Pay cap reduces spending by £8.5bn this year

New analysis by the TUC union has revealed that the public sector pay cap has reduced spending power in England by £8.5 billion this year.

The analysis shows that every English region has seen big falls in spending power since the cap was introduced in 2010, with England’s 50 poorest parliamentary constituencies alone enduring a combined loss in spending power of £3 billion since 2010, or £544 million this year.

Regionally, the North East and North West, which boast the highest share of public sector workers, have seen falls of £2.1 billion and £7 billion respectively since the start of the decade.

The TUC analysis shows that public sector workers are earning, on average, over £2,000 less today than if their pay had risen in line with inflation, with separate polling showing that 15 per cent of public sector workers skipped meals this year to make ends meet.

Frances O’Grady, TUC secretary, said: “The public sector pay squeeze has driven up in-work poverty. And that means less money spent on high streets and in local businesses. The pay cap is a false economy. The Chancellor must use the Budget to give all public sector workers the pay rise they have earned, and end these artificial pay restrictions.”