Theresa May faces Cabinet rebellion to scrap public sector pay freeze despite seeing off Labour’s bid to remove it
Senior Tories have called for a rethink on the divisive austerity measure following the government's woeful election performance
A FRESH Cabinet war broke out this evening as Tory big beasts tried to force an end to the public sector pay freeze - despite a Labour vote to scrap the one per cent cap being defeated.
After Defence Secretary Sir Michael Fallon and Transport Secretary Chris Grayling called for a rethink on the one per cent raise limit, No10 insisted the policy on the controversial cap has not changed.
The latest hint that the government’s policy of austerity is dead came on the same day Labour tried unsuccessfully to force a pay rise for public servants like nurses and firefighters with a Queen’s Speech amendment.
Labour's motion - which was the first vote of the new parliament - was defeated by 323 votes to 309 earlier this evening.
Earlier today the Defence Secretary signalled the longstanding one per cent public sector pay rise cap - which was set to continue to 2019/20 - was under review.
Sir Michael said a long awaited wage hike was “something we have to consider not just for the army but right across the public sector as a whole”.
He said the time for a rethink on the cap, first introduced by George Osborne in 2010, was “close”.
Later Transport Secretary Chris Grayling told the BBC’s Daily Politics: “We have had to take some tough decisions and in the wake of the General Election we are going to have to think through what we do come the next Budget.”
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Initially No10 did not rule out scrapping the cap, saying: “Ministers, including the Prime Minister and the Chancellor, have been clear that we are going to listen to the messages that were sent at the election.”
Mrs May’s Press Secretary added: “We understand that people are weary after years of hard work to rebuild the economy.”
And the end of the cap was welcomed by Tory MPs, with Johnny Mercer telling The Sun: “I want to see the end of the public sector pay cap. Seven years is enough.”
The Plymouth MP added: “Our soldiers and nurses deserve better.”
But later in the day the Prime Minister’s Official Spokesman insisted that “the Government’s policy has not changed".
“The public sector pay review bodies are doing their work in the normal way, and when the report back we will look at their findings.”
Defending the long-running cap, the spokesman added: “Public sector pay restraint has helped keep jobs”.
Shadow Chancellor John McDonnell said that the “shambles” surrounding the Government’s intentions reflected a “war” between No10 and the Treasury over the issue.
He added: “This war between Number 10 and the Treasury isn’t sustainable.”
And Lib Dem leader Tim Farron said: “The Tories are in utter chaos. They have U-turned on their own U-turn within the space of a few hours."
The Resolution Foundation estimate that lifting the cap could cost the Treasury more than £3 billion - and No11 sources say lifting the pay cap was “open to discussion”, but would not commit to the move.
Campaigners the Taxpayers’ Alliance said: “It would be a grave error for the government to completely abandon prudence with public sector pay when the nation’s finances are in such a dire state.”
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