LONDON (Reuters) - The British government will soften its seven-year grip on public-sector pay with police and prison officers set to get increases above a 1 percent cap, media reported.
The reports suggested British Prime Minister Theresa May and her finance minister Philip Hammond want to take a cautious approach to increasing pay for public sector workers.
Police account for around 5 percent of the 5.1 million public sector workers in Britain and prison staff represent a smaller group.
Based on calculations by the Institute of Fiscal Studies, an increase in pay for police to match Britain’s current 2.6 percent inflation rate would cost about 145 million pounds ($191 million) this year, a small extra strain on the budget which is likely show a deficit of 58 billion pounds.
If the government gave all public sector workers a 2.6 percent increase this year, the additional spending would rise to nearly 3 billion pounds, IFS analyst Jonathan Cribb said.
News reports published late on Sunday said ministers were expected to accept recommendations for bigger pay rises this week, paving the way for similar increases for other government employees in future.
The higher increases for police and prison officers are based on the recommendations of independent pay-review bodies, with recruitment and retention problems being cited in the case of prison officers, the BBC said.
Asked on Monday if the public sector pay cap was still in place, the prime minister’s spokesman said the pay review process was continuing. A spokeswoman for the finance ministry declined to comment on the reports.
Public-sector pay was frozen for all but the lowest earners in 2010 and increases were limited to of 1 percent a year from 2013. May has been under increasing pressure from ministers and lawmakers to end the cap since her party lost its majority in parliament in elections in June.
Britain’s inflation rate has risen sharply since last year’s Brexit vote hit the value of the pound and is likely to reach about 3 percent soon, squeezing the spending power of households.
The Bank of England is watching for signs of pay growth as it considers when to raise emergency-level interest rates for the first time since the global financial crisis a decade ago.
Reporting by William Schomberg in London and Rama Venkat Raman in Bengaluru; Editing by Toby Chopra