Liz Truss plan means lower pay for public service workers in poorer areas

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.

But PCS general secretary Mark Serwotka said: “If Liz Truss is elected and tries to go ahead with these proposals, she’ll face opposition every step of the way.

“Civil servants are not a political tool to be used and abused for one person’s ambition; they are the hard-working people who keep the country running, day in day out, and they deserve respect.”

And Dave Penman, general secretary of the FDA union for senior officials, said Ms Truss’s pledge showed her priorities were “completely divorced from reality”.

“The fact that she’s pledged to move more jobs out of London while at the same time pledging to cut regional pay for those very same jobs is just astounding,” said Mr Penman.

“Instead of focusing on ensuring the civil service is attracting and retaining the right people to deliver the high-quality public services the country relies on, Liz Truss would rather take a page out of the P&O Ferries playbook and announce cuts to pay and terms and conditions in the press.”

With ballot packs for the Tory leadership election landing on Conservatives’ doorsteps from Monday, Ms Truss made a further appeal to the right-leaning sympathies of the 160,000 party members who will choose the next PM.

She promised to tackle “left-wing groupthink” in government by abolishing 326 posts devoted to promoting diversity and inclusion within civil service ranks, at a saving of up to £12m.

An official strategy produced by Mr Johnson’s government earlier this year said the roles exist to ensure that the civil service draws effectively on talent from “the widest possible range of geographical, social and career backgrounds” and that “people from minority ethnic backgrounds, those living with disabilities and those who have experienced disadvantage in their early lives can flourish in public service”.

However, Ms Truss said that the posts “distract from delivering on the British people’s priorities” and she would instead tell officials to focus on “delivery on manifesto commitments and frontline public services”.

She also vowed to abolish taxpayer-funded time for public service officials to carry out trade union duties, which she said would save a further £137m annually.

She said: “As prime minister I will run a leaner, more efficient, more focused Whitehall that prioritises the things that really matter to people and is laser-focused on frontline services.

“There is too much bureaucracy and stale groupthink in Whitehall. If I make it into Downing Street, I will put an end to that and run a government that focuses relentlessly on delivering for the British public and offers value to hard-working taxpayers.

“I have shown in my time in government that I’m prepared to take on the Whitehall orthodoxy and get things done. The British people can trust me to deliver on my promises and tackle the cost of living immediately.”

Minister for government efficiency Jacob Rees-Mogg – a prominent supporter of the foreign secretary’s bid for the Tory leadership – said that he was “delighted” by her determination to continue his work of rooting out “woke indoctrination” inside the civil service.

But Mr Penman said that Ms Truss was recycling old Conservative policies that had been tried and failed in the 1980s and 2010s.

“Most civil servants would welcome private sector comparisons on pay, because the government’s own evidence shows that, at almost every level, they are paid less than their private-sector contemporaries,” he said.

“As the government faces the huge challenges posed by a new war on mainland Europe and recovering from Covid backlogs, what we need from a prime minister is solutions for the 21st century, not recycled, failed policies and tired rhetoric from the 1980s.”