Freeze public-sector pay, says spending watchdog

Author: By Brian Brady

In the face of the bitter political row over how the economy can recover,
Steve Bundred also accuses party leaders of failing to be honest about the
need for cuts, even in front-line services such as health and education.

In an article for The Observer, the chief executive of the Audit
Commission complains that no politician has included “severe pay
restraint” among the measures needed to haul the country out of
recession. Instead, he warns that “nothing should be off limits”.

The grim forecast comes amid reports that civil servants are preparing
devastating spending cuts across Whitehall, even as senior politicians
refuse to acknowledge the scale of reductions that will be required. The
Sunday Times
claimed that mandarins had drawn up secret “doomsday”
plans for 20 per cent cuts in public spending.

Labour rebels will this week seek to take advantage of rising concerns over
the black hole at the heart of the public finances, by plunging Gordon Brown
back into the damaging row over the abolition of the 10p tax rate.

A group of backbenchers, led by former minister Frank Field, have launched a
fresh protest against the decision to abolish the tax, insisting that it
should not go ahead until all low-paid workers who lost out are compensated.
The proposed Finance Bill amendment, which would stop the levying of income
taxes unless the Government agrees to pay full compensation, could scupper
the entire Budget. Chancellor Alistair Darling headed off protests last year
with a £2.7bn package for the losers. But more than 30 Labour MPs now demand
full compensation for all affected.

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