The government is set to lift the public sector pay freeze it imposed on millions of workers last year, Rishi Sunak will announce on Wednesday.
The partial pay freeze was imposed by the chancellor in response to the coronavirus pandemic, and was described by unions as “kick in the teeth” for key workers who it hit.
Critics accused the chancellor of economic mismanagement for taking demand out of the economy during a downturn, but Mr Sunak said he wanted public sector wages to match “the context of the wider economic climate” in which wages were falling.
The Treasury briefed the wage plans to the media on Monday evening ahead of the chancellor’s Budget on Wednesday – despite a warning from the Commons speaker not to do so.
“The economic impact and uncertainty of the virus meant we had to take the difficult decision to pause public sector pay,” chancellor Rishi Sunak said in a statement.
“Along with our Plan for Jobs, this action helped us protect livelihoods at the height of the pandemic.
“And now, with the economy firmly back on track, it’s right that nurses, teachers and all the other public sector workers who played their part during the pandemic see their wages rise.”
TUC General secretary Frances O’Grady warned that pay rises had to be above inflation and said the rises could not come at the cost of funding public services.
“The pay freeze won’t be over unless the chancellor fully funds pay rises above the rising cost of living. Otherwise, he will force departments to choose between pay cuts or service cuts,” she said.
The Treasury said the pay rises would depend on the recommendations of independent pay review bodies in particular sectors.
Bridget Phillipson, Labour’s shadow chief secretary to the Treasury said: “With a new deal for workers, exploitative practices like zero hours contracts banned, Fire and rehire outlawed, a minimum wage of at least £10 an hour and fair pay agreements, a Labour government will transform work and raise standards.
“This Conservative government’s choice last year to freeze pay for so many frontline workers, who have been among the real heroes of the pandemic, was damaging and unsustainable.
“The government must work to ensure a fair settlement and reflect the vital work of all key workers including many who have been burnt out over the course of the pandemic.”
The original freeze affected the majority of public sector workers, but some, including NHS staff, were not affected. Mr Sunak was accused of playing “divide and rule” by targeting specific workers.
UK inflation measured on the consumer prices index hit 3 per cent in August, up from 1 per cent in March this year.
It comes as the government confirms that the national minimum wage is to increase for adults over 23 to £9.50.