17 Mar 2012

Civil servants in poorer regions ‘to be paid less’

George Osborne will announce plans to scrap national salaries for public sector workers and pay them according to their region instead – effectively meaning a pay cut of potentially for many of them.

In the run up to next week’s budget, the Chancellor George Osborne looks set to accelerate plans to pay local and central government workers according to the region they lived in.

Treasury officials say the change is needed because public sector wages are up to 18 per cent higher in some areas than for equivalent private jobs. They maintain this is discouraging recruitment and investment.

Mr Osborne announced wide-ranging plans in his autumn statement proposing the move from national to regional pay, but now seems ready to initiate the plans from next month for three government bodies.

Around 140,000 staff of the Department of Work and Pensions, the Home Office and the Department of Transport have been highlighted after they were due to move to regional based pay next year. It would mean staff such as job centre workers, border staff and DVLA employees, would be affected as they started a two-year pay freeze earlier then expected.

Tweets from Faisal Islam:

"Local-level bargaining is not common among national companies due to costs involved in duplication and lack of paybill control": IDS report"

"LSE paper concludes centralised nurses' pay leads to higher fatality rates. Pay ceiling in rich areas. more agency workers. Lower outcomes."

Follow Faisal Islam on Twitter: @faisalislam

But the move has angered unions. The Trade Union Congress general secretary Brendan Barber said: “Moving to regional pay will not just reduce the pay of millions of public servants, but hit regional economies outside London and the South East as people have less to spend.

“This budget is shaping up to be a giveaway for the super-rich and a takeaway from Britain’s hardest hit regions.”

The controversial move follows anticipation that the Chancellor is prepared to cut the 50p top rate of tax for high earners. It appears to be gathering substantially less earnings then expected.

The Liberal Democrats have insisted that if it goes there must be other ways found to tax the rich.

David Cameron, Mr Osborne, Nick Clegg and Treasury Chief Secretary Danny Alexander are due to gather in person on Monday to put the finishing touches to Wednesday’s budget.

Labour leader Ed Miliband denounced an income tax cut “targeted at the richest people in Britain” as the “wrong priority” – saying youth unemployment should be the prime focus.