To introduce regional pay in the public sector (i.e. lower pay in the poorer regions) after already subjecting employees to a 2-year pay freeze, pension cuts and a quarter of a million job deliberate job cuts – in the same budget as removing the 50% tax rate on the 1% ultra-rich – is making this government (totally Tory in all but name) into a byword of greed and selfishness for the extreme rich on a scale that even Thatcher never attempted.
Thatcher dramatically enriched the top tenth of the population, and particularly the topmost 2-3%, but this was against the background of a boom, and she never drove down to the same degree the income of the poorest by huge benefit cuts, expenditure cuts, and deliberately harsh austerity measures. But even leaving aside the issue of provocative injustice, there are strong arguments against introducing regional pay in principle, and especially at this time.
First, it will depress the poorer regions which have already been hit hardest by the slump. At the same time it will bid up pay in the rich south-east, and polarise still further the inequalities between north and south.
Second, by reducing pay in the already low-income parts of the country it will lower the level of aggregate demand in those regions and generally across the country and thus deter private investment because the demand to buy the goods and services produced is being cut back still further. The biggest problem in the UK at present is not the budget deficit, it’s the lack of aggregate demand and the collapse of growth. Chopping back pay will make it worse.
Third, the Tories always complain that there should be a levelling up, not a levelling down. This is levelling down with a vengeance. And how is differential pay by region compatible with a career progression in the public service?
Fourth, the government’s ostensible motive for this change – that the private sector can’t afford to recruit staff because of relatively higher public sector wages in poorer regions – simply doesn’t bear scrutiny. The actual reason the private sector is depressed is because of lack of demand from customers. The government’s real motive for abandoning national pay bargaining is its persisting obsession with weakening the trade unions by every means at its disposal. And the fact that the Tories have dared to take such provocative action underlines once again the extreme weakness of the Labour movement at this time. The country cries out for Labour to demand the power to put a stop to this endless injustice.