If the principal justification for the introduction of local pay rates in the public sector concerns the proposition that the private sector in areas such as Wales and the North-East of England is unable to recruit suitable labour as it is creamed off by the public sector, there would seem to be a flaw in the argument. To wit, by definition these are areas where (1) there are few private sector jobs and (2) there is a substantial pool of unemployed labour. It is less than credible to suggest that reducing pay rates in the public sector will encourage the private sector to expand its operations, particularly as the economies of such areas would be adversely affected by the diminution of centrally sourced finance.
In essence, the government is proposing to attack the symptoms of economic decline rather than the cause. Inevitably, it will not succeed in revitalising the private sector in such areas, as the government must be well aware. For the sake of saving a few pennies of public expenditure, the areas concerned are to be condemned to ongoing economic decline, reinforcing the split between South-East England and the rest of the UK.
Does nobody do any thinking in Her Majesty's Treasury?