Regional Pay

Debate between Rachel Reeves and Kevin Brennan

Wednesday 20th June 2012 Commons Chamber

[Rachel Reeves (Leeds West) (Lab)]

I beg to move,

That this House notes that the national pay review bodies have been an effective way of setting pay while allowing for appropriate regional and local variation consistent with the need to recruit, retain and motivate staff and to keep tight control of public spending; believes that seeking to alter existing frameworks for negotiating and setting public sector pay could increase costs for the taxpayer as well as exacerbating regional inequalities; further notes that unanswered questions about Scottish separation risk uncertainty for the thousands of staff employed in Scotland under UK-wide pay negotiations and bargaining mechanisms; further believes that co-ordinated national negotiations can also reduce uncertainty, help financial planning and reduce costly and time consuming bureaucracy, local negotiations and disputes; and opposes moves intended to weaken or dismantle efficient and stable arrangements for negotiating and setting public sector pay.

We have called this debate today to give Members on both sides of the House an opportunity to raise concerns and ask questions about the Government’s plans for regional pay and to send a message that there is no appetite among nurses, teachers, police officers or, indeed, businesses in our constituencies for disrupting or dismantling the systems we have in place and going down a path that would escalate costs to the taxpayer and exacerbate regional inequalities. We are giving the Government an opportunity to dispel the confusion that they have created, and perhaps to get out of the hole that they have dug themselves into by executing another of the U-turns that have become something of a speciality of late.

Last autumn, the Chancellor announced his desire to make public sector pay

“more responsive to local labour markets”. —[Official Report, 29 November 2011; Vol. 536, c. 802.]

At the time he described it as a “very significant reform”, and one newspaper said that the Treasury regarded it as

“one of the most important measures it can introduce to rebalance the economy.”

The Chancellor’s supporters were excited. The hon. Member for Tamworth (Christopher Pincher) said enthusiastically that

“a truly local…negotiating structure”

would make wage rates in economically depressed communities more competitive.

More recently, there have been signs that the Liberal Democrats and, perhaps, 10 Downing street have become worried about the new mess that the Chancellor has got them into, with signals given out that nothing is decided and, in the words of the Deputy Prime Minister,

“there is no proposal on the table”.

In response, the hon. Member for Cannock Chase (Mr Burley) has called on the Chancellor to “hold firm”, and the hon. Member for South Northamptonshire (Andrea Leadsom) has said that national pay bargaining is the reason why businesses are struggling at the moment.

[Kevin Brennan (Cardiff West) (Lab)]

My hon. Friend may not be aware of this, but the Federation of Small Businesses in Wales has also come out against the Government’s proposals for regional pay. Should it not be a warning to them that they are on completely the wrong path?

[Rachel Reeves]

I am not surprised at all, because in reality, if regional pay were introduced and pay were cut in Wales and in other areas of the country, businesses would suffer because people would have less money in their pockets to spend with local companies.

Given the concern that the proposal has caused, the Government have a responsibility today to clarify their position and their plans. Was the Chancellor right when he said that it is a “very significant reform”, or was the Business Secretary right today when he said that there is no question of the Government imposing lower pay on people simply because they happen to live in poorer parts of the country? Those mixed messages have created confusion: confusion about the degree of localisation and variation being proposed; confusion about whether the Government propose to differentiate pay into regions, zones or local markets, which could itself mean many different things; and confusion about whether national bargaining structures would be maintained, replaced with local bargaining processes or dispensed with altogether.

All that we have from the Government is the evidence that the Treasury has submitted, alleging that in many parts of the country public sector workers are paid upwards of 10% more than their private sector equivalents.