Major faces backlash over public pay

The Government yesterday announced that salaries of top civil service posts in Whitehall could rise by more than 25 per cent, to £150,000 a year, while nurses may have to settle for 1 per cent in a squeeze on thousands of public sector workers.

Nurses said they had been "betrayed", and teachers' unions threatened industrial action after the Cabinet agreed to a rise of 2.7 per cent for teachers but refused to increase the education budget more than the 1 per cent already allocated. School governors said they would fight the settlement, which could lead to cuts in teaching staff, bigger class sizes, or illegal budgets. Labour warned it would provoke "real anger and a massive sense of injustice".

Gillian Shephard, the Secretary of State for Education, last night urged teachers not to take industrial action, which she warned would "damage their reputation" and mark a return to militancy last witnessed in 1986.

The Cabinet approved rises of 2.5 per cent to 3.8 per cent for senior military officers, 2.5 per cent for the judiciary, 2.5 per cent for hospital doctors, 3 per cent for GPs, 2.5 to 2.9 per cent for the armed forces, and 1 per cent for nurses rising to 1.5 to 3.0 per cent with local pay. The Treasury defended its insistence that the rises will have to be paid for out of productivity savings.

The outcry at the Government's squeeze on public sector pay - forcing many workers to accept rises below the inflation rate - was heightened by the Cabinet's approval of a new performance-related pay scale for 29 permanent secretaries and about six top ambassadors, ranging from a minimum of £90,000 to a maximum of £150,000. They include Sir Robin Butler, the Cabinet Secretary, the highest paid civil servant in Whitehall, on £118,179, and Sir Terence Burns, head of the Treasury, on £110,563. They will sit on a new top civil servants' pay review committee, which will advise on the pay awards for their colleagues who currently may earn a maximum of £95,051 a year.

The new system is designed to attract more top civil servants from the private sector. But the performance-related increases will apply to those already in post. A senior Treasury spokesman denied that the difference in treatment between nurses and Whitehall mandarins was insensitive.

"Overall, we have to pay what is necessary to recruit and retain. For the first time permanent secretaries' pay is being related to performance. It will have to be justified. Nurses and teachers get on through promotion but once you become a permanent secretary, you cannot further your career in the Civil Service via promotion," he said.

The Government was already on the defensive over big pay rises and share bonuses for the heads of the privatised utilities. The timing of the announcement deepened these difficulties, coming on the same day as the Rowntree Foundation report, which showedwidening inequalities in the past five years. It led to clashes in the Commons between Tony Blair, the Labour leader, and John Major.

Gordon Brown, the shadow Chancellor, said: "There will be real anger and a massive sense of injustice and betrayal that the nurses are getting £3 a week extra while top Whitehall civil servants stand to make an extra £600 a week."

The teachers' threat of action comes as the Government's relations with the unions were improving after the end of the test boycott. Leaders of the National Association of Schoolmasters Union of Women Teachers will recommend industrial action over class sizes to the union's Easter conference.