The chief executive of the Audit Commission, Steve Bundred, has asked political parties to realise the pressing need for pay cuts in the public sector.

In an article in the Observer, Mr Bundred said that spending cuts were needed to balance the budget regardless of which political party was elected and warned that the wages of public sector workers needed to be trimmed as well to balance the public finances.

"Cuts are inevitable, and perfectly manageable. We should insist on a frank and intelligent debate about how and where they will fall, which will then enable everyone to make more sensible plans."

He also warned that reductions in economic growth and tax revenue were likely to be greater than previously forecast with rising debt interest payments meaning that pay cuts would also need to extend to key services such as health and education.

"Health and education will not be immune from pay restraint, partly for reasons of fairness to others, partly because the NHS is the world's third largest employer, and also because ministers will correctly assume that as public sector workers have done well over the past decade, they will tolerate some modest real reduction in earnings," he stated.

Mr Bundred concluded that a false distinction was being made between spending cuts and investment by the political parties and stated that at least £5 billion needed to be cut from the wages of government-backed bodies.

He added that it was fair to reduce spending in health and education as the "massive growth" in the sectors over the past decade meant that there were efficiency savings available that would not harm the quality of key public services.

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