Autumn statement to cause public sector debt problems

The chancellor of the Exchequer George Osborne has delivered his autumn statement and this has brought more news that may disappoint those working in the public sector who face debt management issues.

All but the lowest paid of state and local government employees face a pay freeze at present, with this coming to an end for some next year and the majority in early 2013.

Mr Osborne told the House of Commons this will be replaced by a two-year cap on pay rises at one per cent.

He said: "I accept that a one per cent average rise is tough", but claimed this is also "fair" on taxpayers funding it.

However, this view has been rejected by the Trades Union Congress (TUC).

TUC general secretary Brendan Barber commented: "Public servants are no longer being asked to make a temporary sacrifice, but accept a permanent deep cut in their living standards," claiming that the reductions made to public sector remuneration and benefits will add up to "over 16 per cent by 2015 when you include pay and pension contributions".

Those who are facing debt problems as a result of their lack of a significant pay rise and recent increases in the cost of living may wish to seek debt management plans to make it easier to cope with their repayments.

However, such problems may equally beset those employed in the private sector, with Mr Osborne noting in his statement that public sector pay has risen twice as fast as that of private employees in the last four years.

By Joe White