Chancellor Rachel Reeves hints at above inflation public sector pay rises

Rachel Reeves said a decision will be made soon amid reports of a recommended 5.5% rise for teachers and NHS staff

Chancellor Rachel Reeves has said the government will “make sure the sums add up” if public sector workers are given above inflation pay rises.

Reports which first appeared in The Times suggest independent pay review bodies have recommended the 5.5% rise for teachers and around 1.3 million NHS staff.

Speaking to the BBC, the Chancellor said she valued public service workers and that “people won’t have long to wait for a decision”.

“There is a cost to not settling, a cost of further industrial action, and a cost in terms of the challenge we face recruiting,” she told Sunday with Laura Kuenssberg, stressing her spending rules were “non-negotiable”.

“We will do it in a proper way and make sure the sums add up.”

Rachel Reeves became the first woman to get the keys to No 11 Credit: Stefan Rousseau/PA

She also said the government would carry out a review of pensions to help stimulate growth by unlocking cash in schemes.

“People who make sacrifices and save every month to put something aside for their retirement, they deserve better than the returns they’re getting on those savings today,” she said, adding there was an “urgency” from the government to unlock investment.

Paul Johnson, director of the influential Institute for Fiscal Studies, said the public sector would be in pay rises across the economy, and would cost an extra £3 billion for schools and the NHS alone.

He told the BBC: “In terms of the cost, there isn’t a specific number that is budgeted for schools, it’s probably 1 or 2%, it’s certainly nothing like 5.5%, so we’d certainly be looking at at least an additional £1 billion on schools’ costs relative to what they’re currently expecting.

“And a number at least double that across the NHS if the proposals for the NHS are similar, which it appears that they might be.”

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