In 2024/25, the UK awarded public sector pay rises averaging 5.8% across most workforces — NHS 5.5%, teachers 5.5%, civil servants up to 5%, police up to 4.75%. The total additional cost to the Treasury is estimated at £9–10 billion. This was funded partly by additional Treasury allocation and partly by requiring departments to find savings elsewhere.
What Was Awarded in 2024/25
The 2024/25 pay round — covering the financial year from April 2024 — was the most generous in public sector pay for over a decade and followed several years in which public sector pay lagged significantly behind inflation. The major awards were:
- NHS workforce (Agenda for Change): 5.5% consolidated pay rise for 1.3 million NHS staff in England, covering nurses, paramedics, allied health professionals, and support staff. Junior doctors received a more complex settlement including a phased element to address their longer grievance.
- NHS consultants and senior doctors: 6% consolidated increase following a period of significant industrial action.
- Teachers (England): 5.5% recommendation from the School Teachers' Review Body (STRB), accepted in full by the government — the first full acceptance of the STRB recommendation for many years.
- Civil service: Variable by department, averaging approximately 4.5–5% within Treasury guidance. The Cabinet Office guidance permitted up to 5% for the Senior Civil Service and 4.5% for wider civil service grades.
- Police: 4.75% consolidated increase recommended by the Police Remuneration Review Body and accepted in full.
- Armed forces: 6% recommended by the Armed Forces Pay Review Body — the highest military pay award in many years, following real-terms pay cuts during the period of high inflation.
- Prison officers: 5% consolidated increase.
Who Are the Biggest Public Sector Workforces
The UK public sector employs approximately 5.9 million people in England, Wales, Scotland, and Northern Ireland — approximately 17% of the total UK workforce of around 34 million. The NHS is the largest single employer: NHS England alone employs approximately 1.5 million people (including agency and bank staff), with approximately 1.3 million on Agenda for Change contracts.
Education (state schools, further education, and higher education) accounts for approximately 1.4 million employees. Local government employs approximately 1.5 million. Central government civil service employs approximately 500,000. The armed forces number approximately 150,000 regular personnel. Police services employ approximately 145,000 officers plus approximately 75,000 civilian staff.
The concentration of public sector employment in health and education means that pay awards in these two sectors dominate the total cost of any across-the-board public sector pay round. A 5.5% award to NHS Agenda for Change staff alone costs approximately £3.7 billion per year.
| Workforce Group | Pay Award 2024/25 | Approximate Workforce Size | Estimated Additional Annual Cost |
|---|---|---|---|
| NHS (Agenda for Change) | 5.5% | ~1.3 million | ~£3.7bn |
| NHS (doctors — consultants) | 6.0% | ~50,000 | ~£0.5bn |
| Teachers (England) | 5.5% | ~450,000 | ~£1.1bn |
| Civil Service | 4.5–5% | ~500,000 | ~£1.0bn |
| Armed Forces | 6.0% | ~150,000 | ~£0.6bn |
| Police | 4.75% | ~145,000 | ~£0.4bn |
| Prison service | 5.0% | ~40,000 | ~£0.1bn |
| Other public sector | Various | ~2m+ | ~£2.0bn est |
Workforce sizes approximate — exclude Northern Ireland and some devolved workforces. Cost estimates based on mid-point salary assumptions. Indicative only.
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The Total Cost
HM Treasury estimates the total additional cost of the 2024/25 public sector pay round at approximately £9.4 billion for England alone. Including devolved equivalents (Scotland, Wales, Northern Ireland follow broadly comparable settlements for their own public workforces), the UK-wide figure is estimated at approximately £10–11 billion annually.
This was funded through a combination of additional Treasury allocation to departments (approximately £3–4 billion), and an expectation that departments would absorb the remaining cost through efficiency savings, vacancy management, or slower growth in non-pay spending. NHS England received the largest single additional allocation.
The ongoing annual cost of a pay rise — unlike a one-off payment — is permanent. A 5.5% NHS pay award in 2024/25 creates a higher baseline for 2025/26 and all subsequent years. Compounded over five years of above-inflation pay growth, the public sector pay bill grows substantially in real terms even before any headcount increase.
How Public vs Private Pay Compares Over 20 Years
ONS Annual Survey of Hours and Earnings (ASHE) data shows a consistent pattern over the past two decades: public sector pay is higher at lower skill levels and lower at higher skill levels compared to the private sector. For manual, administrative, and basic professional roles (nurses, teachers, social workers), public sector pay broadly matches or slightly exceeds private sector equivalents. For senior professional, managerial, and executive roles, private sector pay is substantially higher.
Between 2010 and 2022, public sector pay fell significantly in real terms relative to private sector. The NHS pay bill was constrained by explicit policy. Teacher pay saw real-terms cuts of approximately 15–20% between 2010 and 2022 in terms of purchasing power. During the inflationary period of 2021–2023, public sector workers with fixed-year agreements saw significantly larger real-terms pay cuts than private sector workers, who benefited from a more flexible labour market.
The 2024/25 settlements partially reversed this. For the first time in over a decade, average public sector pay growth (5.8%) exceeded average private sector regular pay growth (approximately 5.2% in the same period). The ONS's measure of public sector average weekly earnings now slightly exceeds private sector for the first time since approximately 2012.
Public Sector Pensions: The Hidden Additional Cost
Pay comparisons between public and private sectors are systematically understated because they almost universally exclude pension benefits. Public sector workers in the NHS, teaching, civil service, and local government typically participate in defined benefit (DB) pension schemes — schemes that guarantee a specific income in retirement based on salary and years of service, index-linked for life.
The employer contribution to these schemes ranges from approximately 20–30% of pensionable salary. NHS employer contributions are currently 23.7% of pay. Teacher pension employer contributions are 28.6%. Civil service pension employer contributions are approximately 27–28%. These contributions are paid by government and represent a real cost to the Treasury over and above the headline pay bill.
The equivalent in the private sector is very different. The median private sector employer contribution to workplace pensions is approximately 4–5% of salary (with the minimum auto-enrolment requirement at 3%). The differential — 20–25 percentage points of salary in additional pension value — is not included in any public pay comparisons but represents an enormous additional element of total public sector remuneration cost and an equivalent implicit liability on taxpayers.
The unfunded public sector pension liability — the total present value of future DB pension payments already earned by current and past public servants — is estimated at approximately £2 trillion. This is technically a government liability funded from future tax revenue, not a pre-funded savings pool.
Implications for Future Tax and Borrowing
The combination of a large, above-inflation public sector pay settlement and the structural growth in public sector pension costs creates a sustained upward pressure on public spending that must be met either through higher taxes, higher borrowing, or lower spending elsewhere. The OBR's fiscal analysis explicitly identifies public sector pay as a key fiscal risk — small deviations from budgeted pay growth quickly translate into hundreds of millions of additional cost across the system.
For the 2025/26 pay round, Pay Review Bodies were asked to submit recommendations within Treasury affordability guidance that implied increases of approximately 2.8% for most public sector groups — well below the 2024/25 settlements. Whether this guidance produces settlements at that level, or whether industrial and political pressures push awards higher, will be a significant determinant of the public finances for the rest of the decade.