Millions of nurses, teachers and members of the armed forces will receive a pay rise next April as Rishi Sunak unfreezes public sector pay in the budget.
The size of the pay rises will depend on recommendations from independent pay review bodies, which set pay for frontline workforces including nurses, police, prison officers and teachers.
The Treasury says the government will be running a full pay round and the awards will be announced next year once ministers respond to the pay review bodies’ recommendations.
Announcing his latest budget pay boost, Mr Sunak said: “The economic impact and uncertainty of the virus meant we had to take the difficult decision to pause public sector pay.
“Along with our Plan for Jobs, this action helped us protect livelihoods at the height of the pandemic.
“And now, with the economy firmly back on track, it’s right that nurses, teachers and all the other public sector workers who played their part during the pandemic see their wages rise.”
The chancellor says his temporary pay pause in November helped protect jobs at a time of crisis during the pandemic, but also ensured the gap between public and private sector pay did not widen further.
The Treasury also says that despite the public sector pay freeze, more than a million NHS workers received a 3% pay rise in 2021/22, meaning an average nurse will now receive around an additional £1,000 a year.
Mr Sunak signalled that pay rises for public sector staff were on the way in a Sunday TV interview when he said he would set out a “new pay policy” in his budget on Wednesday.
Asked if public sector workers could expect pay increases, the chancellor said: “That will be one of the things that we talk about in the spending review.”
According to the Treasury, public sector average weekly earnings rose by 4.5% in 2020/21 while private sector wage increases were a third lower than they were pre-pandemic, at only 1.8%.
But the government claims that despite the one-year break, most public sector workers will still see their earnings rise and their weekly earnings have increased by an average of 3% since April.
The news on public sector pay follows the Treasury’s announcement that the national living wage will increase from £8.91 to £9.50 an hour from next April, an extra £1,000 a year for a full-time worker.
Young people and apprentices will also see their wages boosted as the national minimum wage for people aged 21-22 goes up to £9.18 an hour and the apprentice rate increases to £4.81 an hour.
The living wage increase was the latest in a blizzard of pre-budget announcements by the Treasury in recent days which provoked an explosion of anger in the Commons from Speaker Sir Lindsay Hoyle.
“At one time ministers did the right thing if they briefed before a budget – they walked,” he told MPs with his voice trembling with rage.
As MPs shouted “resign!”, Sir Lindsay went on: “Yes absolutely, resign. It seems to me we’ve got ourselves in a position that if you’ve not got it out five days before it’s not worth putting out.
“It’s not acceptable and the government shouldn’t try to run roughshod over this house. It will not happen!”
Follow budget coverage live on Sky News on Wednesday with the chancellor’s announcement from 12.30pm