Unions criticise 'unfair' pay cap

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Unions have attacked plans for a 1% cap on public sector pay increases from 2011 as "unfair and unjustified".

In his pre-Budget report, Chancellor Alistair Darling said the pay ceiling would take effect between 2011 and 2013 as part of plans to cut the deficit.

Union leaders said low-paid workers should not have to "pay the price" for a recession they did not cause and warned of "problems" ahead.

Unison boss Dave Prentis said he would not "sign up" to the proposal.

Announcing the measures, Mr Darling said public sector pay accounted for more than half of current spending by government departments.

Among other money-saving measures, he also revealed that state contributions to public sector pensions schemes would be capped by 2012.

Unions are concerned that low-paid workers are bearing the brunt of measures to rebalance the public finances, undermined by the banking crisis and recession.

Public sector workers, many of whom are low paid, should not have to pay the price for a crash they did nothing to cause Brendan Barber, TUC general secretary

The Trades Union Congress said the combination of the pay cap and a separate proposal for a further 0.5% rise in National Insurance contributions for those on more than £20,000 a year would really hurt its members.

"A centralised pay cap on public sector staff is unfair," said general secretary Brendan Barber.

"Public sector workers, many of whom are low paid, should not have to pay the price for a crash they did nothing to cause. I don't think that's right or justified."

Asked about the possibility of industrial action, he said there could be "problems" ahead, with much depending on the state of the economy and inflation levels at the time.

'Betrayal'

Unison, which has threatened to withdraw financial backing from Labour MPs who do not promote its values at the next election, said its members would react with "fury" to the announcement.

"I am not going to sign up to this," said Mr Prentis.

"I know how our members feel - they feel angry and betrayed. It is just not on to make nurses, social workers, dinner ladies, cleaners and hospital porters pay the price for the folly of the bankers."

The move would have a damaging knock-on effect on the economy, he said, curbing the amount people spend.

Tax experts said the pay cap amounted to a real-terms cut in pay.

"The chancellor's policy of protecting 'front-line public services' comes with a hefty price for public sector workers," said Alan Downey, head of public sector at accountants KPMG.

"Many public sector workers will be asking themselves whether it might be preferable to cut front-line services so that their pain is shared to some degree with the recipients of benefits and services."

Ministers have already announced plans to freeze the pay of 40,000 top public servants from 2010-11.

The Conservatives have promised to freeze all public sector pay for those earning more than £18,000, excluding members of the armed forces, for a year from 2011.