Rishi Sunak hints at blocking public sector pay rises as he attacks ‘completely unreasonable’ doctors’ strikes
Rishi Sunak has hinted he will ignore recommendations for public sector pay rises, saying workers “need to recognise the economic context we are in”.
Reports surfaced over the weekend that the prime minister planned to block upcoming proposals from public sector pay bodies in an attempt to tackle soaring inflation in the country.
And health minister Helen Whately refused to commit to the uplift during an interview with Sky News on Monday morning.
Unions and opposition parties have hit out at the rumoured decision, saying inflation was not being driven by the wages of nurses and teachers, but by the economic decisions taken by the Conservatives over their 13 years in power.
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Last week, the Office for National Statistics confirmed inflation was stuck at 8.7% and the Bank of England raised interest rates to 5% – a 15-year high.
Asked by broadcasters today whether public sector pay was a major driver of that inflation, Mr Sunak said: “Government borrowing is something that would make inflation worse, so the government has to make priorities and decisions about where best to target our resources.
“And that’s why when it comes to public sector pay, we need to be fair, but we need to be responsible as well.”
Pay review bodies or PRBs take evidence from across sectors like the NHS and education each year, as well as submissions from government, before saying what wage rises should be introduced for the following 12 months.
Amid anger from unions about the figures failing to match inflation last year, Health Secretary Steve Barclay insisted it was right for ministers to “continue to defer to that process to ensure decisions balance the needs of staff and the wider economy”.
The PRBs’ recommendations are expected to be published next month, alongside formal pay offers, with reports claiming they could be around 6% for the health service and 6.5% for teachers.
But while being questioned on public sector pay, Mr Sunak said: “It is important that we don’t make the inflation situation worse and it is important we prioritise the things that are right.
“I am making the decisions that are right for the long term and that is what I am going to continue doing.”
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TUC general secretary Paul Nowak accused the government of “playing politics with working people’s incomes”, adding: “It risks permanent economic harm – and will undoubtedly damage recruitment and retention of staff in our vital public services.
“Instead of blaming workers who can’t afford to put food on the table or petrol in their cars to get to work, ministers should focus on a credible plan for sustainable growth and rising living standards.”
The joint general secretary of the National Education Union, Kevin Courtney, also claimed Mr Sunak was “laying the groundwork for a further real-terms pay cut and one that flies in the face of the recommendations of the pay review body”, demanding the reviews be published as soon as possible.
Labour’s shadow health secretary, Wes Streeting, did not commit to his party accepting the recommendations were they to win power at the next election, but he did say he wanted PRBs “back up and running with the full confidence of everyone involved”.
He added: “It is not working people that have driven our economy off the cliff, it is the Conservative Party. We are still paying through the nose for that disastrous mini-budget that all of those Conservative MPs cheered on.
“People are paying through the nose on their mortgages, paying through the nose with their bills going up and their weekly shop, paying through the nose with rising energy bills, and Britain is an outlier when you look at other economies.
“That’s why we need a serious plan to get growth back into the economy.”
Government pay position offers Labour opportunity and challenge
The government’s wavering position on NHS pay presents Labour with both an opportunity and a challenge.
On the plus side, they can point to the fact the position of ministers seems at odds with what they were saying back in December.
Then, the government argument went that it was not for them to decide how much nurses, teachers, or police officers should be paid because this is determined by independent pay review bodies.
Now, they are suggesting the opposite – with health minister Helen Whately the latest to refuse to commit to following recommendations if the government judges they are not affordable.
Labour’s Emily Thornberry was withering in her interview with Sky News this morning: “I mean, seriously – do they really have a policy at all?”
Highlighting government inconsistency on political issues of this sort is exactly what you would expect an opposition party to do.
But it’s not entirely straightforward for Labour. They know there are questions that follow which could be challenging for the party.
Would they commit, for example, to following all pay review body recommendations in power?
Around half of public sector workers are covered by them (civil servants are not), but they are not binding, although Conservative governments have ignored their recommendations more than Labour did in power.
And given Labour agrees with the government that inflation needs to come down, and agrees with the Bank of England that interest rates needed to rise – how comfortable will they be supporting potentially inflationary public sector pay hikes?
The reports come while strike action by junior doctors over pay and conditions continues, with unions planning a five-day walkout next month.
Calling for pay restoration equating to a 35% rise, the British Medical Association (BMA) said wages had decreased by more than a quarter since 2008 when inflation was taken into account, and many doctors were burnt out from an increasing workload.
But when asked why he wouldn’t pay the profession more, the prime minister hit out at the industrial action and called the BMA’s demands “totally unreasonable”.
Mr Sunak said: “I think everyone can see the economic context we are in, with inflation higher than we’d like it, and it is important in that context that the government makes the right and responsible decisions in things like public sector pay.
“It is very disappointing that junior doctors have taken the decision that they have done. Over half a million people’s treatments have already been disrupted and I don’t think anyone wants to see that carry on – it’s just going to make it harder to bring waiting lists down.”
He added: “And I think people need to recognise the economic context we are in, and I am going to make the decisions that are the right ones for the country.
“That’s not always easy, people may not like that, but those are the right things for everybody, that we get a grip on inflation, and that means the government not excessively borrowing too much money and being responsible with public sector pay settlements.
“That is what I am going to do and I would urge everyone to see that is the right course of action.”
Labour’s Mr Streeting said he understood the “pain junior doctors are feeling in their pockets”, and while pay restoration for doctors could not happen “overnight”, staff understood that – and it was for Mr Sunak to fix it.
