Regional Pay (Public Sector)

Glyn Davies Excerpts

Tuesday 10th January 2012 Westminster Hall

[Glyn Davies (Montgomeryshire) (Con)]

Thank you, Mr Chope, for calling me to speak on this complex, interesting issue. This is the first time that I have spoken under your chairmanship, and it is a great pleasure to do so. I congratulate my good friend, the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards). We have discussed this matter once, briefly, on Welsh radio, and I said then that I wanted to speak in this debate. The gist of what I said then, and shall say now, is that we are facing a complex issue. It is difficult to understand how the hon. Gentleman could be so definitive about a response.

There are serious issues here. On 29 November, the Chancellor announced a review of the case for regional pay. We are talking about an announcement that there will be an inquiry reviewing the case; that is not sufficiently definitive to be described as proposals. A number of hon. Members who intervened mentioned proposals, but we are considering something that could have a damaging effect and could distort local markets.

The issue is not new. I first became involved in it 30 years ago, and it was a chastening experience. I am talking about the general, in-principle case for looking at regional pay. I had just become chairman of Montgomeryshire district council, and had very little experience of public work; I had probably been put in that position a little earlier than I should have been. I was a local farmer—a small businessman—and it seemed to me that the local authority was distorting the local market. It was paying a significantly higher rate than the local market. People were being transferred, and local businesses were complaining about losing their best staff.

I went to a conference in Kensington town hall; I was very green and new. My chief executive, who came with me, put me down to speak. When I was on the platform, I made what I thought was an entirely rational point, but I was booed off the platform. I was an independent chairman; I was speaking with a local businessman’s logic about how we could run the business—the local authority—more efficiently and not distort local markets, but I was booed off. That was more than 30 years ago, so there is nothing new about this debate.

I have read some quotes made by the previous Prime Minister when he was Chancellor of the Exchequer, and they were incredibly positive about regional pay. I am sure that when we have this debate in July after the inquiry reports, which will be the obvious time to discuss what might then be considered proposals, his quotes will be mentioned; there are legions of them, strongly supporting regional pay and saying how vital it is for the future of our economy.

[Helen Goodman]

Labour Members are concerned that there is not an open inquiry, but a collecting of arguments for doing something that the Chancellor already wants to do. Will the hon. Gentleman say who is on the commission, who is undertaking the review, and whether the trade unions are involved with it?

[Glyn Davies]

No, I cannot say.

[Hywel Williams]

The hon. Gentleman says that the debate is on a long-standing, old question from 30 years ago. I thought that the Conservative position on it in Wales was made clear in a debate on 30 September 2008, when Mr William Graham—some hon. Members might not know that he is a senior Conservative Assembly Member—said:

“First Minister, you will know that the Welsh Conservatives firmly oppose the introduction of regional pay for civil servants.”

What has changed?

[Glyn Davies]

I am sure that Mr William Graham will be extremely honoured to be quoted in a debate in this House. I will tell him about that when I speak to him later today, as I have arranged to do—[Interruption.]—not on this issue, but on another one that will be of particular interest to Welsh Members across the board.

This issue has the potential to distort local markets. That was my view 30 years ago, and I still see that potential now. I should have thought that I would have found a measure of agreement with the hon. Member for Carmarthen East and Dinefwr in our discussions on Sunday morning, because there are significant questions about the difficulty of transferring from one area to another, for example, and whether inflexibilities will be introduced into the market. There are a host of other issues to consider, too.

We need an inquiry. I understand that one or two Opposition Members feel that the inquiry may not look across the board. I would be disappointed if that were so. We need an inquiry that will bring forward the information that all of us, including the Chancellor, need to make a balanced judgment. The appropriate time for that to happen that will be in six months.

[Owen Smith (Pontypridd) (Lab)]

Will the hon. Gentleman undertake to speak to his boss, the Secretary of State for Wales, and perhaps even the Chancellor, because, as he just learned from my hon. Friend the Member for Bishop Auckland (Helen Goodman), there is not a review? A series of letters have been sent to the national pay review bodies, asking them to consider the matter. Will he take up the challenge and tell the Chancellor that there ought to be a public review, and that trade unions and other bodies absolutely ought to be involved?

--- Later in debate ---

[Glyn Davies]

I thank the hon. Gentleman for that intervention, and as the Parliamentary Private Secretary to the Secretary of State for Wales, I reassure him that all the issues that I am involved with in the House feature in our discussions. When I am asked tomorrow what I have been doing since Christmas, I will certainly point to the debate that I am involved in today. I hope that that satisfies him on his request.

