THE rise in the inflation rate revealed yesterday will cost the States an additional £4 million in staff wages, the Treasury has confirmed.

The recently agreed pay deal for manual workers sets the 2007 increase at the March RPI level, which was yesterday announced at 4.4% – a two-year high – but the States only set aside enough money to cover a 2.5% increase and the Treasury says that the States are looking at a shortfall of about £4 m. That shortfall is one of the extra costs which have taken public-sector spending up 7.7% this year and which will prompt Treasury Minister Terry Le Sueur to go back to the States to ask for more money. The following pay groups have yet to settle a pay deal: ambulance workers, teachers, the Fire and Rescue Service and nurses. The June RPI figure will also have an extra financial impact on the States because it is one of the indicators used to increase benefit payments.