Key workers may get more pay

Ministers are studying plans to pay teachers, health service staff and other key workers even more if they live in London in a bid to defuse a potential wages timebomb affecting up to five million employees.

Leaked documents show Chancellor Gordon Brown has been given stark evidence of the growing pay divide throughout the South-East between private-sector workers and their public-service counterparts.

Figures reveal that key public-sector workers, including nurses, teachers and council employees, are losing out by at least £2,400 a year.

Since coming to power, Labour has moved on an ad-hoc basis to boost wage levels in the capital, with differing increases for the police, nurses, civil servants and teachers.

A formal "London weighting" scheme for the public sector was abolished under the Tories in 1982.

Ministers may now copy "flexible" pay schemes operated by some big private employers to retain staff in London and the South-East.

The Treasury study comes as teachers prepare to strike in the capital tomorrow over their London allowances.

Ministers are keenly aware of the problems of recruiting key staff in London and the South-East, where the cost of living, particularly in housing, is much higher than in other parts of the country. A confidential paper prepared for Treasury ministers states: "In areas of high average wages (London and the South-East) gross weekly pay is higher for workers in the private sector. The situation is the inverse in the rest of the country, where average pay in the public sector is higher. The pattern applies to both males and females."

One problem for ministers if they give staff in the South-East more pay is that they will face union claims that they are subverting the national pay-bargaining structure for the entire public sector.

There is also concern that staff could leave the North and Midlands to work in London, leaving some areas bereft of key staff.

Ministers are in no doubt, however, that something has to be done to boost recruitment levels, with hospitals and schools in London relying increasingly on freelance agency staff. The booming property market has also made it impossible for large numbers of public-sector staff to get a first foot on the housing ladder, while rents are typically 54 per cent higher in London than in the rest of the country.

Although the average male publicsector worker earns £200 a month less than his equivalent in the private sector, the pay gap is even greater for managers. In the South-East, a manager is paid an average of £530 a week in a hospital, school or council, while somebody at a similar level in a private company would receive £780.

? Thousands of police officers are today due to attend a mass protest in Westminster over the Home Secretary's plans to reform the service.

More than 5,000 off-duty officers from across Britain will meet outside Parliament to lobby MPs about controversial proposals to shake up their pay structure and introduce a new breed of civilian wardens with police-style powers. Last month rank-and-file officers voted by 10 to one to reject David Blunkett's pay offer, which would slash overtime and remove a range of allowances.