Almost half-a-million civil servants in Britain and Northern Ireland will lose automatic rights to annual pay increments, while a further 150,000 people working in the civil service and other state bodies will lose their jobs over the next two years.
The controversial move, which has already met with opposition from unions, formed one of the centrepieces of cuts announced by Chancellor of the Exchequer George Osborne to be enforced in 2015/16 – the first year of the next government.
Besides curbing the public pay bill, Mr Osborne warned that immigrants living on benefits will have their payments cut if they fail to learn English, while people will have to wait seven days after losing a job before being allowed sign on for welfare.
Deeply unfair
Defending the abolition of pay increments, he said the existing system sees everyone “move up a pay grade every single year – regardless of performance”, with some getting a guaranteed 7 per cent rise annually for much of their career.
“Progression pay can at best be described as antiquated; at worst, it’s deeply unfair to other parts of the public sector who don’t get it and to the private sector who have to pay for it,” he told the House of Commons.
Meanwhile, he said annual increments will also be removed from National Health Service staff, prison warders and police, though not soldiers.
Teachers’ pay will be set by schools from the autumn – a change that is to be met with strike action in the north west of England today. Under the proposals, pay will be linked to performance in the classroom, with schools setting salaries rather than following a national framework.
On public job cuts, Mr Osborne said 350,000 posts in all branches of public administration have gone since 2010, while a further 150,000 jobs will go over the next two years.
Meanwhile, he said more than £100 billion (€117.7 billion) worth of welfare spending – excluding the cost of meeting the State pension – will be subject to a cap in future, to ensure that the cost of individual benefits does not run out of control.
Up to now, welfare spending figures have been set by demand, unlike in countries such as the Netherlands, Finland and Sweden, where budgets are created and ministers then have to juggle figures if one benefit costs more than expected.
The British move has been spurred by the explosion in the cost of tax credits brought in by Gordon Brown during his time in the Treasury and housing benefit, which is now costing taxpayers more than £20 billion a year.
Penalised
Under the change, a ceiling will be set for each for four years, while the independent Office of Budget Responsibility will issue warnings if it looks likely to be breached. Ministers wanting to exceed the figure will have to come before the Commons to explain.
On welfare, Mr Osborne said claimants will have to show from the off that they are looking for work and will be expected to produce CVs immediately and meet weekly with job centre staff, along with facing a rigorous three-monthly investigation of their case.
However, the decision to delay eligibility for job seekers’ allowance to seven days immediately attracted criticism, with some campaigners warning it will drive the needy towards food banks.
In addition, the change will discourage people from taking up short-term work, since they will be penalised every time such contracts end by being deprived of a week of benefits.
