The government's proposal to introduce different salary levels for public sector workers according to where they work in the country is a "deliberate attack" on the workers, shadow Treasury chief secretary Rachel Reeves has said.
As MPs took part in an opposition-led debate on 20 June 2012, she urged the Commons to back a Labour motion hailing national pay review bodies as "an effective way of setting pay while allowing for appropriate regional and local variation".
Were the government to press ahead with its plans, the divide between rich and poor areas of the country would be exacerbated, and "costly and time consuming bureaucracy" would be increased, the motion adds.
Ms Reeves claimed that an extra year's pay freeze in north-east England would take £78m from the regional economy. In Wales the figure would be £97m; in Scotland £162m; in Yorkshire and the Humber £130m; and south-west England £140m.
But Cabinet Office Minister Francis Maude argued that comparatively high public sector pay in some areas was reducing the amount of investment in private businesses.
He argued: "There is, we believe, a strong case for looking at introducing local market-facing pay and at how it can be done."
Independent pay review bodies are currently considering the proposal.
Mr Maude insisted: "It is not about ending national pay bargaining. Pay can be made more responsive to local labour markets within a national bargaining framework.
"Any benefits from localising pay can be realised without any need to get rid of national pay bargaining."
But Conservative backbencher Andrew Percy said it was already extremely hard to get teachers and nurses to come and work in his region, the Humber.
"How we'd do that if we paid them even less is beyond me," he told MPs.
Liberal Democrat MP John Pugh argued the politics of regional pay were "lethal and divisive".
"You pitch region against region, you abandon the principle of equal pay for equal work and you end up treating the low-paid and local differently from the high-paid and mobile," he said.
Nonetheless, the House rejected Labour's motion by 286 votes to 226, a government majority of 60.
Instead it backed, by a similar majority, a government amendment to the motion noting "the importance of recruiting, retaining and motivating staff and keeping tight control of public spending".
The government motion also points out that "the then Chancellor of the Exchequer [Gordon Brown] first proposed a fair framework for local and regional flexibility for pay in his statement to the House of 9 June 2003".