Lib Dems move to block local pay

Lib Dem deputy leader Simon Hughes said he believes the controversial Treasury proposal is “unlikely to proceed” if his party backs a motion to maintain national pay bargaining for teachers, nurses and other key public sector workers.

The issue has proved an incendiary one within the Coalition ever since Chancellor George Osborne announced in his Budget speech that he would bring forward proposals for local pay deals later this year.

The Treasury is expected to publish its proposals within weeks, insisting that national pay deals keep public sector wage levels artificially high in areas where average pay is otherwise low – so “squeezing out” private sector growth.

However, opponents insist the proposal will see pay held down for millions of people in lower wage areas for years to come, so draining money away from poorer parts of the country.

Lib Dem leader Nick Clegg has already said he will veto any policy which would widen the North/South divide, but has voiced support for allowing individual schools to set their own pay levels.

Backbench Lib Dems – and many Tory MPs with constituencies in the North – have been more forthright on the matter, demanding the policy be dropped amidst fear of a ‘brain drain’ of talented public sector workers into better-paying areas.

Speaking at a pre-conference briefing at Westminster, Mr Hughes said there was a “perfectly valid” economic argument to be made for differential pay.

But he added: “There was a fairly early and robust response from many in the party saying ‘no, we don’t think that’s the right thing to do’.

“This is the first opportunity since then for the party to take a view in the light of the debate.

“My judgment is this will be passed as a motion... because of the strength of feeling expressed, not just in Wales and Scotland, but the regions of England.”

Mr Hughes made it clear that adopting a stance against local pay as Lib Dem policy would not automatically signify a change in the Government’s position. But it would send a clear message to senior Lib Dem cabinet members including Mr Clegg, Chief Secretary to the Treasury Danny Alexander and Business Secretary Vince Cable that their grassroots expect them to block the Treasury plan.

Mr Hughes said: “Obviously it takes two to make a coalition policy in the present Government. We can’t promise we can deliver everything.

“But if this motion is passed, it will give a very clear steer to Nick and Danny and to Vince it wouldn’t be an acceptable policy to us – and I imagine that means it would be unlikely to proceed.”

The motion warns that regional pay could “adversely affect” many areas, taking money out of the local economy and so hitting businesses hard.

Allies of Mr Osborne are, however, gearing up for the fight.

Yesterday 25 leading economists sent a letter to The Times calling on the Government to “act decisively” and end national pay deals for good.

Tory rising star Kwasi Kwarteng, the MP for Spelthorne, published an article insisting the Treasury must hold firm in face of opposition across the North.

“If we want to rebalance our economy in the long run, we have to make it make it easier for the private sector to hire the best workers,” he said. “That cannot happen while we stick to national pay bargaining.”

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