• Government set to review 1 per cent cap on public sector pay increases, according to several reports
  • Recommendations from pay review bodies have been ignored in previous years
  • NHS Pay Review Body said in March that pay restraint should end

The government is to review the 1 per cent cap on public sector pay increases, according to several reports this afternoon.

Downing Street sources appear to have briefed journalists to that effect after prime minister’s questions this afternoon, and ahead of a Commons vote triggered by Labour.

The Press Association quoted a source 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.

“We understand that people are weary after years of hard work to rebuild the economy.

“Public sector pay restraint is one of the tough choices we’ve had to make to balance the books after Labour’s crash and what was left behind. We are working through and looking at recommendations from pay bodies that are coming.”

Several reports said the policy could be reviewed in time for the autumn budget.

Recommendations from public sector pay review bodies have been ignored in previous years, on the basis that a cap had been imposed by the government.

In March, the NHS Pay Review Body recommended a 1 per cent pay rise for Agenda for Change staff in 2017-18, but it was effectively bound by the government’s policy.

And in an unusual move, the PRB warned that time was running out for the policy, saying: “Our judgement is that we are approaching the point when the current pay policy will require some modification, and greater flexibility, within the NHS.”

In recent weeks, cabinet members Chris Grayling and Michael Fallon have suggested the government could consider lifting the pay of public sector workers, while Jeremy Hunt has hinted that he could lobby for an end to pay restraint.

It is unclear where the money would come from to pay for the increases. The Institute for Fiscal Studies has estimated that a 1 percent increase would cost around £500m.