Regional pay

I asked the First Minister the following: Q1 Leanne Wood: What representations has the First Minister made to the UK Government regarding the introduction of regional pay for civil servants? OAQ(3)1281(FM)

The First Minister (Rhodri Morgan): This matter comes up from time to time in discussions with Government Ministers. We do not advocate the approach of setting two-tier pay. We have long accepted the need for London weighting, but if you start introducing minus weighting for areas far away from London, that will exaggerate the distinction between London and south-east England and the rest of the country.

Leanne Wood: I welcome your answer, First Minister. As you know, the UK Government has already introduced regional pay as a pilot scheme in the Ministry of Justice. The plan is to roll out regional pay throughout the non-devolved civil service. Do you agree that, if it is rolled out, it is inevitable that gross domestic product in Wales will sink and the wealth gap between Wales and the rest of the UK, which is already too great, will grow over time, which would be disastrous for Wales? Do you agree that the policy severely undermines the Government of Wales’s efforts to reduce poverty and raise our GDP? Clearly, this is not a devolved matter, but we do have a great interest in it. Will you agree to raise the matter with your colleagues in London as a matter of urgency?

The First Minister: We have done that pretty consistently. The Governor of the Bank of England commented last week that we need a period of slower economic growth in the UK to squeeze inflation out of the system. Inflation tends to be at its highest in London and south-east England, especially asset price inflation and pay inflation, because you have very high pay in the city—at least you did until very recently. That tends to make it difficult to recruit civil servants and other public servants, which causes a problem with running public services in London. London weighting copes with that, but if you start reducing pay in areas away from London, you will exaggerate the inflationary forces in London and south-east England and the degree to which Mervyn King thinks you have to slow the economy down to correct inflation.