Chancellor keeps the squeeze on public-sector pay: Nicholas Timmins, Stephen Goodwin and Barrie Clement report on renewed warnings over wage rises

PUBLIC-SECTOR employees were warned yesterday that they face an indefinite squeeze on their pay as Kenneth Clarke, the Chancellor, told the pay review bodies that any increase in the coming year must be paid for by productivity.

Mr Clarke's evidence to the review bodies came as Michael Portillo, Secretary of State for Employment, said the public sector faced an indefinite future of no pay rise above inflation, unless paid for by productivity.

In his evidence to the five independent review bodies which recommend pay for 1.4 million people - from doctors, nurses and teachers to the armed forces and senior civil servants - Mr Clarke said that any increase would have to be 'offset, or more than offset, by efficiency and other economies'.

Confirmation of what Mr Portillo admitted was 'a public-sector pay policy' came as inflation edged up 0.1 points to 2.4 per cent in July, while unemployment in August fell by 34,200 to 2,595,900. 'Overall,' Mr Portillo said, 'the public-sector pay bill has to remain pretty well static because the Government must control its costs and it must control the imposition that it places on taxpayers.'

To the extent that efficiency improved 'we should be able to have a little more pay', but that would have to be at the level suited to the new very low inflationary world.

Union leaders reacted angrily. Mick Graham of the GMB warned it was 'storing up trouble for the future', while the Royal College of Nursing said it was 'grossly unfair' when MPs were awarding themselves 4.7 per cent.

In his evidence to the review bodies, Mr Clarke expressed 'concern' that the workers they cover have done better than other public-sector staff. 'Higher pay costs could lead to reductions in service levels, or reductions in employment, if they cannot be covered within provision by the necessary efficiency savings and other economies.'

Mr Clarke said pay increases had to be earned and that 'annual across-the-board increases should not be regarded as a right'. Justifying the continued 'tight regime', his submission said pay settlements generally continued to run at levels that were low by historical standards.

Ann Clwyd, Labour's employment spokesman, said that as well as the fall in the unemployed count, yesterday's figures showed 34,000 fewer people in work over the past three months. 'Jobs are not being created,' she said. 'Jobs are disappearing.'

The public-sector pay bill freeze, however, may not be as strict as the Chancellor likes to pretend. Most settlements seem to have come out at, or near, the inflation rate since Mr Clarke announced in his November Budget speech that the clampdown affecting some 5 million employees would last three years. Scrutiny of the increases enjoyed by most employees this year, however, could lead to the notion that a 'going rate' developed during the public-sector pay round.

The review bodies covering professionals in public service set the ball rolling with 3 per cent awards, similar to the predictions of the inflation rate when they made their deliberations last Christmas.

Since January, most of the rises for groups of workers have been in a narrow range from 1.7 to 3 per cent. Some employees have received considerably more at a time when the 'headline' rate of inflation ranged between 2.3 and 2.6 per cent. Some observers might argue that not all the rises were fully paid for out of savings and that the extra money would be sought through creative accounting, price rises and a deterioration in services.

Leaders of striking signal workers were the first to point to the 4.7 per cent award to MPs where no 'efficiency measures' were delivered or even possible.

------------------------------------------------------------------------ MAJOR PUBLIC-SECTOR PAY SETTLEMENTS, 1994 ------------------------------------------------------------------------ Organisation Staff Group Increase Comments (nos.) (%) JANUARY Royal Mail Jnr & Middle Managers 1.7 (11,000) APRIL Armed Forces Service Personnel 2.7 First stage; (260.000) further 0.9% average due 1.1.95 British Rail All Staff 2.5 (78,000) Civil Service Clerical & Secretarial 2.2 Comprises lump sum (100.000) worth 1.8% + improved meritpay scheme worth 0.4% Civil Service Executive & Support 2.2 Comprises lump sum (62,000) worth 1.6% + improved merit pay Education School Teachers (E&W) 2.9 (470,000) NHS Doctors & Dentists 3.0 (123,000) NHS Nurses & Midwives 3.0 (468,000) NHS Professions Allied to 3.0 Medicine (47,000) Public Services Senior Salaries Review 2.75 Plus 2.8% 3rd stage Body (2,000) of 1992 award; total rise 5.4% Universities Lecturers & Related 2.5 Plus lump sum (60,848) worth 0.35% JUNE Civil Service Customs & Excise 2.6 2.2% merit + O4% (25,000) linked to new pay structure JULY Bank of England Main Staff Group 2.5 Plus 4.3% merit pot (2,000) AUGUST BBC All Staff 3.0 Minimum rise (23,000) pounds 400pa Civil Service Inland Revenue 2.6 3.1% for most (58,300) staff who meet performance targets SEPTEMBER Police Federated Ranks 3.0 Additional rises (120,000 from restructuring ------------------------------------------------------------------------ Source: IDS Report 673/September 1994 ------------------------------------------------------------------------

