§ Mr. Nicholas BrownTo ask the Chancellor of the Exchequer by how much he estimates public sector pay will fall in real terms over the next three years; and how many public sector jobs he estimates will be lost.
§ Mr. DorrellIn the climate of low inflation, it is necessary to change the expectation of pay increases which come automatically every year, regardless of performance. Pay rises have to be earned. This principle has increasingly been adopted in the private sector, and the public sector has to follow suit. We are confident that all areas of the public sector can make the efficiency savings necessary to fund pay settlements.
The Government do not directly control manpower numbers in substantial parts of the public sector and so cannot give projections. But as in the private sector, in controlling pay costs, the Government cannot rule out job losses. The way to safeguard jobs is to keep wages at affordable levels.