Tories put public pay on election agenda

Increase will break spending ceilings

Teachers, nurses, doctors and the armed forces are set to receive pay rises of between 3.2 and 3.4 per cent this year.

The move by Kenneth Clarke, the Chancellor, was being interpreted as a pre-election attempt to put public-sector pay on the political agenda. The increases will be above the Government's tight spending ceilings, but will be staggered to keep them in line with the targets.

Mr Clarke is expected to tell the Cabinet next week that the rises recommended by the five main review bodies covering public-sector pay should be phased in."As a point of principle, we never actually reject the recommendations," according to one minister.

Ministers believe that the decision to ratify the rises recommended by pay-review bodies will test Labour's new tough approach to public-sector spending.

Last week Gordon Brown, the shadow Chancellor, said that a Labour administration would stick to the Government's current targets for the next two years.

Trade unions are likely to push for full implementation of the award from the beginning of the financial year.

However, a Labour source last night denied that the move would put Mr Brown under pressure, and said the party would implement the pay-review bodies' recommendations in full.

"The Tories are only interested in scoring cheap political points," the source said.

The five main review bodies which make recommendations on pay for 1.3 million public-sector workers are believed to have concluded that the workers should receive increases well below the average of 4 per cent that they were given last year.

The bodies were warned by ministers at the time of last November's budget that they should be cautious in their approach this year. Their recommendations cover around one-quarter of the total public sector workforce, but are expected to set the scene for the rest of the 5.3 million total. Nurses and the armed forced are believed to be in line for an average 3.3 per cent rise, while teachers will get around 3.25 per cent and doctors 3.4 per cent.

Instead of recommending an increased proportion of pay negotiated at a local level, the nurses' body is understood to have opted for an across- the-board award. Last year it sought a 2 per cent national award plus local rises, but 10 months into the financial year most National Health Service trusts have not agreed to the local element of the deal.

NHS spending is expected to rise by 3 per cent in real terms in the coming year, although hospital and community services have been given only 2 per cent rises. Many are running deficits which they will be expected to pay off, as well as meeting normal pressures on finances such as the growing numbers of elderly in the population, medical advances and rising emergency admissions.

In schools, the increases will cause further problems, on top of a tight budget settlement, and may lead to a renewed round of teacher redundancies.

Last night Philip Hunt, director of the National Association of Health Authorities and Trusts, said that there was very little room for manoeuvre. The increases would be "very tough indeed", he said.

Last year, the review bodies recommended awards averaging more than 4 per cent, which ministers regarded as too high.

In September Mr Clarke called for lower awards this year, saying that inflation was falling but that the pay rises had not adjusted. Inflation is running at 2.5 per cent but the Chancellor expects it to fall to 2.25 per cent by the summer.

The Labour leader was put under pressure on his party's spending plans last night at a meeting of 2,000 sixth-formers in London. One pupil asked Tony Blair about comments by Michael Meacher, Labour's environment spokesman, that Mr Brown still had scope to raise taxes.

"What is absolutely untrue is to say that Labour has hidden spending plans that it has not properly financed," Mr Blair said.