Public servants in poorer regions to get lower pay
George Osborne will announce plans to pay lower salaries to public sector workers in poorer parts of the country in his budget next week.
The chancellor will argue that public sector pay should mimic the private sector and be more reflective of local economies. He intends to start the process in three Whitehall departments in the coming financial year, as part of a phased introduction.
The first posts to be considered for localised pay are the 100,000 staff in the Department for Work and Pensions; 21,000 posts in the Home Office, including Border Agency staff; and 16,000 staff in the Department of Transport, including the DVLA in Swansea.
The Treasury intends to spread the reforms beyond the civil service across the public sector in the years ahead as staff come out of the public sector pay freeze.
The department is not trying to introduce just regional pay, but local or zonal pay that might take account of, for instance, living costs in suburban Manchester as opposed to inner-city Manchester.
The Treasury regards the change as one of the most important measures it can introduce to rebalance the economy. Osborne claims the move would provide a boost to the private sector in the north and south-west, arguing that employers in these areas cannot afford to recruit staff owing to the relatively high public sector wages in cheaper areas of the country.