1 December 2011

Way back in 2009, before the general election, I explored the itch of the Tories to localise benefits and public sector pay, to end the setting of them at a largely uniform, national standard and to have them set them at local levels. Now it isn’t just the Tories of course; the Liberal Democrats are up to their elbows in this localisation too.

I returned to this topic over several posts and I have put links to them at the foot of this one.

Now the itch has grown. In his autumn statement George Osborne has said the Tory Libdem government will move to end national pay settlements and localise them and thus in places like Cornwall stifle increases. No, he didn’t say it like that. He talked of bringing public sector pay “in line with local labour markets,” how public sector pay could be made “more responsive to local labour markets,” and how “more local market-facing pay” (yes, really) could be introduced into the civil service. Read it in paragraph 1.110 in the autumn statement. Of course for higher paid people market-facing might mean more money but not for most people in the public sector.

What will be the actual result of the local-labour-market-facing localisation?

Let me restate the arguments about pay of my earlier posts. Cornishing public sector pay (and benefits) carries the risk of large disadvantages for many people in Cornwall. Cornwall is in general a low-pay county; average pay here is lower than in much of England (see the 2011 ASHE data.) Many people in Cornwall gain from national standards in wages. The levels of wages for people in the public services here, like nurses and teachers and civil servants, are set by national standards and comparisons and negotiations not by what happens in the local private sector. For example, Cornwall local private sector wages are not used as comparators to decide what to pay a teacher or tax inspector here. Localising their pay makes it vulnerable to local competitive impact, that is, lower pay here outside the public sector might draw down Cornwall public sector pay below national benchmarks.

Localisation would be a way for a Tory Libdem government to stifle longterm public sector pay and benefits in places like Cornwall, to cut us off from progressive increases elsewhere. I think the Tories-Libdems are coming to see localism as a way of cutting public expenditure. Local variations in public sector pay (and benefits and even the minimum wage) might seem reasonable. After all, local living costs do vary and market pay varies. However, the Tory Libdem approach appears not to be about topping up mandatory national payments in areas of high living costs or influencing private sector low pay upwards. In practice the localising of payments would be seized as an opportunity to cut back public sector pay costs. Even within Cornwall we might have a contentious post code pay and benefits lottery to reflect variations in housing costs and private sector pay in different parts of the county.

If this Tory Libdem market-facing localisation happens, and that is most likely, I think it will have a damaging effect on the living standards of many people in Cornwall already reeling from austerity. Let’s see what the parties and groups in Cornwall have to say.

ADDITAMENTUM 8 December 2011: The Guardian of 8 December 2011 has the localisation story.

Earlier posts

Tories eye benefits and wages in Cornwall 6 September 2009

Vote Tory today, cry tomorrow 1 February 2010

Tory-Libdems to localise NHS pay in Cornwall? 19 July 2010

Localising benefits 31 July 2010

And see this (‘£7,000 pay gap for Westcountry workers’ in Western Morning News 16 December 20110).