Regional Pay

Russell Brown Excerpts

Wednesday 20th June 2012 Commons Chamber

[Mr Russell Brown (Dumfries and Galloway) (Lab)]

Thank you, Madam Deputy Speaker. I regret that once again in this House I have to make mention of the fact that my constituency is a low-wage economy area. We talk about the “race to the bottom” and my locality does not have far to go in terms of it being a low-pay area. One of the greatest benefits to come to the area was the introduction of the national minimum wage in the late 90s. I sat on that Bill Committee, which sat through the night on more than one occasion. At that time, only one party was saying that we should have regional variations; I look across to the Liberal Benches because that was the case put by Lib Dem Members at that time. I am delighted that some on those Benches have had a change of heart.

Some 11,400 people are employed in the public sector in my area, which is some 28% of those employed in the constituency. We depend on the public sector in rural localities, so much so that there are occasions when we struggle to employ highly skilled people, be that in the NHS or in the local authority. The Government may be looking at reducing people’s salaries, but we already pay golden hellos for people to come to work in my area, such is the difficulty in recruiting quality people to the area.

The public sector pay arrangements support local and regional economies, ensure fairness and transparency, and support the whole concept of equal pay. When we introduced the national minimum wage in the late 90s, the greatest benefit came to those who were employed in the private sector. We went from scurrilously low wages of £1.50, £1.75 and £2 an hour to a wage that was recognised as being absolutely necessary to take people out of poverty. What came off the back of that? Additional money went into the local economy. It was calculated at the time that for every £1 million that went into a local economy, 39 jobs were created. What the coalition Government are considering would reverse that.

The hon. Member for Cannock Chase (Mr Burley) made his case and I would love to hear what he would recognise as reasonable pay for any kind of job. He said that between 1997 and 2007, private sector jobs went down in number. His party recognises those years as the years of plenty, so if such jobs went down in number then, where on earth are we going now? If he is dependent on the private sector to get this country back on its feet, I am afraid that he is living in dreamland.

The debate is about regional variation, so I want quickly to mention Scotland. Although Scottish Ministers set pay policy for devolved bodies, some 30,000 public sector workers in Scotland are employed by UK Departments and could be affected by the UK Government’s policy on regional pay. Furthermore, there are many unanswered questions about Scottish separation risking uncertainty for those thousands of staff employed in Scotland.

[Dr Eilidh Whiteford (Banff and Buchan) (SNP)]

I would have liked to have been more supportive of what the hon. Gentleman is saying this afternoon, but I find the language and tone of the last part of his speech very disappointing. Does he welcome the minimum wage of £7.20 an hour that the Scottish Government introduced for public sector workers for whom they control pay?

[Mr Brown]

I mentioned that I was up through the night when the national minimum wage was introduced, and I must tell the hon. Lady that her colleague, Alasdair Morgan, who was the Member for Galloway and Upper Nithsdale at the time, was in his bed while the rest of us were battling for a national minimum wage in this country. She mentions the wage of £7.20 an hour and I am delighted that the SNP Government have followed the lead of Glasgow city council, which was where it originated.

The TUC has estimated that even a 1% reduction in public sector pay would hit 680,000 public sector workers. In Scotland, that would reduce incomes by £162 million. Again, I tell the hon. Member for Cannock Chase that if we take £162 million out of the local economy that must have an impact on private sector businesses. If we take the money out, the marketplace will collapse around it and further jobs will be lost.

I mentioned the Liberals and I am delighted that the hon. Member for Southport (John Pugh) is in the Chamber today. On 15 January this year, he said in the Financial Times that what the Government were considering was a “deliberate ploy” to fragment the public sector. He said:

“It is an unsound and untested economic theory to suggest that the national pay structure is crowding out private sector employment in the north and north-west.”

That goes for the length and breadth of this country. The proposals are a bad idea, verging on absolute insanity.

--- Later in debate ---

[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.

[Mr Russell Brown]

rose—

[Miss Smith]

Does the hon. Gentleman still think that we are all in dreamland when we seek to support the private sector?

[Mr Brown]

I have no doubts in my mind that some are. The hon. Lady says that the Conservative party supports the national minimum wage, but will she guarantee that it will not be frozen for years to come?

[Miss Smith]

If I tried to answer that question, I suspect that I would soon end up outside the scope of the debate. It is particularly important to note that we need to consider the evidence, which the Chancellor has asked for by asking the pay review bodies to consider the question. That evidence would come into the answer to the hon. Gentleman’s question.