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Public sector pay reform planned Brown defends public sector pay
(about 2 hours later)
Public sector workers could have their salaries set for three years rather than 12 months under plans being put forward by Chancellor Alistair Darling. Gordon Brown says he wants three-year pay deals for public sector workers, rather than the traditional annual deals, to help keep UK inflation low.
He says the move will help departments plan budgets, employees to plan ahead, as well as control inflation. At his monthly media conference, the PM said the measure was necessary to maintain long term economic stability.
Ministers face mounting pressure over a decision to limit public sector pay rises to 2%, with unions warning of a "collision" with workers.Ministers face mounting pressure over a decision to limit public sector pay rises to 2%, with unions warning of a "collision" with workers.
Lib Dems say Labour would be wise to remember "the winter of discontent".Lib Dems say Labour would be wise to remember "the winter of discontent".
The TUC said any three-year deals would depend on the terms offered. The TUC say any three-year deals would depend on the terms offered.
Mortgage rates
Public sector pay rises are recommended by an independent body and this year suggested 2.5% increases.Public sector pay rises are recommended by an independent body and this year suggested 2.5% increases.
But the government decided to award that rise in two stages - so it equates to a 1.9% rise - saying it would tackle higher inflation and keep interest rates and mortgage rates low.But the government decided to award that rise in two stages - so it equates to a 1.9% rise - saying it would tackle higher inflation and keep interest rates and mortgage rates low.
'Guaranteed earnings'
The budgets of Whitehall departments are set for three-year periods and ministers now want to see public sector pay awards for nurses, the police and other public servants to be fixed in the same way.
Mr Darling argues that the new longer-term agreement will guarantee earnings growth for 5.5 million workers as well as help ward off inflation.
If we were to agree to a three-year pay deal that would really need to be a very decent, fair award Karen JenningsUnison Analysis: MPs' pay disputeSend us your commentsIf we were to agree to a three-year pay deal that would really need to be a very decent, fair award Karen JenningsUnison Analysis: MPs' pay disputeSend us your comments
It will also allow departments to plan more effectively, as public sector pay accounts for about a quarter of all public spending. The budgets of Whitehall departments are set for three-year periods and ministers now want to see public sector pay awards for nurses, the police and other public servants to be fixed in the same way.
"What there is is certainty as to what the pay increase will be, not just this year, but next year and the year after," the chancellor told BBC Radio 4's Today programme. Mr Brown said staging public sector pay awards last year had "helped break the back of inflation in Britain in 2007".
"And I think that is absolutely a huge step forward for public sector employees. "Now in 2008, we have to show that we can maintain stability over the long term," he said.
"It also helps in relation to the wider economy and it helps departments, which of course get their spending allocated over three year periods, so everybody knows where they are. "To send out the best possible message, about long-term inflation and about stability and to be fair to public sector workers, one way forward is a move towards long-term public sector pay settlements.
"What we are looking at here is to get a degree of certainty so that both sides - employer and employee - know where they stand." "It means as people face mortgage bills and utility prices they know exactly what their income is likely to be.
"The whole purpose of this is keeping inflation under control... There is no point in a big salary rise that's wiped out by a big inflation rise."
'Collision course''Collision course'
Chancellor Alistair Darling says the new longer-term agreement will guarantee earnings growth for 5.5 million workers.
It will also allow departments to plan more effectively, as public sector pay accounts for about a quarter of all public spending.
The government is already under pressure to solve the ongoing row over public sector pay.The government is already under pressure to solve the ongoing row over public sector pay.
The TUC has criticised its centralised pay target of 2%, arguing that ministers are "on a collision course with six million public servants" because the deal represents a significant cut in living standards.The TUC has criticised its centralised pay target of 2%, arguing that ministers are "on a collision course with six million public servants" because the deal represents a significant cut in living standards.
There is growing anger among police officers over their pay awardThere is growing anger among police officers over their pay award
General Secretary of the TUC, Brendan Barber, said long term pay deals could be agreed but only on certain terms.General Secretary of the TUC, Brendan Barber, said long term pay deals could be agreed but only on certain terms.
"The problem is last year we saw the government impose pay deals of only around 2%. Inflation was running at over 4%, so millions of public service workers saw themselves facing a real cut in their living standards," he said."The problem is last year we saw the government impose pay deals of only around 2%. Inflation was running at over 4%, so millions of public service workers saw themselves facing a real cut in their living standards," he said.
"Longer term deals can help create the space to address some of those longer term issues, but unions will only buy into this kind of idea, if they're very confident that people's living standards will be protected throughout the period of a deal.""Longer term deals can help create the space to address some of those longer term issues, but unions will only buy into this kind of idea, if they're very confident that people's living standards will be protected throughout the period of a deal."
Karen Jennings, head of health at Unison, said its members were also concerned about the economy.Karen Jennings, head of health at Unison, said its members were also concerned about the economy.
Strike actionStrike action
"If we were to agree to a three-year pay deal that would really need to be a very decent, fair award."If we were to agree to a three-year pay deal that would really need to be a very decent, fair award.
"Also it would have to remove the risks of an unstable economy from the health workers themselves."Also it would have to remove the risks of an unstable economy from the health workers themselves.
"What I mean by decent and fair is that the economy is unstable at the moment, our members are concerned about paying their mortgages, about rising fuel costs and so on."What I mean by decent and fair is that the economy is unstable at the moment, our members are concerned about paying their mortgages, about rising fuel costs and so on.
"There's quite a bit of uncertainty over a three-year period, when things can change rapidly over months in the economy.""There's quite a bit of uncertainty over a three-year period, when things can change rapidly over months in the economy."
Lib Dem deputy leader Vincent Cable warned that being too tough could result in a second "winter of discontent", when the country was regularly crippled by strikes in 1978/9.Lib Dem deputy leader Vincent Cable warned that being too tough could result in a second "winter of discontent", when the country was regularly crippled by strikes in 1978/9.
"The government clearly wants to be very tough on public sector pay," he said, but "they are going to have to be very careful about how they manage this"."The government clearly wants to be very tough on public sector pay," he said, but "they are going to have to be very careful about how they manage this".
MPs' payMPs' pay
Police in England, Wales and Northern Ireland are currently in dispute with the government over the staging of the 2.5% pay rise - in Scotland it was paid in full.Police in England, Wales and Northern Ireland are currently in dispute with the government over the staging of the 2.5% pay rise - in Scotland it was paid in full.
Thousands of prison staff in England and Wales also walked out in August last year over the government's decision to give them their pay rise in two stages, causing the government to seek to reintroduce powers to ban such industrial action.Thousands of prison staff in England and Wales also walked out in August last year over the government's decision to give them their pay rise in two stages, causing the government to seek to reintroduce powers to ban such industrial action.
Civil servants have also staged industrial action, which could be repeated, while strikes have been threatened in the NHS and local government.Civil servants have also staged industrial action, which could be repeated, while strikes have been threatened in the NHS and local government.
Meanwhile Prime Minister Gordon Brown has urged MPs to limit their own salary rises to keep them in line with those of public sector workers. Meanwhile, Mr Brown has urged MPs to limit their own salary rises to below 2% keep them in line with those of public sector workers.
The decision on MPs' pay will be made by the House of Commons, but Mr Brown said increases must stay below 2%.
The government has argued public sector pay must be controlled to curb higher inflation caused by rising energy and food prices.