In the first Budget of the coalition government, Chancellor George Osborne brought in a swathe of policies designed to bring spending in the public sector under control.
The main one was a two-year pay freeze for every public sector worker earning over £21,000.
Meanwhile, those earning less than this threshold will be protected and receive £250 pay increases each year for the next two years.
The chancellor said although he knew there were a lot of hard workers within the sector, who had not caused the recession, “they must share the burden to pay to clear it up”.
Osborne said he had previously looked to freeze salaries for one year only, but had been forced to extend it to make greater savings.
In addition, much-debated public sector pensions will be under review by Lord John Hutton, a former secretary of state for work and pensions, in an attempt to reduce the £9 billion burden they represent to taxpayers.
The review will be carried out in time for next year’s Budget, but an interim report will be filed before the Spending Review, which is to be held on 20 October 2010.