Summary of the editorial from IDS Pay Report 964, November 2006

Government sends tough signal to public sector over 2007 pay rises

The Treasury has sent a very strong signal to public sector employees with its call for the NHS review bodies to award pay increases of just 1.5 per cent to doctors and nurses in 2007. The move appears puzzling at first, since rises at this level would come in below the Government’s own inflation target of 2 per cent. Indeed up until now, the Treasury has called for public sector pay increases to be in line with this target.

In addition, the last time large numbers of public sector employees received such low increases was in 1993, when the then Conservative government imposed increases of 1.5 per cent on all groups. However this was at a time when the economy was only just coming out of recession. By contrast, the economic picture today is much healthier – the Government’s own preliminary estimate of GDP growth for the third quarter of 2006 indicates increased output in all sectors and strong growth overall.

The proposals are clearly aimed at curbing public spending at a time when NHS finances are being restructured, and many trusts are dealing with deficits caused by Government targets, the cost of contracts with private sector providers and new financial management systems, as well as other demands such as the new consultants’ contract and Agenda for Change, the new pay system for nurses and all other NHS staff. 

... the full editorial can be read in IDS Pay Report 964