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Regional pay plans would lead to a 'brain drain'

By Western Morning News  |  Posted: October 02, 2012

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North Devon Liberal Democrat MP Nick Harvey on why local public sector pay plans would be damaging for the region.

Last week's Liberal Democrat conference in Brighton focused on the question of "fairness" during the tough times we are experiencing – and which look likely to continue for some time.

This manifests itself on questions of tax – where the Liberal Democrats clearly demarked at this year's Budget our determination to help reduce the burden on those at the bottom of the pile – and benefits, where radical changes on the way risk causing havoc for many people who rely on them.

And one specific issue on the conference agenda was immediately relevant: the wretched idea of regional or local pay for public sector workers, which is really just shorthand for crude cost-cutting with little if any thought about the long term consequences.

Westcountry MPs and activists overwhelmingly voted in support of a motion rejecting proposals to scrap national public sector pay bargaining. I believe this is an absolutely vital stand.

Supporters of local pay argue that workers across the country are choosing to opt into public sector employment instead of private sector jobs, incentivised by higher pay and better terms of employment. The public sector is allegedly "outbidding" the private sector in this respect, crowding out private sector growth and affecting overall economic growth.

But in areas like North Devon, and much of the wider rural South West, regional pay – or any of its other names: local, zonal or "market-facing" pay – would simply exacerbate regional inequalities by reducing wages in an area with some of the lowest private sector pay in the country.

The "threat to growth" presented by public sector in areas like ours is simply a myth. By contrast, reducing or suppressing wages would undoubtedly have a knock-on effect on the private sector in terms of the profits and pay of the shops, traders and business services that depend in part on the spending power of public sector employees.

These short sighted proposals simply fail to take into account the immense damage wage differentiation could do.

Allowing the same job to attract different wage rates around the country would undermine the 40 years of progress on achieving equal pay rights for equal work: divvying the country up into arbitrary pay areas and paying poorer people less.

In our region we simply cannot risk the "brain drain" that regional pay would inevitably lead to, deterring doctors, nurses and teachers from coming here to fill posts which are already hard to fill. And, with the toxic gap between low wages and high living costs in rural Devon and Cornwall, we risk our own public servants upping sticks to move elsewhere for higher pay and lower housing costs, taking money out of our local economies.

The realities of regional pay are already on the horizon in the South West, where 20 NHS trusts have formed a pay consortium, opting out of nationally negotiated contracts and forging ahead to pursue their own terms and conditions on pay – which would overall cut pay for nurses and other healthcare staff by up to 15%. There has understandably been a regional outcry from hospital staff and unions, and this example should heighten the sense of urgency around preventing the damage regional pay could do.

Stimulating private sector growth is absolutely vital to our economic recovery, but it will not be achieved by cutting the pay of those who deliver our public services and are sometimes the best customers of our local traders. That just creates a race to the bottom.

As I said in my own speech in the debate at Brighton, this is a critical issue of fairness. Regional pay will undermine economic growth in the South West and create huge inequalities across the country as public sector investment is inevitably drawn to more affluent areas. The logic is flawed and it is time that the Government put a stop to these proposals, looked at the wider consequences and listened to the Lib Dems who voted for the fair pay motion last week in Brighton.

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