TUC says postcode pay are unfair and ill-thought out

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Sixty leading academics have today warned that the government’s regional pay proposals for public sector workers could cause huge economic damage and widen inequalities between different parts of the UK.

In a letter published in today’s Times, the academics say that there is ‘no convincing evidence’ that regional or local pay rates would boost the economic performance of regional economies. Instead they are concerned that regional pay would reduce consumer spending power and undermine businesses in less prosperous regions of the UK. The academics fear the result of a regional pay policy would ‘aggravate geographical, economic and social inequalities’.

The group of academics include many leading figures in the field of regeneration and economic development. They are drawn from academic institutions right across England, Scotland and Wales, and are based in many of the areas that could lose out if existing national pay arrangements are abolished.

The academics’ intervention in the debate comes as ministers consider whether to proceed with plans that could end national pay bargaining, following a review instigated by the Chancellor in last year’s autumn statement.

The letter has been co-ordinated by Keith Shaw who is Professor of Politics at Northumbria University, and who has over 25 years of experience in urban policy and economic development. He said: “This proposal will depress public sector pay in regions outside of London and the South East and, in areas such as the North East, could lead to a spiral of decline that would serve to further widen the ever-growing north-south divide.

“This concern is also shared by a number of North East businesses and government MPs in the region, who are also opposed to the proposal.”

John Tomaney, Professor of Urban and Regional Planning at University College London said: “I have serious concerns that the full impact of what has been discussed in terms of regional or local public sector pay has not been appreciated by the government. Reducing wages and spending power in the poorest regions can only widen divisions and harm any economic recovery.”

Edmund Heery, Professor of Employment Relations at Cardiff Business School added: “Regional pay will remove income from and thereby further impoverish the Welsh economy, make it harder to attract good quality candidates for vital service jobs, and waste money by adding a new, regional level of pay setting for employers and employees alike.”

Commenting on the letter, TUC General Secretary Brendan Barber said: “This is yet more evidence that the government’s plans for regional or local pay are not just unfair, but ill-thought out. They will end up costing local economies dearly as public sector workers in poorer regions rein in their spending.

“The Chancellor should take the views of these many academic experts seriously and put a stop for once and for all to these flawed and counterproductive proposals.

“Introducing a postcode pay lottery which would effectively cut the wages for nurses, teachers and dinner ladies in poorer parts of the UK won’t boost regional economies one bit. Instead it risks doing irreparable harm to the whole economy and to our public services.”


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