'Get used to strikes': Pay cut looms for millions of public sector workers after autumn statement

Unions and economists have warned millions of public sector workers will be hit with a real-terms pay cut after chancellor Jeremy Hunt unveiled £54bn of tax hikes and spending cuts in his autumn statement.

On Thursday, Hunt set out a package of around £30bn of spending cuts and £24bn in tax rises over the next five years in what he said was a "balanced plan for stability".

He admitted that, while overall spending in public services will rise over the next five years, this spending would grow more slowly than the economy.

Hunt said for the remaining two years of the government's spending review, it would protect the increases in departmental budgets it had already set out in cash terms, a sharp real terms cut given high rates of inflation.

Critics have warned that this could result in an effective 5% real-terms pay cut for millions of public sector workers.

Resolution Foundation chief executive Torsten Bell said Hunt's package relied on "being able to hold down public sector pay", and warned that Britain should "get used to strikes".

The country is already facing a "winter of disruption", with an increasing number of workers voting to take industrial action that will disrupt services including the NHS, fire service, public transport, postal deliveries and universities.

Read more: Autumn statement summary: How the money in your pocket will be affected by Jeremy Hunt's budget

In a thread on Twitter, Bell wrote: "Largely sticking to current spending plans in short term + pencilling in just 1% real growth after 2025 is basically taking a bet on being able to hold down public sector pay... get used to strikes everyone

"So on spending the big picture is: - bit of redistribution from aid to health/schools but basically sticking to current plans for next two years - tight spending plans from 2025 onwards (no good news for public services but not Osborne level cuts)."

He said while Hunt had suggested that the government would continue to back 'capital spending', his measures effectively meant a "big cut".

He added: "Jeremy Hunt has decided talking like an adult has done enough work to reassure markets so he can leave the consolidation until the economy is through the recession. He's right."

Ben Zaranko, an economist at the Institute for Fiscal Studies, highlighted that the chancellor's plans will likely equate to real-terms pay cuts.

He tweeted: "The OBR expect CPI inflation to be more than 7% next year. The Chancellor has confirmed he is sticking to his cash spending plans for the next two years, which are predicated on pay awards of ~2% per year. Another 5% real-terms pay cut for public sector workers on the way?"

Unions also condemned the government's plans, saying they will affect public sector workers while the rich had been 'let off the hook'.

TUC general secretary Frances O’Grady said: "The Conservatives crashed the economy – now they are making working people take the hit.

"We are all paying the price for the last decade of Tory governments, which decimated growth and living standards. Today’s statement shows it will be two decades until real wages recover.

"The chancellor talked about everyone making sacrifices, but the super-rich have once again been let off the hook – token tweaks to tax will do little to dent their bank balances.

“This is a government more interested in rewarding wealth than work. This is a government choosing to hold down the wages of nurses and teachers while it allows bankers unlimited bonuses.”

Watch: PM: Nurses' pay demands are not affordable

Shadow chancellor Rachel Reeves accused Jeremy Hunt of having "picked the pockets" of the entire country through a "raft of stealth taxes" in his autumn statement.

Responding to his autumn statement, she told the Commons: "The Conservatives have picked the pockets of purses and wallets of the entire country as the chancellor has deployed a raft of stealth taxes taking billions of pounds from ordinary working people.

“A Conservative double whammy, that sees frozen tax thresholds and double-digit inflation erode the real value of people’s wages."