Rishi Sunak has insisted there will be no return to austerity in his spending review next week.
Faced with the job of balancing the UK’s books in the grip of the coronavirus pandemic the chancellor told Sky’s Sophy Ridge on Sunday: “You will not see austerity next week.
“What you will see is an increase in the government spending on day-to-day public services and quite a significant one, coming on the increase that we had last year.”
He did not deny reports that he could impose a pay cap on millions of public sector workers, but said decisions had to be taken “in the context of the wider economic climate”.
“I think it would be fair to also think about what’s happening with wages, with jobs, with hours, across the economy when we think about what the right thing to do in the public sector is,” he said.
Unions have reacted angrily to the reports, though frontline NHS doctors and nurses are expected to be exempt.
It comes as the chancellor was set to unveil a £3bn package of new spending to support the NHS in recovering from the pandemic at the upcoming spending review.
The NHS will get £1bn to address backlogs by catching up on checks, scans and operations that were delayed by COVID-19.
Around £1.5bn will be used to ease existing pressures in the health service and £500m will help support mental health services.
Mr Sunak will also unveil the long-delayed National Infrastructure Strategy for £100bn of long-term spending to help tackle the climate crisis and invest in transport.
In addition, he will also announce changes to the Treasury’s “green book”, a set of rules to determine the value of government schemes which is thought to favour London and the South East of England.