The Scottish Government has waded into the growing row within the UK cabinet over the cap on public sector pay in a bid to exploit post-election Tory divisions on austerity.
Finance Secretary Derek Mackay has written to Philip Hammond asking for talks to find a “sustainable” way for public sector workers to get a pay rise, with the Chancellor’s colleagues continuing their pressure for a rethink.
Former Prime Minister David Cameron also stepped into the debate yesterday when he attacked “selfish” politicians who risked national finances in an attempt to appear “compassionate”.
Speaking at a conference in Seoul, South Korea, Mr Cameron said: “Giving up on sound finances isn’t being generous, it’s being selfish: spending money today that you may need tomorrow.”
Last week Mr Mackay confirmed that the 1 per cent ceiling on pay rises in the public sector would come to an end in Scotland from next year, and demanded Mr Hammond follow suit.
Raising pay for public sector workers across the UK has been costed at between £4-6 billion and would see Scotland gain hundreds of millions of pounds through the Barnett Formula, helping Mr Mackay keep his pledge.
But he was accused of a “con trick” by Scottish Labour after SNP MSPs voted in May against a motion calling for an end to the 1 per cent pay cap in the health service.
Ministers also recommended a 1 per cent increase for NHS staff in 2017-18 as part of the annual pay review process.
Labour health spokesman Anas Sarwar insisted NHS staff “need a pay rise right now”.
The PCS union, which represents civil servants, echoed calls for immediate relief with inflation running at a four-year high of 2.9 per cent.
Hitting out at what he called “unnecessary and ideological austerity”, Mr Mackay wrote: “I have seen the debate around public sector pay that is taking place across the UK and the divisions within the Cabinet on this subject.
“It is also clear that there are instances – such as the agreement for Northern Ireland – where the Treasury is able to identify additional resource to ease the austerity imposed by successive budgets.”
The Scottish Government’s intervention came as Mr Hammond hit back at growing calls from within cabinet for austerity measures to be eased, insisting there had to be a “grown up” debate.
Mr Hammond admitted the public were “weary” of austerity but said the government’s stance on the pay cap has not changed.
The Chancellor warned that increasing economic growth or raising taxes were the only ways to fund increased spending.
Police minister Nick Hurd told the House of Commons there was an “active discussion” within government about ensuring frontline workers are paid fairly, while Boris Johnson also backed a public sector wage boost.
Environment secretary Michael Gove and Defence Secretary Michael Fallon have also called for the public sector pay cap to be lifted. Reports have claimed that backbench MPs have been given assurances the issue will be tackled in the Autumn budget after a group took their demands to Downing Street.
In a speech at a Confederation of British Industry dinner on Monday night, Mr Hammond made the case for continued discipline over the public finances.
He said: “Our policy on public sector pay has always been designed to strike the right balance between being fair to our public servants and fair to those who pay for them.
“That approach has not changed; and we continually assess that balance.
“But we do, of course, recognise that the British people are weary after seven years’ hard slog repairing the damage of the Great Recession. They have travelled a long way but still the sunlit uplands seem stubbornly to remain one further ridge away.”
A Downing Street spokesman said yesterday: “There are public sector pay review bodies carrying out their work. We are in the process of working through recommendations.”