Defiant Philip Hammond confirms the public sector pay cap hasn’t changed despite huge pressure on him to scrap it
But the Chancellor did signal he was willing to hike wages - but only if people can stomach tax rises to pay for it
A DEFIANT Philip Hammond confirmed the Government's approach to the public sector pay cap has not changed despite huge pressure on him to scrap it.
But the Chancellor did signal he was willing to hike wages in the future - but only if people can stomach tax rises to pay for it.
Speaking to the CBI last night he launched a fierce defence of the economic plan of his predecessor George Osborne, stressing fiscal discipline needed to remain in place.
Mr Hammond insisted it would be reckless to abandon the good work achieved through higher spending and higher borrowing.
He said: “It would be easy to take our foot off the pedal but instead we must hold our nerve.”
But the Cabinet minister conceded he was aware of the “frustration” over stagnating pay growth, telling business leaders: “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."
He insisted a balance had to be struck between “being fair to our public servants” and “fair to those who pay for them”.
MOST READ IN POLITICS:
And he said there needed to be a “grown up debate” about how to meet demands for improved public services, arguing that increasing economic growth or broad-based tax increases were the only ways to fund them.
His comments will be seen as another slap down for Boris Johnson and others around the Cabinet table who have been pushing for the Tories to respond to the frustrations of nurses, teachers and soldiers living under the 1 per cent cap.
The Foreign Secretary joined Michael Gove, Sir Michael Fallon and Chris Grayling from Theresa May’s top team calling for an end to the squeeze on public sector wages.
And Police minister Nick Hurd told the Commons yesterday there was an "active discussion" under way to ensure frontline workers are paid fairly.
Responding to his comments the Prime Minister's official spokesman said: "There are public sector pay review bodies carrying out their work.
“We are in the process of working through recommendations. That is what the minister was referring to."
Increasing public sector pay would boost the earnings of 5.1 million workers, including 1.6 million in the NHS and 1.5 million in public education, according to the IFS, but is likely to cost billions of pounds.