2:42pm Saturday 17th March 2012
© Press Association 2013
Trade unions have reacted with fury to plans by George Osborne to reduce public sector salaries in poorer parts of the country.
The Chancellor is expected to use next week's Budget to announce he is accelerating moves, floated in December, to close the gap with wages paid by firms. He believes the so-called public sector "premium" - which the Treasury puts as high as 18% in some places - is stifling private sector recruitment in areas with low unemployment.
However union leaders described the move, which could affect some pay packets as early as next month, as a "cruel" attack on workers that would spark an exodus and hit services.
Shadow chancellor Ed Balls warned that axing national pay setting would result in an anarchic "free for all" competition for staff that would drive up the cost to the taxpayer and Business Secretary Vince Cable, while endorsing the principle of the policy, urged caution over the possible effects of its implementation on career progression.
As last-ditch political wrangling continued within the coalition over the detail of Wednesday's package - the pay issue emerged as one area Mr Osborne is determined to prioritise.
Late last year he wrote to pay review bodies across the public sector asking them to draw up plans by July for regional pay bargaining and the potential scrapping of national deals. Now he is expected to announce that three departments that employ 140,000 civil servants could sign up within months - with changes possibly backdated to next month's pay packets.
It is still to be determined whether the rules would apply only to new employees though there are expected to be reassurances that no current staff will see their pay cut.
The Department for Work and Pensions, the Home Office and the Department for Transport are in line for the change as they are the first to emerge from a two-year pay freeze. It would then be opened up to the rest of the public sector as that restriction was lifted.
Lining up to condemn the move, trade union anger was further fuelled by reports that Mr Osborne was ready to reduce the 50p rate of income tax on salaries over £150,000. TUC general secretary Brendan Barber said: "This Budget is shaping up to be a giveaway for the super-rich and a takeaway from Britain's hardest hit regions."
Public and Commercial Services union general secretary Mark Serwotka said the combination of the measures "would not only be cruel, it would be economically incompetent and counterproductive. He added: "Local economies - already suffering from Tory-led, politically motivated butchery - are crying out for investment, not more cuts."
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