Rachel Reeves hints at above inflation public sector pay rises

[Nearly Sane]

Difficult to see what else they can do, but as the article hints at difficult to see how the self imposed borrowing limits will allow it without either tax rises or cuts elsewhere.

https://www.msn.com/en-gb/money/other/reeves-says-she-will-make-sums-up-over-public-sector-pay-rises/ar-BB1qlDgo

[ProfessorDavey]

Difficult to see what else they can do, but as the article hints at difficult to see how the self imposed borrowing limits will allow it without either tax rises or cuts elsewhere.

https://www.msn.com/en-gb/money/other/reeves-says-she-will-make-sums-up-over-public-sector-pay-rises/ar-BB1qlDgo

Will be interesting to see how this develops.

One thing to note is whether any pay increase is fully funded. I think people often assume that when there is a public sector pay increase that the organisation in question get more funding - that isn't the case.

So in my role as a school governor I get to over see (and set) the school's budget. In recent years pay increases have not been fully funded - so the first 2%, as an example, has to be funded out of the existing school budget with only increases above that level being matched by extra money. In fact there was a recent uplift in the employer contribution to the teachers pension scheme, which was completely unfunded - down to the school to find the money.

So in our 2024/25 academic year budget we have assumed that the first 2% of any pay deal will need to be found from the school's existing budget.

So the point is that although there may be a 5.5% increase in salaries that won't necessarily all rely on finding more money from central government.

[Nearly Sane]

Will be interesting to see how this develops.

One thing to note is whether any pay increase is fully funded. I think people often assume that when there is a public sector pay increase that the organisation in question get more funding - that isn't the case.

So in my role as a school governor I get to over see (and set) the school's budget. In recent years pay increases have not been fully funded - so the first 2%, as an example, has to be funded out of the existing school budget with only increases above that level being matched by extra money. In fact there was a recent uplift in the employer contribution to the teachers pension scheme, which was completely unfunded - down to the school to find the money.

So in our 2024/25 academic year budget we have assumed that the first 2% of any pay deal will need to be found from the school's existing budget.

So the point is that although there may be a 5.5% increase in salaries that won't necessarily all rely on finding more money from central government.

Preach.

[Nearly Sane]

Hmm ... are you interested in actually discussing this matter - or are you only interested in lazy ad homs?

It was a compliment. I thought it was an excellent post.

[ProfessorDavey]

It was a compliment. I thought it was an excellent post.

Blimey! Compliment therefore accepted. I will remove my post.

There are also other factors that means that a 5.5% increase in salaries does not cost the Treasury the equivalent amount of money. The most obvious being that approx. 25% will go straight back to the Treasury in tax. And potentially if those teachers spend a little more then likely there will be 20% of that spend coming back in VAT.