Tories in push for regional wages

Robert Halfon, a prominent Tory backbencher from Essex who has successfully campaigned for successive fuel duty rises to be cancelled, now wants the coalition to make sweeping changes to the national minimum wage by hiking the level for people living in better-off parts of the UK.

The proposal has clear echoes of Chancellor George Osborne’s efforts to introduce regional pay deals within the public sector, which were finally shelved last year after repeated warnings that the plan would damage the Northern economy.

David Cameron also removed proposals for benefits to be set at a regional level from a speech he was due to make in 2012, amid concerns in Downing Street about how it would be received in poorer parts of the country.

But Mr Halfon, who is widely credited within the Tory party for leading the campaign to keep fuel duty down throughout the current Parliament, insists a regional approach to key economic policies should still be considered.

“I urge the Government to institute a regional minimum wage – in addition to the national minimum wage, not as a substitute for it – because of the different costs of living in different parts of the country,” he told the Commons.

Last week the Chancellor finally responded to Labour’s warnings about a “cost of living crisis” with the announcement that wants the national minimum wage to begin to rise at a faster rate than inflation. Mr Osborne mooted a figure of £7 an hour by 2015 – a significant increase on the current £6.31.

Any indication that the Government is seeking to introduce a North/South split in minimum pay could unravel the positive message Mr Osborne is seeking to send out to lower-paid voters.

Nick Clegg, the Deputy Prime Minister and MP for Sheffield Hallam, has previously said he would block any proposal which would widen the North/South divide.

However, Mr Halfon insisted a regional minimum wage could work “within regions” as well as on a wider national level – raising the spectre of minimum levels of pay being higher in wealthier cities such as York than in less-affluent neighbours such as Bradford.

“I am talking about the differing costs not just from North to South, but within regions,” Mr Halfon said. “That has been done in other countries, such as Canada and the United States, where individual states can set minimum wage rates above the federal minimum.

“We need to consider such an approach seriously.”

While the Government has not given any indication it would back a regional approach, Liberal Democrat Business Secretary Vince Cable said it was a “legitimate” matter for debate.

“Perfectly legitimate issues (have been) raised about why there was no regional variation,” York-born Mr Cable said. “There is a proper debate to be had. “As it happens, I endorsed the principle of the national minimum wage. However, there is a perfectly respectable argument for regional variation.”

Responding to criticism from Labour, Mr Cable highlighted the Opposition party’s campaign for firms and public bodies to introduce a “living wage” for low-paid workers set at a higher level than the minimum wage – and taking in regional price variations.

“The Labour party now promotes the living wage, at the heart of which is the idea that there should be regional differentials, with people in London being paid more and people in the 
west country or the north of England being paid relatively less,” he said.

Comment: Page 10; Labour’s ‘One Nation way forward’: Page 11.