On April 28, 2025, Downing Street announced that the government will not provide any additional funding for pay rises after independent review bodies recommended increases for teachers and NHS staff that exceed the amounts budgeted by ministers. The pay review body for teachers in England suggested a pay rise of approximately 4% this year, while the equivalent for NHS staff recommended an increase of about 3%. Both figures surpass the 2.8% that the government had allocated in their proposals to the pay bodies, raising concerns about the potential strain on public finances.
Prime Minister Sir Keir Starmer, addressing the issue, stated that the government would review the pay proposals and respond in due course. Last year, the government had accepted the recommendations of the pay review bodies in full, granting workers raises between 4.75% and 6%, a move that had successfully quelled widespread industrial action. However, the current situation poses a significant challenge as the government has made it clear that any pay increases above the budgeted amount would require cuts or efficiency savings from other departments.
Starmer emphasized the importance of collaboration with NHS staff to achieve better results, saying, "I think what we've proved is by working with staff, we get better results." He added that the government would respond to the pay recommendations after careful consideration. However, the Prime Minister's official spokesperson reiterated that there would be "no additional funding" for pay deals if the recommended awards exceed what departments can afford.
The potential for further strikes looms large, particularly among teaching unions such as the NASUWT and the National Education Union (NEU), which have threatened industrial action if pay rises lead to cuts or layoffs. NEU General Secretary Daniel Kebede stated, "They need to ensure the pay award is above inflation, that it takes steps to address the crisis in recruitment and retention, but most of all that it is fully funded." The British Medical Association (BMA) has similarly criticized the government's approach, suggesting it reflects a lack of understanding of the unresolved issues stemming from two years of industrial action.
Health Minister Stephen Kinnock, speaking on Sky News, acknowledged the government's commitment to increasing the incomes of working people while also stressing the necessity of balancing the books within fiscal constraints. "We will give these recommendations careful consideration," he said, urging trade unions to engage constructively with the government. However, he recognized the reality of the financial position, indicating that any increases in pay would have to be funded from existing budgets.
Paul Johnson, Director of the Institute for Fiscal Studies, remarked that the government faces tough decisions regarding public sector pay. He indicated that any increase in salaries could lead to tax rises or cuts in other areas, stating, "If you're increasing pay then you can't do other things. You can't employ more teachers or open breakfast clubs or have more doctors and nurses." This sentiment reflects the broader concerns regarding the sustainability of public sector funding amid rising costs and stagnant economic growth.
As the government prepares for local elections, public dissatisfaction over pay and the potential for strikes could significantly influence voter sentiment. Starmer's commitment to reforming the NHS, including promoting the use of a new app to streamline services, is part of a broader strategy to improve public services and reduce waiting lists. He noted, "Three million extra appointments since we've been in government," highlighting the government's focus on delivering tangible results.
The salaries of NHS staff and other public-sector workers, including police officers, teachers, and armed forces members, are determined by eight independent pay review bodies (PRBs). These bodies represent approximately 2.5 million workers, accounting for about 45% of public-sector staff and a pay bill of around £100 billion. The PRBs consider overall earnings in both the public and private sectors, as well as the forecast rate of inflation, when making their recommendations.
The government's initial budget, which was criticized by unions for being insufficient, has set the stage for potential unrest. The BMA described the proposed pay as "pay erosion" for medical staff, while Unison labeled it "barely above the cost of living." The pressure on Chancellor Rachel Reeves is mounting as she navigates a difficult economic landscape, with rising costs of benefit spending and public sector pay increases contributing to a growing deficit.
In light of the recommendations, the government faces a dilemma: either accept the higher pay proposals and find the necessary funding or risk inciting further industrial action from unions. The NASUWT has already indicated that it will pursue strikes if the pay award is not fully funded by the government rather than being sourced from budget cuts. The NEU has similarly pledged to hold a formal ballot if the pay offer is deemed unacceptable.
As the situation unfolds, the government must balance the need to support public sector workers with the fiscal realities of a constrained budget. The Treasury has made it clear that there will be no funding for pay rises beyond what was set out in the budget, emphasizing the need for careful consideration of the recommendations from the independent review bodies.
With the potential for strikes looming and public sentiment shifting, the government's approach to public sector pay will be closely scrutinized. The outcome of this situation will not only impact the livelihoods of millions of workers but could also shape the political landscape in the lead-up to the next general election.
