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Regional pay: a new coalition divide

17 May 2012

3:31 PM

17 May 2012

3:31 PM

As if Lords reform, communications surveillance powers and same-sex
marriage weren’t enough, it looks like there’s another issue that’ll cause a good deal of friction between Liberal Democrat and Conservative MPs: plans for regional public sector
pay bargaining. It’s something George Osborne is understandably keen on — James laid out the political and economic reasons behind it just before the
Budget — but now the Lib Dems are making clear that they don’t share the Chancellor’s enthusiasm. In the Q&A after his pupil premium speech on Monday, Nick Clegg said:

‘Nothing has been decided. I feel very, very strongly, as an MP from South Yorkshire with a lot of people in the public services, that we are not going to do anything which simply
willy-nilly exacerbates a north-south divide.

I really do think it’s important that people should be reassured that we are not just going to sort of rush headlong in imposing a system from above which, if it was done in the way some
people describe, would be totally unjust because it would actually penalise people working in some of the most difficult areas.’

And today, 22 Lib Dem MPs — including party president Tim Farron, assistant government whip Mark Hunter and former leader Charles Kennedy — have written to the Guardian echoing their leader’s views:

‘There are many myths about the inflexibility of public sector wage settlements, but following calls for evidence by pay review bodies, distorted comparisons between the public and
private sector workforce have been widely dismissed. They ignore the differences in the types of jobs as well as the age, gender, qualification and skill levels of staff in the two sectors, blind
to the fact many of the lowest paid public sector jobs have been contracted out to private firms. Accordingly, many predict the introduction of regional pay would be bureaucratic and expensive
and impact negatively on the provision of services, employee morale and many other important elements of local economies.’

This debate will really come to a head in July, when the Pay Review Bodies present their report on the economic case for local pay. The Treasury has made its position clear, submitting evidence to the review bodies making the case in favour — highlighting the large gap
between public and private pay in areas like Wales and Yorkshire and the detrimental impact this has, particularly on growth in those regions. But, as their letter today makes clear, the Lib Dems are
determined to ensure that their concerns are taken into account as well.

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