Public sector pay gap 'increases'

 8 May 2011 Last updated at 20:49 ET  Policy Exchange director Neil O'Brien said public sector pay had got "hugely out of control". Pay in the public sector in the UK has risen faster than in the private sector, a report for a think tank says.

The centre right Policy Exchange said public sector wages were rising while many in companies were seeing "drastic cuts" in their standard of living.

It said the gap between equivalent workers in both sectors was more than 30% when based on hourly pay.

But the TUC said the report was aimed at creating divisions between public and private sector workers.

The report said the gap - or pay premium - between what a typical public sector worker earns above their equivalent in the private sector has increased by 4% to 16.5% over the past two years for salaried workers.

But it says this has risen by 35% for workers paid by the hour, despite efforts by the government to reduce the public wage bill.

At the same time real pay has fallen for the bottom 30% of private sector workers.

The report found that in Scotland, Wales, the North East and North West of England, a typical public worker can expect to be paid a fifth more than the typical private sector worker.

It says the only group where private sector pay was higher was for the top 10% of earners.

Policy Exchange director Neil O'Brien said public sector pay had got "hugely out of control".

"It is unreasonable and unfair to expect private sector workers to make all the sacrifices," he said.

"We need a much better-balanced system of public pay, with organisations like the NHS and schools given greater freedom to vary pay so they can attract staff but also get value for the taxpayer."

TUC leader Brendan Barber said both sectors were facing pay freezes, job losses and pension devaluations.

He said: "The government's policies of deep, rapid cuts are doing grave damage to the whole economy, and ordinary workers in every kind of job are suffering the longest decline in living standards for decades."

Banking sector gives up PPI fight

9 May 2011 Last updated at 03:37 ET  The Financial Services Authority believes the PPI compensation bill could be ￡4.5bn The banking industry has abandoned a legal fight over the mis-selling of payment protection insurance (PPI).

The British Bankers' Association, which fought the case, said it would not appeal after losing a court challenge against new rules on mis-selling.

Separately, Barclays Bank said it had set aside ￡1bn to pay PPI compensation, and RBS said it would not contest the court ruling.

Last week, Lloyds Banking Group made a ￡3.2bn provision for possible claims.

PPI policies are supposed to cover loan repayments if someone falls ill, has an accident or loses their job.

But the policies were mis-sold, many to self-employed or unemployed people who would not have been able to claim, and to consumers who did not realise they were taking out a policy.

Last month the High Court ruled that the banks were at fault.

'Important step'

In a statement the BBA said: "In the interest of providing certainty for their customers, the banks and the British Bankers' Association have decided that they do not intend to appeal."

Continue reading the main story

We don't always get things right: when we get them wrong, we apologise and put them right”

End Quote Bob Diamond Chief executive, Barclays Bank Royal Bank of Scotland confirmed on Monday that it would also be addressing customers' complaints, but said it had yet to decide how much to set aside for possible claims.

RBS said in a statement: "We are already in discussions with the FSA to clarify its requirements and the implications for our customers and shareholders.

"This is an important step for all UK banks in our efforts to restore the confidence and trust of consumers," it said.

HSBC has yet to make a statement on the issue following the BBA's announcement. The bank is due to release a first-quarter trading update later on Monday

'We apologise'

Barclays chief executive Bob Diamond said the bank would now begin the process of compensating customers.

"We don't always get things right: when we get them wrong, we apologise and put them right.

"We have taken this decision because it is in the best interests of our customers, as well as for Barclays and its shareholders. Creating certainty, particularly regarding past issues, is of benefit to all parties," Mr Diamond said.

The Financial Ombudsman Service welcomed the banks' decision to deal with the mis-selling.

"It's very good news that the banks will not be appealing the High Court's clear-cut judgment, which endorsed the ombudsman and FSA's approach to PPI complaints," said chief ombudsman Natalie Ceeney.

"Consumers should come to us at the ombudsman if they're unsure about what to do next. Meanwhile we will be working with the banks, over the coming weeks, to ensure that consumers' complaints are dealt with fairly and promptly."

The Financial Services Authority has estimated that banks will have to pay up to ￡4.5bn to settle the thousands of claims.