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Louise Thomas
Editor
Rachel Reeves has suggested that substantial pay increases for public sector workers could be on the horizon to address the costs of ongoing industrial action and recruitment challenges.
The chancellor has assured that “people won’t have to wait long” for a decision, following recommendations for a 5.5% pay rise for teachers and 1.3 million NHS staff.
Reeves emphasized the need for a well-planned approach to funding these raises, with an announcement expected by the end of July alongside a Treasury review.
However, schools and hospitals might struggle to cover these increases from their current budgets. Paul Johnson of the Institute for Fiscal Studies estimates the pay rises could add at least £3 billion to costs for schools and the NHS.
A higher-than-expected pay rise could pose a significant challenge for Reeves’s first budget, likely coming in the autumn, especially after promising to control borrowing and ruling out a string of tax rises during the election campaign.
On the other hand, failing to meet the pay review bodies’ recommendations, expected to be published this month, could lead to clashes with trade unions representing the six million public sector workers. Daniel Kebede, general secretary of the National Education Union, has warned that ignoring these recommendations could result in strike action.
Now, we want to know what you think: should public sector workers get a 5.5% pay rise, or should Reeves keep the purse strings tight?
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