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29 Jun 2022

‘Reckless’ to boost public sector pay in line with inflation, No 10 says

‘Reckless’ to boost public sector pay in line with inflation, No 10 says

Downing Street has argued it would be “reckless” to raise public sector pay in line with inflation, as ministers defended reinstating the triple pensions lock while arguing in favour of wage restraint elsewhere.

The Prime Minister’s official spokesman stressed the Government does want to reward workers in the public sector with a pay rise, but warned against “chasing inflation”, which he said could lead to people’s take-home wages counting for less.

It comes as the rate of inflation rose again in May, according to the Office for National Statistics (ONS), remaining at 40-year highs and deepening the squeeze felt by households across the UK.

The triple lock ensures state pensions rise by the highest of inflation, pay growth or 2.5%.

Next April’s pension increase is set to be determined by the rate of inflation in September, which is currently expected to be around 10%.

But No 10 has insisted boosting public sector wages to a similar degree would further stoke mounting costs.

Asked if the Prime Minister was worried about fuelling intergenerational resentment, the spokesman said: “We will keep explaining to the public why we think this is the right approach, and we are confident that the public will understand that it would long term have a bigger impact on their take-home pay if we were to take actions – reckless actions – now that could spike inflation.

“It’s important to stress that does not mean we do not want to reward public sector workers with a pay rise, we do, it’s just we must make sure that we don’t do anything that has a knock-on impact which feeds into this global inflationary spiral that there is the potential to see.”

Pressed on how he would define “reckless action”, he said: “As I’ve said a number of times this week, it involves chasing inflation with wages so that you end up having the knock-on impact of pushing inflation ever higher, and therefore meaning the pay that people do take home is worth less.

“That’s not what the public wants, it’s not what we want, and so you need to strike a careful balance.”

Earlier, Rishi Sunak defended the Government’s plan to increase the state pension in line with inflation despite calling for pay restraint across the public sector.

The Chancellor said that unlike pay increases, a major hike in pensions would not lead to inflation in the wider economy.

He said: “It’s right that we reward our hard-working public sector workers with a pay rise, but that needs to be proportionate and balanced with the need not to make the inflationary pressures worse and also to see what’s affordable for the taxpayer.

“The slight difference with pensions is that pensions are not input costs into the cost of producing goods and services that we all consume, so they don’t add to inflation in the same way.”

Deputy Prime Minister Dominic Raab also defended the Government’s policy on pensions and public sector wages.

He told BBC Radio 4’s Today programme: “They (pensioners) are particularly vulnerable and they are disproportionately affected by the increase in energy costs which we know everyone is facing.”

The Government had committed £37 billion to help people cope with rising costs, he said, but “at the same time we have got to stop making the problem worse by fuelling pay demands that will only see inflation stay higher for longer and that only hurts the poorest the worst”.

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