Labour tax rise fears as public sector pay hikes to cost £10billlion
An expert warned that money for public sector pay rises "can only come from higher borrowing than they're planning, higher taxes than they're planning or cuts in spending elsewhere."
The Labour Government could bring in a whopping £10billion's worth of tax rises to fund public sector pay bumps it has been claimed.
An independent pay review body has reccommended that teachers, nurses, and other staff should get a 5.5 percent pay rise.
This is above the current rate of inflation, which stands at 2 percent. However, price rises since 2022 have left many in the UK struggling to make ends meet.
The National Education Union has threatened walkouts if its members do not secure a pay rise.
It has been reported that public sector pay rises would cost the public purse £3.5billion for schools and the NHS.
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This could cause a headache for Chancellor Rachel Reeves as Labour try to balance economic responsibility with offering fair pay to public sector workers.
Paul Johnson, director of the Institute for Fiscal Studies, warns that it could cost £10billion as a whole.
He told The Sun: “The answer is the same as the answer always is when asked: where can the money come from?
“It can only come from higher borrowing than they’re planning, higher taxes than they’re planning or cuts in spending elsewhere.
“There is no fourth option here.”
A Government spokesman said: “We value the vital contribution the almost 6 million public sector workers make to our country.
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“The Pay Review process is ongoing, and no final decisions have been made.
“We will update in due course; however we are under no illusions about the scale of the fiscal inheritance we face.”
Conservative MPs are now warning Labour against the move despite external advice suggesting that public sector workers should get a pay rise.
Tory MP Alec Shelbrooke said: “We took the tough decisions to keep inflation under control.
“If Labour give in to their union paymasters, it’ll increase inflation again, making everyone suffer.”
Shadow Treasury Minister Laura Trott said: “Labour cannot pretend that things are worse than they thought, nor that they didn’t know what their economic inheritance was when they made promises during the election.
“We will keep them to these promises, particularly their pledge not to raise taxes on working people.”
