THIS week’s spending review will not plunge the UK back into austerity, Chancellor Rishi Sunak has said.
The Treasury head is due to announce a multibillion-pound plan to invest in long-term infrastructure projects and fund the fight against the coronavirus pandemic on Wednesday.
But the TUC has appealed to a “sense of fairness” in urging ministers not to impose a public sector pay freeze, which is expected to exempt frontline NHS workers.
Yesterday Sunak suggested he could impose the pay freeze for those in reserved services, but insisted he would not impose a return to austerity.
While he said it is not the time to impose tax hikes “in the fog of enormous economic uncertainty”, his stance on public sector pay triggered angry reactions.
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Frances O’Grady, the head of the TUC confederation of trade unions, told Sky’s Sophy Ridge on Sunday: “We saw ministers join millions of us clapping firefighters, refuse collectors, social care workers.
“I don’t think this would be the time to reward them with a real pay cut.
“If you want to motivate a workforce when we are still facing a second wave of a pandemic – and we’re going to have a tough winter, we all know that, the last thing you do is threaten to cut their pay.”
There is thought to be a chance of industrial action if the freeze is confirmed, something Labour said would be an “absolute kick in the teeth” for frontline workers.
Sunak, also appearing on the programme, told Ridge: “You will not see austerity next week, what you will see is an increase in government spending, on day-to-day public services –quite a significant one coming on the increase we had last year.”
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But, while he said that he “cannot comment on future pay policy”, Sunak added: “When we launched the spending review I did say to departments that when we think about public pay settlements I think it would be entirely reasonable to think of those in the context of the wider economic climate.
“I think it would be fair to also think about what is happening with wages, with jobs, with hours, across the economy, when we think about what the right thing to do in the public sector is.”
The Chancellor also declined to commit to an extension of the temporary £20 increase to Universal Credit.
It was introduced because of the pandemic but is due to end in April, despite vocal calls for a U-turn from five opposition parties.
Labour’s shadow chancellor Anneliese Dodds said a freeze on public sector pay would knock confidence out of the economy and would “be pitting different groups of workers against each other”.
She stated: “I do not think there should be that freeze right now. I think that’s economically very damaging, it’s an irresponsible choice.”
In the spending review, Sunak will unveil a £3 billion package to support the NHS in recovering from the pandemic, with the Treasury saying the NHS will get £1bn to address backlogs by catching up on checks, scans and operations that were delayed by Covid-19.
He will also detail the much-delayed National Infrastructure Strategy for £100 billion of long-term spending to help tackle the climate crisis and invest in transport.
Sunak will also alter the Treasury’s “green book”, a set of rules to determine the value of Government schemes which is thought to favour London and the south east of England as he seeks to deliver on the UK Government’s “levelling up” agenda.
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Yesterday Scotland’s Finance Secretary Kate Forbes – whose meeting calls have been stonewalled by Sunak’s office – unveiled a six-page letter detailing her call for a £98bn stimulus package.
This would include action on non-domestic rates, VAT charges on personal protective equipment and that Universal Credit boost.
An HM Treasury spokeswoman said: “We have protected hundreds of thousands of Scottish jobs through the furlough scheme, provided loans of nearly £3bn to Scottish businesses and given the Scottish Government an additional £8.2bn to tackle the impact of coronavirus.
“As we have throughout this crisis, we will continue to listen and respond to people’s concerns and work closely with the devolved administration in Scotland.”
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