Millions of public sector workers set for pay rise

Millions of public sector workers are likely to receive an above-inflation pay rise due to be announced by Rachel Reeves next week after more than a decade of austerity.

- Rowena Mason

The chancellor is expected to accept the recommendations of public sector pay bodies for pay rises on Monday - in a move that economists believe could cost up to £10bn.

The NHS and teaching public sector pay bodies are reported to have recommended a 5.5% rise - and similar advice is likely to have been given by other pay review bodies, covering workforces such as doctors and dentists, armed forces, prisons and police officers.

The rises would help reverse years of declining wages, deal with staff shortages and see off the threat of industrial action.

Reeves is expected to confirm the pay rises as she sets out her case on Monday that the Conservatives left the government with a dire economic inheritance, including a black hole of £20bn. Despite the difficult economic circumstances, she is expected to make the argument that the pay rises are necessary to avoid the costs to the economy seen in the waves of strikes under the Conservatives.

As part of the process, Reeves asked for an analysis from Treasury officials on the cost to the economy of industrial action, with the strikes of 2022 and 2023 all having a knockon impact on productivity.

This is understood to have found that every day of teachers' strikes cost the economy £300m because of lost working hours, while industrial action in the NHS cost £1.7bn in total to the taxpayer.