Chancellor Philip Hammond all but admits saying public sector workers are 'overpaid'

Philip Hammond has all but admitted saying public sector workers were "overpaid".

The Chancellor said it was "a simple fact" that wages for employees of the UK's public services earned about 10 per cent more than private sector staff when "very generous" pensions contributions were taken into account.

Mr Hammond was grilled by the BBC's Andrew Marr over comments he reportedly made during a Cabinet meeting this week.

He caused "astonishment" by describing public sector workers as overpaid, according to The Sunday Times.

The Treasury initially denied he had made the comments, but when challenged on what he had said, the Chancellor pointedly - and repeatedly - declined to do the same on BBC1's Andrew Marr Show on Sunday morning.

"I'm not going to talk about what was or wasn't said in a Cabinet meeting and it's easy to quote a phrase out of context," he said.

But he added: "Public sector pay raced ahead of private sector pay after the crash in 2008-09. Taking public sector pay before pension contributions, that gap has now closed - public and private sector pay on average are around and about the same level.

"But when you take into account the very generous contributions that public sector employers have to pay in for their workers' pensions - their very generous pensions - they are still about 10 per cent ahead."

Asked directly whether he felt public sector workers were overpaid, Mr Hammond said: "This is a relative question; this is about the relationship between public and private sector pay.

"It is a simple fact - independent figures show this - that public sector workers on average are paid about 10 per cent more than private sector workers."

The Treasury had earlier denied that Mr Hammond made the remarks during Tuesday's Cabinet meeting.

A spokesman said: "The Chancellor was describing the public sector pension premium. He did not say that public sector workers were overpaid."