Now Gove claims we can lift the pay cap without raising tax
Cabinet split widens over public sector wage freeze
‘We must live within our means’
TORY infighting over austerity intensified yesterday as Michael Gove said higher State spending would not mean taxes need to be raised. The Environment Secretary appeared to support calls for the 1 per cent cap on wages for public sector workers to be lifted.
Health Secretary Jeremy Hunt and Education Secretary Justine Greening have also asked for billions more in funding for the NHS and for schools.
Chancellor Philip Hammond has suggested taxes would have to rise to pay for additional spending. But Mr Gove said yesterday: ‘I don’t see any reason why they need to.’
He told the Andrew Marr Show that ministers should ‘listen to the pay review bodies who govern each individual area of public sector pay’, adding: ‘These bodies have been set up so we can have authoritative advice on what’s required to ensure the public services on which we rely are effectively staffed and the people within them effectively supported. I think we should respect the integrity of that process.’
Defence Secretary Michael Fallon, Transport Secretary Chris Grayling and Mr Hunt have all suggested the wage cap for nurses, teachers, police and civil servants should be relaxed.
But trade minister Greg Hands, an ex-chief secretary to the Treasury, said there has been ‘no change in government policy’ and made a determined plea for ‘budget discipline’. He told the BBC’s Sunday Politics show spending must not get ‘out of control’, adding: ‘We must live within our means.’
He also insisted the pay cap meant around 200,000 public sector jobs had been ‘ saved’ and said any decision should wait until the Autumn Budget.
Other ministers are urging Theresa May act now instead of facing months of Tory infighting as well as public sector strikes.
Mr Hammond could raise taxes to pay for higher spending, or borrow more. The Chancellor has given himself some budget breathing space, estimated at £20billion, and still hit his borrowing target.
A Downing Street source said the conclusions of pay review bodies would be considered ‘ on a case-bycase basis’. That is unlikely to mean blanket pay increases, but particular awards in different sectors. The source said: ‘While we understand the sacrifice that has been made, we must also ensure we continue to protect jobs and deal with our debts.’
Labour’s health spokesman Jonathan Ashworth demanded inflation-linked pay rises for public sector workers. According to the Institute for Fiscal Studies, that would cost around £6billion now and £9.5billion a year by 2022. But Labour only budgeted £4billion in its manifesto to lift the pay cap. On Wednesday Mr Hammond put the brakes on plans to lift the cap – just hours after Downing Street suggested it could go, saying Mrs May had ‘heard the message’ that voters were ‘weary’ of austerity. The 1 per cent cap affects 5.1 mil- lion workers and under current plans will run until 2020.