Chancellor Alistair Darling has failed to rule out a pay freeze for NHS workers as a way of reducing the public sector wage bill by £5bn.
Wage levels are due to be announced in the next few weeks and they are expected to reflect the current low level of inflation.
Mr Darling said public sector salaries would be “fair” to private sector workers, who have seen their salaries frozen since the start of the recession.
The move comes after Audit Commission chief executive Steve Bundred said that NHS workers would have to “tolerate” a freeze as they had “done well” over the past 10 years.
But the Government is expected to face a serious backlash from trade unions if it imposes real-terms pay cuts and leaders have warned of strike action if the plans go ahead.
Speaking about the proposals, Mr Darling said: “Public sector pay obviously has got to reflect prevailing conditions, and in particular inflation has come way down.
“And of course we have got to be fair with regard to people who work in the private sector, many of whom have seen their pay conditions somewhere near freeze.”
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“I disagree with the statement made by Mr Darling that public sector salaries would be fair to private sector workers. I did not see private sector pay being fair to public sector workers especially in relation to high bonuses. Historically, primary care pay has been lower, there is no pay structure and pay rises have not reflected the increase skills and work within primary care” – Anna Richardson, Essex