Question to the HM Treasury:

To ask the Chancellor of the Exchequer, if he will make an assessment of the potential impact of public sector pay restraint on the economy.

Pay for most frontline workforces – including nurses, teachers, armed forces and police officers – is set through an independent Pay Review Body (PRBs) process. The PRBs consider a range of evidence when forming their recommendations, including the need to recruit, retain and motivate suitably able and qualified people; the financial circumstances of government; the government’s policies for improving public services; and the government’s inflation target. They consider the whole remuneration package of those working in the public sector when forming their recommendations, including the substantially more generous pensions available, on average, for public sector workers.

As part of the PRB process, HM Treasury publishes economic evidence to PRBs. HM Treasury published its economic evidence to PRBs for the 2023/24 pay round in January. This set out the economic, labour market and fiscal context within which we ask the independent PRBs to consider their recommendations for 2023-24 pay awards. Please see the evidence HMT has published.

Economic_Evidence_January_2023_-_final_version_PUBLISHED.pdf (publishing.service.gov.uk)

More generally, the OBR will include any impact of government policy on the economy in their economic forecasts.