By Alice Hood and Neil Foster of the TUC Pay Fair campaign
Wednesday’s autumn statement included little good news for working people, with one notable exception. The government’s decision to rule out regional and local pay in the NHS, civil service and prisons is a victory for campaigners who have warned about the implications since it was first mooted by the chancellor 12 months ago.
The TUC Pay Fair campaign warned the plans would be divisive, counterproductive, expensive and impractical, and built the broadest coalition against the plans.
Grassroots councillors from across the political spectrum discussed Pay Fair motions and the support from every region showed opposition to the policy. They were joined by 217 MPs from eight different political parties who spoke out, publicly warning how it would affect their constituents and their local economies.
Many trade union members played a key role in highlighting to MPs the practical problems if the policy was adopted. Others ran street stalls, distributed leaflets, and young members in the North of England created an effective video to raise awareness. Meanwhile, Left Foot Forward conducted interesting analysis highlighting specific electoral consequences for coalition MPs had the government pressed ahead.
A number of studies and reports demonstrated the economic consequences for struggling regional economies if postcode pay was introduced across the public sector.
This was particularly important since the government had shown no inclination towards conducting or publishing economic impact analysis on the policy. The new economics foundation (nef) showed that even if questionable assumptions of ‘crowding out’ were correct then regional and local pay would still have a negative impact on the entire UK economy.
Incomes Data Services (IDS) later showed there was very little evidence of ‘crowding out’, meaning nef’s worst case scenario that it could cost the economy up to £9.7bn per year and up to 110,000 jobs became increasingly relevant. This built on earlier authoritative work from IDS showing many large multisite private sector businesses also used national pay arrangements just like the public sector.
Sixty senior academics concluded in a letter in The Times ”there was no convincing evidence” regional or local pay would promote economic growth. Instead they warned it would “aggravate geographical economic and social inequalities”. A number of businesses in the North East also were concerned about the collective impact lower public sector pay could have on demand in less prosperous economies and prompted a number to speak out.
Wednesday’s public sector pay review announcements were not a universal success for trade unions. While rejecting regional and local pay for schools, the proposal of crude performance related pay measures for teachers is inappropriate and unworkable. The TUC will now be working closely with teaching unions on this.
While the political campaign against many of the original proposals has largely been won, there are still industrial and policy battles such as this which need public support and solidarity, and there’s no room for complacency. A significant minority of public sector employers such as NHS Trusts and academies already have some freedom to opt out of national pay bargaining; nineteen health trusts in the South West have been exploring lower pay and conditions for their workforce for several months.
It is to be hoped the combination of the campaign run by unions in the region and nationally, Wednesday’s announcement and welcome ministerial disapproval will spell the end of this damaging attempt to break away from the transparency and fairness offered by a national system.
Yesterday the deputy prime minister concluded:
“The case for regional pay has been looked at. It’s been lost. And, for this coalition government, that case is now closed.”
The government is right to reject the policy.
All those across the UK who helped campaign against it should be proud of the contribution they made and take encouragement from this in other vital campaigns to defend the wages and living standards of working people.
• Graphic: Why postcode pay doesn’t add up – December 7th, 2012