Civil servants may move out of the capital

More than 20,000 public-sector workers could be transferred out of London as part of a package of measures to boost the regions.

The Chancellor announced that he had asked Whitehall departments and other public bodies to submit proposals for relocating staff by 2005.

Gordon Brown said 10,000 civil service posts had recently been moved out of the capital and indicated that the more would be soon. "Successful relocation out of London by private companies suggests public-sector jobs transferred to regions and nations could exceed 20,000, to the benefit of the whole economy," he said.

Mr Brown said that a regional price index would be published to show variations in inflation rates. That move follows a Whitehall review that found public-sector wages varied far less by region than those in the private sector. It said there was "significant scope" to make public-sector pay more flexible.

But Adam Price, Plaid Cymru's Treasury spokesman, said the proposed index could be disastrous. "This will create two-tier pay scales and will attract key workers like nurses to relocate in the South-east of England, putting further strain on an already overstretched NHS," he said.

Mr Brown said an extension of regional science and industry councils was being considered and, for the first time, the nine English Regional Development Agencies (RDAs) had been involved in preparatory work for the Budget. "The more each of the UK's regions and Scotland, Wales and Northern Ireland enter into global competition, the more we must encourage them and help them harness their distinctive strengths, overcome their weaknesses and, with a modern, locally led regional policy, rise to the challenge of making their skills, innovation and enterprise world-class," he said.

Sir Graham, who leads the RDAs on Treasury issues, said: "I'm pleased the Treasury has considered our suggestions seriously. We look forward to repeating this exercise in future years to help the Government achieve sustainable economic growth in all UK regions."

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