Public sector workers face real terms pay cuts from 2011-12 onwards, according to the Treasury’s own figures.

The chancellor used his pre-Budget report today to announce a 1 per cent cap on pay uplifts “across the public sector” for 2011-12 and 2012-13, saying that will save £3.4bn a year from 2012-13 onwards. That follows a similar cap for senior public sector managers announced earlier this year.

But his report forecasts that inflation will be up to 3.5 per cent from 2011 onwards when measured on the retail price index. Measured on the consumer price index it will be lower at 1.5 per cent in 2011 rising to 2 per cent in 2012, but that will still leave public sector workers experiencing a real terms cut.