Due to come into force from April 2021, the details of the UK government’s Spending Review 2020 on health, education, transport and public services, were particularly high-profile this year due to the financial impact of the Covid-19 (Coronavirus) pandemic. While NHS staff are expected to receive a pay rise based on advice from national review bodies, increases for the majority of the public sector will be paused in 2021-22. The pay freeze does not, however, apply to 2.1 million public sector workers who earn below the £24,000 median national income. The government plans to prioritise these public sector workers who are expected to receive a pay rise of at least £250.
As part of the review, the government has also committed £2.9 billion to fund a new three-year UK-wide programme intended to provide support for more than one million long-term unemployed people. Accepting the full recommendations of the Low Pay Commission (LPC), the government will raise the national living wage to £8.91 an hour in April this year which is an increase of 2.2% and which will apply to those aged 23 and over. Accepting further LPC recommendations, the government will also increase the national minimum wage, with rates similarly due to apply from April this year, including an increase in the hourly rates for those ages 16-17, 18-20 and 21-22 respectively.
The government has set a further £21 billion aside for contingency funding as part of the £55 billion support package for public services. This is intended to provide necessary support for public services as and when required throughout 2021. With much uncertainty over the path of the pandemic and prospects of recovery in the coming months, it remains to be seen whether greater financial support will be needed.
Louise Skinner and Lee Harding are partners at Morgan, Lewis and Bockius LLP
