Regional Pay

Jim Sheridan Excerpts

Wednesday 20th June 2012 Commons Chamber

[Rachel Reeves]

The hon. Gentleman should speak to the 9,500 public sector workers in his constituency. That number is substantially larger than his majority.

What families and businesses in these parts of the country need is not an even tighter squeeze on the wages of the people who are keeping their public services running, but a Government with a proper plan for jobs and growth who will work actively with businesses to get investment flowing into the sustainable, competitive, high-value industries of the future. That is what we need to improve living standards and economic opportunities in every part of the country.

[Jim Sheridan (Paisley and Renfrewshire North) (Lab)]

My hon. Friend has highlighted the enthusiasm of the hon. Member for South Northamptonshire (Andrea Leadsom) for these measures. It may be helpful to share with the House the fact that the same Member is asking for exemptions from the minimum wage for employers. Perhaps that is the real agenda here.

[Rachel Reeves]

I thank my hon. Friend for mentioning that. That is how the Government will get the economy moving again—by cutting the pay of the most vulnerable workers and introducing regional pay.

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[Jim Sheridan (Paisley and Renfrewshire North) (Lab)]

It was extremely interesting to hear the contributions of the hon. Members for Hexham (Guy Opperman) and for Brigg and Goole (Andrew Percy). All that I can say is that there is room for them on the Labour Benches should they wish to come across. We even have our own private section should they wish to make progress.

Tomorrow, the House will pay tribute to Aung San Suu Kyi, and no doubt Ministers and Government Members will be pushing forward to get their pictures taken with her for their press releases. They should remember what she has stood for—fairness for workers, regardless of their social background or where they come from. When Members are speaking to her tomorrow, perhaps they will remember that.

Any sensible, decent Government have a responsibility to promote fair employment, and that cannot be done by paying nurses, teachers, jobcentre staff and so on less to work in poorer parts of the country. Indeed, regional or local pay could mean two workers with the same skills and experience being paid differently in two different places even though they were doing the same job. It could worsen inequalities between regions by making it difficult to attract and retain skilled public sector workers in low-pay regions.

Local or regional pay could also work against equal pay. The gender pay gap is smaller in the public sector than in the private sector, and great progress has been made towards promoting equal pay through measures such as “Agenda for Change”.

Perhaps the Economic Secretary could answer a practical question. If an employee of the Ministry of Defence worked as a civil servant or engineer at Faslane and then was transferred to Portsmouth, would their pay vary accordingly either up or down? Who would pick up the administration costs if that were to happen?

The other major concern that people have is about the minimum wage. The Minister for the Cabinet Office has sought to reassure the House that regional pay will not have an impact on the minimum wage, but we have to remember that there are still Government Members arguing that there should be exemptions from the minimum wage. I am sure that there are a number of unscrupulous employers who will see regional pay as an opportunity to undercut people’s wages and exempt them from the minimum wage legislation.

The case for regional pay is not even backed up by evidence. I have spoken to a number of local employers in my patch, and, in the nearly 10 years I have been here, I have never had one employer come forward to say that the reason they have difficulties employing people is the lack of regional pay. That is a non-starter, so regional pay is not evidence-based at all. Perhaps the Economic Secretary will explain exactly where the evidence has come from.

I know that time is short and other Members want to speak, but I want to say in the nicest possible way to my colleague from the Scottish National party, the hon. Member for Banff and Buchan (Dr Whiteford), that nice person though she is, if the SNP’s ambition and aspiration is to pay a higher minimum wage in Scotland, it has had the opportunity to do so during the time it has been in government. Unfortunately, it has chosen not to do that. It therefore remains an aspiration, because the SNP has not implemented it. The few local authorities that have implemented it have had their budgets cut, which shows exactly what it is all about for the SNP. It does not care for the workers, it does not work for the workers and it very seldom turns up for the workers.

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[Jim Sheridan]

Will the hon. Lady give way?

[Elizabeth Truss]

I want to continue because we have only a limited amount of time in the debate.

The Government need to be bold in their approach. We need to move from national wage bargaining to individual contracts, as Sweden did. That change was well received by the unions and public sector workers. We need to move to flexi-jobs, similar to German mini and midi-jobs, which have reduced unemployment by half since 2005. We need seriously to look at exempting small businesses with under 10 workers from some dismissal regulations, as Germany did—the change reduced unemployment. The time to take bold action is now.

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[Miss Smith]

I will say, for the hon. Lady’s benefit, what I have already said: I look forward to the results of the research that the pay review bodies will be doing.

The gap between public and private sector pay varies significantly around the country, with the Institute for Fiscal Studies calculating a variation of up to 18%. That situation could needlessly limit the number of jobs, including perhaps those of police officers, that the public sector can support, and therefore the services that can be supplied. In addition, it could lead to unfair variations in the quality of public services through higher vacancy and turnover rates in some areas. Finally, it could also hurt the private sector, which often needs to compete for staff with the public sector. The CBI has said that it is essential to compete and that the Chancellor was right to ask for the exploration of the issue.

The need for pay levels that reflect local labour markets was of course recognised by the previous Government, when they took forward pay reform in the courts service. I will just dwell on that, because it has been discussed this afternoon. I suspect that the hon. Lady is not familiar with the fact that staff were given a choice about whether to opt in or out of that reform at that time, and the opt-in rate rose to 97% over 12 months. That is something to be welcomed. Let me jog memories further. The then Chancellor, the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown), who is again not in his place, set out plans. He said that in our country

“it makes sense to recognise that a more considered approach to local and regional conditions in pay offers the best modern route to full employment.”

Labour Members will wish to reflect on those words.

[Jim Sheridan]

May I remind the hon. Lady that the previous Government introduced the national minimum wage? Does she agree or disagree with the hon. Member for South Northamptonshire (Andrea Leadsom), who seeks exemptions for employers to exclude people from the minimum wage?

[Miss Smith]

I agree with what my right hon. Friend the Minister for the Cabinet Office said earlier, which was that this Government and the Conservative party fully support the national minimum wage.