Government should automatically accept public sector pay reviews - Labour

Public sector workers' pay decisions should follow the process used to fix MPs' salaries, ministers have been told as Philip Hammond faced fresh criticism.

The Chancellor sidestepped Labour calls to apologise after reportedly telling a Cabinet meeting that public sector workers are "overpaid" when their pensions are taken into account.

Treasury Minister Liz Truss fielded questions on public sector pay, amid calls to lift the 1% cap, during a Commons questions session in which shadow chancellor John McDonnell warned that an NHS pension scheme could be undermined as low wages have forced many to opt out.

Labour former minister Diana Johnson advised the Government to automatically accept decisions of pay review bodies, similar to the way wages for MPs are agreed.

She told Ms Truss: "We all agree that MPs' pay recommendations are decided independently and go through automatically.

"However, with other public sector pay review bodies they do take into account Treasury submissions but then they find their recommendations are vetoed by ministers.

"So if it's good enough for Members of Parliament, why is it not good enough for nurses, the armed forces, firefighters and teachers?"

Ms Truss replied: "We do take notice of what the independent pay review bodies say. We've just approved the teachers' pay review body, we've just approved the nurses' pay review body.

"If we listen to their recommendations - the pay review body for the NHS said we do not see significant short-term nationwide recruitment and retention issues that are linked to pay - we follow that advice and gave the pay accordingly."

Mr McDonnell earlier said of Mr Hammond in the Commons: "When it comes to commenting on wages, doesn't (Ms Truss) agree that it ill becomes a multi-millionaire earning £145,000 - admittedly in a temporary job - and living in two grace-and-favour properties at taxpayers' expense to attack public sector workers, our hospital cleaners, nurses, teachers and firefighters as being overpaid?

"Public sector workers' pay has fallen on average by £4,000 in the first six years of this Government.

"One in five NHS staff are forced to take a second job, teachers are facing a further cut of £3,000 in their salaries by 2020.

"Don't you think the Chancellor should do the right thing and apologise?"

Ms Truss replied: "Yet again you're not giving the House the full picture of what is happening with public sector wages.

"Last year teachers' pay went up by 3.3%, more than half of nurses and other NHS workers saw a pay rise of over 3%, the armed services saw a pay rise of 2.4% and the cleaner you talked about (on the Andrew Marr Show) was not employed by the public sector, they're employed by Serco.

"Get your facts right."

Mr McDonnell said the Government had privatised the cleaning jobs, adding: "I note the fact the Chief Secretary did not refute the Chancellor said these staff are overpaid."

He said Mr Hammond had tried to "justify his attack" by using "divide and rule" tactics between public and private sector workers, citing public sector pensions.

Mr McDonnell added to Ms Truss: "Are you aware these supposedly generous pensions across several professions pay on average the princely sum of just £5,000 a year, and that low pay has forced many public sector workers to opt out of their pension scheme? Eleven percent of NHS staff have opted-out of their pension scheme, a figure that, if it continues to rise, potentially will undermine the whole scheme whatsoever."

Mr McDonnell asked Ms Truss to back lifting the pay cap to ensure public sector workers can have "some hope of a fair wage settlement ... and a decent future pension".

Ms Truss said the shadow chancellor had not "acknowledged the truth" over the figures she had raised regarding public sector pay increases.

She added: "At the moment, we have a situation where public sector workers are paid in line with the private sector, which is right to allow the public sector and private sector to flourish so we can create wealth in this country.

"In addition, public sector workers have a 10% premium on their wages in pension contributions - and that is in the OBR (Office for Budget Responsibility) report."