Why regional public sector pay won't happen

By Matthew Barrett
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The Coalition's idea of making public sector pay relative to private sector wages within each region is one with which I agree. The latest word from the Treasury seems to be that such a proposal is still under review. It was announced as a proposal in the Budget, but the Lib Dem Chief Secretary to the Treasury, Danny Alexander, told a GMB union conference last week that no decision had been taken. He said: "There will be no change unless there is strong evidence and a rational case for proceeding."

However, I suspect that no such policy will come to pass, for four reasons. 

First, the Lib Dems are opposed - as the Independent reminds us today. The leader of the Lib Dems in Wales has vocally opposed it, and Nick Clegg has given the signal he will fight against regional pay. An Early Day Motion opposing the plans currently has eight signatures from Lib Dem MPs.

Second, Conservative MPs in low private sector salary regions (who would therefore see the biggest drop in public sector wages if such a policy came about) have spoken out against the idea. 

• Guy Opperman, the MP for Hexham is quoted by the Daily Telegraph as saying: "I see no economic argument for introducing regional pay. ... I am very concerned that regional pay would lead to a reduction in the pay packets of some public sector workers in the North East. I do not believe reducing public sector pay will help stimulate private economic growth."

• Rory Stewart, the MP for Penrith and the Border, opposed the plan, according to Carlisle's News & Star, who say he "worries that setting regions against each other would result in bitter local negotiations with unions and resentment."

• John Stevenson, the MP for Carlisle, appeared on an ITV Border programme, saying he has "concerns" about the idea of regional pay, and "would have to be convinced" of its merits before voting for it. 

Third, polling suggests the public are concerned about the idea. The usual caveats about trusting polls commissioned by organisations fighting against a policy apply, but nevertheless, one should take note of the fact that a Survation poll for the TUC (pdf) finds large public support for an independent study into regional pay plans. Survation asked the following question:

"The government has not published an independent study on the likely impact of regional public sector pay on regional economies outside of London and the South East. How important is it that the government commissions and publishes an independent study on on the likely impact of this policy before deciding if it should proceed?"

49% of people said a study was "very important", including 33% of those who intend to vote Conservative at the next general election, and 27% consider it "quite important", including 41% of likely Tory voters.

Importantly, the biggest regional support for a study is in the Midlands and Wales (55%). The Midlands is an area where the Tories need to defend every inch of territory in order to be the biggest party in Parliament post-2015, and Wales is where the Tories could hope to pick up seats if the Lib Dems stay where they are in the opinion polls. Although an "independent study" does not automatically mean outright opposition to the policy, it must indicate scepticism in many cases.

Finally, and relating to the last point about the Midlands being most sceptical, many Tory (and Coalition as a whole) MPs with small minorities need to keep as many public sector workers onside as possible in order to keep their seats at the next election. A few examples to note, from data I have seen:

• Dan Byles in North Warwickshire has a majority of 54, and represents 7,500 public sector workers.

• George Eustice in Camborne and Redruth has a majority of 66, with 8,900 public sector workers.

• Jonathan Evans in Cardiff North has a majority of 194, but an astonishing 22,500 public sector workers.

Presumably more than 54, 66, and 194 public sector workers voted Conservative in 2010 in the respective constituencies mentioned above. For this reason, expect Lib Dems and low-majority Tory MPs to have grave concerns about any regional pay proposals - and expect the plans to be significantly changed or dropped altogether.