The chancellor's Budget last month left local government with more questions than answers – and one of the biggest questions was: where next for public sector pay?

Philip Hammond may not have direct control over local government pay packets, but the chancellor's actions often set the tone for local government pay. Instead of clarity over how he would bring an end to the wider public pay ‘cap', the Budget offered a fudge with Hammond merely vowing to examine nurses' pay and to fund the recommended rise.

This week's announcement that local government employers will offer a headline 2% increase this year and next is likely to be met with mixed emotions across the sector. It is both not enough and too much.

After several years of 1% increases amid stagnant inflation rates, a 2% rise looks generous. Local authorities will hit the chancellor's 2015 commitment to raising the National Living Wage to £9 by 2020 – a £2 increase for the lowest paid in the five years since the announcement, while the jump from £5 to £7 took 13 years.

But a 2% rise is still a real terms pay cut, with inflation currently running at 2.8% CPI. The mortgage rate increase has hit housing – both owner-occupied and the rental market – and food inflation is currently at 4.1%.

In reality, local government workers still deserve more. Delivering essential local services against a backdrop of austerity, soaring demand and dwindling staffing levels, frontline workers deserve more than town halls can currently afford.

And therein lies the problem. Attracting staff in local government is becoming harder as stress levels rise. It only takes a Lidl or a Tesco to open locally to create an exodus in care staff who can earn more money with less stress, stacking shelves for a living.

From social workers to senior managers, local government staff are feeling the strain as the sector seeks creative ways to mitigate cuts.

But in truth, 2% is as much as many councils can manage to add to their pay bill without forcing themselves into a financial crisis. For years councils have wanted to pay staff more in order to keep them – they just haven't had the cash.