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 Faculty of Nursing on Tuesday known 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 personal 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 non-public sector pay development.

The transfer got here after official figures confirmed public borrowing was prone to be £30bn decrease than anticipated, as a consequence of components corresponding to excessive tax receipts, a fall in vitality costs and low public funding.

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

Sunak’s allies mentioned it had taken a number of months for each 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 instructing unions to reopen “substantive formal talks” on pay, circumstances and reform, however provided that the Nationwide Schooling Union known as off walkouts set for subsequent week. The NEU, the most important union within the sector, mentioned it was not but able to abandon its strikes, for the reason that 3 per cent pay rise proposal it knew of was not sufficient.

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

Senior authorities officers additionally confirmed that Jeremy Hunt, the chancellor, was anticipated to allocate extra money to departments to fund a part of the pay rises, relatively than anticipating all the money to be discovered inside present budgets.

Hunt mentioned pay rises have been recurrent and public spending restraint remained very important, however added: “We do perceive how troublesome it’s for individuals 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 assessment our bodies, masking areas together with the NHS, armed forces, police and jail workers.

They mentioned they may 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 share factors to that evaluation it will value an additional £3.7bn a 12 months for all public sector employees. A one-off cost would improve that sum.

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

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

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

A 1.5 share 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 mentioned 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 Price range Duty, the UK official watchdog.

Extra reporting by Jasmine Cameron-Chileshe and Bethan Staton