Boris Johnson has added to mounting Cabinet pressure on Theresa May to ease austerity by scrapping the 1% public sector pay cap.
The foreign secretary thinks the recommendations of independent pay review bodies which back increases should be followed, a Government source said.
Mr Johnson “strongly believes” a public sector pay rise can be done in a “responsible way”, the source added.
This means it will not put undue pressure on public finances, with the Chancellor still aiming to wipe out the deficit by the middle of the next decade.
Pressure is mounting on the Prime Minister and Mr Hammond to relax austerity, with several Tory MPs calling for an end to the pay cap after the party disastrously lost its majority in the General Election to anti-austerity Labour, which has pledged to scrap the 1% ceiling.
Mr Johnson’s views go further than those stated by his old adversary and Cabinet colleague Michael Gove, who said the Government has “got to listen” to the pay review bodies, one of which has already recommended a pay rise for NHS workers this year.
Increasing public sector pay would boost the earnings of 5.1 million workers, including 1.6 million in the NHS and 1.5 million in public education, according to the Institute For Fiscal Studies (IFS). It is likely to cost billions of pounds.
In March, the NHS pay review body highlighted “widespread concerns” about recruitment, retention and motivation among employers and staff and said “we are approaching the point when the current pay policy will require some modification, and greater flexibility, within the NHS”.
Health Secretary Jeremy Hunt will reportedly cite the report while demanding the pay cap is scrapped for NHS workers.
A Number 10 source has said the Government is responding to the recommendations of pay review bodies currently reporting to ministers “on a case-by-case basis”.
The source said the pay cap was brought in to “deal with the mess we inherited from Labour” and acknowledged the “hard work and sacrifice” made by public sector workers, saying jobs had been protected and the deficit reduced by three quarters.