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Philip Hammond is at the centre of a new row with the Conservative cabinet after it was claimed he told ministers that public sector workers were “overpaid”.
The Chancellor angered ministers when he made the comment at Tuesday’s weekly meeting of the Cabinet, the Sunday Times reported.
The Conservative minister reportedly claimed public sector workers are overpaid as he refused to lift the controversial one per cent pay cap because they receive bigger pensions.
It is the second time the Chancellor has found himself embroiled in a row with his own Cabinet within days, having reportedly said driving trains is now so easy that “even a woman can do it” at a transport meeting.
Senior Tories have also indicated that the party should consider lifting the pay cap, despite Mr Hammond’s recent assertion the Government should “hold its nerve”.
The Treasury denied Mr Hammond made the comments.
The Sunday Times report quoted a cabinet source as saying: “Philip used a fairly inflammatory phrase. He said they were ‘overpaid’.
“That caused some general astonishment. His overall tone was that we shouldn’t give them more cash because they are overpaid.
“Later in the meeting both Boris Johnson and the PM said we should not say public sector workers are overpaid.”
It added that five sources had attested to the Chancellor using the word.
The allegations came at a sensitive moment for the Government with ministers under increasing pressure to lift the one per cent public sector pay cap.
It prompted speculation that Mr Hammond was the victim of a briefing war as ministers jockeyed for position to succeed Theresa May.
According to The Sunday Times, Mr Hammond said public sector workers were “overpaid” when their pensions were taken into account and that train drivers were “ludicrously overpaid”.
A Treasury source said: “The Chancellor was describing the public sector pension premium. He did not say that public sector workers were overpaid.”
Mr Hammond has angered hardline Brexiteers in the Cabinet – including Foreign Secretary Boris Johnson – by arguing for a deal which prioritises jobs and economic growth over controlling immigration.
He has also warned of the need for a lengthy transitional period after Britain leaves the EU to prevent business falling off a “cliff edge” – seen by some hardliners as an attempt to reverse last year’s referendum vote by stealth.
The latest claims came as The Mail on Sunday reported that supporters of Brexit Secretary David Davis were hoping to enlist Mr Hammond’s backing to help see off Mr Johnson in the event of a leadership contest.
Rebuttals to the Chancellor’s reported comments soon followed from leading public sector organisations.
A spokesman for the Royal College of Nursing said: “Nurses across the UK are being forced to take second jobs, rely on family handouts or even turn to food banks.
“It would be insulting of the Government to claim these people earn too much.
“The Government holds pay awards below inflation and forces year-on-year pay cuts on public sector workers.
“Nursing staff earn £3,000 less per year in real terms compared to 2010. Our protests will continue until the Government scraps the 1% cap.”
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