The only point that I want to make in my contribution is that the debate is too early. We need to have it in July, and we will. It will be an issue for the Floor of the House—an important and possibly contentious issue; I do not know. We will have to wait and see what the report says. It is possible that the issue will be contentious, but we must wait to see any proposals. In principle, I do not have any objection to the idea of a flexible labour market. Clearly, however, it must work and must not have a negative impact, and that can be decided only when we see the results of the inquiry, and information on which we can base a proper judgment.

--- Later in debate ---

[Owen Smith]

I am grateful to the hon. Gentleman for that intervention and pleased that he makes no apologies for what he said. I entirely agree with the arguments that he made in respect of solidarity and collaboration right across the UK for people who have similar interests across Britain, whichever area of the country they live in. I wholeheartedly share his views about that, which is why I am a Unionist, not a nationalist, on today of all days.

I congratulate the hon. Member for Arfon (Hywel Williams), my hon. Friends the Members for Newcastle upon Tyne Central (Chi Onwurah) and for Sedgefield (Phil Wilson), who made a powerful speech, and of course the hon. Member for Montgomeryshire (Glyn Davies), who I am delighted is taking up the challenge of telling the Secretary of State for Wales and the Chancellor of the Exchequer that we need a proper review to address this very complex issue—as he described it—as opposed to a couple of private letters to the heads of the national pay review bodies.

Public sector workers must wake up every morning wondering what this Government will do to them next. We have seen the continuing pay freeze; we have seen additional cuts in wages when inflation is taken into account for the next two years; we have seen the 3% additional effective cut in wages as a result of the changes in public sector pensions; and 710,000 public sector workers, up from the 400,000 previously admitted to, are waiting to see whether they will be in a job at the end of this spending period.

Against that backdrop, there was the bombshell in the Chancellor’s autumn statement that regional pay will be re-examined. The Chancellor said that the evidence suggests that regional pay should be considered, because there are disparities between pay bands in the public sector across the UK. As we know, the Chancellor is very keen on evidence-based policy, so I thought that I would assess the evidence in respect of regional pay to date, because we have some experience of it.

London weighting is well established. It is a means of trying to deal with the problems, particularly in respect of housing, for people working in London on lower public sector wages. The previous Government sought to expand that by looking at key worker status and further help for key workers in London. As several hon. Members have said today, and as the Chancellor said repeatedly when he appeared before the Treasury Select Committee, we also have the experience of the Courts Service. However, the Chancellor has been slightly less than fair with the facts in respect of the Courts Service. The fact is that the Courts Service changes that were introduced in 2008—the previous Labour Government introduced zonal pay and five zones across the UK—were a significant improvement on the disparities that existed hitherto. The Courts Service came together in 2005. There was a merger involving the magistrates courts, the county courts, the Crown court and the Supreme Court. Before that point, more than 50 rates of pay were being applied across the Courts Service, so we went from 50 to five. The reality is that despite protestations by some of the unions at the time, most members happily opted into that service; indeed, more than 95% did so.

Opposition Members, who believe in evidence-based policy, would like the Government properly to review the experience of workers in the Courts Service. They should consider retention, rates of pay and the way in which the system has facilitated movement or otherwise across the country, and bring that to the table as part of the evidence for the current proposal.

[Glyn Davies]

It has become fashionable for Opposition Members to disown the policies of the previous Government and, in fact, to disown their own policies at the start of this Government. I have listened to the hon. Member for Pontypridd (Owen Smith), who has discussed the five regional zones and evidence-based policy. He has described the current proposal as a bombshell, which indicates to me that he has no interest in the results of the inquiry. All we are hearing is knee-jerk opposition to make a point before we have even heard the facts.

[Owen Smith]

For the third time, I have to tell the hon. Member for Montgomeryshire that there is no inquiry. A couple of letters have gone from the Chancellor to the heads of the pay review bodies asking them to come forward with evidence on how local pay might reflect local market conditions, which is not an open inquiry. I thought that the hon. Gentleman had taken up the challenge to appeal for an inquiry.

The world has changed since the policies were implemented in 2008 on the Courts Service, which took place in an economy that was growing right across the UK. The world has changed. When the facts change, we reconsider our views, and we are doing that right now. We are thinking about the meaning of the Government’s proposals on regional pay and what the evidence shows us. We will come to a considered view when we know what the Government are proposing, but let us look at the evidence.

Of course, it was a previous Tory Chancellor, in the 1990s, who first talked about introducing regional pay on a much wider scale. What happened in the NHS? Local bits of the NHS were given the right to conduct local bargaining, but they lacked the necessary experience and were unable properly to assess local market conditions. As a consequence, there was more than a year’s delay before regional pay bands were set. When regional pay bands were set, the differential across the country was 0.1%. The rationale for that was, of course, that managers understood that, given the problems and complexity that widespread differentials would throw up, a collective agreement right across the country was the best possible option. The Chancellor agreed, and a year later he took back the power, concerned that there might have been spiralling costs had the situation continued.