There are eight independent pay review bodies in the public sector.
Two MPs, representing 514,000 teachers and 1.36 million NHS workers, have proposed a pay rise of around 5.5%. The other six MPs are widely expected to propose similar increases.
Inflation is running at 2 per cent, having recently returned to the Bank of England’s target after prices surged due to the impact of Covid on supply chains and Russia’s full-scale invasion of Ukraine.
Agreeing to the recommendations would be hugely costly for the Treasury. The Institute for Fiscal Studies has said that agreeing to the demands of the NHS and teachers alone would cost £3bn a year.
Internal Treasury estimates endorsed by the Conservative Party suggest that total settlements for public sector workers could be as high as £8bn, According to the Sunday Times.
While Ms Reeves will announce her decision to parliament alongside a broader disclosure of public spending pressures this month, the funding will not be revealed until the budget in the autumn.
Political space to raise taxes
Mr Hunt used a BBC interview on Sunday to warn that Labour was using “disinformation” to stir up controversy about how bad their economic legacy was in order to create political space for tax hikes.
“What is absolute nonsense is that this business is the worst economic legacy since the Second World War,” Mr Hunt said.
He pointed out that inflation had returned to normal and that the United Kingdom had become the fastest growing economy in the G7.
“I think the reason she’s doing this is because she wants to pave the way for tax increases,” Mr Hunt added.
It comes as the Labour government is set to see its first rebellion this week as left-wing Labour MPs press Sir Keir to raise the two-child benefit cap to help tackle child poverty.
But Lord Blunkett urged the prime minister to stand his ground, telling the Telegraph that families must show “responsibility” and suggesting the government focus on other priorities.
Ms Reeves said she would not make “unfunded commitments”, suggesting that lifting the cap would cost £3bn. Any change in position is unlikely before the Budget at the earliest.