As regional pay is in the news, here are my three quick thoughts on the matter:
1. Regional pay already exists in the public sector; I know because I used to receive different pay from colleagues in the same job and on the same pay-scale point elsewhere in the country. In my case, it was called “London weighting”. The sensible question therefore is not “should there be regional pay?” but “is our current system of regional pay perfect, and if not how should it be changed?”
2. Regional pay does not have to mean regional pay bargaining. Regional pay can go along with national pay bargaining if you don’t want to use it as a tool to weaken employee negotiating power (though if you do, chances are you’ll call it weakening of the power of trade union bosses).
3. Regions are a poor unit to use if improving public services is a major aim. For example “London” includes both Tower Hamlets and Kensington. If you want to let a school in the most deprived area pay teachers more in order to attract the highest quality staff they often otherwise lose out on to other areas, you don’t just need to vary London pay compared to the rest of the country. You need to allow pay in Tower Hamlets to be higher than for Kensington. Some teachers love the challenge and greater purpose of teaching in the toughest schools, but generally flat pay rates mean teachers are more attracted to those schools where teaching is easiest rather than attracting the best to the schools where the kids need the best teachers the most.