Union pay demands could cost even more than £1,000 per household estimate, minister claims

NHS nurses hold placards during a strike, amid a dispute with the government over pay, outside St Thomas' Hospital in London, Britain December 15, 2022. REUTERS/Henry Nicholls
NHS nurses hold placards during a strike, outside London's St Thomas' Hospital on Thursday. (Reuters)

The government's claim that it would cost £1,000 per household to meet unions' pay demands may be an underestimation, a senior cabinet minister has warned.

Oliver Dowden said matching pay rises with inflation would only send prices up further.

The chancellor of the duchy of Lancaster told the BBC's Sunday With Laura Kuenssberg programme the country must stabilise its public finances first.

He said that while most unions are basing their pay requests on CPI inflation (currently at 10.7%), nurses – who staged a mass walkout on Thursday and have threatened further strike action – are asking for a rise that is 5% above the RPI inflation rate of 14.2%, amounting to a demand of over 19%.

Dowden said that, for this reason, it could cost the country even more than the estimated £28 billion to meet unions' demands.

Read more: UK government forced to call on army for help amid widespread strikes

LONDON, UNITED KINGDOM - NOVEMBER 17, 2022: Cabinet Office Minister and Chancellor of the Duchy of Lancaster Oliver Dowden arrives in Downing Street to attend the Cabinet meeting chaired by Prime Minister Rishi Sunak in London, United Kingdom on November 17, 2022. Later today, Chancellor of the Exchequer Jeremy Hunt is due to outline the Autumn Statement in the House of Commons which is expected to be focused on increasing taxes and cutting spending to fix the public finances amid cost of living crisis and inflation reaching 11.1 % in October. (Photo credit should read Wiktor Szymanowicz/Future Publishing via Getty Images)
Oliver Dowden said meeting unions' current demands would make inflation worse. (Getty Images)

He said: "I would love to give nurses an enormous pay rise. The reason why we're not doing this is because our duty is to everyone, public and private sector, to make sure we have stability in our public finances... We don't want to put that at risk."

However, Kuenssberg asked why the independent Institute for Fiscal Studies (IFS) predicts that it would cost the public a significantly lower £14 billion to meet public sector demands.

Many economists expect inflation to drop in 2023, suggesting that public sector pay rises will be lower in real-terms than the government has claimed.

Read more: The 'astonishing' rise in people claiming one key benefit

Kuenssberg also pointed out that Downing Street has based its estimation on the rate for October – a 41-year high of 11.1% – rather than using an average, suggesting it isn't painting an accurate picture.

Insisting the government's projections are not "misleading", Dowden said: "We can only take the number that we have now.

"The inflation number we have now, it was a bit over 11% last month, it’s dropped very slightly to 10.7% – it's reasonable to take that number and project it forward and say what it will cost next year.

"If they are saying that they want to have a lower number, then that is a different proposition, and that's not what they're coming to the table with."

LONDON, ENGLAND - DECEMBER 15: An ambulance drives past as nurses and supporters gather to demonstrate outside St Thomas' hospital in Westminster on December 15, 2022 in London, England. Nurses in England, Wales and Northern Ireland have begun the first of two day-long strikes over pay and working conditions, with a second taking place on 20 December. (Photo by Leon Neal/Getty Images)
Dowden called on ambulance staff and other public sector workers to 'give families a break this Christmas' and call off their planned strikes. (Getty Images)

It comes as ambulance crews in England prepare to walk out for two days on 21 and 28 December in a dispute over pay.

Dowden said the government had been "working relentlessly" to ensure that anyone with serious or life-threatening injuries could still rely on the ambulance service during these strike days.

Read more: What strikes are happening in December?

But he suggested that those with more minor injuries should dial 111 instead of 999 and that they should aim to make their own way to hospital if they are able to do so.

Calling for workers to call off the strikes and to "give families a break this Christmas", he said: "It really is in the unions' hands.

"I would urge the unions to be reasonable, to engage both in terms of calling off this strike, but also in terms of the kind of level of service they’re willing to provide."