Prime Minister Rishi Sunak signed off on pay rises for millions of public sector workers in the UK, as he tries to end the months-long battle with labor unions that is undermining his government’s efforts to improve services ahead of a general election expected next year.
(Bloomberg) — Prime Minister Rishi Sunak signed off on pay rises for millions of public sector workers in the UK, as he tries to end the months-long battle with labor unions that is undermining his government’s efforts to improve services ahead of a general election expected next year.
Police pay will go up by 7%, teachers will get a 6.5% increase and doctors will see a 6% rise — in line with recommendations from the official public pay review bodies, Treasury minister John Glen told Parliament on Thursday. He also announced pay awards for the armed forces and prison officers, and said there would be no new borrowing or spending to fund the extra pay.
Sunak is trying to reset the political narrative around the strikes, which are fused in the minds of voters with an overall decline in public services under the governing Conservative Party. His ministers had repeatedly hinted the government might not accept the pay bodies’ proposals as it prioritizes the fight against inflation. By accepting, the premier is putting pressure on staff to return to work and accept what he called a “fair” offer.
“There will be no more talks on pay,” Sunak said in a televised press conference in Downing Street. “We will not negotiate again on this year’s settlements, and no amount of strikes will change our decision.”
Sunak got an immediate boost when the heads of the teaching unions said they would recommend members accept the pay settlement and end strike action. But others may prove tougher to persuade, according to Stuart Hoddinott, a senior researcher at the Institute for Government think tank.
“It’s positive the new approach the government is taking, but it doesn’t make up for the very combative negotiations over the last nine months,” he said, adding that relations will be hard to repair. “There’s been a lot of bad blood.”
Some unions are also likely to be angered by the failure to fully fund the pay awards, particularly in the health care sector where budgets are already stretched. Sunak promised that no front-line services would be cut to find the money, though he also warned some policies would have to be “re-prioritized.”
That points to the dilemma facing Sunak, who has asked voters to judge him on his pledge to cut inflation — a priority he has used to justify limits on public sector pay increases. On Thursday, the prime minister made clear that there would be no new borrowing or taxes to fund the pay settlement and that it would not be inflationary. Instead, departments were asked to find savings.
“We only have a fixed pot of money to spend from,” he said. “That means government departments have had to find savings and efficiencies elsewhere in order to prioritize paying public sector workers more.”
What that potentially means is Sunak gets more staff back to the workplace — at the risk of setting back his bigger, longer-term challenge to fix the UK’s ailing public services. Just before Sunak spoke, NHS data showed a record 7.47 million procedures classified as “incomplete” as of the end of May.
Tens of thousands of England’s junior doctors began a five-day strike on Thursday, plunging the National Health Service into the longest strike in its history. Hoddinott at the IfG predicted ending the doctors’ strikes would be the most difficult for Sunak.
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“Sadly, this just shows this government has no understanding of the current situation — this award will not end the dispute, nor will it retain doctors and stop them going abroad,” Phil Banfield, spokesman for the British Medical Association which represents doctors, told BBC Radio.
The situation is different for teachers because Glen announced more than £1.4 billion of extra funding for schools over two years — to come from the Department for Education’s existing budget — signaling other parts of education spending will have to be cut back.
With an election due by January 2025 at the latest, polls show voters blame the ruling Conservatives for the erosion of public services on their watch, leaving the ruling party facing a double-digit deficit to the opposition Labour Party in most surveys.
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Sunak and Chancellor of the Exchequer Jeremy Hunt are calculating that if they can get inflation down — it’s currently running at 8.7% — they can still try to campaign on their economic record. That’s why the government was determined not to do anything inflationary with the pay settlement.
Economists have argued that hiking public sector pay is unlikely to provide a major boost to inflation if it is funded by tax increases or spending restraints rather than borrowing. It is different to the rapid pay rises being seen in the private sector, which threaten to cause a wage-price spiral as businesses then pass on their higher staff cost back to consumers.
The government estimates the pay rises will cost about £2 billion — that compares to an overall public sector pay bill of £233 billion in the tax year 2021-22. Sunak said some of that would be recouped by lifting the cost of UK visas and the price for migrants to use the NHS — two policies that will please the rebellious right-wing of his Tory party.
Ending the strikes would also remove a drag on the economy. The UK has lost close to four million days due to strikes, levels not seen since the days of Margaret Thatcher, at a cost of £1.3 billion, according to data from the Office for National Statistics and the Centre for Business and Economics.
Still, it is not clear that the pay awards will end the strikes, while any service cuts would not help the Tories’ electoral prospects. Pressed on the potential scaling back — including the National Health Service and schools — Hunt told ITV on Wednesday the UK faces a “very difficult time.”
“The government is putting its departments between a rock and hard place,” Sharon Graham, general secretary of one of the UK’s biggest labor unions Unite representing more than 100,000 NHS workers, said in emailed statement. “They now have to choose between paying workers a half-decent salary or cutting services in already underfunded public services.”
Meanwhile, even as the government potentially repaired some of its relations with workers, it suffered a defeat in a high court battle with 13 labor unions over changes it made last year to strike provisions, overturning a 1970s rule banning temps from doing the work of those taking industrial action. The judge ruled the decision unlawful and quashed the government’s changes.
–With assistance from Joe Mayes, Kitty Donaldson and Tom Rees.
(Updates with Sunak comments from fourth paragraph, details throughout)
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