Lord in call to lift cap on pay

Wales On Sunday - - NEWS -

THERESA MAY and Chan­cel­lor Philip Ham­mond must lift the pub­lic sec­tor pay cap as it is un­sus­tain­able in the long-term but will have to cut spend­ing or hike taxes to pay for it, a for­mer top Trea­sury of­fi­cial has said.

Lord Macpher­son of Earl’s Court, who spent a decade as per­ma­nent sec­re­tary to the Trea­sury until 2016, said a fail­ure to prop­erly cost any lift­ing of the 1% cap would leave the deficit un­ac­cept­ably high.

His com­ments came amid mount­ing spec­u­la­tion that the Prime Min­is­ter was ready to end the long-stand­ing cap on pay rises in the pub­lic sec­tor af­ter a dis­as­trous gen­eral elec­tion which saw the Tories lose their House of Com­mons ma­jor­ity.

Ear­lier this week, De­fence Sec­re­tary Sir Michael Fal­lon said the Gov­ern­ment fully un­der­stood that pub­lic sec­tor work­ers have taken their “share of the pain” of deficit re­duc­tion and sig­nalled that the Chan­cel­lor was look­ing at the is­sue.

The Institute for Fis­cal Stud­ies has said if pub­lic sec­tor pay were to rise in line with in­fla­tion for the next three or four years it would cost the pub­lic purse £6bn to £7bn more than con­tin­u­ing with the cap.

Com­ment­ing on the spec­u­la­tion, Lord Macpher­son told BBC Ra­dio 4’s West­min­ster Hour: “Gen­er­ally pay caps aren’t sus­tain­able in the long term. So the Gov­ern­ment does need to find a way of get­ting off this pol­icy.

“On the other hand, it does cost money. And what I would be ask­ing the Prime Min­is­ter and in­deed ask­ing Mr Ham­mond is, well, if you’re go­ing to re­lax pol­icy in this area, how are you go­ing to pay for it?

“What tax are you go­ing to raise, what spend­ing are you go­ing to cut? Or are you just go­ing to let the deficit re­main at an un­ac­cept­ably high level?”

The Trea­sury is due to send out let­ters within weeks set­ting out the re­mit for pub­lic sec­tor pay re­view bod­ies for next year’s pay round and Mr Ham­mond is un­der pres­sure to al­low them greater flex­i­bil­ity to rec­om­mend more gen­er­ous rises.

One plan re­port­edly un­der con­sid­er­a­tion could see the low­est-paid pub­lic sec­tor work­ers, along with groups with the big­gest re­ten­tion prob­lems such as nurses and se­nior civil ser­vants, granted a pay rise at least in line with in­fla­tion in April, with re­straint for oth­ers lifted in 2019.

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