The Cabinet ministers of Keir Starmer have received a cautionary message advising against utilizing the emergency funds from the Treasury to support salary increases in the public sector. The government’s reserve funds, amounting to £9 billion last year, will now need to be repaid by government departments if accessed, under new regulations.
The directive, issued by Chief Secretary to the Treasury James Murray, explicitly states that these funds cannot be allocated for public sector pay increments. The Prime Minister’s spokesperson highlighted that access to these reserves will be limited to exceptional circumstances and explicitly prohibited for public sector wage hikes.
In a recent communication, Rachel Reeves also emphasized to the Cabinet that the reserve funds should only be tapped into for genuinely unforeseen and unaffordable pressures. This move aligns with the Chancellor’s strategy to adhere to fiscal rules aimed at reducing borrowing.
During a speech at the Labour conference, Reeves warned about upcoming economic challenges due to global economic headwinds. She stressed that the government will face further difficult decisions as the economy continues to show signs of long-term damage.
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