Wednesday 21 March 2012

Regional pay - will he, or won't he?

We will very shortly know whether the Chancellor will or will not propose the introduction of Regional Pay as part of his budget.  The mood music has been confusing and changeable over recent days; the current balance of opinion seems to be that it will not be introduced after all.
If that turns out to be true, no doubt some will heave a great sigh of relief.  That looks premature to me, however.  Given the regularity with which the idea has been floated, by Labour and Conservative-Lib Dem governments alike, I think we can take it as read that our real masters – the senior civil service – are committed to the idea and will continue to press whoever happens to be in government at the time to introduce the concept.  History suggests that they’ll probably get their way eventually; this is not an issue which is simply going to go away.
There are good reasons to oppose it, of course.  Not only is it a direct – and almost certainly deliberate – weakening of hard-won rights to collective bargaining and equality of treatment of employees, it is also a mechanism for reversing the fiscal transfers which are inherent in the current unified approach.  It is, in short, a mechanism by which GVA and wealth are removed from the poorest areas and transferred to the richest.
It does however leave those of us who support independence with something of a dilemma, because it is inherent in our position that wage levels in the public sector should be set in Wales rather than for the UK as a whole, and it is easy to see why opponents suggest something of an inconsistency here.  Whilst there might be a difference in the underlying principle between the introduction of regional pay set at a UK level and the devolution of pay rates to Cardiff, the potential impact on individual pay packets may not look that different.
In the short term, devolution of power to set wages would almost certainly offer better protection for public sector employees in Wales than would be available for those in the poorer areas of England; it seems certain that the Welsh Government would use such powers to maintain a level of parity.
Longer term, though, there can be less certainty. 
There are two not inconsiderable practical issues.  Firstly, if wage rates across England start to diverge, with what level of wages would the Welsh Government seek to maintain parity?  London rates?  The England average?  Some sort of notional starting point enhanced by inflation?  The second is the question of impact on budget.  I don’t doubt that the UK Government would ‘adjust’ the Barnett formula based on what pay rates would be if they were set in London; maintaining higher pay rates than that would inevitably impact on other budget areas.
Then there’s the question of principle.  Why would an independent Wales – or even a devolved Wales with the right to set public sector salaries – always do so by reference to salary levels set elsewhere, rather than in line with local circumstances and needs?  As far as I’m aware, Dutch civil servants’ salary isn’t set by comparison with what is paid in Germany – why would the relationship between England and Wales be any different?
The context is different, of course.  Opposing the introduction of regional pay, and proposing the devolution of power over the issue are, in my view, the right things to do for Wales, even if they appear contradictory.  But we do need more clarity of thinking over the longer term consequences of the latter.  And the issue underlines the danger of looking at pay rates in isolation – devolving pay rates as a stand-alone matter may create as many difficulties as are resolved.


Unknown said...

I agree that probably this was kite flying - and won't be in the budget - but it won't be long before the tory junta introduces it. By doing so - with the inevitable regional benefits and minimum wages that will follow - will serve to undermine one of their core reasons for retaining the union, the redistribution of 'wealth'.

By reducing the inflow of cash across the border it will also reduce the 'deficit' Wales is said to be running with England of about 6 billion (According to Trench) emasculating even further the reason for retaining a union where our neighbours and partners are determined to destroy by privatisation the social provision that we in Wales hold dear - NHS, Police, Welfare, roads infrastructure. Even the most pig-headed unionist will find it difficult to argue the case of 'shared values', precious history, 'stronger together' etc when the Tories have made all their plans known.

And Labour in Wales will find it hard to argue 'vote Labour to keep the Tories out' when Labour in England are trailing despite the economic and social atrocities being perpetrated by the Tories.

Anonymous said...

The original basis for establishing large 'civil service' centres like Companies House and DVLA in South Wales was actually to farm out the 'low skilled clerical' grades to the 'provinces' while keeping the high paid 'skilled' classes in London. At no point was the Admiralty. the MoD and Foreign Office or the MI6 dispatched to Gateshead or Glamorgan. So in effect the British state has always kept the posh jobs in the South East and the slave jobs in Wales and the north of England. I think Wales should not forget this. This new "Regional Pay" is just the formal application through civil service grading what the British state has institutionally been doing for many years. I've heard it been asked why Plaid and the SNP be in opposition to regional pay as they stand for national independence. Surely, the real question that should be asked is if the UK wide political parties are so committed to the Union, then why is it the high paid jobs of other parts of the UK state still located in London with an already enhanced London weighting? We currently all live under the same tax regime. There's another point where both Labour and Tory spokespeople have been referring to 'taxpayers' burden. Let me point out that neither the DVLA in Swansea or Companies House in Cardiff get any subsidy from general taxation. They are self financing state institutions paid for out of fees paid by their customers, that of drivers and companies. They have are paid for from the treasury budget as such, and have been self financing agencies collecting revenue FOR the treasury, for some time. Bizarrely, the government is trying to reduce the wages and conditions of self financing institutions in Wales, while enhancing wages and conditions of wholly taxpayer subsidised institutions in London. I think they call it called the United Kingdom.

Boncath said...


Regional wages are also found in the private sector
One must also not forget those who work alonside others whose income is considerably enhanced above theirs by tax credits and other payments.
Pay is a nightmare and most definitely not an even playing field