Chris Leslie, the shadow chancellor, supports the pay freeze. But his next boss disagrees. Photo: Getty Images
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Labour at odds over public sector pay freeze

Yvette Cooper, Liz Kendall, Andy Burnham and Jeremy Corbyn are all against the public sector pay freeze. But Harriet Harman and Chris Leslie both back the policy. 

Labour's leadership candidates have all announced their opposition to the continuing public sector pay freeze, putting them on a collision course with Harriet Harman, the party's acting leader, and Chris Leslie, the shadow chancellor.

Andy Burnham, the bookmakers' favourite, was the first candidate to rule out a continuation of the pay freeze, while Liz Kendall also confirmed her opposition to continuing pay restraint at a Q&A in central London this morning. The Kendall campaign believe that they can find the money to end the freeze through reducing the scale of British tax breaks - which currently stand at £100bn a year. 

Yvette Cooper believes that continuing the pay freeze - which has been in place since 2010 - will hit recruitment and retention. "Is the Chancellor really saying he can afford to cut inheritance tax for estates worth £1million," the shadow home secretary asks, "but the people who care for us and keep us safe should have to face five more years of real term pay cuts?" Cooper believes that a decade worth of cuts to public sector pay will do lasting damage to the quality and morale of public sector staff, and that, in any case, that the NHS is increasingly having to turn to more expensive agency staff to fill staffing gaps means the savings are void.

Jeremy Corbyn, meanwhile, is against cuts and will not be supporting the public sector pay freeze. That puts all four candidates in opposition to the policy position set out by Harman and Leslie.

In some respects, the fact that Harman will leave office when the new leader is elected on September 12 renders the row moot. However, Leslie, who is supporting Cooper's bid and is a longstanding ally of the shadow home secretary, was considered likely to remain in post as shadow chancellor should either Cooper or Kendall win the leadership. (Should Burnham win, Rachel Reeves is widely tipped to be appointed both his official deputy, and shadow chancellor, shadowing George Osborne both as Chancellor and as First Secretary of State.) His support of the pay freeze may imperil his chances of keeping hold of the role, or re-open the divides of the first phase of Ed Miliband's leadership, when he and Alan Johnson disagreed over the 50p rate and tuition fees. 

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to domestic and global politics.

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Lord Sainsbury pulls funding from Progress and other political causes

The longstanding Labour donor will no longer fund party political causes. 

Centrist Labour MPs face a funding gap for their ideas after the longstanding Labour donor Lord Sainsbury announced he will stop financing party political causes.

Sainsbury, who served as a New Labour minister and also donated to the Liberal Democrats, is instead concentrating on charitable causes. 

Lord Sainsbury funded the centrist organisation Progress, dubbed the “original Blairite pressure group”, which was founded in mid Nineties and provided the intellectual underpinnings of New Labour.

The former supermarket boss is understood to still fund Policy Network, an international thinktank headed by New Labour veteran Peter Mandelson.

He has also funded the Remain campaign group Britain Stronger in Europe. The latter reinvented itself as Open Britain after the Leave vote, and has campaigned for a softer Brexit. Its supporters include former Lib Dem leader Nick Clegg and Labour's Chuka Umunna, and it now relies on grassroots funding.

Sainsbury said he wished to “hand the baton on to a new generation of donors” who supported progressive politics. 

Progress director Richard Angell said: “Progress is extremely grateful to Lord Sainsbury for the funding he has provided for over two decades. We always knew it would not last forever.”

The organisation has raised a third of its funding target from other donors, but is now appealing for financial support from Labour supporters. Its aims include “stopping a hard-left take over” of the Labour party and “renewing the ideas of the centre-left”. 

Julia Rampen is the digital news editor of the New Statesman (previously editor of The Staggers, The New Statesman's online rolling politics blog). She has also been deputy editor at Mirror Money Online and has worked as a financial journalist for several trade magazines. 

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