Regional Pay

Huw Irranca-Davies Excerpts

Wednesday 20th June 2012 Commons Chamber

[The Minister for the Cabinet Office and Paymaster General (Mr Francis Maude)]

I beg to move an amendment, to leave out from “House” to the end of the Question and add:

“notes the importance of recruiting, retaining and motivating staff and keeping tight control of public spending; further notes that the then Chancellor of the Exchequer, the right hon. Member for Kirkcaldy and Cowdenbeath, first proposed a fair framework for local and regional flexibility for pay in his statement to the House of 9 June 2003; supports the Government in asking the widely respected independent pay review bodies to consider how public sector pay can be made more responsive to local labour markets; and believes the Government is correct in awaiting the conclusions of those deliberations before making a decision on bringing forward proposals in respect of public sector pay’.

The shadow Chief Secretary, the hon. Member for Leeds West (Rachel Reeves), began by quoting the Chancellor, so let me quote the Chancellor a little more extensively:

“I can tell the House that the British economy is…better placed to recognise local and regional conditions in pay”.

He continued that, in future, we therefore plan that

“remits for pay review bodies and for public sector workers, including the civil service, will include a stronger local and regional dimension”.—[Official Report, 9 April 2003; Vol. 403, c. 283.]

That was the Chancellor in 2003, the previous Prime Minister. He set that proposal out at time when his advisers were the current Leader of the Opposition and the shadow Chancellor. I do not know whether the shadow Chancellor wrote that passage for the Budget speech—a lot of the Budgets around that time turned out to be “Balls”. Did he write it? Does he agree with it? If not, what has changed in the meantime? [Interruption.] It was clearly the best the right hon. Gentleman could do at that time. I shall come to the history behind the current Government’s approach, because the idea that it is a dramatic new departure is absurd. There is quite a long history, but we now have the opportunity to explore it.

[Huw Irranca-Davies (Ogmore) (Lab)]

Will the Minister give way?

[Mr Maude]

I shall get started, but I will give way to the hon. Gentleman in due course.

Let me begin by setting out the Government’s approach to this important issue. First, we believe there is a strong case for looking at introducing local market-facing pay and at how that can be done, but let me say clearly that our approach is not about ending national pay bargaining. Pay can be made more responsive to local labour markets within a national bargaining framework. Any benefits from localising pay can be realised without any need to get rid of national pay bargaining.

Secondly, the proposal is not about making further savings. We will continue to operate within tightly constrained overall public sector pay remits.

--- Later in debate ---

[Mr Maude]

I am going to make a little progress, but I will give way in due course.

Those pay remits are currently set at 1% a year. We need those constraints in order to address the appalling legacy of the biggest budget deficit in the developed world, which was left by exactly the people who now complain about its effects. Our approach is not about making further savings, but entirely about creating greater flexibility within those pay remit constraints.

Thirdly, this is not about cutting anybody’s pay. Even if we wanted to, we would not be legally able to do so.

[Huw Irranca-Davies]

rose—

[Mr Maude]

I will give way to the hon. Gentleman, who has been persistent.

[Huw Irranca-Davies]

Will the Minister speculate on why the Chief Secretary to the Treasury thinks the sun shines out the backend of this policy, while the Liberal Democrat leader in Wales has told him to stick it where the sun don’t shine?

[Mr Maude]

That was about as laboured a joke as I have heard in this place, but we will let the hon. Gentleman know.

Like the previous Government, we have said that it is important to look at the level at which public sector pay is set in each labour market over the longer term, which is why, in the autumn statement, the Chancellor announced that there was a case for considering how local pay could better reflect private sector labour markets. He invited the independent pay review bodies to consider the evidence, which is exactly what they are now doing.