Local public sector pay rates could save taxpayers £9 billion

Embargoed: 00:01 Sunday 31 July 2022


  • TaxPayers’ Alliance proposes reforms to national pay bargaining in the public sector, saving £8.8bn and making the system for pay deals fairer.

  • The gap between public and private sector pay costs up to £20bn a year, meaning additional costs for taxpayers and pay rise disparity within regions.

  • Campaign group outlines new policy of regional pay bargaining, with savings used to raise the personal allowance and cut income tax.


In light of ongoing disputes with trade unions about public sector pay rates, new research from the TaxPayers’ Alliance (TPA) has found that introducing localised pay could save taxpayers almost £9 billion a year. This would be enough to raise the personal allowance by £600 and cut income tax by 1p.

On average, public sector employees receive higher pay than the private sector in every region of the UK, with this disparity potentially costing £20 billion a year. The campaign group is proposing a reform to national pay bargaining to introduce region-based public sector pay.

Currently, public sector pay increases are decided at a national level. A localised pay system would mean that rises would no longer be uniform across large sections of the public sector. Instead, they would be relative to circumstances in their region, bringing them more into line with the private sector. In low-cost regions, staff wouldn’t be guaranteed excessive rises. In high-cost regions, public sector employers could reduce reliance on expensive agency staff.

The analysis showed that, while private sector pay fell by an average of 2.3 per cent in 2021, public sector pay rose by an average of 5.8 per cent. The highest public sector pay hike was in Scotland, where public sector workers saw an average increase of 9.7 per cent, while private sector employees saw a 4.4 per cent fall in pay. Average pay went up across the country in the public sector, but in the private sector fell in every region except the North West and the West Midlands. 

With inflation skyrocketing, expecting struggling taxpayers in the private sector to contribute to higher public sector wages across the board is unsustainable. To limit the cost to the taxpayer, the TaxPayers’ Alliance is calling on the government to introduce regionalised pay rates for public sector workers. 


Key findings:

  • Introducing regional pay bargaining could save £8.8 billion a year.

  • The pay disparity between the public and private sector costs around £20 billion per year.

  • In 2021, the median UK wage for the public sector was £28,627 while the median private sector wage was £25,085, a gap of 14.1 per cent.

  • Median annual gross pay was 31 per cent higher in the Scottish public sector compared to the private sector, the largest gap in the UK.

  • In London, public sector pay rose by 3.4 per cent while private sector pay fell by 5.7 per cent.

  • Moving all London civil servants to the North East, the lowest paying region, could save almost £450 million per year.

  • Distributing grade six and seven civil servants evenly across all regions would save almost £116 million in salary payments per year.

  • The Department for Environment, Food and Rural Affairs offered the largest single pay rise of any government department at 68.5 percent. Over the same period, the average pay rise in the department was 2.5 per cent


John O’Connell, chief executive of the TaxPayers' Alliance, said:

"It’s time for politicians to get real when it comes to public sector pay.

“National pay agreements see public sector workers enjoy a far more generous deal than in the private sector, protecting their pay rises at the expense of taxpayers whose own salaries are falling.

"The government should scrap this one-size-fits-all approach and introduce much fairer local pay rates.”

TPA spokespeople are available for live and pre-recorded broadcast interviews via 07795 084 113 (no texts)


Media contact:

Elliot Keck
Investigations Campaign Manager, TaxPayers' Alliance
[email protected]
24-hour media hotline: 07795 084 113 (no texts)


Notes to editors:

  1. Founded in 2004 by Matthew Elliott and Andrew Allum, the TaxPayers' Alliance (TPA) campaigns to reform taxes and public services, cut waste and speak up for British taxpayers. Find out more at www.taxpayersalliance.com.

  2. TaxPayers' Alliance's advisory council.

  3. The TaxPayers’ Alliance has launched a petition calling on the government to bring the income tax cut forward and double it to 2p.
This website uses cookies to ensure you get the best experience.  More info. Okay