Inflation-busting pay rises have been recommended by the public sector pay review body for the armed forces, giving the senior ranks higher increases than other public sector groups, including civil servants.
The pay rises recommended by the pay review bodies have presented the Prime Minister with a headache, which the Chancellor is determined to resolve by holding public sector pay down closer to his 2.5 per cent inflation target rate.
A Whitehall source said: "The armed forces pay review body is a big problem. It is higher than the rest. But there is no way that we are going to pay army officers a higher increase than nurses."
Gordon Brown will urge the Cabinet to phase the pay awards in two stages to reduce the cost, but it is likely that the higher recommendations including those for the armed forces will not be implemented in full. The armed forces were last year awarded 3.2 per cent, but it was phased in two stages in common with other groups by John Major's Tory Cabinet.
The Secretary of State for Defence, George Robertson, is expected to argue in favour of the armed forces increase being implemented. The pay review body, chaired by Sir Gordon Hourston, last year warned that retention was becoming a problem and there was a "worrying increase in the numbers who felt considerably undervalued".
However, the Treasury is ready to point out that the armed forces have shed many senior officers with substantial redundancy pay-outs, at the same time as it is boosting recruitment. Some RAF officers, for example, were allowed to take early retirement in their mid-40s with pay-outs of pounds 100,000 before going into jobs in the private sector.
The Chancellor will seek to spread the pain over pay by making sure all groups have roughly the same increase over two stages, although inflation is running at 3.7 per cent, and wages in the private sector are rising at more than 4 per cent.
The teachers have been recommended to receive less than 4 per cent. Giving all the groups the same uprating could ease the anger of nurses who have been recommended for the second successive year to receive lower increases than family doctors and hospital doctors.Reuse content