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A crass, economically illiterate and downright offensive proposal

September 7, 2012 5:15 pm

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It’s not news to any of us that this Tory-Lib Dem government has no understanding of the regional economy of the North, but this recent article from Tory think-tank Policy Exchange beggars belief.

Supporting the government’s disastrous proposals on regional pay in the public sector, they go on to suggest that the ‘savings’ made from cutting pay should be used to fund infrastructure in the regions affected.

So basically the government should invest in infrastructure in the North only if the wages of nurses, teachers and midwives are cut, and billions sucked out of our regional economies in the process. This proposal is crass, economically illiterate and downright offensive.

Investment in Northern infrastructure is something that will stimulate our broader economy, create jobs and provide a return on investment which the whole country benefits from. It is not something that should be dependent on picking the pockets of local public sector workers. This is a government that has slashed investment, which is one of the reasons why we have no growth and the economy is back into recession. Our nurses and teachers can’t pay for ministers’ mistakes.

This investment should be made by the government driving a programme for growth on behalf of the whole country, without trying to balance it on the backs of public sector workers who have had a pay freeze for the last three years. Meanwhile the Conservative and Liberal Democrats have chosen to prioritise tax cuts for millionaires.

The damaging implications of the regional pay proposals the broader economy have been well documented and will have a substantial impact in the North East. The New Economics Foundation have highlighted that these proposals, supported by Liberal Democrat Danny Alexander, could cost as much as £10 billion to local economies each and every year.

I highlighted recently how George Osborne was attacking the economy of the North on several fronts with a range of policies including Regional Pay. The north east already has the highest rate of unemployment (almost double that of the south west), more than a fifth of children here live in workless households, the highest in the country, and life expectancy is one of the lowest in the country. Combine this with other policies such as the siphoning off of funding in public health funding away from those most in need towards those who live in affluent Tory and Lib Dem areas in the South and it is clear that this government cares nothing for the people of the north.

Let’s not forget their favourite think-tank Policy Exchange do not have the interests of the North at heart. It’s only a few years ago that they produced a report entitled ‘Beyond Revival’ which the echoed the offensive Tory proposals of the 80s that people should move south or ‘get on their bikes’ to find work.

I suggest these Thatcherite policy wonks get on their own bikes, and get up here to see the disastrous impact of this government’s work on the economy and the lives of people here.

Anna Turley is the Labour and Co-operative Prospective Parliamentary Candidate for Redcar.

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  • Andwhynot

    I am not illiterate, and I apologise in advance, but the only description I can think of to describe Danny Alexander is “ignorant wanker”.
    He is as short on economic sense as Osborne and hasn’t the intelligence to challenge the idiots at HM Treasury who are dreaming up these crazy policies and feeding them to the most economically inept politicians we have ever allowed to govern us – and that includes Thatcher’s corner shop economics.
    Alexander is a social / political climber who thinks that idolising Osborne and his cronies will let him into the club. Poor fool does not understand the ruthlessness of the Tories who will discard him on a whim once his inane loyalty is not longer required.
    It is apparent once again from this Regional approach that the Tories and their spineless LibDem followers (no way are they equals in government) are supporting the rich South East at the expense of the rest of us.
    It is blatant robbing of the poor to give to the rich. I can only hope that they reach a point when the hoodwinked electorate wake up and see that they have been so totally screwed that they will never vote for a Tory or a LibDem (a Tory in sheeps clothing) ever again.

  • charles.ward

    Perhaps you could explain how the introduction of regional pay with the proceeds funding infrastructure spending in the same region would be worse then the current situation (rather than some hypothetical scenario with unfunded infrastructure spending).

    If public services could be delivered at lower cost with the proceeds providing real jobs in the region wouldn’t that be a plus?  How can paying people above the market rate for the region be the best system?

    Personally I’d rather see the proceeds given back in lower taxes for the poor so they could spend it on what they wanted rather than government directed infrastructure spending.

    • jonnymarr

      How can paying people above the market rate for the region be the best system?

