The Chancellor should “get a grip” on wasteful pandemic spending rather than freeze the pay of public sector workers, his Opposition counterpart has urged.
Shadow chancellor Anneliese Dodds used a speech on Monday to call for Rishi Sunak to use his spending review this week to treat frontline workers “decently, rather than grinding them down”.
Mr Sunak, in a move that has irked trade unions, has hinted that public sector workers could have to tighten their belts as the Government looks to pay for its coronavirus borrowing.
The Chancellor said on Sunday it would be “entirely reasonable” to consider pay policy in an economy ravaged by the coronavirus pandemic, though it is said to exempt NHS nurses and doctors.
The UK’s debt stands at more than 100% of national income and the Centre for Policy Studies – a centre-right think tank – has calculated that a three-year total pay freeze would provide £23 billion, or £15.3 billion if the NHS is excluded, towards reducing the country’s growing budget deficit.
But Labour’s Ms Dodds has warned that targeting the pay of public sector workers would have a negative impact on the economy and claimed there were savings to prioritise elsewhere.
Speaking during a virtual interview with Reuters, Ms Dodds said an alternative approach was to rein in wasteful spending “related to the Covid crisis”, such as NHS Test and Trace.
Around four in 10 contacts of people testing positive for the virus are still not being reached through the centrally-run Test and Trace system, according to the latest figures.
“The first thing it (the Government) has got to do is get a grip on spending that it is engaged in right now,” Ms Dodds said.
“I mentioned in my speech a number of cases where there has been really poor financial management.
“And we’re not just talking about small amounts of public money here – £12 billion has been spent on Test and Trace and it is still not working in the UK effectively.”
She also called on ministers to help “build economic activity up” again in order to create a larger tax base following the Covid-induced downturn.
The shadow cabinet member rallied against a potential pay freeze for the likes of teachers, firefighters and local authority workers, claiming it would hit local economies and create vacancies in vital public services.
She said: “Having this kind of approach, saying there should be a reduction in the spending power for those groups of workers – and that’s what this would amount to – is going to be very bad for our public services but also very bad for our economies as well, particularly local economies.
“These are the kind of people who go and use local high streets, they use small businesses.
“If they’re concerned about their spending power, they’re not going to go out and do that to the same extent.”
On Wednesday, the Chancellor is due to announce a multibillion-pound plan to invest in long-term infrastructure projects and fund the fight against the coronavirus pandemic.
And he is understood to be preparing to announce £1.25 billion of new funding for prisons, extra money for police recruitment and that the Government’s 10-year schools programme will approve 50 new schools a year.
The Treasury has also said nearly £220 million of funding will also go towards the post-Brexit points-based immigration system.