What will the restrictions entail?
Public and Commercial Services (PCS) union general secretary Mark Serwotka said: "Civil servants along with millions of other public-sector workers have kept the country running throughout this pandemic and the last thing they deserve is another pay freeze".
Such a move is likely to be driven by concerns about fairness, given people working in the private sector have experienced job losses and wage cuts because of the pandemic.
It came as the Office for National Statistics yesterday confirmed that public sector debt hit £2.08 trillion in October, with Government borrowing in the first seven months of the financial year rising to an estimated £215bn. However the gap has narrowed over the last decade.
Around five million people could be affected.
The news comes as the Centre for Policy Studies think tank suggested the government would save £23 billion if public sector pay was frozen for three years.
Excluding the NHS from the pay freeze would save £15.3bn over three years.
Alternatively, it said that an annual 1% pay cap would save £11.7 billion over the period - or £7.7 billion if it did not apply to healthcare workers.
Unions and campaigners had been calling for a pay rise for key workers, many of them in public services, who have been going beyond their duties to protect the public from Covid-19. At the same time, there is a need to control public spending and reduce the structural deficit which the pandemic is likely to have opened up.
© Provided by The i Freezing public sector pay could save billions, according to the Centre of Policy Studies (Photo: PA) What has the Chancellor said?
It declined to comment but pointed to language used by Mr Sunak in a letter about the Spending Review in July. He said public sector pay levels would need to retain parity with the private sector, where wages have decreased during the pandemic.
"The government will argue this is about holding down public-sector pay because private-sector pay has gone down, but it makes no sense economically". Police officers, prison officers, school support staff, teachers, head teachers, DWP workers, hospital ancillary staff, have all put their lives on the line this year and they all deserve a pay rise.
What has the reaction been?
"On the very day we discover the government is planning a pay freeze for millions of workers, GMB is gearing up to lodge a judicial review against the government decision to swindle public sector workers of their pensions should they leave their employment due to redundancy". Whether it is responding to the pandemic or dealing with the challenges of Brexit, our members' work in the public sector has never been more important.
Unison general secretary Dave Prentis said a new pay cap would be a "cruel body blow" to NHS staff not on the frontline. The cap was lifted in 2017.