Rishi’s pay rise for seven million Brits... but how will we afford it?
Award for public sector workers and minimum wage rises to £9.50
MORE than seven million workers are set to be given a pay rise in tomorrow’s Budget.
Rishi Sunak last night declared it was right to award higher wages to public sector employees because the economy was ‘firmly back on track’.
Around 5.6million staff – including nurses, teachers and members of the Armed Forces – will have an increase from April when a one-year salary freeze ends.
At the same time, the minimum wage will rise by 59p to £9.50, boosting the incomes of two million of the lowest paid.
The Chancellor insisted his plans would deliver ‘a stronger economy’.
But there were immediate questions as to where the money would come from with the country facing an estimated £400billion bill for the Covid crisis and the Treasury having already made spending pledges worth billions of pounds.
Business chiefs warned the increase in the minimum wage could hit struggling firms and fuel concerns over inflation.
And campaigners said the boost to public sector pay could anger private sector workers facing a cost of living crisis. The announcement came as:
■ Mr Sunak ruled out slashing VAT on household energy bills – but was urged to think again to help struggling households;
■ With the freeze on fuel duty set to be extended, petrol firms were accused of ripping off motorists as average pump prices hit an alltime high;
■ Mr Sunak was berated by the Commons Speaker for briefing a slew of details in the run-up to tomorrow’s Budget;
■ Labour’s Rachel Reeves warned that voters were facing record tax bills without receiving better public services;
■ Experts warned that the pay hikes could be ‘blunted’ by the threat of rising inflation, rising energy bills, petrol costs and the cost of living crisis.
Mr Sunak last night announced he would lift a freeze on public sector pay. Rises were stopped for all taxpayer-funded staff, with the exception of the NHS and workers earning less than £24,000.
Mr Sunak last night said: ‘The economic impact and uncertainty of the virus meant we had to pause public sector pay. And now, with the economy firmly back on track, it’s right that nurses, teachers and all the other public sector workers who played their part during the pandemic see their wages rise.’
The salaries for most frontline workforces are set through an independent pay review process. Its recommendations will be given next year.
Mr Sunak yesterday also announced the minimum wage for over-23s would rise to £9.50 from April, meaning a full-time worker on the lowest salary would get a pay rise of more than £1,000 a year – before tax. The 6.6 per cent hike is more than twice the consumer price inflation rate of 3.1 per cent.
For those aged 21 and 22, the
‘Unfair payout on protected jobs’
minimum wage will rise from £8.36 an hour to £9.18.
The figure for apprentices will go from £4.30 to £4.81 a hour.
But Mike Cherry of the Federation of Small Businesses said the increases ‘must be matched by support for those who will struggle to afford to maintain jobs’.
The British Chamber of Commerce’s Jane Gratton also warned: ‘Many firms face a cashflow squeeze. So while businesses support the minimum wage, the size of this increase will cause significant concern.’
Torsten Bell of the Resolution Foundation, a living standards think tank, said ‘fast’ rising inflation would eat up two-thirds of the gains for most workers.
John O’Connell of the TaxPayers’ Alliance said: ‘Many had their lives upended by the pandemic, so it’s unfair for those people to pay out for protected public sector jobs.’