Treasury reportedly angered at suggestions 1% limit could be relaxed
The government has been slammed by unions after appearing to backtrack on plans to lift the cap on public sector pay.
Downing Street signalled yesterday that the 1% limit on wage rises would be scrapped in the Budget this autumn.
A Conservative source said: “Ministers, including the Prime Minister and the Chancellor, have been clear that they are going to listen to the messages that were sent at the election.”
But just hours later, Number 10 issued a clarification playing down the prospects of the pay cap being scrapped.
The prime minister’s spokesman said: ““The policy has not changed.”
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Public sector pay, including for civil servants, was originally frozen for two years from 2010, followed by a 1% cap on annual pay rises. This is due – under pre-election Conservative plans – to remain in place until at least 2020.
It is understood that chancellor Philip Hammond – already at odds with several Cabinet colleagues over the Government’s approach to Brexit – reacted angrily when he learned of the earlier briefing of a review.
Adding to the confusion, Cabinet ministers Michael Fallon and Chris Grayling had yesterday dropped huge hints that the public sector pay cap would be relaxed.
Defence secretary Fallon said overturning the policy “is obviously something we have to consider not just for the army but right across the public sector as a whole”.
A source at the PCS civil service union called the briefings “shambolic”.
“Once again public servants are being treated with contempt, in what appears to be open warfare between No. 10 and the Treasury.”
FDA general secretary Dave Penman said the continuation of the pay cap risks seriously undermining public service delivery at a crucial time for the country, and highlighted the union had repeatedly warned ministers about its effects on morale, recruitment and retention.
“As the stark findings of our recent survey of public sector leaders show, one third of civil servants are looking to leave the organisation as soon as possible, while 60% told us their morale had decreased over the last year, citing pay as the main reason for the fall,” he said.
“It’s time for a fundamentally different approach to civil service pay, one that rewards and motivates those people tasked with delivering the government’s agenda. Ending the arbitrary 1% pay cap would be a start.”