Can Labour afford inflation-busting pay rises for teachers and NHS staff?

Well, that didn’t last long. Having preached to us about fiscal responsibility and ‘securonomics’, Chancellor Rachel Reeves appears to be about to cave in at the first opportunity – by hinting that she will grant 5.5 per cent pay rises to teachers, NHS workers, and other public sector workers.

The unions feel entitled to pay rises of 5.5 per cent because they have been recommended by pay review bodies – even though that is more than 3.5 percentage points above inflation. But there is a very big problem. Labour’s manifesto – which we kept being told was ‘fully-costed’ – didn’t allow for pay rises of 5.5 per cent for several million public sector workers. Moreover, Reeves’s deputy at the Treasury, Darren Jones, has been going around telling us that the public finances are in a much worse state than the party believed (which is nonsense, according to Paul Johnson of the IFS, who makes the point that the previous government’s finances are out in the open).