Thursday, 7 October 2010

5 bed house - yours for £132,500

Here's a sound five bedroom house, with off-street parking, decent sized gardens for the kids to play in and close to the city centre and hospital - yours for £132,500. There's only one drawback; it's in Middlesbrough.

It's always come as something of a surprise to Labour that Britain's economy is still not homogenous. When they introduced the national minimum wage, they applied the same threshold across the nation. But the distorting effect of intervention at the lower end of the labour market is as nothing to the effect on the public sector.

By imposing national pay scales in the NHS, local authorities and civil service, Labour have inflated the net worth of public sector workers in areas of the country with low land values by tying them to rewards calculated more correctly for those in areas with high land values. London weighting, which I think is about £2k a year, is becoming more irrelevant as living costs in the South East generally remain stubbornly high. 

If you're a nurse, or a teacher, why wouldn't you want to move out of London to Middlesbrough? Apart from losing London weighting, you'll probably move to a higher-paid post anyway, as most people do. No wonder the public sector are the new elite in the NE and NW Labour heartlands, areas that take billions in taxes from London and the South East to support this distorted economy. 

National pay grades and scales must be scrapped if Cameron is to rebalance the economy fairly; as must the national minimum wage. Local Wages Councils can set local minimums county by county if so desired, though perhaps few would be foolish enough to do so. 

London and the South East is overpaying tax; reducing the economic distortions built-in by Labour will ease their burden, allow markets to operate freely and improve national competitiveness. You know it makes sense. 


Anonymous said...

Hmmm - not so sure about this Radders. The NE & NW have lower land and housing costs as a direct result of the employment situations in these areas that have prevailed over centuries with many different governments. Britain has always been a "London centric" Kingdom and with the might of the financial institutions based there, it will remain so.

The industrial heartlands of this country have always and forever had a raw deal and the only compensatory factor has been the lower price of houses.

Public sector employment during the New Labour years was used as a gigantic gerrymandering scheme, employing 700,000 additional workers and paying and pensioning them well. Well enough to make them vote for the paymaster.

Even though I *hate* Labour for what they have done, even I cannot pin your accusations on them. Moreover, to make national distortions in wages would only serve to disadvantage the northern regions still further.

In the eighties, my southern friends would say to me "if you don't like the north and its lousy pay scales, then move south". So I say to you in return..."if you don't like the high cost of living in the SE, then pack up and come north!"

Me? I decided on the best of both worlds - I live in the north and work in the south.

Coney Island

Anonymous said...

"Local Wages Councils" sounds like another 30 odd qangos to me.

Blue Eyes said...

The industrial areas did not have a raw deal when they were the motors of the economy! The big cities (Manchester, Liverpool, Newcastle, Birmingham) had at least their fair share of wealthy types. Nobody suggested at that time that people in Didsbury and Chorlton should be taxed to subsidise the lifestyles of the middle class in inner London.

Mr Raedwald is quite right. If "the regions" were set free to set their own levels of taxation and public remuneration then they could compete to attract business and development and climb out of their current hole. There is nothing intrinsically poorer about the North that means it should forever be subsidised. That is pure defeatism.

Decision-making, taxation and spending should be pushed down to the most local level. Some areas would be sensible and kick-start themselves. Others would elect idiots. It's called taking a bit of responsibility.

Robert said...

And then there are the gold plated pensions and retirement at 60 which is becoming rarer in the private sector thanks to Brown's pension raid.

They are also having a two year wage freeze when private sector workers are having wage cuts.

If this government is serious about cutting the deficit it should take an ax to public sector pay and benefits. They could do worse than follow the Irish example.

But they are not serious about public spending which is set to rise over the next 5 years.

Anonymous said...

OK, simple example. Social worker in SE on £30k. Social worker in NW on £15k. Guess what's gonna happen other than riots.

Go figure??

Coney Island

Raedwald said...

Plasterer in London making £500 a day, plasterer in Burnley making £200 a day and what's happened?

Well, er, nothing. Because wages are relative to land values and living costs. Burnley isn't bereft of plasterers and London isn't full of Northern plasterers driving down wages.

Even the effects of 'cheap' Eastern European labour & crafts haven't driven down wages appreciably in the 'legal' sector - which still by far exceeds the grey and black economy

The market works. National pay scales just distort it.

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