Chancellor Philip Hammond has defended his reported comments on public-sector pay and pensions.

It follows a report in The Sunday Times which claimed Hammond said public-sector workers are overpaid when you take into account pensions.

According to the report, other members of the Cabinet said Hammond does not believe the 1 per cent public-sector pay cap should be lifted because public-sector workers earn more than those in the private sector because of their pensions.

“Public-sector workers are overpaid when you take into account pensions,” he reportedly remarked.

Speaking on The Andrew Marr Show, Sunday 16 July, Hammond declined to comment on what happens in private cabinet meetings.

“Cabinet meetings are supposed to be a private space in which we have a serious discussion. I’m the Chancellor, you would expect me to put any discussion about public-sector pay in the context of the fiscal and economic situation that we face. Others who represent spending departments, employing large numbers of public-sector workers will bring their experience and their realities to the table.”

However, he said that public-sector pay “raced ahead” of private sector pay after the financial crash in the last decade. “Taking public-sector pay before pension contributions, that gap has now closed, public and private sector pay, on average are around about the same level.”

“When you take into account the very generous contributions that public-sector employers have to pay in for their workers’ pensions, they are very generous pensions, they are still about 10 per cent ahead.”

He described this as a “premium” but said he understands you “can’t feed your kids with your pension contribution”.

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