      Dear Charles,
      What is the market rate for a child’s education or a patient’s care in a low-wage area?
      Anyone can see that regional pay not only institutionalises poverty it also creates a warped incentive for the brightest and best to abandon ship ( brain drain to higher wage areas ). For teachers and nurses etc it is an absolute no-brainer – buy a more expensive house with your better wages and then retire on a better pension based on your higher salary ( and potentially down-size on retirement to a region with lower house prices ) or buy a less expensive house with your lower wages, receive a lower pension and be stuck in your poor area forever. Hmmmmmm…
      Economic and financial illiteracy is a pretty good description for it – not to mention  immoral, given that the brain drain will have a direct effect on the health, education and life-chances of those in low wage regions.

      • charles.ward

         ”What is the market rate for a child’s education or a patient’s care in a low-wage area?”

        The market rate is the rate at which you can continue to fill vacancies with equally qualified people.  The removal of refuse is vital to ensure public health but refuse collectors will never be paid as much as doctors because of supply of potential refuse collectors will always be greater than the supply of doctors.  You don’t get paid based on the importance of the work that you do but rather on the competition for your job.

        “Anyone can see that regional pay not only institutionalises poverty it
        also creates a warped incentive for the brightest and best to abandon
        ship ( brain drain to higher wage areas ).”

        But paying public sector workers more than the going rate for the region creates a brain drain from the private sector in that region.  The region will always be dependant on other regions to fund the public sector jobs.  That institutionalises regional poverty with the region not able to survive without funding from outside.  The region will never be able to grow its own private sector.

        • http://twitter.com/gerry1957 Gerry Ramsden

          The limited supply of professional groupings is controlled by a closed shop system, by paying proportionally more to public sector in one area DECREASES the brain drain to the more affluent areas.
          when skilled workers move away and this leads to a loss is to the local community. Education of students increases job opportunities, increases wages and life expectations.In general brightest workers earn more because they are more flexible and move to where the higher paid jobs are, leaving the LOCAL market driven in a downward spiral.

          Globalisation is a capitalist structure where work is transferred from high cost areas to low cost areas, in a free market. Public sector pay has little affect on this simply because the skill sets are different. 

    • http://www.futureeconomics.org Diarmid Weir

      It’s not as if most public service workers are rich – and they are already spending their incomes as they want. 

      It’s surely not clear that for skilled public sector workers that the market is regional. To the extent that it is not, there is surely a strong argument for (relatively) incentivising  them to depressed areas.

      As to infrastructure, what could be more valuable than health and education services whose staff feel valued on a par with their colleagues elsewhere in the country?

      Finally this sounds like another plank in the right’s pretty revolting strategy of divide and rule for public and private sector workers.

      • charles.ward

         ”It’s surely not clear that for skilled public sector workers that the market is regional.”

        If by that you mean that public sector workers are so mobile that they will move to higher paying areas then region pay structures will have no effect with the wages in poor areas maintaining parity with those in richer areas.  If  public sector workers were that flexible then they would all be moving to London to take advantage of the London weighting.

        “As to infrastructure, what could be more valuable than health and
        education services … ?”

        That doesn’t mean that we should pay over the market rate for these workers.  Paying inflated wages hurts taxpayers by increasing the tax they have to pay, including those in poor areas.

      • http://twitter.com/gerry1957 Gerry Ramsden

        plank of the right pretty good description!

    • robertcp

      To be fair, the Coalition seems to have decided that regional pay is a stupid idea and is backing away from it. 

    • http://twitter.com/gerry1957 Gerry Ramsden

      Regional Pay will drive down only. In the NHS we have had regional pay for 40 years its called London weighting, thats why you cant attract people to london, because even with government calculated pay its still too low. This government like others is using public sector pay (now the majority of pay in Britain) to control the economy.

      SO IN THE AREAS OF GREATEST DEPRIVATION Where local pay is low, you will not be able to attract the staff to provide better services. In Scotland, Wales and Northern EngLand there are already public sector staff shortages, it can only get worse.