Suggested Topics
Start your day with The Independent, sign up for daily news emails
Barn owls are among species that could be affected
charity appeal
Sarah Silverman (middle) with sister Reform Rabbi Susan Silverman (right) and sister actress Laura Silverman (left) at Jerusalem's Western Wall for feminist Hanuka candle-lighting ceremony
peopleControversial comedian stages pro-equality Hanukkah lighting during a protest at Jerusalem's Wailing Wall
Arts and Entertainment
The Bach Choir has been crowned the inaugural winner of Sky Arts’ show The Great Culture Quiz
arts + ents140-year-old choir declared winner of Sky Arts' 'The Great Culture Quiz'
After another poor series in Sri Lanka, Alastair Cook claimed all players go through a lean period
cricketEoin Morgan reportedly to take over ODI captaincy
Have you tried new the Independent Digital Edition apps?
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Recruitment Genius: Finance Director

£65000 - £80000 per annum: Recruitment Genius: Finance Director required to jo...

Recruitment Genius: Medico-Legal Assistant

£15000 - £25000 per annum: Recruitment Genius: This is a unique opportunity fo...

Ashdown Group: (PHP / Python) - Global Media firm

£50000 per annum + 26 days holiday,pension: Ashdown Group: A highly successful...

The Jenrick Group: Quality Inspector

£27000 per annum + pension + holidays: The Jenrick Group: A Quality Technician...

Day In a Page

Homeless Veterans appeal: 'You look for someone who's an inspiration and try to be like them'

Homeless Veterans appeal

In 2010, Sgt Gary Jamieson stepped on an IED in Afghanistan and lost his legs and an arm. He reveals what, and who, helped him to make a remarkable recovery
Could cannabis oil reverse the effects of cancer?

Could cannabis oil reverse effects of cancer?

As a film following six patients receiving the controversial treatment is released, Kate Hilpern uncovers a very slippery issue
The Interview movie review: You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here

The Interview movie review

You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here
Serial mania has propelled podcasts into the cultural mainstream

How podcasts became mainstream

People have consumed gripping armchair investigation Serial with a relish typically reserved for box-set binges
Jesus Christ has become an unlikely pin-up for hipster marketing companies

Jesus Christ has become an unlikely pin-up

Kevin Lee Light, aka "Jesus", is the newest client of creative agency Mother while rival agency Anomaly has launched Sexy Jesus, depicting the Messiah in a series of Athena-style poses
Rosetta space mission voted most important scientific breakthrough of 2014

A memorable year for science – if not for mice

The most important scientific breakthroughs of 2014
Christmas cocktails to make you merry: From eggnog to Brown Betty and Rum Bumpo

Christmas cocktails to make you merry

Mulled wine is an essential seasonal treat. But now drinkers are rediscovering other traditional festive tipples. Angela Clutton raises a glass to Christmas cocktails
5 best activity trackers

Fitness technology: 5 best activity trackers

Up the ante in your regimen and change the habits of a lifetime with this wearable tech
Paul Scholes column: It's a little-known fact, but I have played one of the seven dwarves

Paul Scholes column

It's a little-known fact, but I have played one of the seven dwarves
Fifa's travelling circus once again steals limelight from real stars

Fifa's travelling circus once again steals limelight from real stars

Club World Cup kicked into the long grass by the continued farce surrounding Blatter, Garcia, Russia and Qatar
Frank Warren column: 2014 – boxing is back and winning new fans

Frank Warren: Boxing is back and winning new fans

2014 proves it's now one of sport's biggest hitters again
Jeb Bush vs Hillary Clinton: The power dynamics of the two first families

Jeb Bush vs Hillary Clinton

Karen Tumulty explores the power dynamics of the two first families
Stockholm is rivalling Silicon Valley with a hotbed of technology start-ups

Stockholm is rivalling Silicon Valley

The Swedish capital is home to two of the most popular video games in the world, as well as thousands of technology start-ups worth hundreds of millions of pounds – and it's all happened since 2009
Did Japanese workers really get their symbols mixed up and display Santa on a crucifix?

Crucified Santa: Urban myth refuses to die

The story goes that Japanese store workers created a life-size effigy of a smiling "Father Kurisumasu" attached to a facsimile of Our Lord's final instrument of torture
Jennifer Saunders and Kate Moss join David Walliams on set for TV adaptation of The Boy in the Dress

The Boy in the Dress: On set with the stars

Walliams' story about a boy who goes to school in a dress will be shown this Christmas