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Osborne caps public sector pay rises at 1%

GPs look set to face a further squeeze on their pay after Chancellor George Osborne announced that public sector pay increases will be limited to an average of 1% for two years beyond 2013.

Letter: We'll get no sympathy from the public

The Chancellor said in his Autumn statement to the Commons this afternoon that the country ‘cannot afford the 2% rise assumed by some Government departments', and insisted the move would share the burden of reducing the budget deficit equally between the public and private sector.

Mr Osborne also announced the Government would be asking independent pay review bodies to ‘consider how public sector pay can be made more responsive to local labour markets', and will ask them to report back by July 2012.

The recently announced 2012/13 pay deal froze GP pay for the sixth time in the last seven years - effectively amounting to a 2% real terms cut in funding when taking inflation and rising expenses into account.

Today's announcement raises the prospect of a further tightening of the screw on GP pay, and comes after recent figures from the NHS Information Centre showed that the proportion of GP income being sucked up by practice expenses has for the first time risen above the level it was at before the introduction of the new GMS contract in 2004.

The Chancellor said: ‘In the current circumstance the country cannot afford the 2% rise assumed by some Government departments thereafter.'

‘So instead, we will set public sector pay awards at an average of 1% for each of the two years after the pay freeze ends.'

‘Many are helped by pay progression – the annual increases in salary grades that many people are entitled to, even when pay is frozen. It is one of the reasons why public sector pay has risen at twice the rate of private sector pay over the last four years.'

‘While I accept that a 1% average rise is tough; it is also fair to those who work to pay the taxes that will fund it.'