At our Autumn Conference, members will be offered a chance to influence the party’s policy on regional and local pay. The Pay Review Body has been asked by George Osborne to look into the possibility of paying public sector workers differing amounts based on where they live. As Liberal Democrats, we must ensure that this policy does not go any further. This is why the Welsh Liberal Democrats, in partnership with the South East Cornwall Liberal Democrats, have tabled a motion designed to send the strongest possible signal that the party does not support any extension of regional or local pay.
This debate is nearly always presented as one of heart versus head – our desire for fairness pitched against cold economic realities. But they are far from mutually exclusive. I believe there are unforeseen consequences of regional pay that could harm our already fragile economy.
It has been argued that the high cost of living in some regions, such as London, means extended regional pay is necessary. But if you artificially inflate wages in expensive places, you’ll consequently create inflationary pressures that push property prices further out of reach for hard working people. If public sector workers can’t afford homes in London, then we should tackle the housing shortage, not penalise workers elsewhere.
Another argument made in favour of regional pay is that the private sector in some regions can’t recruit talent because the public sector pays more. This assumes there’s a latent private sector begging for talent, in Wales that is certainly not true and I imagine that is not the case elsewhere either. Our private sector is struggling to employ people because it doesn’t have the finances to do so, existing wage inequity encourages talented young people to leave the region to follow higher salaries in London and the South East. Cementing this inequity in the public sector will only service to accelerate the ‘brain-drain’ and exacerbate housing shortages in places like London.
Moves towards regional or local pay will only further engrain regional inequalities. Freezing people’s salaries for an extended period until they equalise with local private sector pay rates is completely unfair and would lead to declining living standards. Public sector workers need to see and believe that we value them highly, wherever they choose to work.
One must also consider the politics behind this whole issue. If the Coalition Government decides to go forward and extend regional or local pay, it will be a complete gift to our political opponents. Let’s face it – this policy will be toxic.
This motion will give Liberal Democrats the chance to show that we are the party that the public sector can trust. We mustn’t forget that despite Labour’s current opposition to regional pay, they first introduced regional pay into our courts system. We must be able to say that, in Government, we stopped the further extension of regional pay.
We are calling on Liberal Democrat members to vote in favour of this motion not just because we want to protect those parts of the UK that could be affected by declining income (in real terms) over the next decade, but because we believe that regional pay will harm the economic prospects of the whole of the UK.