Cost of living and national pay rates

I've always felt national pay rates are one of the worst examples of union power. The lack of flexibility means that workers in the more expensive areas like the South East struggle to get by, despite extra payments, whilst those in the poorer areas of the country have an above median salary. This was brought home to me about 20 years ago when we were on holiday in Cromer, Norfolk. At the time the Great Wiseone was a teacher in the High Wycombe area, where we live, and there was no way we could have bought a house on her salary. As a teacher she had always fallen for, and supported, the union argument of national pay rates until she saw the cost of housing in Cromer and realised she could have afforded to buy a reasonably goo 3 Bed house on her salary.

I was reminded of this today while visiting our call centre in the Dearne Valley. I grabbed a Salmon sandwich and cappuccino for lunch and, without thinking, offered a £20 note as I only had a few pounds in change and I was expecting something well over £5 – I was extremely pleased when it came to £3.

A couple of nice anecdotes, I know, but they are relevant to today's inflation figures:

Rising food and energy prices could push UK consumer inflation above 4% this year, the governor of the Bank of England has warned.
He was speaking after the Office for National Statistics (ONS) said the Consumer Prices Index (CPI) rose by 3.3% in May, up from 3% in April.

Brace yourself for more large pay claims from the last bastions of unionisation, public service organisations; expect them to demand above inflation national pay rises, despite some of their members being comfortable and others struggling – a sort of postcode lottery that they so despise when it comes to offering NHS services. Because the claims will be so large the Govt will be pushed in to a corner and will be expected fight by the rest of us. This will probably lead to a series of strikes with Gordon eventually caving in to a face saving formula that leaves 2 losers – Those of us in private industry who will have been inconvenienced and will have to cough up the extra money and those who live in the South East and other expensive areas.

Another reason for small government and methods of funding public services that rely on local conditions to set pay scales eg school vouchers.