Fears over public service cuts as Tories fail to offer extra cash for wage hikes
Fears have been raised of a wave of cuts to public services after the Treasury failed to stump up extra cash for pay rises for millions of public sector workers.
Rishi Sunak bowed to pressure and accepted recommendations from pay review bodies for wage hikes for a million public sector workers, including teachers, troops, prison officers, police, junior doctors and consultants.
But only teachers were given a "fully funded" wage rise of 6.5% to see off the threat of mass school strikes in the autumn term. Other departments will have to drum up cash from existing budgets - meaning cuts will have to be found in other areas.
It comes after days of speculation that Mr Sunak was poised to undercut the pay review bodies as he battles to curb rampant inflation.
Instead, the PM told a Downing Street press conference: "Now clearly, this will cost all of you as taxpayers more than we had budgeted for. That's why the decision has been difficult, and why it has taken time to decide the right course of action.
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Rishi Sunak bowed to pressure to give pay hikes to a million public sector workers (Getty Images)"I can confirm today that we are accepting the headline recommendations of the pay review bodies in full, but we will not fund them by borrowing more or increasing your taxes."
Police and prison officers were handed 7% pay boosts, with 5% for most armed forces personnel with a £1,000 consolidated increase. Senior civil servants will get 5.5%.
Junior doctors, who began a five-day walkout on Thursday, refused to call off their strike, saying the offer of a 6% hike with £1,250 consolidated increase amounted to another real terms pay cut.
Hospital consultants, who will go on strike across England next week, will receive a 6% rise. Other NHS staff such as nurses were awarded a 5% rise earlier this year so were not covered by today's announcement.
Pay increases for teachers and the police will come into force from September. The other rises will be backdated to April.
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The wage rises will cost around £2billion in total. Downing Street said £1billion would be clawed back through hiking visa charges for migrants coming to the UK and the levy they pay to access the NHS, as well as cut backs like a recruitment freeze at the Ministry of Defence.
But around £1billion more needs to be found from departmental underspends and budget cuts.
Lib Dem leader Sir Ed Davey accused the Prime Minister of "taking a wrecking ball to public services" and urged him to "come clean" about the impact on hospitals.
Dame Meg Hillier, chair of the Commons Public Accounts Committee, said: "It's going to be some very painful choices for frontline leaders about how they're actually going to fund this." She added that it is "a bit robbing Peter to pay Paul".
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Unite General Secretary Sharon Graham said departments were being put "between a rock and hard place" to pay for wage hikes after years of squeezed funding for public services.
"They now have to choose between paying workers a half-decent salary or cutting services in already underfunded public services," she said.
Prospect union's general secretary Mike Clancy said the Government was "taking a knife to public services to pay for these pay rises", showing "they have learned nothing from the austerity years".
Mr Sunak issued a direct challenge to striking doctors, warning: “Today’s offer is final, there will be no more talks on pay.
“We will not negotiate again on this year’s settlements, and no amount of strikes will change our decision.”
But BMA chairman of council Professor Phil Banfield said it was "a missed a huge opportunity" to end the strikes.
"Public sector workers are not only working in underfunded services, but they are now being asked to pay for them through further cuts and proposed increased visa costs," he said.
"The political choices this Government is making continue to make ordinary people sicker and poorer; that is an unconscionable position for a ‘civilised’ society to be in."
NHS leaders warned that failing to fund the pay rises would hammer hospital budgets and lead to further disruption to patients.
Matthew Taylor, chief executive of the NHS Confederation, welcomed the pay boost but forcing health chiefs to raid their budgets to plug funding gaps would lead to cutbacks to patient care.
He said: "Unless this increase is funded in full, this announcement does nothing more than wield an axe to the NHS’s already constrained budget and potentially allow industrial action to disrupt patient care for the foreseeable future."
And he questioned how the PM would meet his commitment to slash spiralling NHS waiting lists by adding further pressure to hospital budgets.
Shadow Chief Secretary to the Treasury Pat McFadden demanded to know whether it would mean cuts to school and hospital building programmes.
He added: "The economic backdrop that we have colours everything in this statement. It is no longer a matter of judging if the Conservative Government will fail, the fact is they have already failed and that is why the general election cannot come soon enough."
Mr Sunak said Government departments "have had to find savings elsewhere" - but declined to name one example of a service that would be squeezed.
But he insisted schools would not be required to make savings to frontline services. There will be £525 million of additional money for schools in 2023-24 and a further £900 million in 2024-25, mostly found through department underspends.
Experts questioned whether the extra cash would be enough to fill the funding black hole faced by schools.
"Different schools are in very different financial positions, and many have been hit hard by the cost-of-living squeeze," said Jack Worth, from the National Foundation for Educational Research (NFER).
Teaching unions said they would urge their members to accept the offer after months of bitter stalemate.
On Wednesday, the NASUWT won a mandate for strikes in the autumn but the action has now been shelved. The NEU, ASCL and NAHT were also balloting for industrial action.
In a joint statement with the PM and Education Secretary Gillian Keegan, the four major unions said the pay recommendations will "allow teachers and school leaders to call off strike action and resume normal relations with Government".
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