Tuesday, February 28, 2023
Budget should be used to fix public sector pay
The Independent reports on the view of the Institute for Fiscal Studies that Chancellor Jeremy Hunt could afford to give public sector workers a bigger pay rise at next month’s Budget by scrapping plans for a fuel duty freeze.
The IFS say short-term savings from the energy support scheme are looking less costly than first feared, but the think tank believes that Hunt could dig deep into government pockets to help fund a one-off bonus for public sector workers in a bid to avert intensifying industrial action:
IFS director Paul Johnson said a pay rise averaging 5.5 per cent – which would add around £5bn to the cost of the next settlement – could be paid for by ditching the planned fuel duty freeze, worth around £6bn.
Mr Johnson said Mr Hunt had a “straight choice” between helping drivers with fuel costs or helping public sector workers during the cost of living crisis.
“There is a straight choice there, £6bn goes quite a long way, if you are spending that on public sector pay rather than cutting fuel duty,” the expert said.
The IFS chief also said the risk that adding another 2 per cent or 3 per cent to planned public sector pay rises would have an impact on inflation was “extremely small”.
The think tank’s pre-Budget assessment said Mr Hunt may look to extend the current energy support scheme, which would allow households to benefit from the current £2,500 cap for longer before it increases to £3,000 a year.
It calculated that extending the current level of energy support for households and businesses for another three months – as suggested by Labour – would cost the government around £2.7 billion.
Mr Johnson said the move would be a “very straightforward thing for them to do” and comes amid mounting calls for the government to scrap plans to make support less generous for households and businesses from April.
This is going to be the big test for the Chancellor. Will he pursue an austerity agenda or will he put in place practical measures to help with the cost of living while giving public sector pay workers a decent, and much deserved pay rise?
The IFS say short-term savings from the energy support scheme are looking less costly than first feared, but the think tank believes that Hunt could dig deep into government pockets to help fund a one-off bonus for public sector workers in a bid to avert intensifying industrial action:
IFS director Paul Johnson said a pay rise averaging 5.5 per cent – which would add around £5bn to the cost of the next settlement – could be paid for by ditching the planned fuel duty freeze, worth around £6bn.
Mr Johnson said Mr Hunt had a “straight choice” between helping drivers with fuel costs or helping public sector workers during the cost of living crisis.
“There is a straight choice there, £6bn goes quite a long way, if you are spending that on public sector pay rather than cutting fuel duty,” the expert said.
The IFS chief also said the risk that adding another 2 per cent or 3 per cent to planned public sector pay rises would have an impact on inflation was “extremely small”.
The think tank’s pre-Budget assessment said Mr Hunt may look to extend the current energy support scheme, which would allow households to benefit from the current £2,500 cap for longer before it increases to £3,000 a year.
It calculated that extending the current level of energy support for households and businesses for another three months – as suggested by Labour – would cost the government around £2.7 billion.
Mr Johnson said the move would be a “very straightforward thing for them to do” and comes amid mounting calls for the government to scrap plans to make support less generous for households and businesses from April.
This is going to be the big test for the Chancellor. Will he pursue an austerity agenda or will he put in place practical measures to help with the cost of living while giving public sector pay workers a decent, and much deserved pay rise?
