UK Treasury bars ministers from using emergency reserve to fund public-sector pay rises

MUMBAI/LONDON (Reuters) -A deputy of British finance minister Rachel Reeves has told other ministers that they will not be able to use an emergency reserve to fund pay rises in their departments, ahead of what is expected to be a tough budget in November.

Chief Secretary to the Treasury James Murray said the government would not allow public spending to spiral out of control and would clamp down on access to the Treasury Reserve which stands at about 4 billion pounds ($5.37 billion).

Ministers making a claim on the fund would have to show the Treasury how they have used up all savings options and departments would have to repay successful claims in the future.

"This prudent but tough approach to public spending is what will help build a stable economy," Murray said in a letter to the rest of the cabinet which the finance ministry shared with reporters on Wednesday.

Reeves is expected by economists to raise taxes and make spending cuts totalling 25 billion to 30 billion pounds in her budget on November 26 in order to stay on course to meet her targets for fixing the public finances.

"Reserve access will only be granted on an exceptional basis, will not be granted for pay pressures and claims that are made will need to be repaid in future years," Murray said.

Some government departments have agreed bigger pay rises for public sector workers than were budgeted for earlier this year, which may now have to be financed by job cuts or reduced provision of services to the public.

($1 = 0.7444 pounds)

(Reporting by Alistair Smout in MumbaiWriting by William Schomberg and David Milliken in London; editing by William James)