Liz Truss’s Tory leadership campaign suffered a serious setback on Tuesday after she was forced to abandon her plan to cut the pay of public sector workers living in poorer areas of Britain.
The proposal drew ferocious cross-party criticism — including from Tories representing constituencies in the north and Midlands — forcing the foreign secretary to ditch the policy only 12 hours after it was launched.
Rishi Sunak, former chancellor, hopes the self-inflicted error could halt Truss’s momentum in the contest to become Britain’s next prime minister, as Tory members start to receive their ballot papers.
“She’s just not a serious proposition when it comes to understanding the public finances,” said one former minister backing the Sunak campaign. “This is a sign of overconfidence.”
Sunak claimed Truss’s plan for regional pay settlements, tailored to local living costs, would leave millions of nurses, police officers and soldiers an average of £1,500 a year worse off.
Truss’s team insisted the policy had been “wilfully misrepresented” — even though it had issued a press release explicitly stating that £8.8bn could be saved if the policy applied to all 5.7mn public sector workers.
Ben Houchen, Tory mayor of Teesside, said this might come to be seen as Truss’s “dementia tax moment”, a reference to Theresa May’s axing of a plan to fund social care in 2017.
Houchen, who is backing Sunak, said the idea of lower pay for public sector workers in areas such as the north and Midlands — set by new regional pay boards — left him almost “speechless”.
Angela Rayner, deputy Labour party leader, said Truss’s proposal would “level down the pay of northerners”, adding: “This out-of-touch government’s commitment to levelling up is dead.”
After a morning of growing alarm from Truss’s supporters, particularly those living outside of London and the south east, the foreign secretary opted to abruptly scrap the policy just after midday to limit the damage.
“I’m concerned people were unnecessarily worried about my policies,” Truss said. “Therefore I am being clear that regional pay boards won’t be going ahead.”
Truss, a free-market Tory, had argued that public sector pay should be set according to local living costs. She said this would stop the “crowding out” of the private sector, which could not afford to match state salaries.
The policy, part of a wider “war on Whitehall waste”, was inspired by the rightwing TaxPayers’ Alliance think-tank.
The episode illustrates a wider risk for Truss, who has won the backing of Conservative rightwingers by promising a series of radical proposals, including big tax cuts and a drive to shrink the state.
It points to the potential political fallout should Truss become prime minister and start to implement these policies, particularly in “red wall” seats in northern England.
While such policies play well with some Tory members — who largely live in the south — and gain positive headlines in the rightwing press, they risk alienating the party’s northern voters.
Boris Johnson’s promise to “level up” Britain carried an implicit promise of more state spending in the north, not lower public pay and public expenditure reductions.
A Truss campaign spokesperson said: “Our hard-working frontline staff are the bedrock of society and there will be no proposal taken forward on regional pay boards for civil servants or public sector workers.”