The government will seek to ensure that all pay settlements in the public sector will be capped at 1%.
Delivering his pre-Budget report earlier today, Chancellor Alistair Darling said that from 2011†the cap would be placed on basic pay increases across the public sector for 2011-12 and 2012-13, generating savings of £3.4billion a year by 2012-13.
Darling said that senior civil servants would take the lead with a cut in its pay bill of up to £100 million over three years.†
All public sector bodies under ministerial control will also be asked to publish details of the salary (including benefits in kind) and any bonus of employees paid more than £150,000 to the nearest £5,000 and the number of staff paid more than £50,000 in £5,000 increments.
Darling said that any new government appointment of an employee earning more than £150,000 or arrangement award bonuses of more than £50,000 would require "explicit approval" by the Treasury.
Outlining savings to be made in the public sector, the Chancellor said: "Mr Speaker, £12bn from greater efficiency, £5bn from scaling back or cutting lower priorities, and £4.5bn from reducing the cost of public sector pay and pensions.
"These are tough choices, but they are essential if we stick to our plan to halve the deficit and protect the frontline."
Bill Cockburn, chair of the Senior Salaries Pay Review Body (SSRB), is set to report on senior pay across the public sector for the 2010 Budget.