Chancellor of the Exchequer Jeremy Hunt must consider dipping into a £14 billion ($16.9 billion) pot of reserves to fund a pay raise for UK public sector workers or deepening a crisis in frontline services, the Institute for Fiscal Studies said.
(Bloomberg) — Chancellor of the Exchequer Jeremy Hunt must consider dipping into a £14 billion ($16.9 billion) pot of reserves to fund a pay raise for UK public sector workers or deepening a crisis in frontline services, the Institute for Fiscal Studies said.
The research group said it’s “implausible” that the Treasury will not stump up extra money after Hunt used his budget on Wednesday to funnel money to motorists, corporations and wealthy pensioners instead of pay to end a wave of strikes.
Britain is in the grip of a winter of industrial strife hitting services across the economy including rail, healthcare and the civil service. However, there are growing hopes that some of the disputes could be nearing an end.
“You can’t keep cutting the pay of teachers, nurses and civil servants, both in real terms and relative to the private sector, without consequences for recruitment, retention and service delivery,” Paul Johnson, director of the IFS, said Thursday. “Money will have to be found from somewhere.”
He suggested using a £14 billion reserve to fund one-off or backdated pay awards to help end the strikes.
“More generally, the argument that this is not affordable founders on the fact that Mr Hunt found £20 billion a year yesterday for other things,” Johnson said. “This is a question of choices and priorities.”
–With assistance from Andrew Atkinson.
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