“I think the important thing is the prime minister has now got to grip this and get around the negotiating table to negotiate an end to this strike action,” he added. “Because every time we see strikes in the NHS we see delays and cancelled operations.
“The real risk to the NHS now isn’t just that staff walk out for another five days of strike action, but they walk out of the NHS altogether.
“If Rishi Sunak can sit there for an hour negotiating gongs and peerages for Conservative Party donors, supporters and MPs, he can sit around the table for an hour with junior doctors and put patients out of their misery.”
Donald Trump has announced that most goods imported from Mexico are to be exempt from his trade tariff regime for at least four weeks, just days after the charges were imposed.
He confirmed the move following a phone call with his Mexican counterpart Claudia Sheinbaum and, according to his commerce secretary, was due to announce a similar concession to Canada later in the day.
“We are working hard, together, on the Border, both in terms of stopping Illegal Aliens from entering the United States and, likewise, stopping Fentanyl,” Mr Trump posted on Truth Social.
The latest climbdown by the US president came after he surprised financial markets on Wednesday by waiving tariffs against carmakers following pleas from motor industry bosses.
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The White House revealed then that parts due to flow into the US from Mexico and Canada as part of the manufacturing supply chain would not qualify for tariffs so long as they complied with an existing trade agreement struck between the three.
‘Rules of origin’ guidelines under the USMCA deal allow goods to move between the three countries tariff-free if they qualify with a designation that they were made in North America.
US commerce secretary Howard Lutnick told Sky’s US partner network CNBC that if the concession was extended to Canada, then more than half of usual cross border trade volumes would be exempt.
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Why are tariffs such a big deal?
He too signalled there were signs of progress in Mr Trump’s dispute with America’s closest trading partners, saying each had worked hard to make progress in tackling imports of Fentanyl – blamed for high crime and deaths in US communities.
But Mr Lutnick explained that, as things stand, the reprieve would only last until 2 April when the Trump administration plans to impose reciprocal tariffs – on top of the 25% charges that came into force on Tuesday.
The car industry believes that no products from Canada and Mexico are currently subject to tariffs as they comply with the USMCA deal agreed in 2020.
It should spare consumers extra costs of at least $4,000 on the purchase of a new vehicle, industry data showed.
While that could still change from 2 April, Mr Trump is under intense pressure to relax his tariff regime permanently amid a backlash from US firms and financial market investors who fear it is self defeating.
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A closely-watched forecast has even suggested that the threats of a trade war were enough to push the US economy into recession before Mr Trump took office.
The dollar has sunk in value and US government borrowing costs have risen on the back of the turmoil.
It is widely expected that the European Union will be next to face tariffs – possibly from 2 April – after Trump threatened action “very soon” just last week.
Commenting on the threat to the eurozone from such a move, the president of the European Central Bank Christine Lagarde said on Thursday: “Just the threat of those tariff increases and potential retaliations are putting a brake on – on investment, on consumption decisions, on employment, hiring, all the rest of it.
While Mr Trump has not issued a specific threat against the UK, her counterpart at the Bank of England Andrew Bailey told a committee of MPs on Wednesday that the US should work “multi-laterally” rather than bilaterally to resolve its disputes.
Donald Trump is to exclude carmakers across North America from the pain of US tariffs levelled against Mexico and Canada, following apparent pressure from motor bosses.
The White House confirmed the concession was made after the president spoke to the bosses of Ford, General Motors and Stellantis in a call on Wednesday.
Each company has manufacturing operations and suppliers in Canada and Mexico.
There will be a tariff exemption of at least a month on vehicles made across the continent but only if a previous agreement on so-called ‘rules of origin’ is implemented in full.
It governs where a product is first sourced and where a tariff may apply during transit across borders.
“Reciprocal” tariffs are still planned from April, the president’s spokesman said.
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Manufacturers have complained of being worst affected by the imposition of 25% tariffs against both Canada and Mexico since Tuesday because flows of parts between the three countries can be hit by tariffs multiple times.
The complicated nature of their operations can mean a single component crosses a border more than once during the production process.
Such a big spike in costs from tariffs poses a big risk to sales as customers are asked to pay more to help compensate for the sanctions.
Automakers’ share prices have been among the worst hit since Mr Trump took office again in January.
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Why are tariffs such a big deal?
The car bosses, according to Reuters news agency sources, pledged additional US investment but wanted clarity on tariffs ahead.
Mr Trump urged them to shift their operations to the United States, according to a White House statement.
The tariff concession marked the first compromise on the trade issue since the president signalled, on Tuesday, that there would be no U-turns and only more tariffs after Canada said it would respond in kind.
There have been growing signs this week that corporate America is uneasy, at best, with the tariff policy against both Mexico and Canada
Those US neighbours, along with China, which is facing 20% tariffs, are the country’s three biggest trading partners.
The imposition of tariffs on all goods has been received badly by financial market investors, worried that US profitability is at risk.
One closely-watched forecast for US growth suggested that the threat of tariffs since Mr Trump’s election victory was confirmed had hammered activity and plunged the country into recession.
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There are mounting reports of boycotts against US goods in Mexico and Canada.
The nerves were publicly admitted by the boss of Jack Daniel’s maker Brown Forman, Lawson Whiting, on Wednesday when he described Canadian provinces taking American-made alcohol off shop shelves as “worse than a tariff”.
US stock market values are sharply down since the inauguration and the dollar has lost more than three cents against rivals including the euro and the pound just this week amid the tariff turmoil.
Such is the growing investor concern for the health of the US economy, the tariff implications have been partly blamed for a steep fall in oil prices.
Brent crude was trading at $68 a barrel earlier on Wednesday – its lowest level for more than three years.
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