The Cabinet is expected to reject the recommendations, to underline its determination to cut expenditure in the face of growing Tory backbench anxiety about tax rises. But the Cabinet may seek a compromise by delaying introduction of some pay rises.
The review bodies are believed to have used 2.7 per cent as their starting point because that was what MPs have awarded themselves.
Downing Street confirmed last night that the first two reports, covering nurses and doctors and dentists, had been received. Others covering the armed forces are due to arrive within a fortnight.
Public sector pay was limited to 1.5 per cent last year. The review bodies will be angry if their reports are rejected for another year.
Kenneth Clarke, the Chancellor, has warned the review bodies that the Government cannot allow any pay increases not paid for by higher productivity.
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