Labour government is facing its first tussles - but they're just a taste of what's to come

The story of the Starmer government will be shaped by the tension between the change it promised in opposition and the lack of cash available to achieve it.

We can now see the first couple of chapters in this tale – public sector pay and benefits.

The indications this weekend are that the chancellor will acquiesce to a reported above-inflation pay rise for many public sector workers.

To not do so would risk a fresh wave of strikes.

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A bad look for the first few months of a Labour administration.

But that means an immediate multi-billion pound bill for Rachel Reeves to foot.

Her “iron-clad” fiscal rules mean that can’t come from borrowing and the mooted revenues from future economic growth won’t arrive in time for this pay round.

This leaves her with two levers to pull – one marked spending cuts and one marked tax rises.

We may get an indication of the approach in the coming 10 days when the chancellor comes to the Commons to lay out the broader state of public finances and how pay deals fit into that.

On benefits – and specifically the two-child cap – the government has reason to feel it’s on a steadier footing.

Sir Keir Starmer is insulated from much political damage by his huge majority and may feel less inclined to change course given polling suggesting the policy is more popular with the public than it is with parliamentarians.

But these tussles are just a taste of what’s to come.

This autumn will bring a spending review that will fully expose the grisly gulf between what departments need and what is available.

The flashpoints this will throw up are daunting – defence, health, social care, councils, pensions – the list goes on.

Throughout the election campaign both parties were accused of simply not being straight about how little money was washing around Whitehall to fund public services.

Economists called it a conspiracy of silence.

Now in power, staying schtum is simply not an option for Labour.

This article was originally published by Sky.com. Read the original article here.

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