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No10 warns public sector workers over inflation-matching pay rises

State pension is set to soar 10 PER CENT after Government confirms triple lock will be restored… but No10 warns public sector workers not to expect pay hikes to match inflation

  • No10 confirms pensions ‘triple lock’ to be restored after one-year suspension
  • It means state pension could soar by 10 per cent next year – a boost of nearly £1k 
  • But public sector workers are warned not to expect inflation-matching pay rises
  • Ministers express concerns awarding large increases could worsen inflation

The state pension could soar by 10 per cent next year while public sector workers have been warned not to expect pay rises to match rocketing inflation.

Ministers today expressed concerns that awarding large pay boosts to public sector workers could risk worsening the current inflation crisis.

Downing Street acknowleged that sky-high inflation was a ‘significant challenge’ when it came to deciding on future pay rises.

It raises the prospect of nurses, doctors, teachers, soldiers and others in the public sector having to suffer a real-terms pay cut.

Inflation recently soared to a 40-year-high with the headline CPI rate rising to an eye-watering nine per cent in April.

The Bank of England expects the annual rate will get even worse, peaking at 10.25 per cent during the final quarter of this year.

This means that, while public sector workers face warnings they will have to endure pay restraint, pensioners are in line for a large boost.

Number 10 today confirmed the pensions ‘triple lock’ is to be restored after a one-year suspension. 

At a Cabinet meeting today, ministers ‘made clear that the risk of triggering higher inflation must be part of considerations when deciding pay awards this year’

Police and other public sector workers have been warned not to expect pay rises to match rocketing inflation

It raises the prospect of nurses, doctors, teachers, soldiers and others having to suffer a real-terms pay cut

Under the terms of the triple lock, which was a Conservative manifesto commitment, the state pension rises each year in line with whichever is highest out of 2.5%, average wage growth, or CPI inflation for the year to September.

Prime Minister Boris Johnson and Chancellor Rishi Sunak ditched the manifesto commitment and suspended the triple lock for this year.

This was due to Covid-related distortion to earnings growth.

But Downing Street insisted the triple lock would return for next year, with the pensions uplift due to be confirmed in November.  

The Prime Minister’s official spokesman said: ‘The freeze on that was temporary, there’s no plans to change that.’

The full state pension is currently £9,628 per year, meaning – under the Bank’s expectation of the CPI rate reaching 10.25 per cent later this year – pensioners could be in line for a boost of nearly £1,000.

Meanwhile, discussions about public sector pay were held at a Cabinet meeting in Number 10 this morning, with Treasury minister Simon Clarke among those to speak.

According to Downing Street, the PM said the ‘public were understandably anxious about global cost of living pressures and that the Government would continue to support those most in need’.

Mr Johnson noted how the Government had ‘already promised to increase public sector spending and is awaiting decisions by the public sector review bodies’.

But ministers also ‘made clear that the risk of triggering higher inflation must be part of considerations when deciding pay awards this year’, Number 10 said.

Official figures from the ONS show that CPI would have last been above the April 2022 level of 9 per cent in March 1982 – when it was 9.1 per cent

Pay awards for about 45 per cent of the public sector – including the Armed Forces, police, teachers, and the NHS –are decided by ministers and based on the recommendation of eight pay review bodies.

The PM’s spokesman did not rule out ministers overriding the decision of pay review bodies if they suggested above-inflation rises.

‘That wasn’t the suggestion the Prime Minister said and I don’t want to jump ahead of the independent process,’ he said.

‘You’ll know the Government has the capability to do that in the purely hypothetical sense.

‘The point that ministers were emphasising is that a spiralling inflation will do more to damage people’s take-home pay than limited pay restraint.’

Asked if the PM expected public sector workers to prepare for below-inflation pay rises, the spokesman added: ‘I can’t predict exactly where inflation will go, but I think with inflation running so high it does present a significant challenge to things like public sector pay.

‘That said, it would be entirely wrong for me to jump ahead of the process.

‘There is an independent process and the first stage of that is to make recommendations to Government.’

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