Agenda item

Regional and Local Public Sector Pay

That the Exeter City Council notes:

·         The Chancellor of the Exchequer announced in the 2012 Budget the Government’s desire to introduce ‘more market facing’ public sector pay. This could mean regional or local public sector pay.

·         This recommendation has come in advance of the Pay Review Bodies reporting on the issue in July and September 2012.

·         There has been no independent assessment of the impact and consequences this policy could have for public services or the economies of low pay regions.

Exeter City Council believes:

·         The Government’s case is based on the claim that public sector pay is ‘crowding out’ the private sector. This is not supported by evidence, particularly at a time of high unemployment. There are currently 2073 JSA claimants in the Exeter area.

·         This approach also ignores the real reasons for the differences between public and private sector pay. For instance, there are more high skilled workers in the public sector (such as teachers and nurses), and a smaller pay gap between top and bottom earners and a smaller gender pay gap.

·         Public sector employers already have some flexibility to adjust pay in response to local conditions, and higher rates are paid in London and the South East

·         All other English regions and devolved nations stand to be affected by this, with the possibility of years of pay falling behind the cost of living.

·         Workers in the Exeter area are paid £512 pa less than the national average.

·         65% of public sector workers are female.

Exeter City Council further believes:

·         Regional or local public sector pay would have a harmful effect on the City.

·         It will make it harder for schools and other public services to recruit and retain good quality professionals who could earn more for doing the same job elsewhere.

·         There are 31,200 public sector workers in Exeter area and reducing their real terms pay each and every year will dramatically reduce spending power and have a negative impact on the private sector.

·         This policy will not improve the pay of private sector workers but instead could encourage further depression of wages in all sectors.

·         We do not want to be forever defined as a ‘low pay’ city.

·         This policy is therefore counter to our city vision and ambitions for the future.   

Exeter City Council resolves:

·         To write to the Chancellor of the Exchequer and Chief Secretary to the Treasury stating this council’s opposition to plans for regional and localised public sector pay.

·         To write to all local MPs within the next month outlining concerns about the impact that this policy would have on services and the local economy.

·         To sign up to the Pay Fair campaign and raise awareness of the implications and risks of this policy locally, regionally and nationally.  

The following Councillors declared interests and, where indicated*, left the meeting during consideration of this item:

Councillor Bialyk, seconded by Councillor Crew, moved a Notice of Motion in the following terms:-

“Regional and Local Public Sector Pay

That the Exeter City Council notes:

·         The Chancellor of the Exchequer announced in the 2012 Budget the Government’s desire to introduce ‘more market facing’ public sector pay. This could mean regional or local public sector pay.

·         This recommendation has come in advance of the Pay Review Bodies reporting on the issue in July and September 2012.

·         There has been no independent assessment of the impact and consequences this policy could have for public services or the economies of low pay regions.

Exeter City Council believes:

·         The Government’s case is based on the claim that public sector pay is ‘crowding out’ the private sector. This is not supported by evidence, particularly at a time of high unemployment. There are currently 2073 JSA claimants in the Exeter area.

·         This approach also ignores the real reasons for the differences between public and private sector pay. For instance, there are more high skilled workers in the public sector (such as teachers and nurses), and a smaller pay gap between top and bottom earners and a smaller gender pay gap.

·         Public sector employers already have some flexibility to adjust pay in response to local conditions, and higher rates are paid in London and the South East.

·         All other English regions and devolved nations stand to be affected by this, with the possibility of years of pay falling behind the cost of living.

·         Workers in the Exeter area are paid £512 pa less than the national average.

·         65% of public sector workers are female.

Exeter City Council further believes:

·         Regional or local public sector pay would have a harmful effect on the City.

·         It will make it harder for schools and other public services to recruit and retain good quality professionals who could earn more for doing the same job elsewhere.

·         There are 31,200 public sector workers in Exeter area and reducing their real terms pay each and every year will dramatically reduce spending power and have a negative impact on the private sector.

·         This policy will not improve the pay of private sector workers but instead could encourage further depression of wages in all sectors.

·         We do not want to be forever defined as a ‘low pay’ city.

·         This policy is therefore counter to our city vision and ambitions for the future.   

Exeter City Council resolves:

·         To write to the Chancellor of the Exchequer and Chief Secretary to the Treasury stating this council’s opposition to plans for regional and localised public sector pay.

·         To write to all local MPs within the next month outlining concerns about the impact that this policy would have on services and the local economy.

·         To sign up to the Pay Fair campaign and raise awareness of the implications and risk of this policy locally, regionally and nationally.”

In presenting the Notice of Motion, Councillor Bialyk stated that the desire of the Coalition Government to introduce regional or local public sector pay would have an adverse impact on regional economies and that Devon and Cornwall in particular would be badly affected. A number of Councils, including Plymouth and Cornwall, had unanimously opposed the proposal and he hoped that the City Council would do the same. He also urged Members to agree to the City Council signing up to the Pay Fair campaign. Councillor Crew, in seconding the motion, referred to the greater proportion of skilled workers working in the public sector and stated that any reduction in pay levels for this group would impact adversely on the local economy. He also referred to an Institute of Directors survey where the majority of members were not opposed to current public sector pay levels.

Some Councillors felt that greater flexibility in the regional public sector pay formula would stimulate rather than hinder economic growth and that the work force accepted lower wages away from London and the South East because of the quality of life in the South West. Councillor Leadbetter advised that the Cabinet of Devon County Council had requested an economic impact study on the likely effect on the area of the Government’s proposal because of the concerns that regional pay structures could be harmful to local economies.

In supporting the motion, a Councillor referred to the opposition from the Chair of the Devon and Cornwall Business Council to the Government’s proposal as it was felt that it would lead to a greater imbalance between London and the South East and the rest of the country. He stated that legislation had already been enacted in 2006 to enable the introduction of regional pay variations and that this had already been introduced by the Courts of Justice and that a number of NHS Trusts were looking to follow.

Other Councillors supported the retention of national pay structures for the public sector. They felt that introducing regional pay settlements would reduce incomes and therefore spend in the local economy which would be detrimental to local businesses.

In accordance with Standing Order 27(1), a named vote on the Motion was called for, as follows:

Voting for:

Councillors Bialyk, Bowkett, Branston, Mrs Brock, Bull, Choules, Crew, Dawson, Denham, Edwards, Fullam, Hannaford, Lyons, Macdonald, Martin, Morris, Owen, Payne, Pearson, Robson, Ruffle, Sheldon, Spackman, Sutton, Tippins and Wardle

(26 Members)

Abstain:

Councillors Baldwin, Crow, Donovan, D Henson, Mrs Y A C Henson, Leadbetter, The Right Worshipful the Mayor Councillor Newby, Mottram, The Deputy Lord Mayor Councillor Prowse, Shiel and Winterbottom.

(11 Members)

The Notice of Motion was carried.