Hammond resists pay cap calls

CHANCELLOR Philip Hammond is resisting demands to grant ‘knee-jerk’ rises in public sector pay and could postpone any increases until next year at the earliest.

Over the past week, a string of Cabinet ministers have lined up to demand the 1 per cent pay cap is lifted, including Boris Johnson and Michael Gove.

But the Treasury is resisting demands to make any announcement on pay before the autumn. A senior Government source said: ‘That’s where the resistance is coming from. There is more sympathy in No10 than in the Treasury.’

Yesterday, Downing Street hinted the cap would stay in place until next year, despite further signs that ministers’ resistance to constraints was crumbling.

Home Office minister Nick Hurd told the Commons: ‘We want to make sure frontline public service workers, including the police, are paid fairly for their work, not least because of the contribution they have made over the years to reducing the deficit.’

Every one percentage point rise in public sector pay costs an estimated £2billion.

The Chancellor is not opposed to relaxing spending rules but told colleagues taxes must rise to pay for it. Yesterday, former Chancellor Lord Lamont told BBC Radio 4’s Today show: ‘It is not right for Cabinet ministers to gang up on the Chancellor in this way... it is unavoidable that we have restraint on public spending.’

Downing Street said it would consider recommendations from pay review bodies. But 1 per cent awards confirmed for NHS staff and the Armed Forces this year will not be revisited. Pay bodies covering teachers and police are due later this year.

The Government made clear conclusions will still be based on the 1 per cent cap. That would mean pay rises coming in at the earliest in 2018-19.