Regional pay rates plan under fire

A study for the TUC has found no evidence of Government suggestions that the pay of workers such as teachers, nurses and dinner ladies is preventing local firms from hiring staff.

Chancellor George Osborne raised the prospect of different rates of pay for public sector workers in different regions of the country, sparking fears of a further entrenched north-south divide.

The report states that if the pay rates are introduced, Yorkshire and the Humber could be the hardest hit nationally. Yorkshire Labour MPs have criticised the plans, which some Ministers have stressed are intended to cut wage rates.

George Mudie, Labour MP for Leeds East, said: “I think it’s one of the daftest ideas to come from the Tories, they should be concentrating more on the growing divide between the prosperous south and the less well off north as that is the real challenge, especially as I’m speaking from a constituency which is one of the worst for unemployment in Leeds.”

Plans for regional pay rates are based on the idea that the pay of public servants is preventing private sector firms from recruiting because they are unable to match public sector salaries.

The TUC commissioned the New Economics Foundation (NEF) to analyse Ministers’ proposals and said it found little evidence to support the Government’s position.

The report said that the worst case scenario, where the pay of millions of public servants is brought down to private sector levels, could mean that as many as 14,000 jobs could be lost in our region.

Mr Mudie said: “You can’t take that amount of money out or that amount of jobs out without severely damaging the economy – it is a step that they shouldn’t take.”

Labour MP for Leeds Central, Hilary Benn, said: “Regional pay rates are unfair and wont work – they could reduce spending in the Yorkshire region.”

The NEF research has found that the best case scenario for such plans would see just 2,700 more jobs created in our region, still costing the local economy £374m annually as public sector spending power would be further cut.

Leeds North West Lib Dem MP Greg Mulholland denied that there are any proposals for regional pay rates. He said: “There will be no proposals under this government to pay people in the north of England less than those in the south.”

Deputy Prime Minister Nick Clegg has ruled out the idea and many northern Conservative MPs are said to be uncomfortable with the plans.

Mr Mulholland said: “Lib Dem MPs have made absolutely clear that we wouldn’t stand for a regional pay system and I’m delighted that Nick Clegg also has made that clear.”

The NEF report also found that nationally as many as 110,000 jobs could be lost across England and Wales, and the cost to local economies would be £9.7bn a year, if the plans were introduced.

Bill Adams, Yorkshire and the Humber TUC regional secretary, said: “Despite the concerns being voiced by MPs in the parts of the UK most likely to be affected by the introduction of local pay rates, the government has so far refused to rule out this move that would hit public sector workers and their families – who are already feeling the financial pinch as they suffer the effects of a lengthy pay freeze – very hard.”

Pay review bodies are due to report back to the Government this week on the effect of introducing regional pay rates.