Millions of public sector workers will see their pay frozen. Around 4.3 million public sector workers earning over £21,000 face an effective pay cut.
The consumer price index (which ignores housing costs) is currently rising at 3.4 percent. This means over two years a public sector worker on £22,000 would see their pay cut in real terms by nearly 7 percent.
The more realistic retail price index is at 5.1 percent – so the pay cut is over 10 percent.
The 1.7 million public sector workers who are paid less than £21,000 will get a lump sum of £250 a year – which amounts to a pay rise of just 1.2 percent if you earn exactly £21,000.
Yet since this is lower than both measures of inflation, it is also a pay cut.