THE government was condemned by unions and Labour today for planning to reduce controls on City bosses’ pay while calling for restraint in the public sector.

Ministers stressed the need for “fiscal discipline” at a Cabinet meeting, Downing Street said, adding that double-digit pay rises in line with inflation for public-sector workers were “not feasible.”

Prime Minister Boris Johnson said that the latest spending review settlement was “a relatively generous one.”

It came after Cabinet Office minister Steve Barclay reportedly wrote to Chancellor Rishi Sunak with a plan for “deregulatory measures to reduce the overall burden on business” and attract more companies to Britain.

It would involve removing restrictions on director pay, according to a leaked copy of the letter seen by the i newspaper.

The paper said Mr Barclay was requesting further measures from Business Secretary Kwasi Kwarteng to ease the burden on business, referring explicitly to the need to alter curbs on bosses’ pay.

Mr Kwarteng’s department confirmed it is exploring “whether there are any unnecessary restrictions on paying non-executive directors in shares, which could ensure they are fully invested in the success of the company they run.”

TUC general secretary Frances O’Grady told the Star: “Ministers have told our key workers to tighten their belts and not ask for pay rises while City executives are being told to help themselves. That’s not right.

“Deregulation of financial markets contributed to and deepened the financial crash of 2008. Let’s not make the same mistake again.”

Labour’s leader in the House of Lords, Baroness Smith, accused the government of using two sets of rules: one for people on high incomes in the City, and another for workers elsewhere.

She told peers: “On one hand, we’re telling those who are working that you must have wage restraint. 

“Does it not seem somewhat hypocritical to be saying to the City that those constraints, those curbs that have been in place, are to be removed?

“It comes back to [the fact that] the government seems to think the rules are for other people but not for them and their friends.”

Shadow business secretary Jonathan Reynolds said: “It’s the hallmark of a government that lurches from crisis to crisis that instead of giving businesses real certainty, they’re looking down the sofa for random ideas.”