Ministers' fury at curb on their 17 per cent pay rise

GORDON BROWN is to reaffirm the Government's tough stance on public-sector pay by maintaining his squeeze on cabinet ministers' salaries.

To the frustration and anger of some colleagues, the Chancellor has insisted they will have to forgo a pounds 16,000 pay rise for the third year in succession.

David Blunkett, the Secretary of State for Education and Employment, Robin Cook, the Foreign Secretary, Ann Taylor, the Chief Whip, and John Prescott, the Deputy Prime Minister, are all understood to be furious at the decision.

Many in the Cabinet accept that Mr Brown's "hairshirt" approach is aimed at avoiding any appearance of high living after recent controversy over ministers' flights on Concorde and the use of five-star hotels.

With pay awards for doctors, teachers and the armed forces due over the next two weeks, the Government also wants to ensure that its reputation for pay restraint is upheld.

Ministers are, however, upset that they now receive pounds 11,000 less than William Hague, the Opposition leader, who decided to take his full pay rise, and are likely to lose pounds 80,000 over the lifetime of this Parliament.

Tony Blair reiterated his tough line on public-sector pay yesterday when he warned that rises for teachers and nurses had to be performance-related. "Increased pay must be tied to improved results," he said. "And that may mean taking on some sacred cows to make better use of the pay bill," he said.

Pay review bodies are expected to give nurses an average 4.7 per cent rise and doctors 3.5 per cent next year, while teachers and the military may get roughly 2.5 per cent, in line with inflation. In contrast, allowing ministers to receive the pounds 16,000 owed to them would result in a headline- grabbing rise of 17 per cent. A rise in line with inflation is much more likely.

MPs voted before the last general election to increase ministerial salaries from pounds 69,651 to pounds 106,716 after the independent Senior Salaries Review Body claimed that wages had fallen behind the private sector.

But after Labour won power, Mr Brown revealed he would take only pounds 90,267 to "set an example" to the rest of the country and made clear that his colleagues should follow suit.

Mr Blair backed his Chancellor by announcing that he would take only pounds 105,233 of the pounds 147,816 he is entitled to as Prime Minister.

Mr Prescott and other ministers were convinced that the freeze would be lifted after the first two years of the Government, but The Independent has learnt that the pounds 16,000 rise is now "lost" for good.

As a result, each will be out of pocket by pounds 80,000 by the end of the Parliament. "We're never going to get it," one senior minister admitted.

New recommended rises in cabinet pay will be announced by the salaraies board before April. In theory, a minister's pay is made up of a pounds 45,066 MP's salary, plus a pounds 61,650 top up for ministerial duties. All the Cabinet, apart from the Lord Chancellor, Lord Irvine of Lairg, claim pounds 45,201 of the ministerial allowance. Lord Irvine was allowed to receive his full pounds 148,850 to uphold the legal requirement that he should be paid more than the Lord Chief Justice.

Some ministers say Mr Blair can afford to restrict his pay because his wife, Cherie, is a high-profile QC earning up to pounds 200,000 a year. They point out that the rises were approved by an independent body and feel "betrayed" that a freeze intended to last two years has now become permanent.

Yet simply to catch up on the lost pay would mean rises of pounds 32,000 this year. Mr Brown has let it be known that to award even pounds 16,000 would be viewed with dismay by the public.

The Chancellor has repeatedly warned leading businessmen to show restraint on their own rises as part of his campaign for sensible pay policies in both the boardroom and public sector.

"We've fallen victim to our own rhetoric," one ministerial source said yesterday. "A lot of people are upset about not being allowed to take the wage they are entitled to."