Rachel Reeves suggests public sector pay rise above inflation

Chancellor of the Exchequer Rachel Reeves said the Government would “make sure the totals add up” if public sector workers were to receive above-inflation pay rises.

Reports first published in The Times reveal that independent pay review bodies have recommended a 5.5% pay rise for teachers and around 1.3 million NHS staff.

Speaking to the BBC, the Chancellor said she valued public service workers and that “people will not have to wait long for a decision”.

“There is a price to pay for not reaching a deal, it is the cost of further strikes and the cost of the challenges we face in terms of recruitment,” she told Sunday With Laura Kuenssberg, stressing that her spending rules were “non-negotiable”.

“We’ll do it the right way and make sure the totals add up.”

However, ministers were not interested in implementing the recommendations of the pay review bodies.

Chancellor of the Exchequer James Murray said the chancellor would set out the government’s response to the recommendations at the end of the month, taking into account the state of the public finances, adding that it would “not be helpful” for him to “pre-empt the process we are going through now”.

Paul Johnson, director of the influential Institute for Fiscal Studies, suggested the pay rises could cost schools and the NHS alone an extra £3 billion.

He told the BBC: “In terms of costs, there is no specific figure budgeted for schools, it is probably 1 or 2%, it is certainly not 5.5%, so we would definitely have to expect an additional cost to schools of at least £1 billion compared to what they are currently expecting.

“And that figure could be at least twice that across the NHS if the proposals for the NHS are similar, which seems likely.”

Speaking on public sector pay on Sunday morning, the Chancellor of the Exchequer accused former Conservative ministers of “running away” from the decision.

She singled out former Education Secretary Gillian Keegan, saying the recommendations from the Teachers’ Pay Review Body had been on her desk “for months”.

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“She didn’t do anything about it. She didn’t publish it, she didn’t say how she was going to respond to it,” Ms. Reeves said.

“They called elections, they didn’t make the hard decisions, they ran away from them and now it’s up to us to fix it and put it back together.”

Ministers have repeatedly blamed their predecessors for leaving them with the worst financial legacy since World War II.

But former chancellor Jeremy Hunt told Sunday With Laura Kuenssberg that this was “absolute nonsense” and that it was intended to prepare the ground for tax rises.

He said: “Just a few weeks ago I was looking at the same numbers that Rachel Reeves is looking at now.

“It is absolutely clear that if you are prepared to show restraint on public sector pay, as we did last year, if you are prepared to show ambition on public sector productivity, as I did on the Budget, and you are prepared to deliver the welfare reform that was conspicuously absent from the King’s Speech – if you do those three things, it is entirely possible to balance the budget in a way that taxes don’t have to go up.

“I think it’s clear from what we’ve seen in the first two weeks of Labour’s government that they are not prepared to make difficult decisions.”

Mr Hunt also denied he was “running away” from decision-making on public sector pay, saying: “You can criticise me for many things but I don’t think people would want to criticise me for not making the tough decisions.”