Rishi Sunak: I have to make tough choices on public pay

The economic emergency the UK faces means "tough choices" had to be made over which public sector workers would get a pay rise, Chancellor Rishi Sunak has told the BBC.

In Wednesday's Spending Review, he announced a pay freeze that will affect 1.3 million workers.

Staff on less than £24,000 and some NHS workers will get a pay rise.

But shadow chancellor, Anneliese Dodds, criticised the move, saying it will hit consumer confidence.

Speaking to BBC Breakfast, Mr Sunak said: "I've had to make some tough choices and what I couldn't do is justify an across-the-board rise in public sector pay."

Private sector wages have fallen as jobs have been lost, hours have been cut and workers have been furloughed, he said.

Mr Sunak has warned that unemployment could rise to 2.6m by the middle of next year. Meanwhile, the Resolution Foundation think-tank has warned that the Covid-crisis could dent average pay packets by £1,200.

"I am determined to protect jobs and this will help me protect jobs," said Mr Sunak.

He would not be drawn when asked about tax rises, only saying that the current level of spending was "unsustainable".

Richard Hughes, the chairman of Office for Budget Responsibility (OBR), told the BBC's Today programme that this is "a very serious moment" for the economy and "the biggest shock we've faced in three centuries and the biggest shock the global economy has faced in peacetime".

The hit to the economy from coronavirus is twice the size of the financial crisis in terms of its impact on the economy and the public purse, he said.

"It's something few people have faced in their lifetimes."

One of the longer-lasting effects on the economy is that people are out of work and aren't building their skills, a loss "we don't get back when this crisis is over," Mr Hughes said.

The forecast includes the effect of the first two vaccines that were announced to be effective, but not the Oxford AstraZeneca vaccine, which may be available more quickly, he said.

This may help, but there are plenty of factors which may improve or harm the economy, he said.

He defended the agency's estimates for the economy, which some commentators suggest are too pessimistic.

Resolution Foundation has warned that the bulk of the government's extra spending to deal with the "economic emergency" will need to come from tax rises.

That is "a matter for the government", Mr Hughes said.