UNIONS accused Chancellor Jeremy Hunt today of ignoring the public-sector “crisis” when he outlined the government’s plans for “long-term prosperity” ahead of the spring Budget. 

TUC general secretary Paul Nowak said that Mr Hunt had failed to address the “elephant in the room” – the fundamental issue of public-sector pay.

“Public services are the backbone of our economy,” he said. “They are vital for growth and health.

“But the Chancellor is ignoring the massive staffing crisis hitting our schools, hospitals, care homes and other key services.”

In a speech at Bloomberg’s London headquarters, Mr Hunt said that reducing inflation was the “only sustainable way to restore industrial harmony” amid a wave of public-sector strikes. 

The Chancellor said that while the government would focus on reducing inflation over tax cuts, “our ambition should be to have nothing less than the most competitive tax regime of any major country.”

“That means restraint on spending,” he added. 

In response, Mr Nowak said: “Public servants will be deeply worried about the Chancellor’s warnings of further restraint. We know that is usually code for cuts.”

The Chancellor and Prime Minister Rishi Sunak should instead properly fund public services, starting with a fair pay rise for their staff, he argued. 

“We cannot afford to repeat the mistakes of the 2010s, when years of underinvestment gutted front-line services and ultimately led to the staffing exodus we are seeing today.”

National Education Union joint general secretary Kevin Courtney said the government needed to get a grip on the “recruitment and retention crisis in education” starting by giving teachers an above-inflation pay rise. 

Labour’s shadow chancellor Rachel Reeves accused the government of having “no plan” to fix the economy. 

After his Bloomberg speech, in which he reaffirmed a pledge to protect the HS2 high-speed rail project, Mr Hunt insisted that ministers were committed to the line going all the way to London. 

It comes after reports that sections of the line will be axed because of rising costs, sparking calls for the project to be abandoned entirely, including from the deputy chairman of the government review into the project, Lord Berkeley. 

The peer suggested today that the money should be diverted to improving existing railway lines.