Future pay deals will be shaped by tough decisions, Starmer to tell TUC

Keir Starmer will warn public sector unions on Tuesday that future pay deals will be constrained by the “tough choices” necessary to protect economic stability.

Soon after coming to power, Rachel Reeves signed off plans for above-inflation pay increases in the NHS and for teachers; and the transport secretary, Louise Haigh, settled a long-running dispute with train drivers.

But when he speaks at the TUC’s annual congress in Brighton, Starmer is expected to signal his government is likely to take a more stringent approach in future.

“I do have to make clear, from a place of respect, that this government will not risk its mandate for economic stability, under any circumstances. And with tough decisions on the horizon, pay will inevitably be shaped by that,” he will say.

“I owe you that candour because, as was so painfully exposed by the last government, when you lose control of the economy it’s working people who pay the price.”

Union delegates in Brighton have hailed Labour’s plans for boosting workers’ rights but been less impressed with the party’s cautious approach to public spending.

At a private dinner for union leaders on Monday evening, Starmer’s deputy, Angela Rayner, hailed the recent public sector pay deals as good for the economy, echoing the arguments made by Reeves at the time.

“We know stronger public services are necessary for stronger economic growth. The recent pay deal is crucial to both,” Rayner said. “Rachel’s decision to honour the recommendations of the pay review bodies is not just good for your members but for everyone who relies on our NHS and schools.”

She also highlighted Labour’s plans for increasing unions’ power in the workplace, as part of a historic package of measures to boost workers’ rights.

“This government isn’t afraid to say that we want to see stronger trade unions. Because this is a government in the service of working people. This is who I am, and this is what I will fight for,” she said.

Starmer will use his keynote speech on Tuesday – the first by a Labour prime minister to the TUC in 15 years – to urge unions to work hand in hand with business, to help the government rebuild the economy.

“Partnership is a more difficult way of doing politics. I know there’s clarity in the old ways, the zero-sum ways: business versus worker, management versus union, public versus private. That kind of politics is not what the British people want,” Starmer will say.

“When I say to the public our policies will be pro-business and pro-worker, they don’t look at me as if I’m deluded, they see it as the most ordinary, sensible thing in the world.”

Unions have become increasingly concerned in recent months about fierce lobbying from some business groups about the workers’ rights plans, which include protection from unfair dismissal from day one, and a ban on “fire and rehire”.

But the prime minister will insist there is a “mood of change” in the business world, which has seen companies embrace, “the shared self-interest that comes from treating the workforce with respect and dignity. The productivity gain of fairness which is an opportunity to be grasped”.

On Monday in Brighton, the TUC general secretary, Paul Nowak, led delegates in cheering the names of senior Conservatives who had lost their seats on 4 July in what he called a “roll call of political failure”.

Nowak, whose grandfather was a Polish pilot in the RAF, also attacked the rightwing Reform party and its leader, Clacton MP Nigel Farage, for claiming to represent working people.

“Nigel Farage isn’t a friend of the working class. He’s a fraud. A public school educated, private equity loving, NHS privatising, Putin apologist fraud,” Nowak said.