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Lib Dem former business secretary Sir Vince Cable says there are "fundamental differences" between the time at which the pay cap was introduced and now.

He says it was brought in at a time of fear of large-scale unemployment and deflation, whereas now there's a chronic shortage of staff in public services and wages are being squeezed by rising inflation, and calls on the Treasury to drop the cap to reflect "basic economic reality".

Liz Truss tells him that wages are subject to independent review and she'll pay close attention to that.

In other Jacob Rees-Mogg news today, he's called his sixth child Sixtus

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Newly promoted Brexit minister Steve Baker insisted inflation would stabilise when the "one-off" fall in the value of the pound caused by the referendum "washes through".

But he argued that a 2% pay rise for public sector workers would impact on inflation, adding that it would be a "very expensive pay rise for the public finances".

Labour's shadow health secretary John Ashworth suggests Theresa May is hiding behind pay review bodies, when it is ministers that set their terms.

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Conservative Ken Clarke praises the minister for "straightforwardly restating a sensible policy" which will help "bring the economy back into health again" especially in the context of Brexit uncertainty.

He adds any change at this point would be "a political disaster" which would allow the government to be accused of a U-turn.

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Liz Truss replies that the public sector pay cap remains in place "because it is the responsible thing to do" and will enable improvements to public services.

She suggests "he knows perfectly well" fire service pay is dealt with separately in local government budgets.

She accuses Mr McDonnell of "talking down public services".

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When we ask a question to the Chancellor, we expect him to respond, John McDonnell responds to Ms Truss.

This confirms what commentators are saying, he says - it's a Cabinet of chaos rather than a government.

Is there a 1% pay cap still? This is the dictat that the pay review bodies are working to, he says.

"Who actually speaks for the government on this issue?" Mr McDonnell asks. "Daily fearful of a putsch, Number 10 backs down."

"What we've seen is Cabinet ministers scrapping in the school playground," he says.

Public sector works are angry because they have seen tax cuts for the rich and corporations, while their pay is cut.

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Chief Secretary to the Treasury Liz Truss is responding to shadow chancellor John McDonnell's urgent question regarding government policy on public sector pay.

She says we all recognise public servants do "a fantastic job" and pay is designed to be "fair" to them, but must also guarantee services are sustainable in the long term.

She says wages are comparable to the private sector and pension entitlements are often better.

Several ministers have suggested they want the public sector pay cap, in place since 2013 following a two-year pay freeze, to be lifted, and some Conservative MPs have called for a change of direction after the Tories lost their majority in the general election.

But Downing Street has insisted the policy has not changed, with Chancellor Philip Hammond urging ministers to "hold their nerve".

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Catching up now on the final question at (the once again over-running) PMQs, Conservative Robert Halfon urged the PM to confirm that when the oil price fell it should be reflected in prices at the pumps for motorists.

Theresa May replied: "I'm pleased we've been able to hold down fuel duty," adding: "I think you're trying to tempt me down a path which I will not go down because as you know decisions are taken at the time of fiscal events."

The award-winning director warns that it will become harder to make films with EU partners.

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Catching up now on the penultimate question at PMQs - Labour's Alison McGovern asked the PM to give the Commons a date for the publication of a report by Bishop James Jones, who was a key figure in the campaign to uncover the truth about the Hillsborough disaster.

Theresa May said she hadn't seen the report, but she had asked Bishop Jones to carry it out because she was concerned about the way in which bereaved families at Hillsborough had been treated over the years.

She said the government planned to introduce an independent public advocate who can act for bereaved families in cases of public disaster "because too many have to over many years fight to get justice".

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Theresa May was looking "more relaxed and comfortable" during PMQs, reckons the BBC's Deputy Political Editor John Pienaar, "maybe the pressure is off now that she has fallen as far as she has".

But the public sector pay cap is "politically impossible to maintain", he adds, because of the pressure from within her own party.

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On to the post-clash reaction.

"It was as if the election campaign hadn't ended", says Andrew Neil, with Jeremy Corbyn talking about public sector pay and Theresa May saying the country needs to live within its means.

The one difference, he adds, is that Mrs May made a "spirited defence" of Tory economic policy, something, he says, she didn't do during the campaign.

Reality Check

The prime minister and Labour leader have been throwing nurse numbers at each other.

Jeremy Corbyn said: "Last year there was a net loss of 1,700 nurses and midwives to the NHS."

Theresa May responded: "Contrary to what he says, we have 13,000 more nurses working in the NHS [in England] today compared to 2010."

Clearly they are quoting different statistics for different years. Mrs May's 13,000 figure for England is only true if you look just at nurses working on acute, elderly or general wards.

If you look at all areas of nursing, the number of staff, external - or the equivalent in terms of full-time hours - did increase between May 2010 and March 2017, but by a more modest 5,000.

Mr Corbyn's 1,700 figure is for the overall fall in the total number of nurses registered in the UK (not all of whom will be working) in the year to the end of March 2017.

You can read more about the number of nurses in this Reality Check.

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Theresa May was also asked questions about crime in smaller harbours, cinemas and again about "over-stretched and overworked" nurses who use food banks.

Conservative Andrew Bowie added that it was "utterly shameful" that the Scottish government had to go pleading to the European Commission for an extension to the farm payment deadline, which he said was "proof that the SNP is failing rural Scotland".

Speaker John Bercow intervened to say the prime minister was not responsible for the Scottish government.

Theresa May responded to that question by saying the SNP was "failing Scotland".

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