Ten of thousands of British public sector workers are to lose their automatic annual pay rises, chancellor George Osborne said today as he unveiled a spending review involving £11.5 billion in further cuts.

He claimed that Britain was “moving out of intensive care — and from rescue to recovery”.

However, he said the spending review involved “difficult decisions”, adding: “There never was an easy way to bring spending under control.”

Mr Osborne said public sector pay rises will be limited to an average of up to one per cent for 2015-16.

He went on: “But the biggest reform we make on pay is to automatic progression pay.

“This is the practice whereby many employees not only get a pay rise every year, but also automatically move up a pay grade every single year — regardless of performance.

“Some public sector employees see annual pay rises of 7 per cent.

“Progression pay can at best be described as antiquated; at worst, it’s deeply unfair to other parts of the public sector who don’t get it and to the private sector who have to pay for it.

“So we will end automatic progression pay in the Civil Service by 2015-16.

"And we are working to remove automatic pay rises simply for time served in our schools, NHS, prisons and police."

The move, from which the armed forces will be excluded, is bound to provoke fury from public sector trade unions, who claim their members are already paying the price of austerity.

But the chancellor said: “Keeping pay awards down and ending automatic progression pay means that, for every pound we have to save in central administration, we can better limit job losses.”

PA