No blank cheques for unions over pay, says Reeves

The chancellor has insisted there are "no blank cheques" for trade unions, following Conservative criticism of her approach to public sector pay.

Since last month's election, the government has brokered several above-inflation pay deals with unions to bring an end to long-running disputes.

It has led to Tory attacks that Labour has lost control of public pay and is "being played by its union paymasters" who it has "caved to".

But Rachel Reeves said the pay deals were required to ease recruitment problems in areas such as teaching and the NHS.

Speaking to the Guardian, she added: “We have not caved in to any demands. We haven’t done so with the train drivers or the junior doctors.”

Junior doctors have been offered a rise worth 22% over two years, which if accepted would bring an end to industrial action from the BMA union that has seen hundreds of thousands of appointments cancelled since March 2023.

Train drivers in the Aslef union have been offered a three-year deal, including a 5% backdated pay rise for 2022/23, a 4.75% rise last year and 4.5% this year.

The new Labour government has also dropped attempts by the previous Tory administration to change drivers' working practices as part of the deal, which could end more than two years of walkouts on the railways.

Those two deals followed a decision last month to accept a series of above-inflation rises of around 5.5-6% for other public sector workers recommended by official pay review bodies.

The Treasury has estimated that those deals will cost an extra £11.6bn more than budgeted for by the last government, which had allocated cash for rises of 2%.

But in her Guardian interview, Ms Reeves said there were "massive recruitment and retention problems" in the public sector, and not accepting the recommendations would have been “very damaging”.

The chancellor also said she anticipated having to take "difficult decisions" to "do what it takes to put the public finances on a firmer footing".

Her interview came on the day the government published its proposed change to the law halting winter fuel payments for 10 million pensioners in England and Wales.

The suspension of the payments, worth between £100 and £300, is expected to come into force on 16 September.