The Chancellor will announce in his Budget speech on Wednesday that he is bringing forward plans to allow a handful of central government departments to set their own local employee pay rates.
In a move that could lead to further strike action among unions already angry over proposed changes to staff pensions, three departments are to be the first to introduce local pay settlements as of this April, a Treasury source told the Reuters news agency.
They comprise the Department for Work and Pensions (100,000 staff), the Home Office (21,000 workers) and the Department for Transport (16,000 personnel).
The change will take place a year earlier than originally thought when the idea was first announced last November, but the aim is to extend it across the entire public sector over time.
To justify the move, George Osbourne is expected to tell Parliament that public sector wages should mirror those of the private sector, but instead workers earn on average 8% more. In the south east of England, public sector pay is claimed to be 0.5% higher than in the private sector and in Wales a huge 18% more.
The Chancellor has reportedly yet to finalise the details of the proposed changes, which means that it is still unclear whether they will apply to all workers or just new recruits.
Cruel and counter-productive
But government sources have made it clear that existing staff will not be subject to pay cuts. Instead wage levels are more likely to be adjusted over time, with larger pay increases being awarded to employers in the south east of England, where it can be more difficult to fill certain posts.
Nonetheless, Mark Serwotka, general secretary of the largest civil service union, the Public and Commercial Services Union, slammed the plans as “cruel“ and “counter-productive”, attesting that they would hit the poorest areas of the country hardest.
Local economies were “crying out for investment, not more cuts”, he added.
Ravi Subramanian, West Midlands regional secretary for the largest public sector union, Unison, on the other hand, accused Osbourne of wanting nurses and care workers to take a pay cut in order to fund a reported reduction in the 50p tax rate for high earners to 40p or 45p – a move that is again expected to be announced in Wednesday’s Budget.
The move comes as employers’ body, NHS Employers, called on the government to consider maintaining a national framework for health service pay, although it conceded that some organisations may prefer local arrangements.
Its submission to the NHS Pay Review Body pointed to research showing that large private sector employers with sites across the country tend to work within national pay frameworks rather than undertake local pay bargaining in order to save time and money.
