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UK public sector workers face new pay curbs next year, after the Treasury said it would not raise taxes to fund more generous bonuses.
The Departments for Education and Health said as evidence for independent pay review bodies that anything beyond a 2.8 per cent rise in the pay of teachers, NHS staff and doctors would be unsustainable in 2025-26, absent significant cuts in other spending. Similar pay guidance will cover prison officers, police, members of the armed forces and senior civil servants.
Trade unions, who have demanded a sustained push to make public sector wages more competitive, reacted angrily to the announcements.
Unison, Britain's largest union, said the proposed increase for NHS workers was “barely higher than the cost of living”.
Pay review bodies are not obliged to follow government guidance when they make recommendations to ministers, but guidance from Whitehall departments sends a clear signal that 2.5 million public sector workers are likely to receive limited pay rises next year.
This would be in sharp contrast to the generous 5-6 per cent pay rises for 2024-25 introduced by the Labor government immediately after the general election in July.
A 2.8 per cent increase would be enough to keep wages rising faster than prices, with current forecasts for UK inflation of 2.6 per cent in 2025-26, but it would be less than the average wage settlement of 3 per cent expected in Private sector. .
The Treasury said this year's pay awards were sufficient to bring public sector workers' wages on par with their private sector counterparts – even before taking into account more generous pensions – and that the backdrop of a slowing labor market would make it easier to recruit and retain staff. .
The Treasury said following the tax rises announced in the October Budget, departmental spending limits for 2025-26 have now been set and “unlike recent years, there will be no additional funding available for wages”. Guides to pay review bodies.
Departments will need to cut other spending on front-line services or realize more productivity gains if they want to receive higher pay bonuses.
Public sector unions – which led a wave of strikes to protest wage cuts under the previous Conservative government – objected to the new wage guidelines.
Helga Pyle, head of health at Unison, which represents many low-paid hospital workers, said: “The government inherited a financial mess from its predecessors, but that is not what NHS workers wanted to hear.
“Improving performance is a key government undertaking, but the proposed pay rise barely exceeds the cost of living.”
Philip Banfield, chairman of the governing council of the British Medical Association, which represents doctors, said the government had failed to understand the “unresolved issues after two years of industrial action” if it believed a 2.8 per cent increase would be enough.
Professor Nicola Ranger, head of the Royal College of Nursing, said: “The government today told nursing staff that they are worth just two extra pounds a day, less than the price of a coffee.”
There was also concern that even a modest increase in wages for public sector workers would put new pressure on departmental budgets.
One health official said hospital chiefs increasingly fear that Chancellor Rachel Reeves' planned £22.6bn increase in the NHS's day-to-day budget over two years will be “swallowed up” by next year's pay bonus and will be “above and beyond”. NHS budget. “The NHS can really afford it.”
The Ministry of Education said that most schools will not be able to cover the proposed 2.8 percent increase in teacher salaries unless they achieve other competencies.
But Daniel Kebede, secretary-general of the National Education Union, said a “major pay correction” was needed to address the teacher recruitment and retention crisis.
“There are no ‘efficiencies’ that can be achieved without further damaging education… This will not work,” he added.
