Government in turmoil over public sector pay after Treasury backlash

Posted On: 
28th June 2017

The Government was in turmoil tonight after appearing to backtrack on plans to lift the cap on public sector pay.

Theresa May and Philip Hammond appear to be at odds over public sector pay.
Credit: 
PA Images

Downing Street signalled earlier today that the 1% limit on wage rises - which has been in place since 2010 - would be scrapped in the Budget this autumn.

A Tory 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."

Public sector pay cap facing axe in Budget as government signals climbdown

Michael Fallon: Tories must consider ending 1% public sector pay cap

But just hours later, Number 10 issued a clarification playing down the prospects of the pay cap being dumped.

The Prime Minister's spokesman said: "“The policy has not changed."

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.

Shadow Chancellor John McDonnell took to Twitter to mock the Government.

Adding to the confusion, Cabinet ministers Michael Fallon and Chris Grayling had this morning dropped huge hints that the public sector pay cap would be relaxed.

Defence Secretary Mr 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".