Next week’s Budget must end the public sector pay cap say Solidarity and other Unions.
Research from the IPPR think tank revealed yesterday that much of the cash spent on higher wages after lifting the 1 per cent cap would almost immediately return to the Treasury in the form of higher tax revenue and lower benefit payments.
It calculated that a pay rise for cash-strapped public-sector workers in line with inflation over the next two years would cost £5.8 billion.
However, according to the study, once income tax receipts and national insurance were combined with lower benefit payments, this figure falls to £3.5bn.
It would also boost spending and in turn bring more cash into government funds.
TUC general secretary Frances O’Grady warned ministers to do their homework, describing the report as “compulsory reading” for them.
“Raising public-sector pay would boost spending in local economies and would help the public purse by raising tax revenues and reducing the cost of in-work benefits,” she added.
The research, supported by general union GMB, showed how public-sector pay had been “significantly eroded” over the past seven years.
A schoolteacher outside London is now paid nearly £3,000 less in real terms than in 2010-11. Nurses have also received an effective £3,000 pay cut over the same period.
GMB national officer Rehana Azam said: “Recruitment and retention problems are impairing public services for everyone as staff are pushed to breaking point. The public-sector pay pinch is hurting, but it isn’t working.
“It is a moral outrage that in one of the world’s richest economies, public-sector workers are left homeless, skipping meals and relying on foodbanks.”
Unison general secretary Dave Prentis warned that the country and its public services could not afford the pay cap to stay in place a moment longer.
“Unless Chancellor Philip Hammond (pictured) comes up with the extra money to fund a decent wage rise for all public servants in next week’s Budget, there’ll be a high price to pay.
“As experienced staff leave for better-paid jobs in other parts of the economy and employers can’t pay enough to attract new recruits, the staffing crisis grows.”
Pat Harrington, general secretary of Solidarity said: "Both the moral and practical case for removing the pay gap are clear. This budget should end it."