Chancellor Philip Hammond has reiterated that the 1% cap on public sector pay rises has been scrapped but said he wanted to see any new deal “tackle” some the health service’s challenges.
On Tuesday, Mr Hammond is expected to unveil the smallest budget deficit since 2002 due to better than expected public finances.
“I hope [this] will lead to a pay settlement that satisfies workers in the NHS but is also fair to tax payers”
This has prompted calls from the opposition for him to announce an end to the government’s so-called policy of “austerity” on policy on public sector spending.
Speaking yesterday on the BBC ahead of Tuesday’s spring statement, the chancellor said: “There is light at the end of the tunnel.
“What we are about to see is debt starting to fall after it’s been growing for 17 continuous years… but we are still in the tunnel at the moment,” he told The Andrew Marr Show.
Asked if “austerity” was over, Mr Hammond said: “Most people take that to be a reference to the public sector pay cap and we’ve removed the 1% cap on public sector pay.”
He added: “Unions and management are right now are in negotiations for a settlement for nurses and other Agenda for Change staff in the NHS.
“I hope [this] will lead to a pay settlement that satisfies workers in the NHS but is also fair to tax payers, because it tackles some of the challenges we have in the NHS and makes it more effective and efficient,” he said.
Unions and NHS Employers, which negotiates on behalf of the government, are believed to be close to agreeing a multi-year pay deal and contract changes.
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NHS nurses and other staff in the health service could be set to receive a 6.5% pay increase over a period of three years if they sacrifice a day of holiday, according to media reports last week.
The multi-year pay deal would see Agenda for Change staff receive a 3% wage increase in 2018-19, followed by a rise of between 1% and 2% in the two years after, suggested the reports.
The government is expected to put forward the proposal to staff later this month, according to The Guardian newspaper, which claimed the deal was worth £3.3bn.
Also appearing on the Marr show on Sunday, Labour shadow chancellor John McDonnell called on the government to end its austerity programme.
He said Mr Hammond had “shifted the deficit onto the shoulders of NHS managers, headteachers and onto the shoulders of local government leaders. “They’re facing a financial crisis because of government cutbacks,” he said.
He also claimed the government’s plans for an NHS pay deal were “miserly and mean-spirited”. “Pay is, at the moment, just about matching inflation, that’s all,” he noted.
“Pay is, at the moment, just about matching inflation, that’s all”
In addition, Mr McDonnell called on the government to use its spring statement to end what his party has described as an “immediate crisis” in public services provided by councils.
Mr Marr himself also described local authorities across the country as “screaming with pain” and facing a “financial precipice”.
However, Mr Hammond responded by citing money already given to councils and promised instead to “look at the numbers” in the autumn budget.
“Local authorities have done an incredible job in delivering efficiencies,” he said, adding: “Of course they’re under some pressures.”
Tomorrow, the chancellor will give a half-yearly update on public finance figures, but will not be delivering any new tax or spending measures.
The move forms part of government changes to move its main budget statement from the spring to the autumn.