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Regional public pay proposals: decent theory, indecent context Regional public pay proposals: decent theory, indecent context
(about 21 hours later)
Unlike many controversial coalition policies, the expected move towards regional public sector pay in next week's budget does – in theory – have something to be said for it. Nationally organised unions rage instinctively against change. And yet, with money so tight, every public pound needs to be stretched as far as it can be, and this is unlikely to be achieved by striking wage bargains nationwide.Unlike many controversial coalition policies, the expected move towards regional public sector pay in next week's budget does – in theory – have something to be said for it. Nationally organised unions rage instinctively against change. And yet, with money so tight, every public pound needs to be stretched as far as it can be, and this is unlikely to be achieved by striking wage bargains nationwide.
News is inescapably a sunny-side-down business, so any government making the case for change cannot expect credit for boosting relative salaries in the south, but must instead be ready to answer the damning charge of imposing lower wages on the poorest places. Whitehall can reasonably point to recent Institute for Fiscal Studies analysis documenting wild variation in the gap between what public servants actually get and what they might hope to earn elsewhere – men working for the state in Wales enjoy an average premium of 18%, whereas in the south-east they endure an outright penalty. Providing extra funds to retain good staff in places where public wages cannot compete is a reasonable priority, and one which might help preserve fragile service quality among savage overall cuts. There is also scope for pointing out the miserable alternative – many a minister who has lacked the bottle to grapple directly with their payroll has ended up capping costs by outsourcing instead, with all the loss of ethos and the lining of corporate pockets that involves. Pay flexibility is, surely, preferable to privatisation.News is inescapably a sunny-side-down business, so any government making the case for change cannot expect credit for boosting relative salaries in the south, but must instead be ready to answer the damning charge of imposing lower wages on the poorest places. Whitehall can reasonably point to recent Institute for Fiscal Studies analysis documenting wild variation in the gap between what public servants actually get and what they might hope to earn elsewhere – men working for the state in Wales enjoy an average premium of 18%, whereas in the south-east they endure an outright penalty. Providing extra funds to retain good staff in places where public wages cannot compete is a reasonable priority, and one which might help preserve fragile service quality among savage overall cuts. There is also scope for pointing out the miserable alternative – many a minister who has lacked the bottle to grapple directly with their payroll has ended up capping costs by outsourcing instead, with all the loss of ethos and the lining of corporate pockets that involves. Pay flexibility is, surely, preferable to privatisation.
But stuck in a slump that has heightened a familiar north-south divide, the required pitch is tricky indeed. Ministers will only be listened to if they can demonstrate competent management, regard for fairness and broader regional policies that close as opposed to widening the fault lines that beset Britain's map. As it stands, the government is failing all three tests. It can thus talk until it is blue in the face about how Sweden moved smoothly from centralised public pay bargaining to individual contracts, and it will not persuade its workforce.But stuck in a slump that has heightened a familiar north-south divide, the required pitch is tricky indeed. Ministers will only be listened to if they can demonstrate competent management, regard for fairness and broader regional policies that close as opposed to widening the fault lines that beset Britain's map. As it stands, the government is failing all three tests. It can thus talk until it is blue in the face about how Sweden moved smoothly from centralised public pay bargaining to individual contracts, and it will not persuade its workforce.
Market-mad economists suggest that high public pay in the UK's sluggish regions and nations puts a drag on local private industry by forcing it to raise wages up to levels where it cannot compete. Even in the best of times, this is a claim to appeal to senior managers – not workers struggling to get by on modest pay. In times like these, where the north is beset principally not by any supply-side problem, but by a chronic lack of demand, this argument is not merely shaky – it is upside-down.Market-mad economists suggest that high public pay in the UK's sluggish regions and nations puts a drag on local private industry by forcing it to raise wages up to levels where it cannot compete. Even in the best of times, this is a claim to appeal to senior managers – not workers struggling to get by on modest pay. In times like these, where the north is beset principally not by any supply-side problem, but by a chronic lack of demand, this argument is not merely shaky – it is upside-down.
Any private firm seeking to hire in Gateshead or Swansea will not find a shortage of applicants, whatever pay they offer. The great difficulty faced by shops, factories and business services in such communities is instead selling their wares. Reducing the pay of a swath of the local workforce is hardly going to help. The problem might be surmountable if pay flexibility were accompanied by bold and regionally targeted public investment projects to fill the demand gap, but there seems no chance of that.Any private firm seeking to hire in Gateshead or Swansea will not find a shortage of applicants, whatever pay they offer. The great difficulty faced by shops, factories and business services in such communities is instead selling their wares. Reducing the pay of a swath of the local workforce is hardly going to help. The problem might be surmountable if pay flexibility were accompanied by bold and regionally targeted public investment projects to fill the demand gap, but there seems no chance of that.
As well as grasping regional policy, the government would need to demonstrate a solid grip on public-sector management in order to prevail by persuasion. But as the gratuitous and inexplicable reorganisation of the English NHS moves from parliament into the country, the coalition has squandered its chance to establish that. Its rhetoric belittles the essential efforts of "back office" staff, and it has made no strategic argument for targeting changes on particular civil service posts, such as in jobcentres, as opposed to hospitals and schools. This all inflames anxieties about certain staff being picked off.As well as grasping regional policy, the government would need to demonstrate a solid grip on public-sector management in order to prevail by persuasion. But as the gratuitous and inexplicable reorganisation of the English NHS moves from parliament into the country, the coalition has squandered its chance to establish that. Its rhetoric belittles the essential efforts of "back office" staff, and it has made no strategic argument for targeting changes on particular civil service posts, such as in jobcentres, as opposed to hospitals and schools. This all inflames anxieties about certain staff being picked off.
Most damningly of all, however, it looks as if this change could come in a budget whose headline move will be to cut tax rates for the highest earners. If largesse is the order of the day for those at the top, modestly renumerated staff who pay out pensions and keep tabs on driving licences in the UK's poorer corners will reject George Osborne's demands for them to show restraint – and they will be right. Most damningly of all, however, it looks as if this change could come in a budget whose headline move will be to cut tax rates for the highest earners. If largesse is the order of the day for those at the top, modestly remunerated staff who pay out pensions and keep tabs on driving licences in the UK's poorer corners will reject George Osborne's demands for them to show restraint – and they will be right.