PUBLIC sector workers have been told to expect real-terms cuts in their wages as part of UK Government efforts to avoid the “evil” of a 1970s-stile inflationary spiral.

The chief secretary to the Treasury said there was a need for “collective society-wide responsibility”, adding: “We cannot have inflation-busting pay increases”.

Simon Clarke said that if pay demands chased inflation it would “bake in” a repeat of the wage-price spiral seen in the 1970s, which would be “absolutely destructive”.

His comments come as the country faces its biggest rail strike in 30 years, with 40,000 RMT workers due to walk out  tomorrow, Thursday and Saturday, crippling services UK-wide.

Independent public-sector pay review bodies determine pay for UK Government employees.

Mr Clarke claimed he was not going to pre-empt their work, but said it was “unlikely” they would match the headline rate of inflation, currently 9 per cent and set to hit 11% in October.

Asked on BBC Radio 4’s Today if public sector workers should not expect a pay rise in line with inflation, Mr Clarke replied: “Correct.”

He said: “In the current landscape of inflation at 9% bordering 10%, it is not a sustainable expectation that inflation can be matched in payoff…

“We cannot get into a world where we are chasing inflation expectations in that way because that is the surest way I can think of to bake in a repeat of the 1970s, which this Government is determined to prevent.”

He said that while “we enormously value the work of all of our public sector workers”, the “absolutely destructive” inflation of the 1970s could only be averted “if we have a realistic expectation now about pay”.

Earlier this year the Prime Minister’s spokesman said that Bank of England Governor Andrew Bailey’s plea for wage restraint was not the Government’s position.

But Mr Clarke made no attempt to hold to that position.

“What a spokesperson has said is for them. I’m clear that the reality is that we are trying to manage the inflation difficulties that this economy and indeed the wider West is facing.”

Mr Clarke also told Sky News: “Public-sector pay discipline really matters here.

“We have an inflation problem in this country … If we don’t want that problem to either intensify or prolong itself, then we need to be sensible around pay awards.

“If we give awards which are above inflation in this landscape, then we are in a really difficult place in terms of bringing down inflation, which in turn obviously is driving the cost of living.

“We cannot have inflation-busting pay increases. The Government is trying in good faith to manage what is a very difficult balancing act between making sure that people get the pay awards they deserve … this has to be set against the wider responsibility I have, the Government has, to the public finances to make sure they are sustainable.”

 He said pay awards for Government employees currently being recommended by independent pay review bodies were “coming in at a sensible level”.

But he added: “People have to recognise that if we’re going to forestall the evil of inflation – inflation destroys savings, it destroys growth, it damages any economy where it gets an endemic grip – then we’re going to have to show collective society-wide responsibility”.

“I’m not going to pre-empt the results of the individual pay review bodies but I think it is unlikely that they will match the headline rate of inflation at the rates we’re now seeing.”

Asked if a recession was inevitable and necessary to halt inflation, Mr Clarke told Times Radio: “We don’t expect a recession, it’s important not to talk ourselves into that mindset”.

While there are significant global economic challenges, “there are also considerable underlying strengths to the UK economy”, he said.