Public sector workers and private sector workers are underpaid. Brexit will make that worse

Leaked comments supposedly made by Chancellor Philip Hammond about public sector workers being overpaid miss the point. Britons are underpaid full stop. The hard Brexit favoured by the leakers is making it worse

Chancellor Philip Hammond: Can he salvage anything from the Brexiteers' wreckage? (PA)

So are public sector workers overpaid, as certain unnamed Brexiteer cabinet ministers (I’ll leave you to guess which) have suggested that Chancellor Philip Hammond argued during a cabinet meeting?

It's notable that the likes of Foreign Secretary Boris Johnson and former BFF Michael Gove, the Environment Secretary, have intimated that it might be time to ease the cap on their pay rises.

Mr Hammond, however, is reported by someone in the Brexiteer camp to have argued against that in cabinet by alleging that, in relative terms, they are overpaid when compared to their private sector colleagues.

The Chancellor subsequently clarified his position during the traditional round of Sunday political interviews by saying that public sector pay raced ahead after the financial crisis, and even though private sector workers have since caught up, when their copper bottomed guarantteed pensions the former are still, in relative terms, ten per cent better off.

He's right that those pensions are a benefit not to be sniffed at at a time when interest rates and investment returns are so low that private sector workers will have save a huge amount of money to get anything close to a decent income when they retire.

However, the possibility of a half decent pension won't be of much comfort those on modest or low incomes who are struggling in the face of rising prices and housing costs and who have families to feed and bills to pay.

For what’s it’s worth, my view is that the debate completely misses the point. Both Britain's public and its private sector workers are underpaid. As TUC general secretary Frances O’Grady keeps saying, the nation needs a pay rise. All of it.

The trouble is, the extreme Brexit Messrs Gove and Johnson, those avowed Thatcherites turned fearless defenders of public sector workers, want is going to ensure all of us get paid less, again regardless of where we work. And perhaps a lot less in real terms.

That damage is already making itself felt. Businesses that can are busily setting up EU subsidiaries, shifting functions, and making plans to pull out. Meanwhile investment is declining and so is economic growth. We’re being outpaced by Greece, for goodness sake.

That's going to cause a lot of pain to a lot of people. It's already starting to be felt.

Meanwhile, the civil service is woefully under prepared, the Brexit discussions are going badly, and mainstream businesses are tearing their hair out because it is all but impossible for them to make any plans. Hey, here's an idea, let's create a nice little political row to distract attention from the mess we're making!

Mr Hammond might have been making the wrong argument on the subject of public sector pay, but he is mostly making the right arguments on Brexit. As the man in charge of Britain's economy he seems bent on trying to get a few more lifeboats into the water before the iceberg hits.

Hence the leaks against him, with the aim of making those lifeboats leak.