Public pay policy has not changed, says Hammond

Philip Hammond insisted Westminster's policy on public pay has not changed and that the "right balance" needed to continue to be struck between what is fair for workers and taxpayers.

The Chancellor of the Exchequer, who was facing pressure from colleagues to lift the 1% public pay cap, said he understood people were "weary" following seven years of austerity, the BBC reported.

Speaking at the Confederation of British Industry president's dinner, on Monday evening, he rejected calls to "take the foot off the pedal" saying that government must "hold its nerve" in the face of calls for a "different path" of higher taxes and borrowing.

Hammond was also facing mounting tension within his own party for him to reconsider the 1% limit on increases in public sector salaries, which had been in place since 2012.

Boris Johnson threw his weight behind a rethink on Monday, with sources suggesting he thought public sector workers could enjoy higher rewards in a "responsible way", without damaging the public finances.

Pay rises of 1% for dentists, nurses, doctors and the military had already been agreed to for 2017 and Downing Street had reportedly already said ministers would respond to pay review bodies in due course.