
(Image: POOL/AFP via Getty Images)
“It is graduate public sector workers in London and the South East who are least well paid relative to the private sector and local living costs.
“Yet they will be targeted by the freeze.
“Two teachers working half time on £20,000 each will each get a £250 pay rise. A full-time teacher doing the same job for £40,000 will get nothing.
“This is no way either to spend public money or to treat public sector workers.”
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Mr Sunak yesterday revealed the government has now committed £280bn to get the UK through coronavirus – and public services Covid funding will be £55bn in 2021/22.
That includes £18bn on testing, PPE and vaccines next year, £3bn for the NHS, £2bn for transport, £3bn for councils, £250m for rough sleeping and £2.6bn for devolved governments.
As a result Britain’s borrowing is now the highest in peacetime history – but it won’t be enough to stop the worst hit to the economy in 300 years.
But the Chancellor raised the minimum wage by just 19p an hour and 2million people’s benefits by 37p a week.
All public sector workers who earn over £24,000 and don’t work in the NHS will have their pay frozen for a year from April 2021.
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Mr Johnson said despite the Chancellor “spraying enormous amounts of money” on coronavirus, “this was a pretty austere spending review” which will cut non-civid-related public service spending by more than £10bn next year.
“This may not quite be a return to austerity, but for some public services it may not feel much different,” he said.
Some areas outside health and defence “could well be facing another bout of austerity – if the Chancellor does in fact stick to his spending plans.”
Mr Johnson added: “It is not obvious that either the need or the appetite for public spending has diminished since March.
“There has been no top up to NHS spending plans after next year. Frankly I would be most surprised if these plans were adhered to.”
The top economist also slammed the “disappointing” failure to confirm a £20-a-week boost to Universal Credit will remain from April.
If the boost ends, 6million households will see their payments reduce overnight by £1,040 a year.
Ministers have said they will only make a decision in the new year on whether to extend the £20 – leaving millions facing an anxious wait.
Chief Secretary to the Treasury Steve Barclay told ITV last night: “What we've always said is it's a temporary measure that we've brought in alongside with Covid to respond to that.
“Now of course these things are kept under review, but it's not a decision for this spending review.”
But Mr Johnson said: “Experience suggests that pressure will build for it to be kept and the government may change course in response.”
Rishi Sunak has refused to rule out smashing a hole through the Tory manifesto and raising income tax or VAT to pay for coronavirus.
The Conservatives’ manifesto pledged less than a year ago: “We will not raise the rate of income tax, VAT or National Insurance.”
But Mr Sunak admitted in his spending review yesterday: “Our economic emergency has only just begun”.
And he’s already now broken a different manifesto pledge to keep paying 0.7% of GDP into foreign aid – cutting it to 0.5%.
Asked if he’d come back in a year or two years and cut the tax pledge too, Mr Sunak told BBC Radio 4’s Today programme: “I’m not going to get drawn on future fiscal policy, as much as you try.”
Pressed repeatedly by the BBC, Mr Sunak eventually admitted the aid cut was a political choice.
He said: “We made a choice. We made a choice yesterday to prioritise people’s jobs, public services and helping this country get through coronavirus.
“I think that is the right choice to make and I think it is a choice the British people will support.”
Mr Sunak insisted the aid cut was not permanent – but refused to say when it will end, and it could last more than one year.