Rishi Sunak has said he is willing to make unpopular decisions on public sector wages, in the clearest sign yet that he could block pay rises recommended by review bodies.
The Prime Minister said he has to make “difficult decisions” as part of his plan to curb stubbornly high inflation, which is feared could be fuelled further by wage increases.
Unions have expressed outrage over reports that ministers are likely to take the rare step of rejecting some recommendations of the independent pay review bodies.
Mr Sunak told the BBC’s Sunday With Laura Kuenssberg: “When it comes to public sector pay I’m going to do what I think is affordable, what I think is responsible.
“Now that may not always be popular in the short term, but it’s the right thing for the country.”
Mr Sunak defended the Bank of England’s decision to raise interest rates to a 15-year high last week, a move that piled pressure on mortgage-holders.
He urged cash-strapped Britons to “hold our nerve” with interest rate hikes as he stressed “there is no alternative” to stamping out inflation.
Mr Sunak’s Chief Secretary to the Treasury also stressed that ministers would consider “the implications for inflation” when deciding on public sector workers’ pay.
John Glen told Sky News’s Sophy Ridge On Sunday show: “As a matter of principle pay review bodies are a very significant part of resolving the pay issues.
“But obviously we’ve also got to take account of the effect on inflation.
“That would be irresponsible not to do that.”
He added: “Obviously I’m very aware of the massive contribution that teachers, nurses and public sector workers make and we’ve got to get the right outcomes that are fair to them, but also aren’t inflationary.”
Pay review body recommendations are not legally binding on the Government and, although they are typically accepted, ministers can generally choose to reject or partially ignore the advice.
But this would be a controversial move, after the Government defended last year’s below-inflation pay rises by saying they had followed the bodies’ advice.
It could further inflame ongoing disputes with unions and lead to more strike action.
Union leaders warned that “playing politics with working people’s incomes would put everyone’s futures at stake” and would have profound consequences for future industrial relations.