No worker will pay for the economic crisis, unions have insisted, after Chancellor Alistair Darling refused to rule out a public-sector pay freeze to provide an extra £5 billion public investment.

In a week where the government has come in for criticism for being evasive about spending plans, the Chancellor gave little assurance to working people.

"We will decide on our pay policy over the next few weeks. It has got to be fair to people who work for the public sector, just as we have to be fair to the private sector," he said.

Attempting to pitch worker against worker, Mr Darling insisted a race to the bottom was the only way for Britain to come out of the recession.

"We have got to be fair with regard to people who work in the private sector, many of whom have seen their pay conditions somewhere near freeze."

Mr Darling's comments follow a recommendation by Audit Commission chief executive Steve Bundred for real-term wage cuts, claiming that this would be a "pain free" way to help the economy recover.

In a highly controversial article in a Sunday newspaper, Mr Bundred said that £50 billion needed to be found to plug the hole in the public finances.

Instead of suggesting a tax rise for the highest earners, Mr Bundred insisted £5bn could be found by freezing public-sector pay.

Mr Bundred also attempted to speak for public-sector workers, suggesting they "have done well over the past decade" and would not mind wage reductions.

In a side swipe at the unions, Mr Bundred said: "Don't believe the shroud wavers who tell you grannies will die and children will starve if spending is cut. They won't. Cuts are inevitable and perfectly manageable."

UNISON general secretary Dave Prentis had no time for Mr Bundred's protests and insisted that wage freezes were not the way to get through a recession.

"Let's be clear, the recession was caused by bankers and speculators and the lack of regulation. Low-paid public-sector workers, who will be helping communities through the recession, shouldn't be expected to pay."

The UNISON leader called for some "fairness to be injected into the system, crack down on tax evaders and make the rich pay their fair share."

NASWUT general secretary Chris Keates agreed that reducing the purchasing power of workers would not help Britain out of recession.

"The idea that you have to have some equity of misery, that because the private sector is suffering, the public sector must too is disgraceful."

She added: "What it is doing is not understanding the role of public services in a recession - to sustain and rebuild the economy."