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Philip Hammond has sparked a backlash with a bid to curb the pay of five million public sector workers.

The Government had won plaudits last year after it finally bowed to pressure and axed the 1% pay cap.

But now the Chancellor is planning to plug the enormous black hole in Tory finances by banning blanket pay rises across the board for nurses, teachers and police officers.

He is set to announce in next week’s Budget that future wage increases will instead be based on people’s performance and where they live in the country.

But the proposal prompted anger from union bosses who said it was yet another blow for workers “who have already seen their pay fall massively under this Tory government”.

(Image: Getty Images)

Leaders of unions representing millions of public sector workers said staff should be paid the rate for the job, not where they live.

Mr Hammond has reportedly told top Tories he wants greater “flexibility” over public sector pay and is looking to take a more “targeted” approach after the abolition of the 1% cap.

He is expected to warn Britain’s five million public sector workers that in future, pay rises will be focused on retention, performance and productivity.

The new regime will also better reward those in London and the South East, because the Treasury believes public sector pay is more “competitive” with the private sector outside of the these areas.

However, this is likely to fuel concerns over a North/South pay divide.

The Treasury decline to comment on reports that Tory ministers have been told public sector pay rises will in future be based on performance and where workers live.

Dave Prentis, general secretary of Unison, Britain’s biggest public services union, slammed the plans.

He said: “Tory ministers are pushing so-called regional pay again. It’s a complete non-starter for public sector workers who have already seen their pay fall massively under this Tory government.”

Mr Prentis warned: “What regional pay means in practice is further attacks on the wages of NHS staff, school staff, police staff and others.

“And as for performance related pay - nurses, care workers and teaching assistants are already being paid far less than their hard work and incredible performance deserves. They need better pay, wherever they live and work.”

Unite assistant general secretary Gail Cartmail added: “The Government’s mask has once again slipped. Rather than ending austerity, it appears to be preparing to launch another broadside against public sector workers.

“Public sector workers are increasingly struggling to make ends meet as pay increases still lag far behind inflation and are failing to meet rising living costs.

“As well as being blatantly unfair regional pay ignores the reality of the real challenge to recruit and retain staff. Workers must be paid the rate for the job regardless of where they work.”

Rehana Azam, national officer of the GMB, said: “People should be paid for the job they do and skills and experience they have, not where they live.

“It isn’t fair or practical and will weaken public services and lead to a talent drain from poorer areas.

“Performance related-pay just does not work in the public sector - how do you judge it? A paramedic who saves the most lives? It doesn’t make sense.

“The Government tried to introduce it in 2012 and was defeated then, so why do they think it will work now?”

Garry Graham, deputy general secretary of Prospect, said: “The civil service has already been singled out for particularly harsh treatment on pay.

“The vast majority of staff are not covered by review bodies and even where they are, the review body’s recommendations are often ignored.

“Ministers have been advised that civil service pay increases and pay levels lag significantly behind both the private and public sector. Despite this they have already chosen to cap pay increases at 1.5% despite the increasing recruitment and retention problems many departments and agencies face.”