Britain’s new Treasury chief Rachel Reeves suggested she would give public sector workers above-inflation pay rises to help end strikes, according to AP News.
The Labour Party government is under pressure from supporters and unions to spend more on wages and welfare benefits, two weeks after it was elected on promises not to raise personal taxes or increase government borrowing.
I think people know that things are a mess. I’m going to level with people about the scale of the challenge and then begin to fix the foundations. I am going to run our economy with iron discipline, bringing stability back.
The Labour Party won a convincing victory in the July 4 election, promising to boost Britain’s sluggish economy, unleash a wave of housing and green energy projects, and fix the country’s battered public services.
Inflation dropped back to 2 per cent and Prime Minister Keir Starmer‘s government wanted to settle strikes by thousands of hospital doctors who placed additional burdens on the publicly-funded National Health Service. Nurses, teachers, railway workers and other public sector workers also went on strike last year demanding pay rises.
Paul Johnson, director of the Institute for Fiscal Studies think-tank, stated that it could cost the government 3 billion pounds ($3.9 billion) more than budgeted. Meanwhile, Reeves said the government was studying the recommendations and would find a way to give workers a pay rise and “make the sums add up.”
There is a cost to not settling, a cost of further industrial action, a cost in terms of the challenge that we face in recruiting, retaining doctors, nurses and teachers.
The government is also under pressure from anti-poverty groups and many Labour Party lawmakers to scrap policies introduced by the Conservatives. The old policy limits widely paid welfare benefits and tax credits to the first two children in a family. The new government also says it cannot afford to abolish the two-child cap.
However Conservative lawmaker Jeremy Hunt claimed accusations that the party had left the economy in a worse state were “absolute nonsense.”
She [Rachel Reeves] wants to lay the ground for tax rises. She should have been honest about that before the election.
