According to No 10, the seven-year public sector pay cap will be lifted next year. The government is to lift the 1% annual cap on public sector pay from next year and said that police and prison officers will get higher rises this year. 

Theresa May’s spokesman confirmed that police would receive a 1% pay rise plus a 1% bonus for the year and prison officers a 1.7% rise. 

The PM’s official spokesman said: “The cabinet agreed that our public-sector workers are among the most talented and hard-working people in our society. They, like everyone else, deserve to have fulfilling jobs that are fairly rewarded. The government takes a balanced approach to public spending, dealing with our debts to keep our economy strong, while also making sure we invest in our public services. The government recognises that in some parts of the public sector, particularly in areas of skill shortage, more flexibility may be required to deliver world class public services, including in return for improvements to public sector productivity.”

The announcement came after major unions warned that they would take industrial action to try and end the public sector pay freeze. The leader of Unite union, Len McCluskey, said that there was a prospect of mass industrial unrest over public sector pay and that his union was willing to ignore the law and strike. “If the government has pushed us outside the law, they will have to stand the consequences,” he told in an interview to the Radio 4 Today programme earlier today.

Pay Rises: How much will they cost the government?

The BBC’s Anthony Reuben explained that, while we don’t exactly know how much public-sector workers will be getting, apart from police and prison officers, the Institute for Fiscal Studies has estimated that an extra 1% pay for the whole public sector would cost the government £1.8bn a year. This, the government can get back through income tax and National Insurance. Reuben pointed out that raising pay in the NHS would encourage staff to stay and would reduce costly agency staff and save money.

Treasury minister Liz Truss said that the higher increases for rank-and-file police and prison officers, would be backdated to September 1.

Chancellor Philip Hammond said to ministers that he supported pay rises, as long as they could be funded from savings within departments. However, the number of NHS staff would also translate into health budget cuts in order to increase nurses, midwifes, doctors and others’ wages.

But Unison general secretary Dave Prentis called for equality when lifting the cap: “It's a tiny step in the right direction but not nearly enough. For seven long years the government's harsh pay cap has been hurting public sector workers, their families and the services they provide. There must be no selective lifting of the cap. No one part of the public sector is any more deserving than the rest. With inflation on the rise, the cap must go for everyone and it must go now.”

Unions call the offer “pathetic” 

TUC general secretary Frances O’Grady described the pay rise as “pathetic” and “derisory”: “This below-inflation pay offer is pathetic. Public sector workers have suffered seven long years of real pay cuts, and are thousands of pounds worse off. Today’s announcement means bills will continue to rise faster than their wages. If Ministers think a derisory rise like this will deal with the staffing crisis in our public services, they are sorely mistaken.”

Steve White, chairman of the Police Federation of England and Wales said that the news will make officers “angry” and leave them disappointed. He explained: "We were not greedy in what we asked for. Officers have been taking home about 15% less than they were seven years ago."

With inflation rising to 2.9%, the apparent rise is actually “a real terms reduction” in the public-sector workers’ spending power. The general secretary of the Prison Officers’ Association, Steve Gillan said:  Inflation is running at 2.9%. Anything below that inflation rate is a pay cut for our members….I don’t know what the rest of the public sector is going to get. I have made it clear that it is a pay cut. It is not acceptable. Our executive will be looking to coordinate action with other trade unions.”

Liberal Democrat leader Vince Cable welcomed the government’s offer but recognised that the cap should be lifted in a fair manner: "It is good to see the government finally recognise that the public sector pay cap is no longer sustainable. The cap must now be lifted across the board so all public sector workers are given the pay rise they deserve."

He added: “Nurses, teachers and other public sector workers are set to be hundreds of pounds worse off in real terms as a result of rising inflation. Unless urgent action is taken, the recruitment crisis in nursing and teaching will only get worse."