LIZ Truss has been accused of a “catastrophic error of judgment” after ditching plans to cut the pay of public sector workers outside London.

In a major stumble in the Tory leadership race, the foreign secretary was forced to U-turn after a ferocious backlash to a policy that was denounced as “levelling down”. 

Ms Truss announced on Monday that she intended to wage a “war on Whitehall waste” to save £11billion, some £8.8bn by paying workers around the country different wages.

Her campaign said nationally negotiated civil service salaries failed to reflect the variable cost of living, and so regional pay boards would adjust pay in line with local job markets.

Critics quickly pointed out the only way to reach the £8.8bn figure would be to cut the wages of nearly six million workers, including in the NHS, police and the armed forces, as well as the core government civil service. 

The influential Teesside mayor Ben Houchen, who is supporting Ms Truss’s rival Rishi Sunak, said he was “actually speechless” at the proposal.

Others said it would be a fundamental breach of the levelling up agenda supposed to raise standards outside London and the south east.

Mr Sunak’s campaign said the plan could leave millions of public workers facing £1,500 of pay cuts against the backdrop of a cost-of-living crisis.

One supporters of the former Chancellor told the BBC it was a "catastrophic error of judgement" by the foreign secretary. 

Ms Truss is currently the favourite to replace Boris Johnson in No10, but now faces intense scrutiny over her judgment, just as Tory members start to get their ballot papers.

Ms Truss’s campaign, which has repeatedly mocked Mr Sunak for performing U-turns over tax cuts, claimed there had been “wilful misrepresentation” of its plan.

A spokeswoman said: “Over the last few hours there has been a wilful misrepresentation of our campaign. Current levels of public sector pay will absolutely be maintained.

“Anything to suggest otherwise is simply wrong.

“Our hard-working frontline staff are the bedrock of society and there will be no proposal taken forward on regional pay boards for civil servants or public sector workers.”

But former chief whip Mark Harper, a supporter of Mr Sunak, said Ms Truss should “stop blaming journalists - reporting what a press release says isn’t ‘wilful misrepresentation'” of her now abandoned regional pay policy.”

He added: “So this U-turn has wiped out £8.8 billion in savings. Where are these going to come from now? An economic policy that can’t be paid for isn’t very Conservative. Mrs Thatcher would be livid.”

Mr Houchen said: “There is simply no way you can do this without a massive pay cut for 5.5m people, including nurses, police officers and our armed forces outside London. This is a ticking time bomb set by Team Truss that will explode ahead of the next general election.”

Alex Thomas, programme director of the Institute for Government, told Radio 4: “The whole Civil Service pay bill is only about £9 billion. You’re not going to reduce the Civil Service pay bill to £200 million unless you pretty radically reshape the state.

“I know she [Truss] wants to be radical but possibly not quite that much, so it’s going to come from the wider public sector, it’s going to come from nurses and teachers and local authorities.”

He argued the “complicated and controversial” move would mean nurses and teachers being paid less or receiving slower pay rises than others, adding: “This is not war on Whitehall, it’s more like war on Workington.”

Vowing to vote for Mr Sunak, Steve Double, the Tory MP for St Austell and Newquay, said the “terrible idea” would be “hugely damaging to public services in Cornwall, where we already struggle to recruit NHS staff”. The billions saved would be coming straight out of rural economies. This is levelling down not up.”

North West Durham MP Richard Holden, another supporter of the former chancellor, said Ms Truss’s policy would “kill levelling up”.

Simon Hoare, the Sunak backer who chairs the Commons Northern Ireland Committee, said it is a “totally bad initiative” that would result in “levelling down”.

Unions representing civil servants reacted furiously to the plans.

FDA general secretary Dave Penman said: “As the Government faces the huge challenges posed by a new war on mainland Europe and recovering from Covid backlogs, what we need from a prime minister is solutions for the 21st century, not recycled failed policies and tired rhetoric from the 1980s.”

Mark Serwotka, general secretary of the PCS union, said: “If Liz Truss is elected, and if she tries to go ahead with these proposals, she’ll face opposition every step of the way.

“Civil servants are not a political tool to be used and abused for one person’s ambition – they are the hard-working people who keep the country running, day in, day out, and they deserve respect.”

Mike Clancy, general secretary of Prospect union, said: “Liz Truss has spent the last few weeks trashing the record of her own Government. Judging by this vacuous attempt to garner headlines friendly to her selectorate, she plans more of the same economically illiterate and insulting ideological nonsense that this Government has been churning out in recent years.”

Labour shadow chancellor Rachel Reeves said: “This latest mess has exposed exactly what Liz Truss thinks of public sector workers across Britain.

“Her proposal - and the fact she pushed for a similar change in 2018 when she was a Treasury minister - reveals her priority would be to slash the pay packets of working people.

“That would suck money out of local economies and send our communities backward.

“Twelve years of the Tories and this is what we’re left with.

“They offer nothing but more of the same. Britain deserves better.”

UK Liberal Democrat leader Sir Ed Davey called it plain “incompetence”.

He said: “U-turning on a multi billion-pound policy five weeks before even taking office must be a new record.

“We can’t let Liz Truss run the country with the same incompetence she’s running her leadership campaign. The British people must have their say in a general election.”