UK prime minister Rishi Sunak is exploring a 5 per cent pay rise for public sector employees to finish an escalating wave of strikes after the Treasury was given an sudden £30bn windfall.

In an indication of a change of temper after months of strife, the Royal School of Nursing on Tuesday referred to as off a 48-hour strike due subsequent week in England to restart “intensive” negotiations with well being secretary Steve Barclay.

The Treasury has indicated in a non-public memo, seen by the FT, that public sector awards of as much as 5 per cent for 2023-24 would solely have a “low danger” of setting a benchmark for protracted excessive personal sector pay development.

The transfer got here after official figures confirmed public borrowing was more likely to be £30bn decrease than anticipated, because of elements comparable to excessive tax receipts, a fall in power costs and low public funding.

The improved outlook for public funds has given the prime minister scope to make improved pay gives, as he seeks to finish the commercial motion that has dominated politics throughout his time in workplace. Nurses specifically have received widespread public assist.

Sunak’s allies stated it had taken a number of months for either side to “perceive one another’s place” however the prime minister now wished to maneuver decisively to deliver the strikes to a detailed.

Schooling secretary Gillian Keegan additionally invited educating unions to reopen “substantive formal talks” on pay, circumstances and reform, however provided that the Nationwide Schooling Union referred to as off walkouts set for subsequent week. The NEU, the most important union within the sector, stated it was not but able to abandon its strikes, because the 3 per cent pay rise proposal it knew of was not sufficient.

Nonetheless, authorities insiders confirmed ministers have been contemplating each a pay provide of about 5 per cent for public sector employees subsequent 12 months and a backdated fee to sweeten the deal, although the headline determine is under forecast 5.5 per cent inflation for the subsequent monetary 12 months.

Jeremy Hunt, the chancellor, stated pay rises have been recurrent and public spending restraint remained important however added: “We do perceive how tough it’s for folks on the entrance line who’ve seen real-terms cuts of their wages.”

On Tuesday authorities departments made their formal 2023-24 pay submissions to eight public sector pay overview our bodies, masking areas together with the NHS, armed forces, police and jail employees.

They stated they might solely afford 3.5 per cent pay rises within the 12 months beginning in April beneath present Treasury allocations.

If Quantity 10 added 1.5 proportion factors to that evaluation it could value an additional £3.7bn a 12 months for all public sector employees. A one-off fee would improve that sum.

However ambulance employees represented by the Unite union have already rejected a better pay provide from the Welsh authorities, and the RCN in Scotland initially rejected a pay provide at an identical degree earlier than recommending an improved provide to its members.

Rachel Harrison, nationwide secretary of the GMB union, described the federal government’s provide of talks with the RCN — excluding different well being unions — as a “again room deal” and a “tawdry instance of ministers enjoying divide and rule politics with folks’s lives”. 

Labour well being spokesman Wes Streeting stated: “Had the federal government agreed to those talks two months in the past, they might have prevented 140,000 appointments being cancelled on account of strike motion.”

A 1.5 proportion level improve in public sector pay would stay nicely under the windfall in public funds seen by the federal government on Tuesday.

In figures that shocked economists and the Treasury, the Workplace for Nationwide Statistics stated the general public sector registered a £5.4bn surplus in January, much better than the £7.8bn deficit anticipated by economists polled by Reuters.

Within the monetary 12 months to January, the general public sector borrowed £116.9bn, a determine £30.6bn lower than forecast in November by the Workplace for Finances Duty, the UK official watchdog.

Further reporting by Jasmine Cameron-Chileshe and Bethan Staton