Millions in the public sector will face a real-terms pay cut after a minister ruled out raising wages in line with ever increasing inflation figures.
Asked by Sky News if people working in the public sector could expect a pay rise to match inflation figures which are at their highest in the UK since 1982, Transport Secretary Mark Harper said the idea was “unaffordable”.
He said: “"I think we want to try and give all the workers in the public sector who work very hard decent pay rises, but they can't be inflation-busting pay rises.
"There simply isn't the money to pay for those given the context, we haven't seen those in the private sector either, the private sector pay rises have generally been settled below the level of inflation, which I accept is difficult for people."
Business Secretary Grant Shapps also warned against an inflationary “spiral”.
Asked if he agreed with Mr Harper that the Government cannot afford inflation-busting pay rises, he told Sky News: “Yeah, I mean, we’ve seen how this works before.
“You have to go back several decades, but high inflation, if you then feed the high inflation and high settlements, you end up in a spiral where it never ends and that’s what happened in the 1970s.
“We’re very determined not to be in that situation now. It won’t benefit anybody.”
Official figures from the Office for National Statistics (ONS) revealed that inflation jumped to a higher-than-expected 11.1% in October, the highest rate since October 1981.
Most predictions had expected inflation to rise to a lower 10.7%.
The ONS said gas prices had risen by nearly 130% over the year, while electricity costs had soared by 66%.
Families were also hit by rising costs across a range of food items, which also pushed up the cost of living to eye watering levels.
The ONS will next publish the rate of inflation for November on December 14.
After which, the Bank of England could decide to raise interest rates on December 15.
It is the best tool that the Bank of England has to steer inflation back to its 2% target.
But the decisions will also have major impacts on people’s finances, not least those with mortgages who will need to start paying more for their home loans.
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