An independent survey suggests a 5.5% pay rise for teachers and nurses in Britain. The Prime Minister says he is ready to face the unions, but the Ministry of Finance is not ready.

According to official figures from the Office for National Statistics (ONS) between June 2022 and December 2023 more than 5 million working days were lost in the UK. These are the worst statistics in the last 30 years for the country, which proves the huge problem it faces with its public services.

The long waiting lists in the National Health System (NHS), the problem of recruiting new teachers and professors, the delays and repeated cancellations on the railways that the British experienced during that period cannot of course disappear overnight. It is something that the new Labor government also has to deal with and depending on the decisions, the smooth running of everyday life in the United Kingdom will be judged or not.

Raises for 2 million workers

But the problem comes to the fore much more aggressively. Independent commissions set up to look into public sector pay have recommended a 5.5% rise for teachers and nurses after publishing their research yesterday. This is an increase higher than inflation and higher than what the Ministry of Finance of the country had budgeted, amounting to 3%.

It should be noted that the increases affect 514,000 teachers and professors and 1.36 million NHS workers. In numbers already put by economists, it means the government needs to find an extra £3.5 billion to be able to meet the rate cap. And it is not only these public sectors that must be satisfied. Independent inquiries are currently underway into pay rises for doctors, police and armed forces, public transport workers and others. After all, there are 6 million civil servants in the UK in total and they have all been on a series of strikes, demanding higher pay and better working conditions, as understaffing is another big problem facing services primarily and the government secondarily.

“Financially weak” the main problem, says the government

British Prime Minister Keir Starmer, from the very first week he took office, has declared “ready to face the demands of the unions”. A government spokesman also told The Times that “we will inform in due course (about the decisions), but we are under no illusions about the finances we inherited from the previous government.”

The statements do not inspire much confidence to satisfy the requests. Of course, if something like this happens, the newly formed Labor government risks additional strikes. Again according to the British newspaper, a source from the health professions union said that “it is difficult not to accept 5.5%, but if the government offers less then we will react”.

Where will the money be found?

A key question now is where the funding will come from. The onus now falls on the Treasury and Rachel Reeves. Economists see the only solution as either an increase in taxes or spending cuts and of course an increase in the country’s borrowing. And somewhere there another problem arises. Just yesterday, the Office for National Statistics published that the country’s borrowing level was higher than expected, reaching 14.5 billion pounds for the month of June, up from 11.4 billion initially estimated by analysts at the City of London. Although it was the smallest amount of borrowing in the last 5 years, it is a sample of how “tight” the state’s finances are.

It remains to be seen what will happen at the end of the month when the Ministry of Finance is expected to publish the first image of the fiscal data, and of course with more certainty towards the end of September, when Rachel Reeves is expected to make the budget statement.