Chancellor Alistair Darling and his deputy Liam Byrne, the chief secretary, stole an audacious political march on the Tories by announcing a one-year pay freeze for the most senior civil servants, members of the judiciary, senior NHS managers, GPs and chief executives of quangos.
The freeze in effect represents a pay cut. And by targeting the richest public-sector figures, it will be seen as a sign that the broadest shoulders must carry the heaviest burden.
More junior groups covering more than 700,000 other public-sector workers fare little better, with proposed rises of between 0 and 1%. This small rise, lower than that expected in the private sector next year, will cover prison officers, hospital doctors and dentists, contract dentists, and civil service groups not tied in to multi-year deals. The recommendation will be put to the independent pay review bodies in the next few weeks.
Some assessed the pay offer as the toughest for 30 years, and as representing the first sign of how serious the Labour spending cuts are likely to become.
Nurses and teachers in multi-year deals that do not end until after next year will be excluded from the freeze, with their pay awards honoured. The military are also excluded from the freeze.
The general secretary of the First Division Association, Jonathan Baume, representing top civil servants, said: "There is no need to make this announcement now. It means the three-year, 7% deal we had until next year is being torn up.
"We were due to submit details of our pay claim to the senior salary review body on 17 November along with the head of the civil service, Sir Gus O'Donnell. A lot of civil servants will be angry that a multi-year deal has been broken like this."
He added that the respected IDS independent pay monitoring body was predicting rises of 2-3% next year in the private sector, raising questions as to why the public sector was being singled out.
The Tories were furious in private that the Treasury had chosen the eve of the shadow chancellor's speech to make the announcement, claiming it breached the loosely observed convention that the parties do not make announcements during one another's conference.
A Conservative spokesman came close to acknowledging that George Osborne, the shadow chancellor, had been planning to making this announcement himself, saying the Treasury move "comprehensively shows that the Conservative party is setting the terms of the political debate on the economy". The spokesman added: "It is surprising the Labour chancellor chose to make this announcement, which affects hundreds of thousands of people, in the middle of a Conservative party conference. People will question his motives."
Philip Hammond, shadow chief secretary, claimed that if the measure was thought out, Labour could have announced it at its party conference last week. He made no criticisms of the decision itself, as the Toriesconsidered whether to include a recruitment freeze in the public sector as well.
Byrne insisted: "If we want to halve the deficit over four years and protect frontline services, we have to make tough but realistic decisions on pay. That means leadership from senior groups."
The head of the Audit Commission, Steve Bundred, has already called for a pay freeze on all six million public-sector workers.
