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Spending chief urges pay freeze Spending chief urges pay freeze
(10 minutes later)
Public sector pay should be frozen or at least subject to "severe" restraint to help rebalance the public finances, says the head of a spending watchdog.Public sector pay should be frozen or at least subject to "severe" restraint to help rebalance the public finances, says the head of a spending watchdog.
Audit Commission chief Steve Bundred told the Observer public sector workers had "done well" in the past 10 years and would "tolerate" modest reductions.Audit Commission chief Steve Bundred told the Observer public sector workers had "done well" in the past 10 years and would "tolerate" modest reductions.
Chancellor Alistair Darling said public sector pay had to be "fair" to private sector employees as well.Chancellor Alistair Darling said public sector pay had to be "fair" to private sector employees as well.
Last year a policy to limit public pay rises to 2% prompted walkouts.Last year a policy to limit public pay rises to 2% prompted walkouts.
Some unions have criticised Mr Bundred's comments as "disgraceful", saying investment over the past 10 years followed decades of underfunding.
'Shroud-wavers''Shroud-wavers'
Mr Bundred wrote: "At a time when inflation is likely to be between 2% and 3%, a pain-free way of cutting public spending would be to freeze public sector pay or at least impose severe pay restraint.Mr Bundred wrote: "At a time when inflation is likely to be between 2% and 3%, a pain-free way of cutting public spending would be to freeze public sector pay or at least impose severe pay restraint.
"This is especially true if real wages in the private sector are still falling.""This is especially true if real wages in the private sector are still falling."
He said it could provide £5bn of the £50bn that would have to be found through tax rises or spending cuts.He said it could provide £5bn of the £50bn that would have to be found through tax rises or spending cuts.
He said health and education spending should not be shielded as efficiency savings could be made in both.He said health and education spending should not be shielded as efficiency savings could be made in both.
We have got to be fair with regard to people who work in the private sector, many of whom have seen their pay conditions somewhere near freeze Alistair DarlingChancellorWe have got to be fair with regard to people who work in the private sector, many of whom have seen their pay conditions somewhere near freeze Alistair DarlingChancellor
"Don't believe the shroud-wavers who tell you grannies will die and children will starve if spending is cut. They won't. Cuts are inevitable and perfectly manageable," Mr Bundred said."Don't believe the shroud-wavers who tell you grannies will die and children will starve if spending is cut. They won't. Cuts are inevitable and perfectly manageable," Mr Bundred said.
Asked about his comments, Mr Darling told Sky News: "Public sector pay obviously has got to reflect prevailing conditions, and in particular inflation has come way down.Asked about his comments, Mr Darling told Sky News: "Public sector pay obviously has got to reflect prevailing conditions, and in particular inflation has come way down.
"And of course we have got to be fair with regard to people who work in the private sector, many of whom have seen their pay conditions somewhere near freeze." "Of course we have got to be fair with regard to people who work in the private sector, many of whom have seen their pay conditions somewhere near freeze."
He said pay policy would be decided "over the next few weeks".He said pay policy would be decided "over the next few weeks".
"It has got to be fair to people who work for the public sector just as we have to be fair to the private sector.""It has got to be fair to people who work for the public sector just as we have to be fair to the private sector."
BonusesBonuses
Public sector pay has proved a contentious issue for the government. Gordon Brown faced union anger in 2007 when he said public sector pay rises had to be held down to prevent inflation.Public sector pay has proved a contentious issue for the government. Gordon Brown faced union anger in 2007 when he said public sector pay rises had to be held down to prevent inflation.
A 2% cap on public sector pay rises in 2008, at a time of rising living costs, was criticised as "morally bankrupt" by the Public and Commercial Services union and prompted walkouts.A 2% cap on public sector pay rises in 2008, at a time of rising living costs, was criticised as "morally bankrupt" by the Public and Commercial Services union and prompted walkouts.
In April the Tories called for an end to the "age of excess" in public sector pay and said very high salaries in the public sector were "difficult to justify" Chris Keates, of the NASUWT teaching union said investment over the past 10 years followed decades of underfunding and criticised Mr Bundred's comments.
In March Gordon Brown said senior civil servants, top NHS managers and judges would get a lower-than-recommended pay rise of 1.5% next year. Looking for constraint, you have got to decide whether that is really the best and fairest way of going about it Ken ClarkeShadow Business Secretary
"The idea that you have to have some equity of misery, that because the private sector is suffering, the public sector must too is disgraceful," he told the Observer.
"What it is doing is not understanding the role of public services in a recession - to sustain and rebuild the economy," he added.
Shadow business secretary Ken Clarke said public sector pay had to reflect "the current low level of inflation".
He told Sky News: "When that is put to you by somebody like the head of the Audit Commission, you look at it as an option but you have got to put it alongside other options.
"Looking for constraint, you have got to decide whether that is really the best and fairest way of going about it."
Liberal Democrat Treasury spokesman Vince Cable said an "absolute across-the-board freeze" in public sector pay did not make a "great deal of sense" because of different contractual obligations.Liberal Democrat Treasury spokesman Vince Cable said an "absolute across-the-board freeze" in public sector pay did not make a "great deal of sense" because of different contractual obligations.
He told Sky News: "The one thing we have said is there has to be an absolute and complete stop immediately to bonuses. But he told Sky News there should be "an absolute and complete stop immediately to bonuses".
"It's absolutely ridiculous that people at the top end of the civil service, in the current public finance environment, two-thirds of them are being paid bonuses over and above their salaries."