Budget 2015: The four Labour leadership candidates opposed public sector pay curbs despite party officially supporting them

Harriet Harman, the acting Labour leader, and shadow Chancellor Chris Leslie want to move Labour away from kneejerk opposition to spending cuts

Labour’s interim leader admitted the widespread doubts about the party’s leadership and economic credibility cost it dearly (Susannah Ireland)

The four candidates running for the Labour leadership opposed the Government’s curbs on public sector pay even though the party’s official line is to support the squeeze.

Both Harriet Harman, the acting Labour leader, and Chris Leslie, the shadow Chancellor, acknowledged the need for pay restraint after George Osborne extended a one per cent ceiling for another four years. They want to shift Labour away from kneejerk opposition to spending cuts.

But Liz Kendall, the Blairite candidate, said public sector workers should get a pay rise funded by reducing the £100bn spent on tax reliefs. “It is time for Labour to stand up for the millions of people in our vital public services who have endured year after year of severe wage restraint and often felt they did not have an effective voice in Parliament to fight their corner,” she said.

Yvette Cooper, the shadow Home Secretary, condemned "an ideological attempt to shrink public services and undermine those who work so hard within them".

Andy Burnham, the shadow Health Secretary, said: “Morale is already at rock bottom; people working flat out to keep our services going will now feel like walking away."

Jeremy Corbyn, the left-wing candidate, said: “It is clear Britain needs a pay rise and that applies to our dedicated public servants too.”

Alistair Darling, Labour’s former Chancellor, admitted: “Labour is in complete disarray at the moment because we don’t have a leader. We are paying the price of not having a credible economic policy.”