Budget raises regional pay threat

Plans to make public service pay systems more responsive to regional labour markets, announced as part of the Budget, have attracted a strong response from the unions.

Pay Review Bodies (which cover 40% of the public sector workforce) are to be given a remit to take regional and local factors into account. This approach could also affect the civil service.

The Treasury argues that a cross-cutting review of the public sector labour market, conducted as part of the 2002 spending review, found that public sector wages vary far less by region as compared with those in the private sector.

However, evidence published by pay specialists Incomes Data Services (IDS) in January casts doubt on this claim (IDS Report 872). It concluded that the overwhelming majority of large, multi-branch private sector companies still operate national pay and grading systems.

IDS says: "The main pay differences remain between London and the South East on the one hand and the rest of the country on the other".

Brendan Barber, TUC general secretary elect, argued that while unions support fair arrangements in and around the Capital to reflect higher costs of living they will also strongly stick up for national agreements.

UNISON general secretary Dave Prentis backed this up, saying: "Extra pay in one part of the country cannot be at the expense of the others. National pay bargaining is a transparent and fair system, which is efficient and aids movement around the country".