Public sector workers in the United Kingdom could potentially receive above-inflation pay rises this summer, according to Chancellor Rachel Reeves. Independent pay review bodies have suggested that teachers and some NHS staff should receive increases of 5.5%. Reeves, the first chancellor to be interviewed from No.11 Downing Street, said that the ongoing cost of industrial disputes and recruitment issues highlighted the importance of resolving the pay issue. However, she also said that she would ensure that spending rules were followed, adding that the sums had to “add up”.
The estimated cost of the 5.5% pay rises could be as much as £3bn, significantly higher than the 2.5% to 3% initially expected by the Treasury. Paul Johnson, the director of the Institute for Fiscal Studies, suggested that the government would have to raise taxes or increase borrowing or make cuts in order to pay for such a rise.
Reeves confirmed that decisions on public pay would be made before the end of July. She also plans to undertake a full review of pensions, including changing the rules to enable greater investment in the UK’s economy by pension funds. Reeves pledged to release up to £8bn for investment through this route.
The full interview with Reeves will be broadcast on Sunday with Laura Kuenssberg. Her shadow, Jeremy Hunt, will also appear on the show
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