Vol. 471 No. 1
38 Ms O'Donnell asked the Minister for Finance the estimated cost to the Exchequer of a three year public sector wage deal in the order of 10.5 per cent; and if he will make a statement on the implications of such an increase in gross public sector pay on tax policy. [20308/96]
The main focus in the negotiation of the pay arrangements to follow the Programme for Competitiveness and Work will be competitiveness, competitiveness being the key to economic growth, employment and social progress. Against that background the aim will be to achieve pay moderation and certainty of pay costs, supported by reductions in taxation. Taxation is, of course, intrinsically tied in with the level of public expenditure, of which the public service pay and pensions bill is a major factor. An increase of 10.5 per cent in public service pay would add an estimated £505 million per year to that bill. Such an increase, as well as any other additional expenditure commitments sought in the context of a new programme, would, obviously, restrict the resources available for taxation reductions.
