As expected, the Chancellor announced in his Budget speech today that he was looking to see whether he could “make public sector pay more responsive to local pay rates”.

There were precedents to such a move, he said, as it was something that the last government had introduced into the Court Service, while London weighting already existed across the public sector.

As a result, George Osborne said that he had asked a number of independent pay review bodies to look into the issue. The idea was, however, that some central departments would have the option of moving to local pay arrangements for those civil servants whose pay freezes ended this year.

 

But Catherine Wilson, employment partner at law firm, Thomas Eggar, warned that, in reality, there was “no culture or history” of going down this route in the public sector and any such move was likely to meet “significant union resistance”.

 

Moreover, she said that, while regionalised pay rates were not necessarily discriminatory in and of themselves, selective implementation could have “adverse consequences”.

 

“For new or perhaps promoted staff, salaries could be cut, but this could also lead to equal pay issues,” Wilson explained. “Offering a promoted member of staff less than others doing the same role based on the market forces argument could risk equal pay arguments, particularly if more female employees are affected when compared to male incumbents.”

 

Equally, deciding to offer reduced regional pay rates for female-dominated jobs but not others could risk public authorities being subject to arguments of unlawful sexual discrimination.

 

“The local government and NHS have been hit with a large number of very expensive equal pay claims over recent years, so the public sector will need to tread very carefully to avoid similar expense,” Wilson warned.