The civilian workforce tasked with equipping the UK's armed forces to be ready for war has been told it must wait until next year for an already limited and disputed pay rise, Sky News understands.
Thousands of employees at Defence Equipment and Support (DE&S) - which is part of the Ministry of Defence - had been expecting the settlement, including bonuses, to start being received this month, a source said.
The delay means morale is "through the floor", the source added.
There had already been widespread unhappiness and disagreement at the size of the pay increase, which is well below the above-inflation 3.6% boost agreed for military personnel.
Trade unions that represent impacted workers are understood to be in negotiations with the Ministry of Defence to try to change minds, with one saying it is "alarmed" at the situation.
But the defence budget is overstretched, despite the government repeatedly boasting about how it is giving UK defence the biggest boost in funding since the end of the Cold War.
In a sign of the strain, a failure to secure a larger uplift from the treasury over the next four years prompted John Healey to quit as defence secretary in June, when Sir Keir Starmer was prime minister.
Mr Healey is now Andy Burnham's chancellor.
DE&S is the legacy equipment and support branch of a newly-formed National Armaments Director Group at the Ministry of Defence.
Its workforce - partnered with industry - is pivotal to the successful delivery of an array of weapons and other equipment programmes set out in a major Defence Investment Plan.
The Public and Commercial Services (PCS) union called on DE&S to implement the pay award as soon as possible "at a time of financial hardship for our lowest-paid members".
It also described the overall pay settlement as "falling well short of the standards set out in our national pay policy, so we cannot accept it".
The union said in a statement: "We are alarmed to hear from DE&S that pay increases will not be received until the early part of 2027. While PCS will attend any meetings that could potentially lead to an improved offer, these delays do not help with the immediate situation, and DE&S should have proceeded with an initial payment to staff, as we requested."
In a further dent to morale, there was speculation that the senior leadership team at DE&S would still be receiving their salary increases and bonuses on time even as the majority of staff suffered a delay.
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A defence source, however, said it was thought that this was no longer the case and everyone would have to wait.
A spokesperson for the Ministry of Defence said: "Our staff work around the clock to help keep the country safe and we are committed to finding a resolution for this year's pay award.
"Discussions with the trade unions are ongoing and support is available for colleagues who may need it in the meantime."
(c) Sky News 2026: No pay rise for key workers equipping the UK for war until next year
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