Keir Starmer's cabinet warned not to use emergency cash to fund public sector pay rises

Keir Starmer's Cabinet ministers have been warned not to use cash in the Treasury's emergency funds to fund public sector pay boosts.

No10 described the clampdown on the use of the government's reserve funds ahead of next month's Budget as "tough but prudent".

The warning came in a letter to Cabinet ministers from the Chief Secretary to the Treasury, James Murray.

Government departments who use the funds, which reached £9billion last year, will be forced to repay the cash over future rules under new rules.

But they have been explicity told it cannot be used to fund public sector pay rises.

The Prime Minister's official spokesman said Mr Murray set out plans to "clampdown on access to the Treasury's reserve".

They added: "Access to reserves will only be granted on exceptional basis and not for any public sector pay rises.

"If Secretaries of State do submit a claim they will now need to demonstrate how they have exhausted all savings options.

"This is a tough but prudent approach to public spending."

Last month Rachel Reeves also told the Cabinet they would have access to the reserve funds limits for "genuinely unforeseen, unaffordable and unavoidable pressure."

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It was said the Chancellor is pushing for the move to stick to her rules to reduce borrowing.

During her keynote speech to the Labour conference last week, Ms Reeves warned the economy was facing "harsh global headwinds".

And she said the government would face "further tests" in the months ahead.

Speaking in Liverpool, Ms Reeves said: "In the months ahead we will face further tests, with the choices to come made all the harder by harsh global headwinds and the long-term damage done to our economy, which is becoming ever clearer."