NORTH East business leaders are calling for Chancellor George Osborne to scrap “damaging” plans to introduce regional pay.
Paul Callaghan, founder of The Leighton Group, is among a group of high-profile North East business figures calling on the Chancellor to kick the plan into touch.
Campaigners say regional and local public sector pay will hit the North East economy hard by reducing consumers’ spending power.
Now, 10 North East businesses from a range of sectors have written to the Chancellor urging him to reject the plans which they believe will weaken confidence and affect the region’s economic recovery.
“This policy risks weakening consumer confidence and demand even further, undermining regional growth and making it harder for the UK economy to get back on its feet,” says the letter.
“We do not believe that reducing the pay of public sector workers such as nurses and teachers in our regions will boost economic growth.
“Instead it could lead to a brain drain and a loss of skills which would harm our region’s valuable public services and the wider economy.”
The signatories urge the Government to concentrate on bringing forward infrastructure spending and “not risk a divisive and harmful policy” such as regional pay.
In July, a study by the New Economics Foundation suggested that regional and localised pay could cost the North East economy up to £761million per year.
The Chancellor is expected to report back to the House of Commons this autumn.
“The spending power of our customers has an impact on our companies’ success and how many people we can employ,” says the letter.
“It is in this light that we urge the Government to reconsider its proposal to introduce regional or localised pay for the public sector.
“This policy risks weakening consumer confidence and demand even further, undermining regional growth and making it harder for the UK economy to get back on its feet.
“There are many things ministers could do to support economic growth, such as bringing forward much-needed investment in infrastructure.
“Now is a time for the country to unite and focus on growth – not risk a divisive and harmful policy such as this.”