Independent pay review bodies have recommended pay rises of around 4% for teachers (514,000) and approximately 3% for NHS workers (1.38 million) in England. These recommendations are significantly higher than the government's 2.8% budget allocation.
The government is expected to accept these recommendations but faces financial strain. Departments will need to find efficiency savings to cover the added costs. The Treasury previously stated there would be no additional funding. The National Education Union will ballot for strike action if the offer is deemed unacceptable or no extra funding is provided. Other unions representing NHS workers, and potentially police, prison officers and soldiers, are also considering industrial action.
The National Education Union and NASUWT have threatened strikes. NHS workers are also considering resuming strikes. The Royal College of Nursing previously rejected a 5.5% pay offer and junior doctors, having received a 22% rise last year, may also return to strike action over further pay demands.
Economists estimate the recommended pay rises could cost an additional ÂŁ1.1 billion. The government's financial position is already challenged by higher-than-expected borrowing. The situation could lead to tough choices regarding spending in other areas and potential financial difficulties in future years.
Labour has highlighted ending strikes as a goal, citing its role in recent reductions in NHS waiting lists. The Treasury is currently reviewing the recommendations.
Millions of public sector workers including teachers and nurses should be given pay rises of as much as 4 per cent, ministers have been told in a move that will put further pressure on Rachel Reeves.
The Times has been told that the independent pay review body representing 514,000 teachers has recommended a pay rise of close to 4 per cent, while the one for 1.38 million NHS workers has recommended closer to 3 per cent.
The pay rises, for England, are significantly more than the 2.8 per cent that the government budgeted for and are likely to place further strain on public finances. Schools and hospitals will be told to find efficiency savings to help meet some of the costs.
Other public sector workers such as police, prison officers and soldiers are likely to be given higher settlements in recognition of the fact that they cannot go on strike.
The chancellor is already facing the prospect of having to raise taxes or cut spending in the autumn to balance the books after the economy was hit by President Trump’s global trade war.
Last week official figures revealed that the government borrowed nearly ÂŁ15 billion more than expected because of increased spending on benefits and the impact of public sector pay rises last year.
The Treasury previously told ministers that there would be no additional funding and that if independent pay review bodies recommended bigger rises, they would have to fund it from existing budgets. It said that departments would have to look at “offsetting savings on non-pay expenditure, including frontline services”, or additional efficiency savings.
The government is expected to accept the recommendations of the pay review bodies in full but still faces the prospect of industrial action. The National Education Union, England’s largest teaching union, has said it will hold a formal ballot if the offer is “unacceptable” or no extra funding is announced.
Members of the NASUWT teaching union threatened to go on strike unless the pay award was fully funded by the government rather than met through cuts to schools’ budgets.
Teachers have taken action over pay
GARETH FULLER/PA
The NHS recommendations, which are closer to 3 per cent, are set to provoke a wave of union anger that could lead to a return to the strikes that caused huge disruptions to hospitals until last summer.
Nurses and other workers are considering whether to resume industrial action, and frontline workers are deeply unhappy about pay.
An NHS source said: “This will go down really badly. These are people who haven’t had a lot given to them in recent years and we know that nurses are gingering up for some kind of industrial action, unions are very upset and it is going to be unrest all over again.”
• Is Britain heading for a summer of discontent?
The pay review bodies have recommended higher settlements after the Office for Budget Responsibility, the fiscal watchdog, increased its forecasts for overall wage growth at the spring statement last month. Inflation has also proved stickier than expected and is forecast to rise to 3.2 per cent this year.
The independent pay review bodies take overall earnings, both public and private sector, and the forecast rate of inflation into account when they make their recommendations.
Last year the government accepted the recommendations of the pay review bodies in full and increased public sector pay by about 5.5 per cent, a move that brought an end to widespread industrial action.
Economists said that the recommended pay rises for schools and hospitals alone could cost the government an extra ÂŁ1.1 billion more than its existing offer.
Ben Zaranko, associate director at the Institute for Fiscal Studies, said: “Paying staff appropriately will be critical if the government to deliver its promised improvements to hospitals, schools, prisons and the police.
“But if pay recommendations run ahead of what public service leaders have set aside, and no additional funding is forthcoming, that will force ruthless prioritisation and tough choices elsewhere.
“Higher pay this year means higher pay in all future years, potentially storing up trouble for future years, when departments are told to live within the much tighter settlements to be set out in June’s spending review.”
Last year the Royal College of Nursing rejected a 5.5 per cent pay award in a warning to ministers that its members expected better this year.
The union went on strike in 2022 for the first time in England, action which ended only when a subsequent ballot fell short of legal thresholds. However, Labour’s workers’ rights package will make it easier for unions to continue strikes in future.
The Royal College of Nursing chief executive Pat Cullen, centre right, on a picket line in January 2023
DANNY LAWSON/PA
Other health unions are also said to be unhappy and are set to consult members about industrial action.
Junior doctors, who were given a 22 per cent pay rise last year to end their campaign of strikes, are also expecting another hefty increase this year as they push to restore pay to 2008 levels in real terms. They are likely to be unhappy with anything below 5 per cent and are signalling they are ready to return to industrial action.
Sir Keir Starmer has cited ending strikes as a key part of his plan to improve the NHS, arguing it is one of the reasons waiting lists have been falling for the past six months.
A Treasury spokesman said the government was considering the recommendations and would respond in due course. He said: “Last year this government accepted the independent pay review bodies’ recommendations in full, providing the first meaningful real-terms pay rises for years.”
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