Hopes raised of Government U-turn over local pay deals

A spokeswoman for Number 10 said yesterday local pay deals will not be introduced without “strong evidence” to prove their worth.

The statement follows a pledge by Nick Clegg last month that he would not allow the policy to proceed if there was any danger it would widen the divide between richer and poorer areas.

Over recent weeks concerns have also been raised by a series of Conservative backbenchers from across the North, who fear the move will see public funds flow into better-off areas.

East Yorkshire Tories Andrew Percy and Martin Vickers are among those who have spoken out against the plan, which was announced by George Osborne last year and pushed forward in his Budget in March.

Mr Osborne insists that holding down public sector pay in low- wage areas will help the private sector to grow.

A report is due to be published for the Treasury later this summer by the independent Pay Review bodies, outlining how local pay deals would work in practice.

However, No 10 appears now to be backing away from the idea amid signs of growing concern across the coalition.

“Unless there is strong evidence and a good case for it, things won’t change,” a Downing Street spokeswoman said.

Union leaders expressed their delight last night at the prospect of another Government U-turn.

The GMB’s Brian Strutton said: “George Osborne’s plan to localise public sector pay is clearly under review. The idea would be electoral suicide for the Government, as local economies would be further depressed.

“The sooner it’s completely scrapped the better.”