Keir Starmer’s Cabinet members have received a caution against utilizing emergency funds from the Treasury to finance salary increases for public sector employees. The government’s reserve funds, amounting to £9 billion last year, will come under stricter control to prevent their misuse. Cabinet ministers have been explicitly notified that these funds cannot be allocated for public sector wage hikes.
The Chief Secretary to the Treasury, James Murray, issued a letter to Cabinet ministers outlining the restrictions on accessing the Treasury’s reserve. In an effort to adhere to fiscal discipline and reduce borrowing, departments will be required to demonstrate exhaustion of all cost-saving measures before seeking access to these funds.
Last month, Rachel Reeves emphasized the limited access to reserve funds for unforeseen financial pressures. During her recent address at the Labour conference, she highlighted the challenges posed by global economic conditions and the ongoing strain on the national economy. The Chancellor is reportedly advocating for adherence to stringent financial guidelines in managing public spending.