Public sector pay to be hit by 2010 spending cuts

Government plans for public sector spending cuts - likely to include severe pay restraint for 2010 - will be set out by the Chancellor Alistair Darling in his Pre-Budget Report 2009, expected during the autumn, writes XpertHR benchmarking editor Michael Carty.

In an interview with the Times on Saturday 5 September 2009, Darling indicated that the Pre-Budget Report 2009 will include a package of measures designed to help pay off Government debt. According to Darling, these will centre on the use of tax revenues and "much tighter public spending".

Cuts to public sector pay awards for 2010 have been on the cards for some time. Back in July 2009, Darling stated that he was in the middle of making tough decisions on the future course of public sector pay awards (external website). The results of these tough decisions will be made known in the Pre-Budget Report 2009.

Darling goes into greater detail as to what can be expected from the Pre-Budget Report 2009 (external website) in the full version of the interview. Here, Darling says:

Once you start getting into recovery then you have to say, "we need to start doing something about the deficit." . . . We will have to decide . . . how much we think we can . . . spend on services, how much we should be devoting to making sure we recover our fiscal position and how we build up our strength. That is a judgment I am going to have to make at the Pre-Budget Report.

Other key points from the interview include the following:

• Although recovery would now seem to be underway, Darling believes further challenges are inevitable, and that exiting the "deepest downturn for 60 years" will not be straightforward.
• Unemployment "will continue to rise".
• "[Bankers'] bonuses shouldn't be guaranteed, they should be earned"

The exact date on which the Pre-Budget Report 2009 will be delivered is not yet known, but XpertHR will once again publish a live blog here on Employment Intelligence, spelling out the key points for HR practitioners when Darling makes his speech.

Subsequently, The Guardian reported on Monday 7 September 2009 that the Government's planned public spending cuts will be rolled out over the next two months, starting with announcements to be made at a lecture given by Darling later this week. The article also provides some background as to how the projected cuts were agreed. It says:

Gordon Brown and the Chancellor, Alistair Darling, agreed the outlines of the new strategy through two lengthy discussions this summer - and it will be billed as a return to New Labour's original commitment to public service reform.

This briefing is based on Pre-Budget Report to spell out the bad news on public sector pay for 2010, which appears on the XpertHR Employment Intelligence blog.