Jeremy Hunt promises to find extra cash to help fund public sector pay deals | Public sector compensation

Jeremy Hunt has pledged to find extra money to help finance public sector pay deals after admitting Britain’s high level of inflation has prevented departments in Whitehall from ending strikes without Treasury support.

The chancellor conceded on Wednesday that the only way the government could fund rewards without cutting frontline services was to provide financial support to his cabinet colleagues.

Giving evidence to the Treasury select committee, Hunt dropped his previous insistence that pay bids for doctors, nurses and teachers should be funded by departments making efficiency savings.

The chancellor said when the pay deals are agreed there will be “discussions with the Treasury” over the level of support.

Clarifying that the UK’s current annual inflation rate of 10.4% has created ‘special circumstances’, Hunt said there would need to be agreement on how much of the cost would be borne by the Treasury and how much thanks efficiency savings and the reallocation of departmental budgets. .

“There will be discussions about the amount of help coming from the center, but we haven’t had those discussions yet,” he said. The Treasury has a contingency reserve – a rainy day fund – that Hunt can draw on to meet unforeseen spending needs.

The Chancellor said the government was committed to there being no cuts to frontline public services and that discussions with ministries would ensure this commitment was met.

Giving evidence to the committee of backbenchers about his budget, Hunt said the annual inflation rate would come down in the coming months as sharp rises in energy and food prices in the last year would not be repeated.

However, he said the cost of living crisis was not over. “There are still inflationary pressures in the economy and I am very concerned about that.”

Noting that inflation rose unexpectedly last month, the Chancellor said: “We need to keep our eye on the ball. There is no room for complacency.”

Hunt accepted that the highest inflation in four decades would lead to a 6% decline in living standards over two years. “I recognize the pressure very well,” he said. “There is pressure on the standard of living. The long-term sustainable way to relieve this pressure is through economic growth.

The Chancellor said the budget contained measures to boost Britain’s sluggish growth rate, but he admitted the government should mitigate the risks posed by Joe’s Inflation Reduction Act (IRA). Biden – a $369bn (£299bn) grant package designed to encourage businesses to invest in green tech in the US.

The Chancellor said it was a “good thing” that the US was taking the climate crisis seriously, adding there was an element of catch-up in the US approach.

But he admitted the IRA posed risks to the UK’s green sector which the government should address. While rejecting the idea that the UK could match the US “subsidy for subsidy”, Hunt said the proposed package deal had to be attractive to investors.

Hunt told MPs he would offer a more detailed response to the IRA and the EU’s green deal package, in his autumn statement later in the year.