Overview

• Independent pay review bodies have recommended a 4% pay increase for teachers and 3% for NHS staff, exceeding the government’s budgeted 2.8%.
• The Treasury has ruled out additional funding, requiring schools and hospitals to make efficiency savings or budget cuts to fund higher pay awards.
• Unions, including the National Education Union and Royal College of Nursing, have signaled potential strike action if pay rises are not fully funded or remain below inflation.
• Official figures reveal a £15 billion borrowing overshoot last year due to public sector pay rises and increased benefit spending, intensifying fiscal pressures.
• Chancellor Rachel Reeves and ministers are reviewing the recommendations but emphasize the need to balance pay improvements with fiscal constraints.