Liz Truss last night revealed plans to cut pay for public sector workers – including teachers and nurses – outside the wealthy southeast in a bid to save £11bn. Labour said the idea would sound the death-knell for the government’s “levelling-up” agenda by widening the regional income gap.
The Tory leadership frontrunner presented her plan as a “war on Whitehall waste” that would also see civil service holiday entitlements slashed.
But she was forced to admit that she would have to replace national pay settlements with regional awards for all public sector workers over a period of many years.
The foreign secretary’s proposal for regional pay boards to set wages in line with the local cost of living sparked fury among unions.
In a warning of confrontation with Whitehall if she succeeds Boris Johnson on 5 September, the PCS civil service union said she could expect “opposition every step of the way”.
And Labour accused her of “declaring war on herself with her fantasy recipe for levelling down”.
Deputy leader Angela Rayner said Ms Truss’s plans would result in “a race to the bottom on public sector workers’ pay and rights”.
Ms Rayner warned: “Her ‘tailored’ pay plans would level down the pay of northerners, worsening the divide that already exists. This out-of-touch government’s commitment to levelling up is dead.”
The row came as Ms Truss’s campaign to seize 10 Downing Street won a major boost with the endorsement of third-placed candidate Penny Mordaunt.
And a poll by Redfield & Wilton Strategies suggested she could beat Sir Keir Starmer in a general election, with 37 per cent opting for Ms Truss as best PM against 36 per cent for the Labour leader. Faced with a choice between Rishi Sunak and Starmer, those questioned split 40-33 in favour of Sir Keir.
Ms Truss initially promised to save up to £8.8bn annually by “adjusting” officials’ salaries to match living costs in the areas where they work.
But aides were forced to amend the claim after experts at the Institute for Government pointed out that the foreign secretary’s target was almost as much as the total annual civil service pay bill of around £9bn.
They clarified that regional pay would initially be introduced only for new starters in the civil service, delivering a tiny fraction of the claimed sums. If successful, it would be rolled out over a number of years to cover all public sector workers, with the £8.8bn target reached only in the long term.
IFG programme director Alex Thomas told The Independent: “Public sector pay in 2020-21 was £235bn; civil service pay is about £9bn. So if you applied this only to the civil service then it would save maybe 3 to 4 per cent of what the Truss campaign claimed.
“This is a very long-term plan and will mean lower pay for public sector workers in areas where the cost of living and median pay is lower.
“It’s not a ‘war on Whitehall’; it’s a significant new approach to all public sector pay over a very long timeframe.”
Ms Truss said that replacing national pay settlements with regional awards would save private businesses in the English regions from being “crowded out” by being forced to compete with relatively high salaries for state employment.
And she said she would save at least another £2bn by placing a 25-day cap on the average civil servant’s annual leave, bringing it down from the current 27 days and in line with private sector averages.
Efforts would also be made to move further civil service jobs out of the capital to add to the 22,000 already due to leave by 2030, delivering savings of £153m in office costs and London allowances, she claimed.
