Fury over austerity threat as Hunt rules out extra money for public sector pay rises

Jeremy Hunt has been warned by union bosses not to impose another round of damaging austerity cuts on frontline services after saying there would be no extra money to fund 6 per cent pay rises in the public sector.

The chancellor is ruling out extra cash if Rishi Sunak agrees to the pay hikes recommended by independent pay review bodies – sparking fears of swingeing cuts across departments.

But furious union leaders told The Independent that “burnt-out” public sector workers were already quitting over low pay – leaving the NHS and schools struggling to provide basic services.

Sharon Graham, Unite’s general secretary, said the government appeared to be threatening to give staff “a half-decent pay rise” only “if underfunded departments like health and education make further cuts to public services”.

She added: “They want us to think that the choice is between the devil and the deep blue sea. This is simply not true. If the government wanted to, it could well afford to pay public sector workers properly, while maintaining and indeed improving funding for schools and hospitals.”

Prof Philip Banfield, British Medical Association (BMA) council chair, said: “Talking about staff pay and frontline services as if they are distinct from each another is a complete fallacy.”

He added: “Staff are leaving because they are not being paid properly or fairly. Without staff, and particularly the expertise of our doctors, the NHS cannot provide frontline services – after all, you need pilots to fly planes.”

Mr Sunak and Mr Hunt are still considering whether to accept the recommendations of pay review bodies to offer millions of workers rises of around 6 per cent or risk further rows with unions by rejecting the suggestions on the grounds of affordability.

Reports in The Times suggest the review bodies have recommended that teachers should receive a 6.5 per cent pay rise for 2023-24, while police officers, prison officers and junior doctors should all get 6 per cent or more – all at a potential cost in excess of £5bn.

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Mr Hunt raised the prospect of departments making cuts elsewhere when he ruled out borrowing at his Mansion House speech on Monday. Mr Hunt told ITV’s Peston on Wednesday that the government “won’t fund any public sector pay awards through additional borrowing”.

Warning of the inflationary impact, the chancellor told the programme: “If you fund any public sector pay rise by increasing borrowing that year, that pumps billions of pounds of extra money into the economy.”

But PCS union general secretary Mark Serwotka said civil servants need “both a pay rise and investment in their departmental budgets” to provide “the quality of service expected by the public”.

He added: “Cuts to wages and to departmental budgets will have the opposite effect, leading to fewer staff and worse services. Rather than peddling the myth that wage rises cause inflation, Jeremy Hunt should give our members the pay rise they deserve without cutting the services they provide.”

Paul Nowak, TUC general secretary, said teachers and NHS hospitals and social care staff were being “driven away” by low pay. “They are burnt-out, underpaid and cannot take it anymore. And all of us who depend on these services are suffering as a result.”

He added: “The government must come forward with a credible funding plan to protect our public services and the staff who work in them.”

Unison’s general secretary Christina McAnea said it “makes no sense to expect the cost of pay rises to come from existing budgets. Without extra funding, there’ll be even greater cuts and pressure on services. That helps no one.”

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Final decisions on the pay review are expected within days, with Mr Sunak warning that “we all live within budgets” and he had to take a “responsible” approach to the public finances and the wider economic picture.

Speaking to reporters accompanying him on his visit to the Nato summit in Vilnius, Mr Sunak said: “We all live within budgets … Everyone can see the economic context that we’re in with inflation where it is – borrowing costs for government, not just in the UK but across the world, are rising.

“We need to look at that context and then decide what is the right thing to do. That is not always easy but that is what being responsible looks like, and that is why we will take the time to get this right.”

Mr Hunt told a dinner event on Tuesday night that Mr Sunak could offer his “next five” pledges before the next election because the government is confident on delivering the five big promises set out in January.

“We’ll be able to say to them you can listen to us – because we delivered the last five, and here are the next five, and we’re a party that delivers,” he told the Onward think tank.

Shadow cabinet minister Lisa Nandy refused to say whether a Labour government would accept the pay review body recommendations in full.

The shadow housing secretary said: “We haven’t seen them all and we would obviously look at them carefully. In the end it is for governments to decide, though.”

She added: “We want a much greater focus on retention and recruitment in the pay review body recommendations, because we think that is becoming the major problem and it isn’t just a question of wages for public sector workers, there’s also the problem of workload.”