Public sector pay rises capped at 1% for four more years, says chancellor George Osborne

Public sector pay increases will be capped at 1% for a further four years from 2016/17, chancellor George Osborne has announced in the first Conservative budget for nearly 20 years.

George Osborne: cap on public sector pay to remain in place (Photo: Julian Dodd)
George Osborne: cap on public sector pay to remain in place (Photo: Julian Dodd)

George Osborne also confirmed plans to increase NHS funding by £8bn a year by 2020 to support plans set out by NHS England in the Five Year Forward View.

The chancellor told MPs that on top of the £2bn increase announced last year, NHS funding was set to rise £10bn in real terms. The rise would allow NHS England to ‘go further than its plan and to deliver a step change in safety, quality and access’.

NHS funding increase

The exact distribution of the funding rise will be announced in the spending review later in the year. 

The first Conservative budget since 1996 confirmed that the NHS would deliver £22bn ‘efficiency savings’ by 2020/21 ‘through improvements to quality of care and staff productivity, and better procurement’.

Mr Osborne said that while there had already been a period of pay restraint, there was a trade off between pay and jobs. ‘So to ensure we have public services we can afford and to protect more jobs we will continue recent public sector pay awards with a rise of 1% a year for the next four years,' he said.

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