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Regional Pay

Posted in BlogBlog | Nov 16, 2012 | By:

In last year’s Autumn Statement, George Osborne referred to his wish to make public sector pay “more responsive to local labour markets”.  His plans to do this outlined what we know now as Regional Pay, a pay system based more on ideology than evidence, and one which if implemented would be detrimental to hundreds of thousands of people across the UK. 

In Westminster the plans have isolated the Conservative Party, leaving them looking increasingly vulnerable and out of touch with the economic situation.  Their coalition partners have parted company with them on this issue, and overwhelmingly supported a motion at their annual conference which expressly argued against the introduction of regional pay.  All parties represented in the Welsh Assembly have united in reaching a cross party consensus against regional pay and even Conservative MP’s from Wales, the North East and South West of England have all shown their opposition to the plans.  Over 61 academics from across the UK, including a large contingent from Wales put their names to a joint letter against regional pay, saying that “such a policy could reduce spending power, undermine many small and medium sized businesses in areas of low pay, and aggravate geographical economic and social inequalities”.  The evidence in support of regional pay has been in short supply, and the arguments pedalled by the conservative party consistently show them as unable to see beyond London and the South East of England. 

The TUC have responded through a campaign called Pay Fair, which has been successful in evidencing the real impact of the proposed plans, and showing the wider consequences.  Well considered research has been crucial in showing that both private and public sector workers would be affected and that the arguments saying that the public sector employees ‘crowd out’ or stifles growth in the private sector are both nonsense and a shameful misrepresentation of the truth.  There is no evidence that the pay of teachers, nurses and refuse collectors is preventing Welsh firms from hiring staff.  Conversely cutting jobs in the public sector would not instigate growth in the private sector.   The research carried out by New Economics Foundation has expressed major concerns that if the plans were to go ahead, regional pay would be counterproductive, dampen economic growth and be likely to increase regional disparities.  It also found that UK Government plans to introduce regional pay rates for public servants could actually cost the Welsh economy as much as £6.6 million a year. 

Regional Pay simply isn’t fair, and it shouldn’t be the case that a public sector worker with the same skills and qualifications would get paid less for doing the same job in different areas.  In the areas where wages would be lower, large amounts of money would be reduced from the local economy as hard pressed workers tighten their belts, thus reducing demand for private sector goods and services and affecting all those who work in those industries.  This could drive businesses, especially small and medium enterprises out of business, further exacerbating the problem and providing a knock on effect to the local economy.  Those people and families from low pay areas would be forced into making decisions over relocating or surviving on a reduced income. 

Evidence has also shown that the most likely to be adversely affected by these proposals are women as currently the gender pay gap is smaller in the public sector and the proud fact that Wales currently has the second lowest gender gap in fulltime earnings amongst UK countries and regions could be threatened if these plans were to press ahead.  The plans to introduce regional pay are unfair, out of touch and inappropriate for the modern workforce.  We urge people to join us in our plans to oppose the introduction of regional pay and to fight to protect the Welsh economy from the brutal attack it would cause.  The TUC Pay Fair website has details of motions that your local authority can debate and examples of politicians who have supported this campaign.


Rhianydd Williams, Wales TUC


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