Mackay pounces on cabinet split

● Scottish Government calls for end to 1% public sector pay cap ● Hammond hits back at colleagues amid pressure for rethink

you may need tomorrow.” Last week Mr Mackay confirmed that the 1 per cent ceiling on pay rises in the public sector would come to an end in Scotland from next year, and demanded Mr Hammond follow suit.

Raising pay for public sector workers across the UK has been costed at between £4-6 billion and would see Scotland gain hundreds of millions of pounds through the Barnett Formula, helping Mr Mackay keep his pledge.

But he was accused of a “con trick” by Scottish Labour after SNP MSPS voted in May against a motion calling for an end to the 1 per cent pay cap in the health service.

Ministers also recommended a 1 per cent increase for NHS staff in 2017-18 as part of the annual pay review process.

Labour health spokesman Anas Sarwar insisted NHS staff “need a pay rise right now”.

The PCS union, which represents civil servants, echoed calls for immediate relief with inflation running at a fouryear high of 2.9 per cent.

Hitting out at what he called “unnecessary and ideological austerity”, Mr Mackay wrote: “I have seen the debate around public sector pay that is taking place across the UK and the divisions within the Cabinet on this subject.

“It is also clear that there are instances – such as the agreement for Northern Ireland – where the Treasury is able to identify additional resource to ease the austerity imposed by successive budgets.”

The Scottish Government’s intervention came as Mr Hammond hit back at growing calls from within cabinet for austerity measures to be eased, insisting there had to be a “grown up” debate.

Mr Hammond admitted the public were “weary” of austerity but said the government’s stance on the pay cap has not changed.

The Chancellor warned that increasing economic growth or raising taxes were the only ways to fund increased spending.

Police minister Nick Hurd told the House of Commons there was an “active discussion” within government about ensuring frontline workers are paid fairly, while Boris Johnsonalsobackedapublic sector wage boost.

Environment secretary Michael Gove and Defence Secretary Michael Fallon havealsocalledforthepublic sector pay cap to be lifted. Reports have claimed that backbench MPS have been given assurances the issue will be tackled in the Autumn budget after a group took their demands to Downing Street.

In a speech at a Confederation of British Industry dinner on Monday night, Mr Hammond made the case for continued discipline over the public finances.

He said: “Our policy on public sector pay has always been designed to strike the right balance between being fair to our public servants and fair to those who pay for them.

“That approach has not changed; and we continually assess that balance.

“But we do, of course, recognise that the British people are weary after seven years’ hard slog repairing the damage of the Great Recession. They have travelled a long way but still the sunlit uplands seem stubbornly to remain one further ridge away.”

Adowningstreetspokesman said yesterday: “There are public sector pay review bodies carrying out their work. We are in the process of working through recommendations.”

0 Irish Taoiseach Leo Varadkar, right, gives Canadian Prime Minister