Cable pulls back on pay change in public sector

Chancellor George Osborne is considering moving to a system of local pay, which could see a public worker in one area paid a different salary to someone doing the same job in a neighbouring area.

The Government claims the move could boost the private sector which currently struggles to compete against high public wages in cheaper areas.

But trade unions and some Labour MPs are vehemently against the proposals, which would allow salaries to take account of the differing cost of living, and claim it would hit workers in the North hardest because living costs are generally lower.

Mr Cable said the Government wanted to encourage flexibility, but admitted ending the long-standing system of national pay deals would be difficult.

“The Government’s overall approach is to try to encourage flexibility but I do recognise the practical problems in the public sector,” he said. “It isn’t just the political issue here that people are going to be levelled down in some of the relatively low wage areas, but there is a genuine problem about how you get a career progression structure in long term public servants if you have differential pay. It is very complicated.”

In response to claims from some of his own Liberal Democrat MPs that it would simply lead to pay cuts for workers in low wage areas, he added: “I do recognise the practical difficulties of this. I realise it’s a subject that will have to be approached with very great care.”

Although workers like teachers and nurses are generally paid the same around the country, the Courts Service already operates a local pay system which sees pay tiered, with central London workers getting £5,500 more than those in some other parts of the country.