Regional Pay (NHS)

Baroness Ritchie of Downpatrick Excerpts

Wednesday 7th November 2012 Commons Chamber

[Ms Margaret Ritchie (South Down) (SDLP)]

The motion in the name of my right hon. Friend the Member for Doncaster North (Edward Miliband), the Leader of the Opposition, comes at a time when public sector workers face a continued pay freeze, an increased pension age and increased pension contributions throughout their careers. It would seem that some are “all in this together” more than others. This Government’s flirtation with regional pay is merely the latest ill-advised policy that undermines the valuable work done by front-line staff in the health service and across the public sector.

A good starting point would be for the Government to clarify their position on the issue, because the current indecision will do little more than breed further uncertainty and bad feeling. Today’s debate should bring a greater degree of clarity from Ministers, but I say that more in hope than in expectation.

Although the focus of this debate is on NHS pay levels in England, it is important to point out that this could have serious ramifications for the public sector in Northern Ireland. Make no mistake: any movement in this direction will put extreme pressure for similar measures to be implemented in Northern Ireland by way of both principle and precedent and as a result of any possible corresponding decrease in block-grant consequentials.

The suggestion that the measure is being considered as a means of equalising pay between the public and private sectors is fundamentally disingenuous. What seems to lie at the centre of the argument is the misplaced notion that public sector workers are paid too much. That contention is rife with misleading comparisons between the public and private sectors, which, as the Institute for Fiscal Studies notes, often ignore factors such as age and levels of qualification, and compare highly selective samples for the purpose of making a political argument. Indeed, any move towards regional pay in Northern Ireland will likely bring the worst aspects of the private sector to our public service, while removing the social guarantees that are the bedrock of a fair system. It will be a case of equalising down rather than levelling up.

In standing up for the public sector, we should not ignore the severe problem of low pay in parts of the private sector. This is a particularly pressing problem in Northern Ireland, where in 2010-11 the pay of private sector employees was 21% below the UK average for private sector workers. The recent discussion of introducing a living wage is much more instructional and productive than any cut to public sector pay. Put simply, low private sector pay in Northern Ireland will not be helped by decreasing public sector pay through the introduction of regional pay scales.

The likely effects of such a move on our public services and our regional economy are clear. There is a strong possibility that it would lead to skills shortages in the NHS and across public services, and to a shortage of much-needed front-line staff in areas where pay is kept low, as I fear it would be in Northern Ireland. That could result in a scenario whereby regions invest in educating and training staff only to lose them to an area with higher pay. The Government have offered no explanation of how they would guard against that. Any such proposal would also remove much-needed money from our local economy. The cost has been put at about £10 billion and the corresponding cut in the Northern Ireland block, at a time when families and businesses are already struggling, would be, frankly, a step too far.

In the Income Data Services report, “Crowding out: fact or fiction?”, researchers found absolutely no relationship between public sector pay levels and private sector job creation, and that regional pay would have a greater impact on women than men. Indeed, they state that most private companies employ national pay scales.

In essence, the Government seem to be attacking a problem that does not exist, while ignoring the problem that does, namely the lack of jobs and the low growth in the economy. This can be seen as nothing more than an ideologically motivated attack on the public sector and we will oppose it. As my right hon. Friend the Member for Leigh (Andy Burnham) has said, this is important, and we in the Social Democratic and Labour party will uphold the principle of national pay agreements.