Spending watchdog urges public sector pay freeze

By Christina Fincher

LONDON (Reuters) - A pay freeze for six million public sector workers would be one of the least painful ways of rebalancing the public finances, the head of the country's independent spending watchdog said on Sunday.

Steve Bundred, chief executive of the Audit Commission, criticised politicians for failing to be honest about the need for cutbacks and said health and education should not be excluded.

"At a time when inflation is likely to be between 2 percent and 3 percent, a pain-free way of cutting public spending would be to freeze public sector pay," he wrote in the Observer newspaper.

The public deficit is forecast to reach 175 billion pounds this year, more than 12 percent of gross domestic product.

In an interview on Sky television, Finance Minister Alistair Darling did not rule out a pay freeze and said the government would be looking at wage settlements over the next few weeks.

"Public sector pay obviously has got to reflect prevailing conditions, and in particular inflation has come way down," Darling told Sky.

"And of course we have got to be fair with regard to people who work in the private sector, many of whom have seen their pay conditions somewhere near freeze."

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