Chancellor says public-sector staff are on average 10% ahead of private counterparts once pensions are considered

This article is more than 3 years old

This article is more than 3 years old

Philip Hammond has urged caution over any moves to lift the cap on public-sector pay, arguing that on average workers in the sector remain better compensated than their private counterparts because of their better pensions.

While the chancellor refused to comment on a report that he had told his cabinet colleagues that public-sector staff were “overpaid”, he also pointedly did not deny it, arguing it was wrong to say public-sector staff had lost out excessively during austerity.

Asked about the “overpaid” comment, which was relayed to the Sunday Times by an unnamed ministerial colleague, Hammond did not deny the report.

“I’m not going to talk about what was or wasn’t said in a cabinet meeting,” he told BBC1’s Andrew Marr Show. “It’s easy to quote a phrase out of context. But I’m very happy to talk about the substantive issue.”



In contrast, Hammond was adamant when questioned about a report in the Sun that he supposedly told the cabinet that driving a modern train was so easy “even a woman can do it”, bringing a rebuke from Theresa May.

“No, I didn’t. And I wouldn’t say anything like that,” he said. “I’ve got two daughters in their early 20s, both high achievers,” he said. “I don’t think like that. I wouldn’t make a remark like that.”

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Hammond said that while public-sector pay had formerly “raced ahead” of private salaries, the gap had now closed. But, he added, public-sector pensions skewed the picture. “When you take into account the very generous contributions that public-sector employers have to pay in for their workers’ very generous pensions, they are still about 10% ahead,” he said.



“And I don’t for a moment deny that there are areas in the public service where recruitment and retention is becoming an issue, that there are areas of the country where public-sector wages and private-sector wages are getting out of kilter in the other direction. We have to look at these things and we have to discuss them.”



Asked whether he thus did believe public-sector workforce was overpaid, Hammond said it was “a relative question”.

He said: “This is about the relationship between public- and private-sector pay. And it is a simple fact – independent figures show that public-sector workers, on average, are paid about 10% more than private-sector workers.

“You can’t eat your pension, you can’t feed your kids with your pension contribution, I understand that. I understand all the issues that public-sector workers are facing.”

Quizzed on whether this meant public workers should expect salary increases to remain within the 1% annual cap, Hammond said the policy had not changed. He said: “We’ve sought to be fair to public-sector workers but also fair to taxpayers.”

But he did not completely shut the door on easing the pay cap in the future: “We do keep this under constant review, and I think the fact, as is well known, [that]the cabinet has been discussing this issue sends a clear signal that we do understand the concern both of public-sector workers and of the wider public.”

Hammond has in recent weeks been seen as something of an isolated voice in cabinet, urging consistency on the policy of limiting annual pay rises for public-sector workers to 1%.

Ministers including Boris Johnson, Michael Gove, Jeremy Hunt and Justine Greening have all suggested lifting the ceiling, prompting the former Conservative chancellor Lord Lamont to urge greater cabinet discipline.

Hammond suggested the leaks over his supposed comments in cabinet were more motivated by differences over Brexit, saying “some of the noise is generated” by ministers who disagree with his aim of prioritising the economy in leaving the EU.

Damian Green, the first secretary of state and May’s deputy, said the briefings from cabinet needed to stop.

“There are a lot of very serious things going on the world and now is absolutely not the time for this type of activity,” he told BBC Radio 5 Live’s Pienaar’s Politics.



The international trade secretary, Liam Fox, told BBC1’s Sunday Politics that the leaks were a result of “too much self-indulgence”.

“I absolutely deplore leaks from the cabinet. I think my colleagues should be very quiet, stick to their own departmental duties,” he said.

“Talk of leadership challenges is completely overblown and completely the wrong thing for the country. The last thing anyone wants is for the Conservative party to turn in on itself.”



The Labour leader, Jeremy Corbyn, said the briefings were sowing confusion.

“It seems quite extraordinary that we’re having varying accounts coming out of every cabinet meeting about who said what to who and at what point in the meeting they said it, and everybody saying nothing actually happened,” he said.



“It’s a very strange meeting where nothing actually happens. Something must have been said by somebody and maybe a little clarity would be helpful.”