Government agrees to implement the recommendations of independent pay review bodies

 The government has accepted and will implement the recommendations of the Independent Pay Review bodies on public sector pay. 

It is a fundamental priority to get inflation under control. So we must do everything we can to meet the Prime Minister’s pledge to halve inflation. That means making responsible decisions, even if they are difficult. If not, we risk making inflation worse. 

We are rightly proud of our world-class public servants and that is why the government has today delivered one of the highest pay settlements in more than two decades, recognising the extraordinary cost of living pressures. 

But we cannot live beyond our means and stoke inflation. It would be neither fair nor affordable to meet unsustainable demands for pay rises well into the double digits. 

So we will stick to our word on public sector pay and the pay review bodies. But we must also stay the course with our fiscal plan, providing a fair deal that follows the recommendations of the independent pay review bodies, but that involves no new spending and no new borrowing. 

That requires difficult decisions. More borrowing would simply add more pressure on inflation at exactly the wrong time, risking higher interest rates and higher mortgage rates. 

The awards represent one of the highest settlements in more than two decades and put more money in the pockets of hard-working public servants at a difficult time:

For Teachers:

• This deal delivers the biggest pay increase for teachers in 30 years.
• This will see the typical teacher take home almost £44,300 a year, with a pay increase of more than £2,700.
• Around 40 per cent of teachers’ pay will rise by between 10 and 17.4 per cent.

For NHS Staff:

• First year Junior Doctors basic pay will rise by 10.3 per cent - or over £3,000. 
• The lowest paid GPs will see an increase of £3,900 or 6 per cent.
• Consultants will see an average increase of around £6,300.
• Our previously agreed deal with NHS staff delivered a 5 per cent pay rise along with one-off awards worth more than £3,600 for the typical nurse or ambulance worker. 

For the Police:

• A typical police officer will see an increase of nearly £5,000.

Armed forces:

• A £2,000 increase with around a 10 per cent rise for the lowest paid personnel - £3,000+ on average.

Prison officers:

• Increases of £1,600-£5,000, with a 10 per cent uplift for the lowest paid. 

The government has delivered on the promise to abide by the PRB recommendations. 

The Prime Minister was clear that we would adhere to this: ‘The pay review bodies have been in existence for a long time, accepted by different political parties as a sensible part of the process. In many cases, those pay settlements were more than what the government had originally thought was doable and indeed higher in many cases than they were in the private sector. That’s why having an independent pay process is an important part of us making those decisions and getting them correct and that’s why we’ve accepted those recommendations in full’.

Many Unions have said we should agree to the PRB recommendations:

• Mary Bousted of the NEU said: ‘We believe the 6.5 per cent is credible, and if that is the case it would be the biggest award announced by a pay review body, we think that is deserved for the teachers, so they should publish it’.
• Dave Penman of the FDA said: ‘If a pay review body, an independent body that the Government set up, that… [it] defended last year when it was hiding behind lower pay rises, recommends higher rises and the Government say no, then people feel rightly angry about that’.
• Patrick Roach of NASUWT said: ‘If the Government chooses to ignore the recommendations of the pay review body, this will have profound consequences for future industrial relations, with industrial action likely in the autumn’.

This deal provides public sector workers with a deal in line with the private sector. The latest median pay settlements across the economy were 6 per cent. This award will see public sector workers get a consolidated wage increase of at least 6 per cent.

However, it is vital that we deliver this in a way that is fair to the taxpayer and does not stoke inflation:

• Our plan is fair to the taxpayer and will not fuel inflation with no new borrowing or spending to fund these awards. More borrowing would simply add more pressure on inflation at exactly the wrong time, risking higher interest rates and higher mortgage rates.
• The Bank of England has been clear that we cannot continue with a cycle of unsustainable pay awards. The Governor has said: ‘But what I would say to people is we expect inflation to come down, and it is important then that price setting and wage setting reflects that…Because the current levels, I'll be absolutely honest, are unsustainable’.
• The IMF has been clear that bringing down inflation should be a priority and has urged us to stay the course with our fiscal plan. We are clear that our fiscal policy will support the Bank of England in getting inflation down - our commitment to return inflation to the 2 per cent target remains ironclad. And we will continue to get debt down by not borrowing for these awards.  

We have to set the right example as one of the country’s largest employers. More borrowing and more demand would just add to pressure on inflation and interest rates at exactly the wrong time, making the Bank of England’s job harder. And given the spending involved in public sector pay, we have to be responsible.

We have made these decisions whilst protecting frontline services. We will be spending £2 billion more this year and £3 billion more next year on pay for these public sector workers than we had planned.

Britain's Conservative government is taking the tough, responsible decisions to protect taxpayers money:

• These recommendations do cost money – we will be spending £2 billion more this year and £3 billion more next year on pay for these public sector workers than we had planned. That requires difficult decisions to make sure we stick with our fiscal plan

The tough but responsible decisions to ensure no new spending and no new borrowing include:

• Delivering efficiencies and savings within Whitehall departments. This includes working with police forces to drive further efficiencies and protecting frontline police officer numbers, and prioritising spending on programmes and core Home Office spending to provide police forces with additional grants to reduce the scale of the pressure. This is alongside our ongoing Productivity Review.
• Increasing visa fees across a range of routes. This includes raising the costs of a variety of visas across the system.
• Increasing the immigration health surcharge. Subject to legislation passing, the main rate will increase to £1,035, and the discounted rate for students and under-18s will increase to £776.

We have made these decisions whilst protecting frontline services. We will be spending £2 billion more this year and £3 billion more next year on pay for these public sector workers than we had planned.

This will not mean reductions in frontline services. Schools will receive the full costs of the pay rise in new funding, above the 3.5 per cent they are already funded for. Any reprioritisation decisions will not impact core schools funding. Frontline health services won't be impacted by any reprioritisation decisions within DHSC - pressures will be covered by wider savings and efficiencies and the increase in the immigration health surcharge.

These savings are fully costed. We have agreed a plan with each department on how awards will be funded from within existing budgets.