Kwarteng must cut 200,000 public sector jobs to meet spending plans, IFS warns

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Kwasi Kwarteng needs to cut more than 220,000 public sector jobs if he is to fund planned wage increases and stay within spending plans, the Institute for Fiscal Studies (IFS) has warned.

The think tank said the chancellor would be faced with finding an extra £5 billion to fund public sector pay this year if he is to deliver on his promise of an average 5 per cent rise.

This is because last October’s spending review set fixed budgets in cash terms for the next three years, when the government drawn salary increase of 3pc. Inflation is currently 9.9%.

The IFS also warned that high inflation, unless extra funding was provided, would mean the cost of public sector pay rises would rise to more than £10bn by the end of Parliament, leaving the government facing job cuts for more than 220,000.

Bee Boileau of the IFS said: “Offering higher pay awards without additional funding places a huge strain on departmental budgets and requires painful cuts elsewhere. If you don’t offer the rewards of higher wages, you risk a wave of strikes and ongoing recruitment and retention challenges. departmental funding would either offset spending cuts elsewhere or reverse some of the Chancellor’s recent tax cuts.

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