Millions of British public sector workers will receive above-inflation pay rises worth £9.4 billion, Chancellor Rachel Reeves will announce next week.
The rises are based on the advice of independent pay review bodies.
They are being introduced to address staff retention, reverse years of declining wages, and stave off the threat of industrial action.
Previous governments have usually accepted the review bodies' recommendations but are not bound by them.
"I have today set out our decision to meet the recommendation of the pay review bodies, because the previous government failed to prepare for these recommendations in their departmental budgets," Ms Reeves told Parliament on Monday (July 29).
"They come at an additional cost of £9 billion this year.”
The public sector in the UK consists of Government-operated and funded organisations, including central and local government departments; the NHS, public corporations including the BBC; emergency services; state education institutions; and the judiciary. These entities are responsible for providing essential public services and infrastructure.
As part of the latest process, Ms Reeves asked for an analysis from Treasury officials on the cost to the economy of industrial action. The Government believes the strikes of 2022 and 2023 affected productivity.
This analysis found that every day of the teachers’ strikes cost the economy £300 million due to lost working hours. Industrial action in the NHS cost taxpayers £1.7bn.
Ms Reeves had refused to say before the general election on July 4 whether public sector workers would get a pay rise. She said she would decide after looking at the books.
However, she recently hinted the Government could be prepared to accept the pay bodies' advice, saying there was “a cost to not settling” negotiations.
Who is included in the public sector pay rises?
NHS workers
Reuters reported that about 1.3 million NHS workers — including nurses and paramedics — and around 500,000 teachers will receive a pay rise of 5.5 per cent.
Junior doctors, who have gone on strike over pay since early last year, will receive an average 22.3 per cent pay rise over two years.
Armed forces
Armed forces staff will reportedly receive a 6 per cent pay rise as part of the announcement made by the Chancellor this week.
Civil servants
After this week’s pay rises were set out by the Chancellor, civil servants are set to receive a pay rise of around 5 per cent. The Cabinet Office’s pay remit guidance confirmed that this pay rise would be available to departments.
