THE CONCRETE ROUNDABOUT (TCR)

Rishi Sunak has claimed that meeting union demands for public sector pay awards would cost every household £1,000 extra a year. This is based on a 11% pay rise for all public sector staff would cost a total of £28bn, spread around 28 million UK households.

In 2021/22 the government spent around £230bn on public sector pay. Each 1% pay increase will add £2.3bn- £2.4bn to the wage bill. For example a 9% pay rise would add around £21bn to the wage bill.

In the October 2021 Autumn Budget and Spending Review, the Chancellor announced that public sector workers would receive “fair and affordable” pay rises i.e. in line with the then rate of inflation of 3%-4%. This would cost around £7bn and was already budgeted for in the government’s calculations. So, an additional £14bn is needed.

Due to higher inflation, the government is already collecting more in income tax, corporation tax, capital gains, VAT, fuel duty, inheritance tax and other taxes. Income tax alone is expected to generate an additional £20bn and the total tax take from inflation will be much higher.

Of course, the real cost of a 9% public sector pay rise is much lower. Most public sector workers will pay at least 20% income tax on any pay increment and 13.25% national insurance. In addition, people will pay more in VAT, fuel duty and other indirect taxes. On average around 35%-40% of the pay rise, nearly £8bn, will be returned to the government in various taxes.

The UK government has scaled its 25% levy on oil and gas companies to 35% from January 2023 as part of its November Autumn statement. Combined with a new 45% windfall tax on the profits of electricity generators, these taxes are predicted to generate £14 billion next year.

So can the country afford to pay public sector workers more (especially if they have less to spend will hurt the economy & private sector), I would say yes.

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Disclaimer: All my comments are my opinions unless stated otherwise. I'm just a fan following my club.

We spent over £15.7 billion on test and trace in a year. We spent over £20 billion on illegal and pointless wars. Of course we can afford it, I'm pretty sure we as a nation are something like £40million in debt already, but I doubt we will under this government.

I would suggest it is essential for the economy thatvinflation level pay rises are given because as pointed out in the original post much of it is returned in tax revenue, the rest isn't squirrelled away as the rich do but spent on goods and services that grease the wheels of the economy.
It will also ensure private companies continue to reward their staff inline with inflation rather than acting as a means to hold all wages down.
Only the rich and those who enable them (Conservative government's and right wing media) are against inflation level rises and above for public sector workers.

You make a good point about what the government immediately 'gets back' from any pay public sector rise. 33% (at least depending on the tax rate) from income and National Insurance. And don't forget any pension contributions - which disappear into the general spending 'pot' rather than a little account with the person's name on it.

Some of the statements made by the government are very 'disingenuous' - but why should that surprise me any more? Actually it doesn't. This ideologically numbed bunch of sycophants and incompetents have done untold damage to the economy and the fabric of society IMHO.
(And as I've said before, I'm a tree hugging Green voter not a Labour supporter).

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Gimme Gimme Shock Treatment

It is a complete mis-understanding that wage rises must equal inflation in order to maintain living standards. Not all of a wage goes on inflation related costs. This amount varies for different people of course, but is not equal.

Hmmmm I guess you are correct those on the lowest incomes need a much higher than inflation rise as essentials such as food and heating are rising much quicker than the price of luxuries like holidays and new cars which these people can't afford anyway.
I hope that was the point you were making!

Not exactly, just making the point that there is no direct relationship between the two.

Actually no one spends their entire income only on cost of living items, so your logic does not apply.

Your last statement is incorrect anyone below the poverty line does, I just Googled how many people in the UK this applies to and a recent published report says 14.5m! Then look at savings 9% have none, 40% have enough to sustain them for only a month. What do you think their money is going on if it isn't cost of living? Most of the country are broke and the very rich are still trying to cream more off the top.
In modern Britain shouldn't a person on an average wage be able to have a house, a car, a TV, a phone or are you thinking these are for the top 0.5% and the average wage should only be enough to feed, heat and clothe yourself?

Clearly Tory policies benefit their backers and members, who are most likely to squirrel money out of the country and who are not motivated to protect institutions like the NHS & their employees.

Wages only account for about 8-12% of unit costs and wages, are not the current source of inflation but that it was mainly down to food and energy costs as well as excess profits in the system by energy and mining companies. The idea that there’s going to be a wage price spiral is false because wages have been falling as a share of wealth that’s created in this country.

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Disclaimer: All my comments are my opinions unless stated otherwise. I'm just a fan following my club.

Actually I can tell you that some people do. Make no mistake about it right now millions of people across the UK are living in destitution.