Keeping public sector pay cap will harm hospitals and schools - IFS
2 min read
The NHS will suffer if the Government refuses to lift the 1% cap for public sector workers, a new report has declared.
Continued pay restraint will see public wages fall to historically low levels compared with the private sector and harm recruitment in hospitals, schools and other public services, the Institute for Fiscal studies said.
It added that the effect will be most pronounced among high-skilled public sector workers, whose pay is slightly lower compared to the private sector than it was before the 2008 crash.
But the IFS noted that increasing pay in line with inflation or private sector earnings would cost the exchequer about £3bn in 2018/19 and about £6bn a year by 2019/20.
Theresa May announced just this month that the 1% cap would be lifted for police and prison officers, with other public sector workers thought to be next in line to see pay restraint eased.
Police officers will receive a 1% rise plus a 1% bonus, while prison officers will get a 1.7% increase – meaning both still get an effective pay cut while prices continue to rise at the rate of nearly 3% a year.
Senior IFS researcher Jonathan Cribb said: “If [the Government] decides to maintain the 1% cap, we should expect increasing difficulties in recruiting, retaining and motivating high quality public sector staff, reducing the quality and quantity of public services.
“But increasing pay for these workers implies substantial extra costs to public sector employers.
“The Treasury could provide extra funds for this by raising taxes, cutting other spending or borrowing more. Asking the NHS, for example, to fund higher pay increases from within existing budgets would be very challenging.”
About two thirds of public sector workers are considered high-skilled because they have completed a degree.
The IFS said pay restraint has hit them the hardest and they have faced the double impact of paying higher sums into their workplace pensions.
PoliticsHome Newsletters
PoliticsHome provides the most comprehensive coverage of UK politics anywhere on the web, offering high quality original reporting and analysis: Subscribe
