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Spending Review: Public sector staff to lose automatic pay rise | |
(about 2 hours later) | |
Millions of civil servants will lose their automatic annual pay increase as part of an £11.5bn cuts package being unveiled by Chancellor George Osborne. | |
Mr Osborne said it was "deeply unfair" to public servants who did not get it and the private sector who paid for it. | |
The chancellor is setting out spending cuts for 2015/16 forced on him by slower than expected economic growth and deficit reduction. | |
Labour has said it will stick to the plans if it wins the 2015 election. | |
Briefing MPs on the plans, which will kick in just before the election, Mr Osborne insisted the economy was on the right track, saying: "Britain is moving out of intensive care and moving from rescue to recovery." | |
And he said the cuts would be done in a fair way and would boost growth. Reforms such as ending "progression pay" in favour of performance-related increases would ease the pain. | |
"Progression pay can at best be described as antiquated; at worst, it's deeply unfair to other parts of the public sector who don't get it and to the private sector who have to pay for it. | |
"So we will end automatic progression pay in the Civil Service by 2015-16. | |
"And we are working to remove automatic pay rises simply for time served in our schools, NHS, prisons and police. | |
"The armed forces will be excluded from these reforms. | |
"Keeping pay awards down and ending automatic progression pay means that, for every pound we have to save in central administration, we can better limit job losses." | |
He also warned of further job cuts in the public sector, as he unveiled a 10% budget cut for the department for communities and local government. | |
Health and schools in England and foreign aid will continue to be protected, meaning other departments are taking a bigger hit. | |
Government departments ranging from the Home Office and Defence to Communities and Local Government are facing average cuts of between 8% and 10%. | |
There will be no further cuts to benefits - but Mr Osborne is expected to announce plans for a long-term cap on welfare spending in his statement to MPs in the House of Commons. | |
The chancellor will also announce long-term plans to invest more in Britain's infrastructure in building roads, railways and housing, with full details to follow on Thursday. | |
The next general election is scheduled for May 2015 and the Conservative-Liberal Democrat coalition has to set out its budgetary plans for the final few weeks of its time in office, irrespective of the outcome of the poll. | The next general election is scheduled for May 2015 and the Conservative-Liberal Democrat coalition has to set out its budgetary plans for the final few weeks of its time in office, irrespective of the outcome of the poll. |
Labour has said that it would match the coalition's current spending totals for the full one-year period. | Labour has said that it would match the coalition's current spending totals for the full one-year period. |
The chancellor had initially hoped to eliminate the structural deficit - the portion of borrowing that is not affected by changes in the economic cycle - entirely by 2014-15. | The chancellor had initially hoped to eliminate the structural deficit - the portion of borrowing that is not affected by changes in the economic cycle - entirely by 2014-15. |
But the timeframe for this has slipped to 2017-18 and Mr Osborne will have to borrow £275bn more than he expected in this parliament than at the time of his first Budget in 2010. | But the timeframe for this has slipped to 2017-18 and Mr Osborne will have to borrow £275bn more than he expected in this parliament than at the time of his first Budget in 2010. |
The government says it has cut overall borrowing by a quarter since coming to power and by a third as a share of GDP. | The government says it has cut overall borrowing by a quarter since coming to power and by a third as a share of GDP. |
Revised official figures released on Friday showed that borrowing rose slightly to £118.8bn in 2012-13 from £118.5bn the year before. | Revised official figures released on Friday showed that borrowing rose slightly to £118.8bn in 2012-13 from £118.5bn the year before. |
Labour leader Ed Miliband said the coalition had broken its promise to clear the deficit and the British people were paying the price for its failure. | Labour leader Ed Miliband said the coalition had broken its promise to clear the deficit and the British people were paying the price for its failure. |
Speaking ahead of the chancellor's statement, he said: "They tell us the economy is healing in government but actually things are getting worse for ordinary families. What we actually need is a fairer plan to get growth moving, living standards rising and the deficit down." | |