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Public sector pay rises capped at 1% for two years

NHS workers will see any pay rises capped at 1% for two years as they prepare to bear the brunt of the UK's shaky economy.

The cap on public sector pay will kick in during 2013 - when the current pay freeze is set to end - and is likely to be below inflation, leading to a real terms pay cut.

In his Autumn Statement, George Osborne admitted the cuts were “tough” but said the government “cannot afford the 2% rise assumed by some government departments” post 2013.

The pay cap is likely to provide savings of more than £1bn by 2014-15.

While Osborne pledged his commitment to protect NHS spending, Dr Peter Carter, Chief Executive and General Secretary of the Royal College of Nursing (RCN), claimed he has seen no evidence to support this.

Dr Carter described the cuts as “deeply provocative” and “insensitive”.

“We have always accepted that money does need to be saved but this latest attack on pay is another hammer blow to the morale of nurses, who are already in the middle of a two year pay freeze, and who are witnessing the NHS going through unprecedented upheaval,”  he said.

“It is for the independent and expert pay review body to recommend an appropriate and fair deal for frontline workers - not the Government.”

A revision of the number of public sector jobs likely to be cut in the next five years saw it increase from 400,000 to 710,000.

"Much of Europe now appears to be heading into a recession caused by a chronic lack of confidence in the ability of countries to deal with their debts,” said Osborne.

"We will do whatever it takes to protect Britain from this debt storm while doing all we can to build the foundations of future growth."