Pay rises for thousands of top civil servants, judges and NHS managers will be capped at 1.5 per cent this year after Gordon Brown overruled an independent pay review to order restraint in the face of the economic downturn.
The Prime Minister insisted that senior officials had to show "leadership" but angry union leaders branded the decision "a slap in the face" for high-ranking public servants.
The Government's 1.5 per cent cap on salary increases for senior civil servants, members of the judiciary and the most senior NHS managers were all below the rises of more than 2 per cent recommended by the Senior Salaries Review Body (SSRB), and fell short of the 2.33 per cent rise awarded to MPs on Monday.
The SSRB had suggested that pay for senior civil servants should go up by 2.1 per cent, while judges should get a 2.6 per cent rise, and senior NHS managers a 2.3 per cent increase.
Doctors and dentists, however, will receive their recommended increase of 1.5 per cent and teachers get their recommended 2.3 per cent. Top military commanders were alone among the most senior public servants in receiving their full recommended pay rise. All salaries for armed forces personnel will increase by 2.8 per cent.
Downing Street has tried to head off anger over the pay deals – which come despite widespread pay freezes and salary cuts in the private sector – by announcing that ministers would forgo their recommended 1.5 per cent pay rise and could not take the increase in their Parliamentary salaries.
The Opposition leader, David Cameron, and the Liberal Democrats leader, Nick Clegg, have also said they will reject increases.
Mr Brown said: "It is important in the present economic climate that senior staff in the public sector show leadership in the exercise of pay restraint.
He said he planned to "fundamentally reform" generous early retirement and severance terms for all civil servants to save up to £500m over the next three years.
But union leaders greeted the public sector pay dealwith fury. Jonathan Baume, the general secretary of the FDA, which represents senior civil servants, said: "This is gratuitous – if sadly predictable – gesture politics. The money saved is small but is a slap in the face for senior civil servants who face ever greater pressures in supporting ministers in these turbulent times.
"The Government has targeted senior staff, both in the civil service and NHS, simply because they are perceived as easy targets."
But business leaders condemned the increases, which are well above the retail prices index – the measure of inflation usually used to determine pay settlements – which currently stands at zero. However, the increases are below the Government's preferred measure of inflation which is running at 3. 2 per cent.
Corin Taylor, a senior policy adviser at the Institute of Directors, said: "Inflation is zero, the Government has enormous deficits it will need to reduce, and pay is now falling in the private sector. At the very least, pay should have been frozen for MPs and top public sector staff. Businesses struggling to pay taxes in the recession deserve no less."
But the Chief of the Defence Staff, Air Chief Marshal Sir Jock Stirrup, who will benefit from a salary increase in the region of £6,300, welcomed the pay rise for top military personnel: "This pay rise is welcome and appropriate acknowledgement of the burden our people are carrying on behalf of the nation and of their remarkable achievements in the face of great adversity."
Public sector pay: What do they earn?
Increase of 2.33 per cent, salary rises to £64,766, up £1,475
Increase of 1.5 per cent (instead of the recommended 2.6 per cent)
Lord Judge, the Lord Chief Justice: £239,845, up £3,545
High Court judges: £172,753, up £2,553
Circuit judges: £128,296, up £1,896
District judges: £102,921, up £1,521
Increase of 2.3 per cent, which takes the average salary for a classroom teacher to £33,764, up £759
Senior civil servants
Increase of 1.5 per cent (instead of the recommended 2.1 per cent)
Sir Gus O'Donnell, Cabinet Secretary: minimum £233,450 basic salary, up £3,450
First Parliamentary Counsel, Stephen Laws: £223,300, up £3,300
Permanent Secretary at the Treasury, Sir Nicholas Macpherson: £172,550, up £2,550
Director General of MI5 Jonathan Evans: £157,325, up £2,325
Head of MI6 Sir John Scarlett: £152,250, up £2,250
Senior NHS managers
Increase of 1.5 per cent (instead of the recommended 2.4 per cent)
The NHS chief executive David Nicholson: £208,075, up £3,075
Doctors and dentists
Increase of 1.5 per cent
Average salary for a GP to £81,200, up £1,200
Average income for a GP partner to £112,665, up £1,665
Average income for a dentist to £97,542, up £1,442
All military personnel
Increase of 2.8 per cent
A soldier on a first tour of duty: minimum £20,255, up £552
Brigadier: minimum £95,128, up £2,591
Chief of the Defence Staff, Air Chief Marshal Sir Jock Stirrup: £233,157, up £6,351