Public-sector pay: where can Rishi Sunak find the cash to stop the strikes?

The government is expected to announce today whether it will approve pay increases of 6-6.5% for public-sector workers.

Rishi Sunak has hinted that he might reject the official pay review body’s recommendation for teachers, junior doctors, police and other public-sector workers.

This would “prompt fresh tensions with unions”, said the BBC, “raising the prospect of continuing public-sector strikes”.

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But signing off on a 6.5% pay rise would create another problem: where Sunak and his chancellor would find the cash to fund it.

What did the papers say?

Jeremy Hunt has “refused to cover any extra increases with more borrowing”, noted The Telegraph, as he believes that could “fuel” inflation. “Borrowing is itself inflationary”, said the chancellor this week.

Instead, he has ordered ministers to find between £2bn and £3bn of cuts to fund the pay rises. Hunt’s “edict” has “provoked a flurry in Whitehall to find savings”, said the Financial Times, with warnings from some ministers that the cuts would damage “already-stretched public services”.

A source told the paper that “the conversations are live” and the “bleeding stumps are out”, referring to the tendency of ministers to issue dire warnings of the consequences of cuts.

Without resorting to borrowing, offering pay increases of 6% or more would “eat into the budgets” of Whitehall departments, agreed the i news site.

But Unite general secretary, Sharon Graham, told the site the choice doesn’t have to be between borrowing or cuts, and Sunak “could start by looking at the money made by profiteering companies that have been driving up inflation”.

“They want us to think that the choice is between the devil and the deep blue sea,” she added, but this is “simply not true”.

Unison magazine has accused the government of “distorting the truth”. The union’s policy officer, Guy Collis, said the government recorded a budget surplus of more than £5bn in January 2023, and government borrowing is currently £30bn less than forecast.

“So the money is there”, he wrote, “it just needs government to make health workers its priority”.

A former speechwriter for Tony Blair also believes the issue is simpler than presented by the government, arguing that Sunak “can sort the strikes if he just stops playing small-time politics” by trying to leverage strikes to dent the popularity of Labour.

Writing for the Evening Standard, Philip Collins warned that “soon there will be a parade of strikes and the feeling that no service in Britain is working”. The “initial union demands are too high, of course”, he wrote, “but this is a negotiation”.

What next?

Sunak and Hunt’s decision will come “against a backdrop of a doctors’ strike, a weak economy and persistent high inflation”, noted The Guardian.

As junior doctors begin a five-day strike in England today, the longest walk-out of its kind in the NHS’s history, pressure is mounting for the government to bring an end to the repeated industrial action.

But with inflation currently at 8.7%, Sunak – who has promised to cut it to about 5.3% by the end of the year – wants to avoid pay increases which could “fuel a wage-price spiral”, said the paper.

He has indicated they could overrule the pay review bodies, arguing they need to make difficult decisions in a bid to halve inflation.

In an interview with the BBC’s Sunday with Laura Kuenssberg, Sunak said he was determined to make “affordable” and “responsible” decisions on public-sector pay, which “may not always be popular in the short term”, noted The Telegraph.

He said there was “no point” in him “doing something that sounds popular and nice today, for example on public-sector pay” because he “would be giving with one hand” and “taking with the other through higher inflation and interest rates”.

But Sky News said “it has now been widely suggested” that Sunak will back pay rises of around 6% for public-sector employees in 2023-24. Each department would then publish the independent review body reports and endorse their recommendations.

The rises “could potentially halt further strike action”, said the broadcaster, but “this decision is ultimately down to unions and their members”.