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"It is right to take difficult decisions.... it means we can keep more people employed"
Unions have reacted with anger to news of a fresh round of below-inflation pay rises for NHS staff in England.
Ministers have announced a basic 1% pay rise, but the 600,000 nurses and other staff receiving automatic "progression-in-job" increases, "typically worth over 3%" will not get the 1% as well.
The main health service unions in England said they would consult members on taking industrial action.
Members of the armed forces, prison officers and judges are due 1% rises.
The Consumer Prices Index (CPI) measure of inflation is currently at 2.0%, and the NHS pay review body had recommended that all NHS staff should get a 1% pay rise - whether they were also entitled to progression pay increases or not.
But Health Secretary Jeremy Hunt said this was "unaffordable and would risk the quality of patient care".
Unison's Christina McAnea accused the government of mixing up annual pay rises with the increments "designed to reflect the growing skills and experience of nurses and other healthcare workers".
'Very modest'"They are not a substitute for the annual pay rise that is needed to meet the increasing cost of living," she said.
"If the government is set on imposing this change, it clearly doesn't understand how increments work. As it stands, they save the NHS money but if this divisive plan goes ahead Unison will be arguing strongly that staff should be paid the full rate for the job from day one.
"I am appalled that this coalition government can openly boast about the economic recovery and claim that we are all feeling the benefits and then treat health workers so shoddily."
But Mr Alexander claimed that the progression pay increases were often worth 3% to 4% and were awarded simply "because of time served in the job" to more than half of NHS workers.
He told the BBC: "The extra 1% should be confined to those who otherwise wouldn't see any pay rise at all.
"That's what the country can afford."
He conceded this was a "very modest increase", but added: "We had two years of a pay freeze, where people who worked for the government didn't get any pay rise at all - except those who receive these increments, who continued to get those even during the years of the pay freeze."
Pay restraint had to be a "big part" of resolving the "huge financial problems we have as a country", he added.
'£1bn shortfall'Separately, Mr Alexander also announced that government departments were not contributing enough to their employees' pension funds.
A detailed review of NHS, teachers' and civil service pension schemes is not due to be published until later in the spring, he said.
"But it is already clear that these will show the level of contributions paid by employers have not been sufficient to meet the full long-term costs of these schemes.
"If current rates were allowed to continue, the shortfall would be nearly £1bn a year across the teachers', civil service and NHS schemes.
"The government is therefore taking corrective action, and will introduce new higher employer contribution rates for these schemes from 2015. This will ensure that the contributions paid by public service employers reflect the full costs of the schemes, including the costs of the deficits that have arisen since previous valuations.
"This will not have any impact on existing pensioners, on member benefits, or on the contributions paid by employees in those schemes. Instead it will ensure that pension costs are properly met by employers and do not fall as an additional cost to the taxpayer."
But Brian Strutton, of the GMB union, said the pensions announcement was a "con trick" to justify the "harsh NHS pay announcement" by suggesting that the cost of pensions had increased.
"But that is not the case. There are no extra costs. Let's not be fooled, there is no justification for the NHS pay review body being overruled."
Mr Alexander said it would be left to individual departments to decide whether to offer senior civil servants the 1% pay rise.
Police and Crime Commissioners are not due to receive the 1% pay increase.
Salaries for police officers, council workers and teachers are determined in a separate process.
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