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Hammond said public sector workers were overpaid, report claims Hammond refuses to deny he said public sector workers were overpaid
(about 2 hours later)
Philip Hammond is at the centre of a cabinet storm after a report he told ministers that public sector workers were “overpaid”. Philip Hammond has argued that public sector workers remain on average better compensated that their private counterparts, refusing to deny he had told cabinet colleagues that public sector staff were “overpaid”.
The chancellor made his comment at Tuesday’s weekly cabinet meeting, according to the Sunday Times. The chancellor has been the subject of two leaks from this week’s cabinet meeting: one about his comments on pay, the other that he reportedly said that driving a modern train was so easy “even a woman can do it”.
The Treasury denied he had used the words attributed to him by the newspaper. The report had quoted a cabinet source saying: “Philip used a fairly inflammatory phrase. He said they were ‘overpaid’. Hammond told BBC1’s Andrew Marr Show he was being briefed against by some cabinet colleagues, with the leaks coming from people who were “not happy with the agenda that I have” in pushing for a Brexit focused on the economy.
“That caused some general astonishment. His overall tone was that we shouldn’t give them more cash because they are overpaid. He vehemently denied making the comment about women as train drivers, saying: “No, I didn’t. And I wouldn’t say anything like that.”
“Later in the meeting both Boris Johnson and the PM said we should not say public sector workers are overpaid.” But asked about the comments on pay, reported by the Sunday Times, Hammond did not reject it, arguing there was a wider general issue with public sector pay. “I’m not going to talk about what was or wasn’t said in a cabinet meeting,” he said. “It’s easy to quote a phrase out of context. But I’m very happy to talk about the substantive issue.”
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 1% public sector pay cap. Hammond said that while public sector pay had formerly “raced ahead” of private salaries, the gap had now closed. But, he added, public sector pensions skewed the picture. “When you take into account the very generous contributions that public sector employers have to pay in for their workers’ very generous pensions, they are still about 10% ahead,” he said.
It prompted speculation that Hammond was the victim of a briefing war, as ministers jockeyed for position to succeed Theresa May. “And I don’t for a moment deny that there are areas in the public service where recruitment and retention is becoming an issue, that there are areas of the country where public sector wages and private sector wages are getting out of kilter in the other direction. We have to look at these things and we have to discuss them.”
It came just 24 hours after a report in the Sun claimed the chancellor told the same meeting that driving a train was now so easy “even” a woman could do it. Asked whether he thus did believe the public sector was overpaid, Hammond said it was “a relative question”.
According to the Sunday Times, Hammond said public sector workers were “overpaid” when their pensions were taken into account and that train drivers were “ludicrously overpaid”. He said: “This is about the relationship between public and private sector pay. And it is a simple fact – independent figures show that public sector workers, on average, are paid about 10% more than private sector workers.
A Treasury source said: “The chancellor was describing the public sector pension premium. He did not say that public sector workers were overpaid.” “You can’t eat your pension, you can’t feed your kids with your pension contribution, I understand that. I understand all the issues that public sector workers are facing.”
Hammond has angered hardline Brexiters in the cabinet – including the foreign secretary, Johnson – by arguing for a deal which prioritises jobs and economic growth over controlling immigration. Asked whether public workers would expect salary increases to remain within the 1% annual cap, Hammond said the policy hadn’t changed. He said: “We’ve sought to be fair to public sector workers but also fair to taxpayers.”
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. But he added: “We do keep this under constant review, and I think the fact, as it well known, the cabinet has been discussing this issue, sends a clear signal that we do understand the concern both of public sector workers and of the wider public.”
The latest claims came as the Mail on Sunday reported that supporters of the Brexit secretary, David Davis, were hoping to enlist Hammond’s backing to help see off Johnson in the event of a leadership contest. Hammond was, however, adamant in rejecting a report in the Sun on Saturday that Theresa May had admonished him for making the sexist comment about women driving trains.
Leading public sector organisations denied that workers were overpaid. “I’ve got two daughters in their early 20s, both high achievers,” he said. “I don’t think like that. I wouldn’t make a remark like that.”
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. Commenting on the series of leaks against him, Hammond said: “If you want my opinion, some of the noise is generated by people who are not happy with the agenda that I have. Over the last few weeks, I’ve tried to advance ensuring that we achieve a Brexit that is focused on protecting our economy, protecting our jobs and making sure that we can have continued rising standards in the future.”
“It would be insulting of the government to claim these people earn too much. But he insisted ministers were was not overly divided on Brexit: “I think the cabinet is coming much closer together on issues like transition, for example,” he said.
“The government holds pay awards below inflation and forces year-on-year pay cuts on public sector workers. “Five weeks ago the idea of a transition period was quite a new concept. I think now you’d find that pretty much everybody round the cabinet table accepts that there will be some kind of transition.”
“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.”