Member Article

North East businesses want regional pay plans scrapped

A group of North East businesspeople have called on George Osborne to reject regional pay plans.

In an open letter to the Chancellor, the signatories, including technology, graphic design, engineering businesses and even a fish and chip shop, warn that a significant fall in wages would impact the regional economy.

The signatories warned that regional pay plans would undermine regional growth and make it harder to achieve economic growth.

Instead, they have suggested it will lead to ‘brain drain’ effect and a loss of skills which will harm the North East’s public services.

A survey published last month by Trade Union Congress revealed 65% of respondents think the proposals should be scrapped.

The research also highlighted the concern over teachers’ pay, as the plans would mean individual schools could leave national pay agreements, and could therefore reduce teachers’ wages.

TUC General Secretary Brendan Barber commented: “Apart from the obvious unfairness of paying a teacher in Gateshead less than one teaching in Gloucester, wildly varying pay rates will make it much harder for schools in poorer areas of the country to attract and retain good quality staff.

“Similarly if individual hospitals are going to be told that in future they are going to have to set their own rates of pay, the time and complexity of the resulting wage negotiations, and subsequent problems with recruitment, as staff that can migrate to parts of the NHS able to pay higher salaries, could have a damaging impact on patient care.

“The government’s regional pay plans will not help create a single new job in the private sector, and can only do harm to already struggling local economies. The most sensible thing ministers could do is drop these ill-thought out plans and concentrate instead on policies that will tackle unemployment and increase the UK’s chances of creating economic growth.”

The letter reads: “Between us we run businesses across the UK of all forms and sizes. In our own way we are all responsible for boosting the private sector and providing valuable employment. Not only do we want to see our own businesses succeed, we also wish to see our communities and regions prosper and thrive.

“The spending power of our customers has an impact on our companies’ success and how many people we can employ. It is in this light that we urge the government to reconsider its proposal to introduce regional or localised pay for the public sector. This policy risks weakening consumer confidence and demand even further, undermining regional growth and making it harder for the UK economy to get back on its feet.

“We do not believe that reducing the pay of public sector workers such as nurses and teachers in our regions will boost economic growth. Instead it could lead to a brain drain and a loss of skills which would harm our regions’ valuable public services and the wider economy. Unemployment is already high and demand for jobs strong. We do not think government fears that the public sector is ‘crowding out’ the private sector are justified.

“There are many things ministers could do to support economic growth, such as bringing forward much-needed investment in infrastructure. Now is a time for the country to unite and focus on growth – not risk a divisive and harmful policy such as this.”

The signatories include: Paul Callaghan CBE, chairman of The Leighton Group; Lynne Davies, of Lynne Davies Web Design; Sandra Dickinson, director of Trapp Inn; John Finley, MD of Finley Structures Ltd; Peter Graham, MD of New Skills Consulting Ltd; Clare Hanson, director of Project Mayhem Dance; Suzanne Murray of Caffeco; Richard Ord of Colmans Fish and Chip Restaurant; Carl Mowatt, owner of Agrafica NE Ltd; and Rob Yorke, MD of Teescraft Engineering Ltd.

This was posted in Bdaily's Members' News section by Tom Keighley .