Magazine article Public Finance

LibDems: Scrap Local Pay Plans

Magazine article Public Finance

LibDems: Scrap Local Pay Plans

Article excerpt

Any moves to introduce local pay into the public sector could lead to ministerial resignations, Public Finance has been told.

Senior Liberal Democrat MP John Pugh said proposals to introduce more 'market-facing pay' should be shelved when reports from public sector pay review bodies are published this autumn.

Chancellor George Osborne asked the independent bodies to 'consider how public sector pay can be made more responsive to local labour markets' in last year's Autumn Statement. He confirmed in this year's Budget that 'more local pay' agreements could be introduced as the two-year public sector pay freeze comes to an end this year.

However, experts have told PF that it is unlikely that the proposal could be in place in time, and Pugh said that there's plainly confusion' about the government's intentions. He warned that the 'ill-thought out' policy could 'exacerbate' the differences between the regions in Britain.

Pugh is the co-chair of the LibDem parliamentary committee for health and social care. In June, he published a critical report examining the history of regional pay in the public sector that was backed by 24 backbench LibDem colleagues.

'I'm clear that I'm speaking not just for the backbenchers but a goodly number of ministers as well, particularly those whose areas are likely to be affected by regional pay. It's the kind of issue that could provoke ministerial resignations,' he told PF.

The public sector already has some flexibility for pay deals to vary by location including the Agenda for Change agreement in the NHS, and so-called 'zonal pay' in the Courts Service, where wages are set based on five zones. Treasury sources told PF that a model similar to the one operating in the Courts Service is among those being considered as a possible reform.

However, Pugh said any attempts to increase variation within these structures were being stymied by the prospect of further change. 1 would agree that it hasn't been realised, but that's because the government is now storing up a political maelstrom around a new set of proposals. It's politically foolish to open up a new front with the public sector, particularly as we are trying to rebalance the economy. …

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