The seven-year limit on public-sector salaries will be axed next year, Downing Street said yesterday.
The 1 per cent cap, which was the centrepiece of the Government’s austerity programme, was due to run until 2020.
But Elizabeth Truss, Chief Secretary to the Treasury, said there would be more ‘flexibility’ next year to tackle shortages of key workers.
Elizabeth Truss, Chief Secretary to the Treasury, said there would be more ‘flexibility’ next year to tackle shortages of key workers
Thousands of police officers and prison officers were offered immediate modest rises after independent pay bodies said they deserved a boost.
Asked if the move signalled the end of the pay cap, Theresa May’s official spokesman said: ‘Yes.’ It follows months of wrangling between the Treasury and No10 over the fate of the cap, which is central to Government efforts to eradicate the budget deficit left by the last Labour government.
A final announcement on next year’s pay deals will be made in the Budget in November. Prison officers will be the first to breach the cap after ministers approved a 1.7 per cent pay increase. Police officers will get a 1 per cent rise, but will also get a one-off bonus worth another 1 per cent following independent advice that salaries were failing to match living costs.
However, the Treasury has not agreed any new money to fund the increase, which will have to be met from existing budgets. Government sources pointed out that police forces have £1.8billion in reserves.
Downing Street suggested more money could be found in the Budget to fund rises for millions of public- sector workers next year. But giving all public-sector staff an inflation-level rise would cost £5billion a year and wreck Chancellor Philip Hammond’s plans to balance the books.
Yesterday’s pay deals are still well below inflation, which hit 2.9 per cent last month thanks to rising clothing and fuel prices – outstripping the 2.8 per cent predicted by economists.
Unions reacted angrily to the pay announcement, having sought a 5 per cent rise for all public-sector staff.
TUC general secretary Frances O’Grady called increases for police and prison officers ‘pathetic’
The Prison Officers’ Association said it was considering strikes over what amounted to a real-terms cut, while TUC general secretary Frances O’Grady called increases for police and prison officers ‘pathetic’. Mark Serwotka, general secretary of the PCS union, said it was ‘a pile of c**p’.
Miss Truss said review bodies and departments were being given greater leeway to use pay to address ‘pinch-points’ within public-sector staffing.
She added: ‘We are making sure that our policy is targeted to where there are specific issues, where we need to make sure we recruit more talent into the public sector, but also where we do need to make sure that we are holding on to those really valued people.
‘There are very different issues for teachers, nurses and police officers.’
But Labour leader Jeremy Corbyn said he would scrap the cap completely ‘for all workers’, adding: ‘The Labour Party totally rejects the Tories’ attempt to divide and rule, to play one sector off against another.’
Theresa May’s spokesman said: ‘Government will ensure the package for public-sector workers recognises the vital contribution they make.’
Meanwhile, the Organisation for Economic Co-operation and Development said the wages of teachers in England fell by 12 per cent in real terms over ten years – while average teacher pay had risen internationally.