For nurses it's 2-3%; for MPs it's 26%; but three utility bosses pocket pounds 1m

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The Chancellor faced an angry backlash yesterday after telling 5 million public-sector workers that their pay must be held below this year's 3 per cent going rate.

Kenneth Clarke told the pay review bodies for nurses, doctors, civil servants and teachers that the Government can afford no pay increases unless they are financed from productivity.

But the sting in the tail, which provoked an outcry from the unions, was his warning that pay recommendations should be lower than they were this year. Most pay awards have averaged about 3 per cent. Public service workers can expect no more than 2 to 3 per cent and it could mean cuts in services to pay for any rises. With MPs awarding themselves a 26 per cent pay rise, and figures yesterday showing company executives averaging increases of 12 per cent, the public service unions accused Mr Clarke of "breathtaking double standards".

Roger Kline, of the white collar MSF union, warned that unions would ballot on industrial action if the staff were not properly rewarded. It means the Government could face industrial unrest in the run-up to the election. John Monks, the TUC general secretary, accused Mr Clarke of playing politics with public-sector pay.

"This cynical ploy is announced on the same day we discover that fat cat directors are giving themselves pay rises over four times the rate of inflation.

"Kenneth Clarke is hitting nurses, teachers and other crucial public- sector workers in the wallet to give him enough money to buy votes with tax cuts in the run-up to the general election."

Barry Reamsbottom, general secretary of the CPSA, the UK's biggest civil service trade union, said: "Mr Clarke thinks that by acting the tough guy with civil servants on their pay, he will win a few more votes for the beleaguered Tory government. This is a strategy that will fail."

He added: "Mr Clarke's wallet is bulging with the 26 per cent pay increase that MPs awarded themselves only three months ago, yet he is intent on forcing civil servants who have met all the targets set by this Government to swallow a pay freeze for a further year.

"It is breathtaking double standards and the electorate will see through it," he added.

Labour acted quickly to scotch suggestions that an incoming Labour government would be a soft touch for the public-sector unions. Alistair Darling, Labour's Treasury spokesman, attacked the Chancellor for "denigrating the efforts of those working in the public sector".

But he added: "We have no intention of giving in or surrendering positions that cannot be justified or paid for. I want to make it abundantly clear we will maintain tight control of public spending and I think most people understand that."