      If you really want to cut public sector spend, look at how many government offices are in London, Look how many public sector employees get grace and favour accommodation. Look AT HOW BADLY THE ECONOMY IS DOING. To turn this around Tories, Libdems and Labour are correct the economy is the driver, unfortunatly George Osborne has done nothing to help except increase the debt and fund deficit in the old Tory wayof selling of the silver, he’ll be onto the children next.

      • charles.ward

         ”Regional Pay will drive down only. In the NHS we have had regional pay
        for 40 years its called London weighting, thats why you cant attract
        people to london, because even with government calculated pay its still
        too low.”

        I can’t make sense of what you are trying to say here.  You are against regional pay and you give an example where the regional pay difference is too low.  If you abolished all regional pay then the London weighting would be £0, you seem to want it to be higher than it is now.

        If it is true that the London weighting is too low and London has specific problems recruiting because of this then regional pay (set by the market not by government) would be the ideal solution.  In regions where recruitment was relatively easy pay could be set a bit lower, where there are problems recruiting then pay could be increased.

        “This government like others is using public sector pay (now the majority of pay in Britain) to control the economy.”

        Public sector pay does not constitute the majority of pay in the country.  As for the government trying to control pay, this is the opposite.  Rather than saying that everyone should be paid the same (except in London) it is allowing pay to adjust to the correct market rate.

        I wonder why Labour are against regional pay everywhere except London?  Could it be that in every Labour region outside London public sector workers benefit from nationally set wages (as Labour does better in poorer regions).  But in the only Labour region with high private sector wages then regional public sector pay (the London weighting) is a great idea!

  • Barry Winter

    Whatever  their limitations the RDA’s highlighted one aspect of modern politics: the need for strategic regional planning (as well as stronger local government powers). Surely the best way to achieve this is through regional assemblies? I know that the experience in 2004 makes people understandably wary of contemplating regional assemblies but  suggest  that we need to think again. This time it should be a call from the grass roots for a radical and democratic regionalism; supporting local initiatives and building links with young people, the unemployed, low paid workers, womens’ campaigns and others. Let’s wee have we can release the talent that is trapped in our overcentralised society.

    We in the Hannah Mitchell Foundation argue it’s time to consider how we give a voice to the peoples of the north. Then, instead of simply bemoaning  about the Tories latest wacky wheeze is, we could start to consiser how to rebuild the regions economically and politically. If they can do it is Scotland and Wales (and credit to them for their efforts), then we could also do the same.

    Barry Winter

  • Barry Winter

    Whatever the limitations of
    the RDA’s they did highlight the value of strategic thinking at regional level
    about politics and the economy. While we can agree that more power should be
    devolved to local authorities, genuine devolution should also include the
    regions.

     

    After the failed attempt to
    secure devolution for the North East in 2004, many will be understandably wary
    of revisiting the question. But times have changed. The people of Scotland and Wales have benefitted from more
    control overt their destinies while the North remains disempowered and vulnerable
    to Tory-led policies. The North-South divide is widening, as Anna Turley and
    others have highlighted.

     

    We need an imaginative,
    radical regionalism for the North (and elsewhere) that co-operates with a
    variety of communities and groups to give people a voice; that can release the
    energies of those trapped in hardship and insecurity. This is about
    regenerating both democratic politics and the regional economy. Then, instead of
    rightly bemoaning what is being done to us, we can begin to develop the
    confidence to decide what we can do for ourselves.

     

    Barry Winter

    The Hannah Mitchell
    Foundation

     

  • jonnymarr

    But paying public sector workers more than the going rate for the region creates a brain drain from the private sector in that region.

    Hook, line and sinker – there is no - repeat NO - evidence for this as far as teachers and nurses are concerned – ditto teachers and nurses choosing to move to low-wage areas like Middlesbrough in order to make their money stretch further – just doesn’t work that way in the real world. Have a think about what it’s actually like to be a nurse in A&E or a teacher in a deprived area and consider the incentives/disincentives to work there in comparison with a nice leafy ( Southern ) ( Tory-voting ) suburb. I politely suggest you re-examine the arguments and re-consider the actual likely impact on low-wage areas. Don’t believe the propaganda. 

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