Northern fears over Osborne’s plans for pay

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Government plans to introduce differing regional pay levels within the public sector are coming under fire amid fears they will lead to the “continuing stagnation and further decline of the North”.

The Hannah Mitchell Foundation, a Left-leaning group calling for policies to help to boost growth in the North of England, said the region needed the new pay plans “like a hole in the head”.

It emerged last week the Chancellor wants to bring forward plans to allow differing levels of public sector pay between different parts of the country as quickly as possible, in the belief higher public pay in low-wage areas is stifling growth in the private sector.

George Osborne is reportedly considering an announcement in his Budget this afternoon,

Unions are furious at the idea, with TUC leader Brendon Barber warning yesterday that regional pay settlements would “drive down wages in poorer areas of the country, cause more business closures, and reinforce the UK’s alarming reliance on London and the South East for growth.”

And lobby groups such as the Yorkshire-based Hannah Mitchell Foundation are warning the move will further entrench the North/South divide.

“It’s exactly the wrong solution to kick-starting the North’s faltering economies,” said the foundation’s general secretary, Prof Paul Salveson.

“The North needs good quality, well-rewarded jobs to put spending power back into the economy. The Chancellor’s suggestion will result in continuing stagnation and further decline of the North”.

His views were echoed by the foundation’s chairman, Barry Winter.

“It’s risible that private employers are struggling to recruit in the North because of high public sector pay rates,” he said. “Anyone north of the Trent knows that job vacancies in the North are becoming an endangered species, with scores of highly qualified applicants for each reasonably paid job which comes up.

“Osborne’s proposal will do nothing to help the labour market and will simply make a bad situation even worse.”