CHANCELLOR George Osborne is understood to be resurrecting discredited plans for regional public sector pay in his Budget tomorrow.

The TUC fears the Chancellor could be seeking to devolve powers in order to attack the minimum wage and said that the policy would mean a “race to the bottom,” driving down wages in areas already suffering low growth — and affecting workers in both public and private sectors.

It would be “a complete false economy. The public sector often sets the going rate for the private sector, and any moves to localise pay will serve only to reduce consumer spending and hurt businesses,” said TUC general secretary Frances O’Grady.

“Breaking up the national minimum wage would carry similar risks, leaving workers in many parts of the country facing poorer pay in depressed local economies.

“Regional pay-setting is not the way to deliver decent wages — a government that is genuinely committed to delivering fair pay would introduce far stronger national rises in the minimum wage and support extending collective bargaining across the UK.”

New TUC research published yesterday found that the regions are lagging far behind London in terms of economic growth and job creation.

Economic recovery is weakest in north-west England.

“Apart from the obvious unfairness of paying a nurse in Gateshead less than one doing the same job in Gloucester, it would make it much harder for hospitals in poorer areas of the country to attract and retain good-quality staff,” said Ms O’Grady.