LIBERAL DEMOCRAT MPS RALLY AGAINST REGIONAL PAY

Thursday, 12 July 2012

A majority of Liberal Democrat backbenchers have expressed their opposition to regional pay by endorsing the findings of a paper which concludes that the scheme will have a ruinous effect on the public sector and UK economy.

The paper highlights how the debate over public sector pay is clouded by the interchangeable way in which terms are used and the lack of clear definition available.  In a supplementary note, John Pugh MP argues that regional pay plans to tie public sector pay to local private sector wages are not only unjustified in economic terms, but also morally repugnant as an affront to the principle of ‘equal pay for equal work.’

Number 10 has committed itself to reviewing the evidence on regional pay and has said that it will be introduced ‘only if there is a strong case for it.’ Accordingly, the document prepared in John Pugh’s office carries out an analysis of submissions to the Treasury and Office of Manpower Economics and establishes that the evidence does not support the introduction of regional pay.

Findings show that the private sector is not being ‘crowded out’ of the market place by public sector wages across the UK and that most business leaders have not struggled to recruit people owing to public sector pay premiums. In fact the private sector has shunned the type of market-facing pay the Government is seeking to introduce because it is considered inefficient.

The paper points out that higher rates of pay in the public sector reflect the more highly skilled and educated nature of the workforce and the type of work carried out.  As most private sector jobs outside London and the South East are in retail and services, local economies are likely to suffer from cuts to public sector wages as there is less income to spend.

Nick Clegg has refused to accept any plans that will exacerbate the North-South divide and this view has been shared by the 25 MPs backing this paper, who are concerned that these proposals will be destructive to all areas outside London and the South East.

The paper concludes that the arguments opposed to regional pay are significantly stronger than those in favour and urges the Government to avoid implementing the policy at all costs.