Regional Pay

Jack Dromey Excerpts

Wednesday 20th June 2012 Commons Chamber

[Alison Seabeck]

No, I am afraid that I cannot. Perhaps one of the hon. Gentleman’s colleagues will allow him to intervene on them later.

In his autumn statement, the Chancellor talked about private sector pay being set in accordance with local labour markets. That is not true. As my hon. Friend the Member for Birmingham, Ladywood (Shabana Mahmood) has just pointed out, some of the most successful companies in the country, including large retailers, banks and telecoms companies, use similar national pay structures.

There is genuine concern among businesses in my constituency that any decision to cap or lower public sector pay will lead to problems for them, in that there will be less demand for their goods and services as families pull in their horns.

[Jack Dromey (Birmingham, Erdington) (Lab)]

Will my hon. Friend give way?

[Alison Seabeck]

I am afraid not; my hon. Friend has only just arrived in the Chamber.

A representative of one business has commented to me:

“As I see it, the lot in power have proved that they don’t get reality.”

Because the south-west is very beautiful, we have a large number of second homes. They push the cost of housing up to levels on a par with those in the south-east, but our salaries are lower and so the mortgage multiplier for our potential homeowners is astronomical. That can be crippling for people desperate for a home; the effect is felt not only in Plymouth but in the rural south-west. That point was well made by my right hon. Friend the Member for Exeter (Mr Bradshaw).

In the South Hams, the house price to income ratio is around 17:1. In the Cotswolds, it is even higher, at closer to 19:1, and those figures were taken at the depth of the recession in 2010. We should remember that many of the public sector workers who work in Plymouth and Exeter live in areas such as the South Hams. They might have struggled to get a mortgage on their dream home in better times, and they will be disproportionately hit by this Government’s proposals on regional pay. The housing market will not allow them to sell their home and move—I am sure that my hon. Friend the Member for Birmingham, Erdington (Jack Dromey) was going to make this point— particularly when new affordable homes are not being built. What are those people to do, when their pay is either cut or frozen and meeting their mortgage payments becomes increasingly difficult? They will stop spending in local shops, hotels and pubs, and on entertainment. That will provide a direct hit on the local economy.

This was a complex matter for the NHS to consider all those years ago, and I urge the Government to be aware of the complexity of boundaries and of the additional costs involved in the work required to ensure that the proposal is consistent and does not lead to poaching or leapfrogging. They are on a hiding to nothing on this one; it will create anomalies and provide yet another example of their incompetence. Every time this happens, however, it is not the Chancellor or the Paymaster General and his mates who are affected, but low-paid working people such as teachers, nurses and midwives.