Pay deal may mean £4 million cuts in public spending

Last week the States offered workers a better deal to break the pay talks deadlock and avert the threat of strike action by manual workers. The new proposal, which has not yet been agreed, is 2.75% for 2006-7 and the March Retail Prices Index figure for 2007-8. However, because the new Public Finances Law does not allow for pay deals to come out of a contingency fund or general reserve, departments will either have to absorb the cuts or go back to the States and ask for more money.