PM wins crunch Queen’s Speech vote despite rift
THERESA May was last night facing a Tory rift over demands for the one per cent cap on public sector pay rises to be scrapped.
In a chaotic day at Westminster, two Cabinet ministers cast doubt on the Government’s commitment to keeping the curb on salary increases for millions of teachers, police, firefighters and other state-paid workers.
They appeared to signal the austerity policy, introduced by George Osborne to tackle the Treasury’s record deficit, was set to be dumped at the next Budget in the autumn.
But the PM’s spokesman later sought to dampen expectations of any relaxation of the cap, insisting: “The policy has not changed.”
No10 is understood to have stepped in following frustration at the Treasury, where Chancellor Philip Hammond was believed to be furious at the prospect of having to find billions more a year to pay the increased salaries.
The sudden reversal led to accusations of a “shambles” at the heart of government.
Last night MPs rejected a Labour attempt at Westminster to scrap the cap by 323 votes to 309.
Mrs May’s government survived the first Commons division of the new Parliament thanks to the backing of MPs from the Democratic Unionist Party.
The vote rejected an amendment to the Queen’s Speech tabled by Labour leader Jeremy Corbyn.
Speculation about an easing of the policy in the next Budget had spread earlier in the day after Defence Secretary Sir Michael Fallon had given a speech at a military policy think tank.
Asked about a pay hike for Forces personnel above the one per cent cap, he said: “That is a huge question. It is partly a matter for the pay review bodies but it also involves a forecast of where you expect inflation to be.
“This is something we have to consider, not just for the Army but right across the public sector as a whole.”
Meanwhile Transport Secretary Chris Grayling told the BBC’s Daily Politics: “We have had to take some tough decisions and in the wake of the election we are going to have to think through what we do come the next Budget.”
A senior Downing Street source fuelled the speculation by saying ministers were “going to listen to the messages sent” by the electorate.
Ex-minister Oliver Letwin said taxes may need to rise to let the Government “spend a bit more” on public services.
Tory backbencher Sarah Wollaston said she had no doubt voters wanted to see public services “addressed”.
Shadow chancellor John McDonnell claimed the confusion reflected a shambolic, unsustainable clash between No10 and the Treasury.
And TUC chief Frances O’Grady said: “If the cap is lifted it will be a massive victory for union campaigning.”