Lib Dems plan inflation link for civil service pay

Party also pledges to increase income tax to pay for NHS cash boost


By Richard Johnstone

17 May 2017

The Liberal Democrats have confirmed the party’s pledge to end the 1% limit on public sector pay increases in their manifesto.

According to the plans published yesterday, the party would end the 1% cap on pay rises in the public sector and uprate wages in line with the Consumer Price Index measure of inflation, which currently stands at 2.7%.

The party said it would also establish an independent review to consult on what it called “a genuine living wage across all sectors”. This would be paid in all Whitehall departments and agencies, and other public sector employees would also be encouraged to pay the rate.


Other pledges include a proposal for a second referendum on the outcome of the Brexit negotiations, as well as a promise to “dramatically reducing the powers of central government ministers to interfere in democratically elected local government”. These include removing the requirement to hold local referenda for council tax increases above the current 2% referendum cap.

The party also said it would establish a Whitehall process to deliver greater devolution of financial responsibility to English local authorities and any new devolved bodies in England, building on the work of the Independent Commission on Local Government Finance. This commission, which reported in 2015, called for all councils to be given full control of council tax discount schemes, currently set nationally, and to retain all business rates.

Further powers would be given initially to what the report called “pioneer areas”, most likely combined authorities, which would be responsible for the number and value of council tax bands. This would include control over when properties are revalued, which has not happened since the current system was introduced in 1993.

Spending plans include a proposal to invest nearly £7bn extra in education, while an extra 1p would be levied on all income tax rates to raise £6bn to spend on NHS and social care.

The party also committed to a £100bn package of additional infrastructure investment, and would reverse the cuts in corporation tax – partly introduced when the party was in coalition – and increase the rate from 17% to 20%.

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