Overview

• Independent pay review bodies have recommended a 3% pay rise for NHS staff and 4% for teachers, exceeding the government’s 2.8% budgeted increase.
• Ministers have confirmed that there will be no additional funding for pay awards beyond departmental budgets, despite union demands for full funding.
• Unions, including the Royal College of Nursing, are signaling potential industrial action if pay awards are not fully funded or exceed affordability limits.
• Last year, the Labour government fully funded a 5.5% public sector pay increase, ending widespread strikes, but this set expectations for current negotiations.
• The government is exploring options like pension reforms and productivity-linked pay to address recruitment and retention challenges without breaching fiscal rules.