The UK faces the "tightest squeeze" on public spending since the 1970s (PDF format, 382.7K), according to research published on the Institute for Fiscal Studies (IFS) website. The impact on public sector pay awards for 2010 and beyond could be severe.
The latest IFS commentary on UK public finances takes into account the confidential Treasury forecast data that were leaked to the Conservative party (external website) earlier this week.
The full IFS report says that the leaked documents suggest that a Labour government would be likely to cut departmental spending by 8.6% (PDF format, 458K) (external website) between 2011 and 2014. According to the IFS, this breaks down as follows:
The leaked Treasury internal forecasts suggest that departmental spending will be cut on average by 2.9% a year in real terms over the three years 2011-12, 2012-13 and 2013-14.
The IFS calculates that these estimates "imply cuts [of] 8.6% in total. This is an even tighter squeeze than the 2.3% a year decline that we had previously estimated that the Budget implied. This would be the tightest squeeze in spending on public services since the UK was negotiating its spending plans with the International Monetary Fund in the late 1970s."
So what will this mean for public sector pay awards in 2010 and beyond?
These latest estimates of the extent to which public spending will be cut suggest that the impact on public sector pay awards for 2010 and beyond will be severe.
Earlier this week, Gordon Brown's speech to the 2009 TUC conference (external website) marked his first public use of the word "cuts" in reference to the Government's public spending plans. Brown's speech also included a commitment to "agreeing realistic public sector pay settlements throughout" as one measure to help ensure "sustainable public finances", the BBC reports.
It remains to be seen just what "realistic public sector pay settlements" for 2010 and beyond will entail. Chancellor Alistair Darling's Pre-Budget Report 2009 - expected to be delivered this autumn - will set out Labour's public spending plans in greater detail, and is also likely to touch on the implications of these plans for public sector pay awards.
As ever, XpertHR will keep you up to date on the latest developments.
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