Issue date
21 Nov 2017
The public sector pay cap has reduced spending power in England by £8.5 billion this year according to new analysis published by the TUC today (Tuesday).

Since the pay caps began in 2010, public sector workers have had £48 billion less to spend in local economies.

England’s 50 poorest parliamentary constituencies alone have seen a combined loss in spending power of £3 billion since 2010, or £544 million this year.

Every English region has seen big falls in spending power because of the cap. The North East and North West – which have the highest share of public sector workers – have seen falls of £2.1 billion and £7 billion respectively since the start of the decade.

The analysis shows that public sector workers are earning, on average, over £2,000 less today than if their pay had risen in line with inflation (CPI). 

Recent TUC polling shows that one in seven (15%) public sector workers skipped meals this year to make ends meet. And 1 in 4 (24%) say they couldn’t pay an unexpected bill of £500.

Research published by the IPPR last week revealed that raising public sector pay would boost spending in local economies. And it would help the public purse by raising tax revenues and reducing the cost of in-work benefits.

TUC General Secretary Frances O’Grady said:

“The public sector pay squeeze has driven up in-work poverty. And that means less money spent on high streets and in local businesses.

“The pay cap is a false economy. The Chancellor must use the Budget to give all public sector workers the pay rise they have earned, and end these artificial pay restrictions.”

Editors note

- A full list of spending power losses for every constituency, along with a breakdown of the 50 poorest is here: bit.ly/2zLmjDI

Impact of public sector cap on English regions

Region

Number FTE public sector  workers

Cumulative total loss of spending power 2010-2017 (£)

Total loss of spending power 2016-17 (£)

East Midlands

252,756

£4,239,082,336

£721,418,228

East of England

316,443

£3,139,745,309

£593,119,147

London

622,561

£11,602,760,178

£1,855,574,282

North East

181,680

£2,101,898,521

£422,079,984

North West

479,906

£7,036,247,545

£1,293,201,150

South East

459,483

£7,496,027,239

£1,280,049,123

South West

311,462

£3,897,252,024

£812,141,970

West Midlands

338,551

£3,662,195,711

£742,296,210

Yorkshire & the Humber

349,027

£5,042,916,726

£800,138,611

England total

3,311,869

£48,218,125,589

£8,520,018,705

- IPPR study into the impacts, costs and benefits of removing the pay cap: www.ippr.org/research/publications/uncapped-potential

- All statistics are based on TUC calculations from official ONS figures. The number of full-time equivalent public sector workers in each region or constituency is taken from the Nomis dataset. Public sector pay figures come from Table 25.7a of ASHE ‘Annual pay for Public Sector - Gross (£) - For full-time employee’ and table 9.7a of ASHE ‘Annual pay - Gross (£) - For all employee’. Data based on all constituencies where ONS data available.

- Salary losses have been calculated using the CPI measure of annual inflation for April of each year through to April 2017. CPI was the government’s preferred measure of inflation until 2017 and is preferable to CPIH when looking at earlier years, because the treatment of housing costs in CPIH changed significantly in 2014.