Coalition in chaos as regional pay scheme set to become latest U-turn


By a Newsnet reporter
The chaos at the heart of the UK coalition was further evident today after reports suggest that Chancellor George Osborne is planning yet another U-turn.
Regional pay awards for public sector workers, a plan favoured by the Chancellor that would have seen pay awards determined by local economic conditions, is said to be under threat.  Mr Osborne has argued that high public sector pay grades are harming local private companies unable to match the conditions.

However Downing Street is now believed to be distance itself from the controversial proposals many insist would lead to lower salaries in areas of high unemployment. 

According to figures published by the UK Treasury, women in Scotland would have been amongst the hardest hit, with some potentially losing almost a fifth of their salary if the private/public pay differential was removed.

The signalling of the latest U-turn comes just over a week after it emerged Lib Dem MP Danny Alexander had expressed his support for Mr Osborne’s proposals.

Newsnet Scotland recently revealed that Mr Alexander, the MP for Inverness, Nairn, Badenoch & Strathspey, twice wrote to Ministers in the Welsh Parliament promoting the idea of public sector pay awards determined by the local market – a plan that would have hit his own constituents.

A letter sent to the First Minister of Wales in January of this year, included statements from the Chief Secretary to the Treasury confirming his support for the controversial scheme: “I am keen to see local, market-facing pay introduced across the UK.” he wrote.
And in a subsequent letter to the Welsh finance minister Jane Hutt, Mr Alexander further promoted the policy by writing: “I believe there may be benefits to local areas across the UK of more local, market-facing public sector pay.”

Mr Alexander’s comments brought a stinging rebuke from Welsh Liberal Democrat leader, Kirsty Williams, who said: “We are strongly and firmly opposed to the introduction of regional pay in Wales.

“Welsh Liberal Democrats do not believe that regional pay will stimulate the local economy; in fact the introduction of regional pay would be disastrous for Welsh workers and the Welsh economy.”

“I have been lobbying the UK government to stop the introduction of regional pay and I will continue to put pressure on them so that regional pay is not introduced,”

Mr Alexander’s endorsement came despite his party leader, and deputy prime minister, Nick Clegg publicly saying: “There is going to be no regional pay system. That is not going to happen. No decisions have been taken.”

The latest confusion over the Chancellor’s controversial proposal highlights the lack of unity not just within the Tory/Lib Dem coalition but amongst Lib Dems themselves.

Stewart Hosie, the SNP’s Treasury spokesman, said: “It is completely wrong to expect people to do the same job for different amounts of money.

“This indication from No 10 just adds to the sense of shambles in the UK Government.  We appear to have another Budget U-turn even before it’s implemented.  This demonstrates why we would be better taking decisions on public-sector pay in Scotland rather than leave it to the chaotic Government in London.”

Dave Prentis, of Unison, said: “At last, the Government seems to be listening to our arguments against local pay bargaining. Unison has all the strong evidence it needs to show the Government it will cause a massive increase in costly bureaucracy, lead to key staff shortages and hit local economies and families.”

A senior Liberal Democrat, speaking to The Herald newspaper said: “Regional pay is something we were never really comfortable with.  We will be pressing further to make sure this does not happen.”