The Cabinet bust-up over public sector pay escalated today as Boris Johnson and Michael Gove were accused of backing abandoning austerity as if they had "got exhausted of watching Poldark and wanted a better programme".
"We want to make sure frontline public service workers, including the police, are paid fairly for their work, not least because of the contribution that they have made over the years to reducing the deficit that we inherited from the party opposite".
Britain could abandon an across-the-board cap on pay for public-sector workers such as teachers and nurses if review bodies said higher rises were needed to recruit and retain workers, Environment Secretary Michael Gove said on Sunday.
But former work and pensions secretary Stephen Crabb said on Monday that cabinet ministers who do not support the government's public sector pay policy should resign.
A source close to Mr Johnson said the former Conservative leadership contender "supports the idea of public-sector workers getting a better deal".
"Our policy on public sector pay has always been created to strike the right balance of between being fair to our public servants, and fair to those who pay for them", Hammond said.
It comes after Mr Hammond's repeated insistence that the only ways to fund extra spending are by increasing borrowing, which he does not appear to favour, putting up taxes, or increasing productivity to boost growth, seen as a more long-term goal. "We need to show how Conservative values and policies can work for those parts of the country, and parts of the population, who have turned away from us", he said. We are in the process of working through recommendations.
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"And in that, the work they have done to safeguard hundreds of thousands of jobs".
Numerous calls for a relaxation of the pay cap have been in support of emergency personnel and other front-line workers, like nurses.
Downing Street has said that pay decisions are to be made on a "case by case" basis.
He said: "Compelling case for a pay increase for nurses being made @BBCr4today by Conservative MP & nurse @mariacaulfield".
"I think it is not right for cabinet ministers to gang up on the chancellor in this way".
The cap was introduced by former prime minister David Cameron in 2010 and has resulted in public sector pay being frozen at one percent rises for the last seven years. "I think it is making his position, which is always very hard, very, very awkward indeed", he said.
However, the peer risked a backlash by arguing that: "Austerity, which is just another word for living within one's means, is not really austerity".
"This is not a choice, it is unavoidable that we have restraint on public spending".