Chancellor refuses to budge on pay cap No10 hints it won’t be scrapped for at least a year
PHILIP Hammond is resisting demands to grant ‘knee-jerk’ rises in public sector pay and could postpone any increases until at least 2018.
Over the past week, a string of Cabinet ministers have lined up to demand the 1 per cent pay cap is lifted. Boris Johnson and Michael Gove joined the clamour over the weekend.
But the Treasury is resisting demands to make any announcement on pay before the autumn. And last night, in a speech to the CBI Mr Hammond made the case for discipline in public spending, arguing that borrowing more meant ‘passing the bill to the next generation’.
He added: ‘ Our policy on public sector pay has always been designed to strike the right balance of between being fair to our public servants, and fair to those who pay for them.’
Yesterday Downing Street hinted the cap will stay in place until next year, despite further signs that ministers support it being relaxed. Home Office minister Nick Hurd told the Commons there were ‘active discussions’ within Government about ensuring those in the public sector are properly rewarded. He said: ‘We want to make sure that frontline public service workers, including the police, are paid fairly for their work.’
Former senior Treasury figures lined up to defend Mr Hammond and call for continued public spending restraint. Every one percentage point rise in public sector pay costs an estimated £2billion.
The Chancellor is not opposed to relaxing spending rules but has told colleagues taxes must rise to pay for it.
Yesterday former chancellor Lord Lamont told BBC Radio 4’s Today programme: ‘I think it is not right for Cabinet ministers to gang up on the Chancellor in this way. I think it is making his position, which is always very difficult, very very awkward indeed. This is not a choice. It is unavoidable that we have restraint on public spending.’
Lord Macpherson, a former permanent secretary to the Treasury, took a swipe at Mr Gove, who on Sunday said new tax increases were not needed to fund pay rises. He said the Environment Secretary was ‘deeply unconvincing’.
Downing Street said it would consider recommendations from public sector pay review bodies. But 1 per cent awards already confirmed for nurses, doctors, dentists and the armed forces this year will not be revis- ited. Pay reviews covering teachers, police, senior civil servants and prison officers are due later this year. The difference in timings appeared to open the door to some groups getting rises earlier than others. But Downing Street made clear their conclusions will still be based on the 1 per cent cap. That would mean pay rises coming in at the earliest in 2018/19.
Sources close to Foreign Secretary Mr Johnson said yesterday that he ‘strongly believes’ a pay rise can be achieved in a ‘responsible way and without causing fiscal pressures’. And Tory MP Maria Caulfield, a former nurse, told the Today programme that ‘frontline staff have carried these services for the last seven years, and if there is no recognition of that and no pay coming forward to recognise that, then that’s when the resentment builds’.