Chancellor Gordon Brown announced two measures in his Budget speech which could threaten the pay of public servants. He outlined a review to examine the re-location of staff out of the South East and into other regions. He also announced measures to ensure that public service pay is more responsive to the regional labour market.Past Civil Service relocation reviews have led to over 10,000 civil service jobs being transferred out of London. It is now proposed that a further review should be carried out by Michael Lyons, Director of the Institute of Local Government Studies at Birmingham University. He will report his findings in time for the next Spending Review. His remit will include not only the civil service but non-departmental bodies and other public services. Based on the experience of the private sector in re-locating staff, it is estimated more than 20,000 posts could be re-located.
Making public service pay more responsive to the regional labour market will be achieved by requiring Pay Review bodies to take account of regional and local factors. In many areas of the country private sector pay levels are substantially below those of the South East. Some 40% of the public sector are covered by Pay Review bodies. This move is likely to create a regional pay system which the public service unions strongly oppose. The unions support national pay with additional allowances for London and other areas. A former senior civil servant commenting on the two measures said: “Moving people out of London into the regions where there are lower rates of pay is likely to run into very stiff opposition. If people are moved to the depressed areas where the pay is likely to be lowest, morale could be severely affected “