Theresa May is preparing to end the seven-year cap on public sector pay rises this month, it has been reported.
Under the plans, revealed in today's Sun, ministers will give the green light to pay rises in line with inflation, which currently stands at 2.6%.
That will be a boost for the millions of public sector workers who have seen their pay rises held down to just 1% since 2010, with rising inflation meaning they have faced a real-terms fall in wages.
Today's reports suggest the government will bring in the changes over a two-year period to spread the cost to the Treasury, with low paid and professions with the biggest retention problems, such as nurses and senior civil servants, among the first to get a pay rise.
Health secretary Jeremy Hunt has apparently been one of the ministers arguing that NHS workers need a pay rise to prevent staff leaving the service.
The move will be rubber-stamped later this month when the chief secretary to the Treasury, Liz Truss, issues advice to the public sector pay review bodies.
“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," a government source told the Sun.
“Being taken for granted for a long time is why people are getting tired with austerity.”
A source in the Treasury said lifting the pay cap was “the biggest domestic issue for us this autumn" and would "dominate the Budget”.