Business World

Sunday 31 August 2014

Osborne scraps automatic pay raises for Britain's civil servants

Colm Kelpie

Published 27/06/2013 | 05:00

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UK Chancellor of the Exchequer George Osborne

AUTOMATIC annual pay rises given to many British civil servants, the equivalent of increments here, are being scrapped under a spending cuts package outlined by UK Chancellor George Osborne.

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Progression pay will be removed for civil servants by the end of 2016 while automatic pay rises for time-served teachers, workers in the National Health Service, prisons and the police are also being binned.

The armed forces will be excluded. Pay rises will be limited to an average of 1pc up to 2016.

In a wide-ranging speech to parliament, Mr Osborne said the biggest reform will be to end pay increases in the civil service regardless of performance, claiming some public sector employees see annual pay rises of 7pc.

"The biggest reform we make on pay is to automatic progression pay," Mr Osborne said.

"This is the practice whereby many employees not only get a pay rise every year, but also automatically move up a pay grade every single year – regardless of performance.

"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."

Northern Ireland, Scotland and Wales will also have to find 2pc savings with the bloc grant to the North set at £9.6bn (€11.3bn).

The latest spending round is to deliver savings to the UK economy of £11.5bn.

It extends the deepest austerity programme in British peacetime history into a sixth year.

Weaker-than-expected economic growth and lower-than-forecast tax receipts have led to the extension of budget cuts until 2017-18.

Key measures include:

* Borrowing for the year set to be £108bn. Total government spending will be £745bn for 2015/2016.

* Council tax will be frozen for the next two years.

* National Health Service will have a £110bn budget with capital spending to rise to £4.7bn.

* Spending on schools will be ring-fenced as has spending in the Department of Health.l

* Justice ministry has to find savings of 10pc, Department of Transport faces 9pc cuts, Department of Energy and Climate faces 8pc cut.

* Welfare savings of £4bn introduced including a cap. But the state pension will not be touched.

Mr Osborne said the country needs to continue to make savings.

See Page 16

Irish Independent

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