Rishi Sunak has hinted that public sector pay could rise in next week’s Budget.
The Chancellor said he will use his spending review to reveal on Wednesday whether or not workers will see a salary increase.
In 2021/22 public sector pay rises, except in the NHS and for workers on less than £24,000, were “paused”.
Mr Sunak said: “Obviously over the past year, we took a decision to have a more targeted approach to public sector pay given that the year before there were large increases and obviously the private sector was seeing pay decreases last year, and people were on furlough.”
He told The Andrew Marr Show that he believed that decision was “reasonable and fair”.
“Now going forward, we’ll have to set a new pay policy and that will be a topic for next week’s spending review,” he said.
Frances O’Grady, General Secretary of the Trades Union Congress (TUC) urged Mr Sunak to end the pay freeze, as she said public services remained “essential to the resilience our economy needs”.
She said: “The spending review must deliver the funding to prove that this government is genuinely committed to building back stronger services.”
Government grappling with ‘biggest economic shock’ since Second World War
Ahead of the Budget Mr Sunak would not be drawn on whether he could rule out tax rises before the next election.
He insisted his “instincts” were for low tax Conservatism and would want to deliver this however, he said the Government has had to “grapple” with “the biggest economic shock that we’ve experienced in 300 years”.
Mr Sunak said this drove borrowing up to levels not seen since the Second World War.
“I’ve got to take the world as it comes, I wish I hadn’t had to deal with Coronavirus in a once in 300 year economic shock and all the damage that has done to our economy,” he told Sky News.
He also pledged that his budget would build “a stronger economy and you will see us supporting business and there are lots of different ways to support business, business rates is one of them.”
Mr Sunak added that his second budget of the year will focus on “looking to the future and building a stronger economy for the British people”.
His previous budgets in March 2021 and 2020 had been heavily focused on supporting the country through the coronavirus pandemic.
However he is now keen to focus on skills, innovation, and economic growth, as he said it was key that public finances were returned to a stable footing.
He told the Andrew Marr Show that he would look to make “strong investment in public services, driving economic growth by investing in infrastructure, innovation and skills, giving businesses confidence, and then supporting working families”.
“Those are the ingredients of what makes a stronger Budget and that’s what we will deliver next week,” he said.
Mr Sunak said a warning from the Bank of England’s new chief economist that inflation could rise above 5 percent would “certainly feed into my thinking about what the right approach to the country is”.
But he indicated that the rise in inflation was down to factors out of his control. He said: “If you take the last inflation number, which was just over three percent, which is obviously higher than we normally target, and you look at what’s causing that, the bulk of that increase is down to two things.
“One of those is the fact that as economies have reopened rather rapidly after coronavirus, that has put pressure on global supply chains, and then the other part of the increase is very much just down to energy prices.
“Both of those factors are global factors. We’re not alone in experiencing those problems, I don’t have a magic wand that can make either of those things disappear.”
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