Prime Minister Gordon Brown has announced he will be restricting pay increases for senior civil servants, senior NHS managers and members of the judiciary.
The Prime Minister has said these employees will enjoy annual pay rises worth 1.5% †rather than the more generous rises outlined in the Senior Salaries Review Body's 31st report on senior salaries 2009, which was published today.
For example, the review body had recommended that the salaries of senior civil servants should be increased by around 2.1%.
The government will, however, follow the report's recommendations for senior military personnel, who will receive a 2.8% increase in their salaries.
A written ministerial statement from the Prime Minister read: "Over the next few years the government will continue to ensure that the value for money is driven throughout all aspects of the public sector to support our drive to continue to improve key public services.
"The government therefore intends fundamentally to reform the severance and early retirement terms for all civil servants in order to control costs. The current arrangements have been in place since 1987 and are inflexible and expensive.
"The new terms require departments to reduce costs and will improve accountability and value for money for the taxpayer, saving up to £500m over the next three years."
NHS Employers believe the pay increases announced are fair in light of the current economic climate.
Gill Bellord, director of pay, pensions and employment relations at NHS Employers, said: "Overall the pay awards announced today for doctors, dentist and very senior managers are lower than included in our evidence to the review bodies last autumn.
"However we believe that the awards strike the right balance in being fair, whilst recognising both the challenging efficiency requirements that the NHS is being asked to deliver and the current economic climate."