Devolved governments slam Osborne’s local pay plan
By Keith Aitken in Edinburgh | 19 March 2012
The UK’s devolved governments are
set on a collision course with Chancellor George Osborne over his proposal to
abolish national pay deals in the public sector.
Scottish Finance Secretary John
Swinney told the BBC over the weekend that the Scottish Government would refuse
to apply localised pay to all public sector wages for which it had
‘My counterparts in Wales and
Northern Ireland are as vociferously opposed to this as I am,’ he added.
Sammy Wilson, Swinney’s counterpart in Northern Ireland, also
spoke out: ‘This proposal addresses a problem that
doesn't even exist,’ he said.
‘There is no evidence that
nationally agreed public sector wages create problems for the private sector in
Welsh First Minister Carwyn Jones
said people should not be penalised because of where they live.
‘We should be looking at a situation where we look to close
the gap in income between different parts of the UK rather than make it worse,
which is exactly what this will do,’ he said.
Osborne has floated the idea,
ahead of Wednesday’s Budget, of replacing national pay deals in the public
sector with local agreements that reflect local pay rates for private sector
workers and local differences in the cost of living.
But the plan has been criticised
in the devolved jurisdictions – and in northern England – as a ploy to
subsidise higher incomes in the Southeast. Trade unions say it would create
huge disparities and drive down both incomes and economic activity in already
deprived parts of the UK.
Swinney said he had told the Treasury that he regarded the
idea as ‘potentially disastrous’.
He said: ‘It
will undermine economic confidence in areas far removed from the Southeast of
England and it will do absolutely nothing to solve the regional inequities that
exist within the UK.’
What is less
clear is the extent to which the devolved administrations could defy the policy
without suffering consequent cuts in their block grant funding from Westminster
– though London might hesitate about creating such a stand-off in Scotland in
the run-up to the independence referendum.
Swinney said the
Scottish Government would ‘go absolutely nowhere near this proposal for the
areas of pay policy that are under our control’. That would include health and
council services and most quangos, but exclude many civil servants.
But he also made
clear that the Scottish Government would not divert funds to make up the
difference for those areas where it did not control pay.
Labour urged the
Liberal Democrat Scottish secretary, Michael Moore, to intervene with the
chancellor against the plan.