Leaked government plans to introduce regional pay rates for civil servants are threatening to push already strained relations between the two to breaking point.
The move comes only weeks after the Prime Minister’s director of strategy, Steve Hilton, who left Downing Street last week, advised him to "road test" swingeing cuts to Whitehall in a belief that the civil service could function effectively with 90% less staff.
It also follows repeated strike action by public servants up and down the coutnry in a bitter row over pensions.
But according to the Observer, the Cabinet Office’s Reward, Efficiency and Reform Group is now adding fuel to the fire by drawing up a “local pay map” with help from management consultancy, Hay Group.
The map places the UK’s 434,000 civil servants into four geographical pay zones and is intended to determine how their wages will be set for the next three years.
The idea is that workers in inner and outer London will be paid most, followed by those employed in a corridor from Bristol to the Thames estuary and people in pay “hotspots” such as Manchester and Birmingham.
Damaging blow
But ministers are also understood to working with estimates that earnings in the north east of England are 10% lower than the UK average, 6% lower in the West Midlands and 7% lower in Yorkshire and the Humber.
Mark Serwotka, general secretary of the Public and Commercial Services Union, said the organisation would fight the plans, which would stifle rather than stimulate growth in the most deprived areas of the country.
“What we can now see is that, on top of a pay freeze, it would be permafrost for public servants in Wales and most of the rest of the UK, with no prospect of a pay rise for years,” he said.
TUC general secretary Brendan Barber added that regionalising pay would deal local economies a “further damaging blow, risk recruitment problems in our public services outside London and the south east and won’t help local businesses take on new staff either”.
But a Cabinet Office spokesperson said that, while the department did not comment on leaks, civil service pay had traditionally been set on a ‘one-size-fits-all’ basis at national level, whereas private sector pay was more in line with local labour markets.
“This means civil servants are often paid more than private sector workers in similar jobs in the same area, which has the potential to hurt private sector businesses,” the spokesperson added.
