The boom in property prices in London and the South of England may in part be the result of government intervention to keep interest rates low, at a time of falling stock prices, while keeping the economy circulating and people in employment. Money instead has been invested in property in what is called buy to rent, on the assumption that people will be able to pay higher rents because there will be no increase in unemployment in the South of England (ie these are the unintended consequences of the government's relatively successful Keynesian interventions to protect the UK against a capitalist crisis.)
This report on severe recruitment problem for public sector workers in the capital is a sign that the efforts to run a partially centralised economy even in a country of only just over 50 million people, is breaking down. This is likely to strengthen New Labour's aversion to central planning and preference for central guidance of market mechanisms. Chris Burford _______________ Larry Elliott Wednesday October 16, 2002 The Guardian The government should abolish national wage deals for public sector workers and immediately pay teachers and nurses in central London 50% more than their colleagues in the north, one of Britain's leading economists said yesterday. Professor Andrew Oswald of Warwick University said the struggle to fill public sector jobs in the expensive parts of the country would only end when pay scales mirrored those in the private sector, where wages took account of regional variations in the cost of living and the quality of life. "We need to arrange pay to attract the right sort of people," he said. "With a national wage scale you just can't do that." Pointing to the shortage of public sector workers in some parts of the country, Prof Oswald said the reason was the pretence that a public sector wage of £25,000 bought the same everywhere. "The fault is ultimately the government's. The answer is straightforward: national pay scales have to go. Forced on Britain long ago by trade unions and bureaucrats, and today held in place not by logic but by political pressure from the north and Wales, in 2002 national pay scales are doing damage to our nation." Prof Oswald said that southern nurses and police officers needed a large wage rise relative to those in other areas. He supported a 40% pay rise for firefighters, but only for those working in the south. "Because local authorities have to compete for workers with private sector firms, public sector wages must be allowed to vary much more across Britain's regions. He said it was not possible to deal with the problem by indirect remedies such as cheap loans for key workers and that the practical problems of differentiating pay could easily be overcome.
