Dudley workers to be paid less than Birmingham, under George Osborne's local pay (not regional pay) plans

By Jonathan Walker on Mar 19, 12 01:54 PM in Politics

Should a worker in Dudley receive less for doing the same job than one in central Birmingham?

That's the question posed by the Government's plans to introduce local pay across the country.

And it is local pay that George Osborne wants to introduce - not regional.

This weekend's papers were full of speculation that the Chancellor is set to speed up plans to introduce local pay in Wednesday's Budget - only for some of today's papers to report that Lib Dems have convinced him to delay the proposal.

Even if measures to introduce local pay aren't announced this week, they will be on the agenda in July when a series of reviews report their finding to the Treasury.

To understand what's planned, it's worth going back to a speech delivered in Westminster Hall by Treasury Minister Chloe Smith, in January.

She made it clear that the policy goes far beyond paying people more in the South East (or to put it another way, paying them less in the North and Midlands). Ministers want a patchwork of pay deals, with some towns and cities paying more than their neighbours.

The debate was actually titled "regional pay", but Ms Smith, the Chief Secretary to the Treasury, took issue with that, saying: "I want to refer briefly to the system of zonal pay in the Courts Service, which has been mentioned. It demonstrates that it is possible for pay to be responsive to local labour markets within a national bargaining framework.

"Of course, those zones did not simply conform to regional boundaries, but took into account the local economy by, for example, putting Norwich, Exeter and Newcastle in the same zone.

"The debate has a misnomer at its heart. In the autumn statement, the Chancellor announced local pay, not regional pay, so we are not talking about something that might take effect at the level of Wales.

"We are talking about something that may, depending on what the experts say, happen at a lower level."

The experts she refers to are the people commissioned by the Chancellor to look into the issue, who are due to report their findings in July.

So how does this "system of zonal pay in the Courts Service" work?

It was introduced in 2007 and means a court administrator in a job classed as band D receives a salary of £24,007 in inner London and £22,138 in outer London.

This falls to £20,367 in "hotspots" across the country, such as central Birmingham.

But it falls again for staff working in other parts of the region such as Coventry or West Bromwich, and even other parts of Birmingham.

Workers outside so-called hotspots were initially paid either the "national plus" rate of £18,469, or the "national" rate of £17,513.

The Public and Commercial Services Union succeeded in convincing the Government to abolish the "national" rate, leaving just the "national plus" band. But this is still 10 per cent lower than the "hotpsot" salary for the same job.

Even staff working in outer Birmingham may find they are paid less than people doing the same jobs in the heart of the city.

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Jonathan Walker

Jonathan Walker - The Birmingham Post's political editor
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