The chancellor used his autumn budget statement to warn of public sector pay restraint beyond 2015.
The full statement, published shortly after George Osborne spoke in the Commons, said the Treasury would explore how “to get the best value for money from the pay bill” and “continuing reform of public sector pay policy can best contribute to consolidation [of the economy] beyond 2015-16”.
The document pointed to the fact the public sector pay bill still accounts for about half of department budgets. It added: “This government has introduced public sector pay restraint up until 2015-16, which has played an important role in consolidation.
“However, the next government will need to continue to reform and take tough decisions on public sector pay and workforce beyond 2015-16.”
The Treasury also revealed plans to pilot “pay bill control” for a “small number of government organisations”.
This would involve organisations setting their pay bills within a predetermined budget from 2014. This will replace the 1 per cent pay rise.
No details of which organisations will be involved in the pilot have been released.
The coalition has already sought changes to the Agenda for Change pay framework for almost one million NHS staff in a deal which was agreed with unions in February.
But the deal did not go far enough for many employer bodies which are calling for further reforms to pay, terms and conditions.
In its latest submission to the NHS Pay Review Bodies, the Department of Health called for the 2014 1 per cent pay rise for doctors, nurses and other NHS staff to be effectively frozen for one year unless unions and NHS Employers demonstrated progress on reforms.
A 1 per cent pay rise went ahead in April after a two year pay freeze.
Contract negotiations are already underway with hospital consultants and junior doctors. This could result in a change in terms and conditions and reform to the controversial clinical excellence award scheme for consultants.
Reforms are also being considered as part of efforts to bring in seven day services.