BRINGING Exeter’s wage levels in line with the national average would bolster the city’s economy by more than £140 million a year, figures indicate.
The scale of the additional potential spending power generated for householders struggling with rising living costs and cash-strapped public services is likely to fuel the current debate over regional pay, which it is feared would hit incomes.
The coalition Government has proposed to end national wage rates and ‘localise’ public sector salaries to make them “more responsive to local labour markets”, and to prevent private firms being “crowded out”.
But in a low wage economy like the South West, critics have warned the measure would see public sector pay dragged down, and take millions out of the economy.
It comes amid moves by 19 NHS trusts across the region to create a regional pay system which would see wage cuts for NHS staff.
The Royal Devon and Exeter NHS Foundation Trust and Devon Partnership NHS Trust are among those signed up to the South West Pay, Terms and Conditions Consortium, which has been branded a ‘cartel’ by critics.
Figures compiled from the Office of National Statistics already show that average annual pay in Exeter standing at £23,155 is £3,460 lower than the national England average of £26,615.
With 40,800 residents recorded as being in full-time employment, raising the salary to the national level would be worth £141 million a year.
Across Devon, where the average salary is £22,514 it would generate an estimated £971 million – almost £1 billion a year.
Average salaries vary across the county, but all are below the England average.
Average annual pay by area is:
Exeter - £23,155
East Devon - £23,293
Mid Devon - £21,958
Teignbridge - £22,705
It is set to spark calls for steps aimed at improving wage levels, and stiffen opposition to measures that could widen the pay gap.
Income levels in Devon have been highlighted by the county council with a parliamentary inquiry into rural communities.
In written evidence to a Commons select committee the authority said wages were among the lowest in the country, and in some parts 64.5 per cent of the national average.
It stated: “We estimate that if Devon’s wage levels reached the national average, there would be an additional one billion pounds circulating in the local economy each year. Clearly, this would have the most fundamental impact on the financial viability of all rural services which often are more expensive to provide: higher housing and fuel costs (especially in the absence of mains gas) are well documented.
“Hence, measures designed to improve productivity and wage levels should have the highest priority.”
Proposed local pay deals for state-funded workers were rejected by delegates at the Lib Dem conference, amid warnings it would hit wages and take money out of the local economy.
And Labour have also opposed the moves, although critics argue the party introduced local pay in the courts service when in power, and claim it paved the way for the NHS changes.
But Conservative Employment Minister Mark Hoban defended the Government stance on regional pay in a briefing at Westminster.
He said: “There are areas of the country where you see quite big public sector private sector differentials.
“There’s a question whether that does squeeze out the private sector. Regional pay is nothing new. The court service does it already.
“So there are some very clear examples where it does work.
“It’s out for consultation at the moment and we await the outcome of that consultation before making our decision.”