Regional Pay

Andrew Percy Excerpts

Wednesday 20th June 2012 Commons Chamber

[Guy Opperman (Hexham) (Con)]

My entire career has been spent being part of the national health service. My grandmother was an NHS matron, and I came into politics when the hospital in which I was born and which saved my mother’s life was threatened with closure. In 2011 I was diagnosed with a tumour and spent several weeks in London NHS hospitals. I saw all that was good in those hospitals and literally owe my life to the treatment I received. I will be for ever grateful.

If I took one thing in particular away from that experience, it was an understanding of just how many individuals are involved in making the whole process work. From the porter and the nurse to the physiotherapist, the care lady and the cleaner, everyone is just as important as each other. I think that all Members of the House should remember that when we talk about the public sector, we are talking about not only the unions and Unite but the care lady who looks after our mothers and the dinner lady who keeps our children safe at lunch time and provides them with food. It is much more personal than the dry debates we engage in.

There are two key arguments in the debate, the first of which is economic. Having worked as a legal aid barrister or state prosecutor for 15 years, I should declare that I, like many public sector workers, am still owed money by the state, notwithstanding the fact that I stopped working for the state on a legal aid basis two years ago. It was during that time that I saw the effects of local pay, as it is described, and took into account the argument of the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown)—as usual, he is absent from his place—who first contemplated it in 2003 and then forced it on the courts service in 2007.

As with so many of the right hon. Gentleman’s economic policies, I see little evidence that local pay was a success. I have tried to study the economic argument behind it, which is based on the Heckscher-Ohlin factor proportions theory and various academic studies performed by august institutions such as the London School of Economics. I do not support such arguments, which are obscure at best and have not been shown to work in real terms. Also—surely this is the crucial point—it is not supported by businesses in my constituency, none of which has come to me to press for it.

[Andrew Percy (Brigg and Goole) (Con)]

I agree entirely with everything my hon. Friend has said so far. The other reason we do not support regional pay is the facts. In my region, the Humber, we cannot get NHS workers to come and work and have to consider paying them more. A few years ago we could not get teachers to teach in the city of Hull and had to give them an enhanced salary to do it. Whatever the economics, the reality is that we cannot get some public sector workers to come to my region. How we would do that if we paid them even less is beyond me.

[Guy Opperman]

I also believe that regional pay is divisive and manifestly unfair. Members who read The Daily Telegraph today—obviously, that includes many on the Opposition Benches—will know that it has criticised me personally for leading the opposition to these divisive plans. It must be very rare to be criticised by The Daily Telegraph and praised by the hon. Member for Sedgefield (Phil Wilson) all on the same day. I was interested when I read on to find that its argument is that pay distortions are

“economically destructive. They make it harder for businesses in the regions to recruit workers at competitive wage rates and as a consequence they stifle enterprise.”

That is not what individual businesses, whether small or large, in my constituency and elsewhere in the north-east are saying to me, however.

This Government, like previous Governments in 2003 and 2007, are right to look at all potential options for boosting growth, and I have no difficulty with them referring the matter for consideration by the pay review body, but ultimately this will not find business support or create the prospect of business growth in the regions that we represent, and we should not support it if it becomes Government policy.

The majority of public sector workers in my region are doing their bit already. They are hard working, and along with the vast majority of my constituents they accept that the Government are right to reduce the deficit, to cut public sector spending, to reform public sector pensions, to freeze pay in some areas and to eradicate some of the non-jobs and excesses that we saw before 2010. That is accepted.

--- Later in debate ---

[Jacob Rees-Mogg]

The reason increased employment in the public sector destroys jobs in the private sector is that every public sector job has to be paid for by the private sector. The public sector creates no wealth. It spends wealth that is taxed from the private sector. If it does not come from tax immediately, it comes from delayed taxation through borrowing. That is the connection. Increasing employment in the public sector increases the burden on the private sector and destroys the ability of the private sector to compete globally.

[Andrew Percy]

I usually agree with my hon. Friend, but will he explain why a schoolteacher in Hull or Grimsby, who faces some of the most challenging schoolchildren in the country and even more challenging parents, should be paid less than a schoolteacher doing exactly the same job elsewhere in the country? That is the problem that my constituents have with this proposal.

[Jacob Rees-Mogg]

My hon. Friend makes a mistake in assuming that the policy will automatically lead to lower pay. Pay will be set by market forces. If it was difficult to employ schoolteachers in his constituency, teachers in that area would have to be paid more than the market rate until it had the required number of teachers.

[Andrew Percy]

There is not a bigger pot of money.

[Jacob Rees-Mogg]

Of course there is not a bigger pot of money, but if we allow competition to work, it will increase the local economy, which means that more money will be gathered in through council tax and the area will have the ability to pay more for the public sector that it needs.

The problem with what we are doing at the moment is that it impoverishes the poor. It keeps the poorest areas of the country poor for as long as possible. I know that Opposition Members and some of my hon. Friends are in favour of the current situation not because they want to keep the poorest areas poor, but for the most noble and romantic of motives. However, their noble approach to this issue is fundamentally wrong. They think that it is fair to ensure that everybody is paid the same, but if by doing that we destroy employment in certain areas and make more people dependent on the state, we are not acting in the broader interests of society.