Councils urged to adopt local pay

29 Mar 12
Ministers have been urged to expand their proposals for local public sector pay into local government.
By Richard Johnstone

Ministers have been urged to expand their proposals for local public sector pay into local government.
Payslip local government

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Chancellor George Osborne confirmed in his Budget that the government would move to introduce local pay agreements for civil servants when the two-year public pay freeze ends.

The freeze started at different times across the public sector. It will end for some departments later this year, including the Department for Work and Pensions, and persist into 2013/14 for others such as Revenue & Customs.

Osborne said the government would ‘see what we can do to make our public services more responsive, and help our private sector to grow’ once independent Pay Review Bodies report on how it might be introduced. Departments would have the option of moving to more local pay when the freeze ends, he added.

The Centre Forum think-tank developed plans to localise pay in 2010. Forum director Chris Nicholson told Public Finance regional pay should be rolled out as ‘we have already had a trial’ following Labour’s introduction of local pay for Court Service staff.

It should be introduced first among the departments that have a ‘national’ presence, he said, adding: ‘I would have thought that the DWP was an obvious one to do it.’

Nicholson also said local pay should be applied across councils, which Centre Forum’s More than we bargained for report found could improve the quality of public services in a given area.

Most council workers’ pay is set in nationally agreed pay scales, negotiated between the Local Government Association and trade unions.

In its submission to the independent pay review bodies, the Treasury said there was an estimated public sector pay premium of about 8%, versus comparable jobs in private firms. This ‘diverts resources’ away from other means of improving public services, it stated.

But, the Trades Union Congress said that the imposition of local pay would ‘widen the North-South divide, and cause more businesses to fail by taking even more money out of local economies’.

And Stephen Bevan, director of the Centre for Workforce Effectiveness at the think-tank The Work Foundation, told PF that even if the move were approved when the review bodies report in July, it might not be effectively introduced. 

He said that in bodies where pay freedoms have already been granted, such as in NHS foundation trusts, it had often not been taken up. 'Local managers don’t have the expertise to manage pay and the evidence is that even where they do, they don’t use it,’ he said.

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