Pay awards key to stability - PM
8 January 2008
New plans to look at long-term pay settlements for public sector workers will help maintain stability in the economy, the Prime Minister has said.
Speaking to journalists at a Downing Street press conference, the PM said that it was vital to secure a "low inflation economy" that has the "flexibility to make the right decisions". Establishing fixed pay deals over three years with workers such as teachers and nurses would help control inflation and make it easier for workers to budget for the long-term, he said.
The PM said:
"What people all round the country want is certainty moving forward, greater stability in their family finances and the knowledge that they have a longer-term pay settlement that can meet their bills, particularly the mortgage.
"We must control inflation. There is no point in a big salary rise that is wiped out by a big inflation rise."
Chancellor Alistair Darling, who joined the Prime Minister at the press conference, pointed out the low level of UK inflation compared with other major economies such as the US and Eurozone. Three-year pay deals woud not only help keep inflation down but also help government departments mangae their spending plans, he said.
The Bank of England, which is independent of government, cut interest rates in December to the current level of 5.5 percent and will meet again on Thursday to make a further interest rate decision. Inflation stands at 2.1 percent and was projected to remain near the two percent target in the Bank's November inflation report.
On Sunday the Prime Minister said that Government ministers would receive a pay increase of 1.9 percent and recommended that MPs vote to receive the same in a forthcoming debate.
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