Theresa May is gearing up to lift the cap on public sector workers' pay this month, as she attempts to win back voters and get her leadership back on track.
The Prime Minister is planning to end the one per cent cap on rises for all public sector workers - which has been in effect for seven years - as one of a number of measures designed to keep her in Number 10.
According to The Sun, ending the pay cap is the "jewel" in a package of major policies. It will be introduced over two years to mitigate the impact of the £4bn cost of the move.
Ministers are thought to favour the option whereby lower paid workers, such as nurses, and professions with retention issues, such as civil service leaders, will see the first rises, from April next year.
Pay hikes of at least the rate of inflation, currently 2.6 per cent, will be authorised, meaning the pay of the average nurse on £31,600 a year go up by at least £820, while a police constable on £28,000 will see a rise of at least £730.
Treasury chief secretary Liz Truss is expected to confirm the plans later this month, in a set of annual guidance letters to pay review bodies that calculate next year’s pay levels for five million public sector workers.
Although chancellor Philip Hammond previously said civil servants were "overpaid" he is understood to back the move.
A senior Whitehall source told The Sun: “The PM and the chancellor think the government need to show we understand the value of people’s service, not just the price of it. Being taken for granted for a long time is why people are getting tired with austerity.”
A Treasury source added: “Lifting the cap and how we pay for it is the biggest domestic issue for us this autumn. It will dominate the Budget”.