Teachers and nurses should be paid more in affluent areas, study suggests

In schools, students in areas which had a high cost of living dropped an average of one GCSE grade per pupil as school struggled to recruit and retain good teachers.

Professor Propper argued bringing wages in line with the private sector would be cost effective and would lead to an increase in quality and performance in schools and hospitals.

Prof Propper, from Bristol University’s Centre for Market and Public Organisation, said there had "long been an argument" that restirictions on pay "imposes problems" about filling vacancies and retaining staff in high cost areas.

“The logic says that you should be paying more in higher cost areas," she said.

Speaking of their preliminary calculations, she added: “When we look at bringing wages in line with people’s private sector counterparts, in schools and hospitals it would be cost effective and lead to an increase in quality.”

Earlier this year, Chancellor George Osborne announced plans for public sector employees in poorer parts of the country having their pay frozen until it is brought into line with local private sector workers.

Matthew Hancock, Conservative MP and former chief of staff to George Osborne, said the research gave another “angle” on the argument for scrapping national pay rates.

“I think getting the most out of taxpayers’ money spent on the public sector is vital; allowing local managers to manage more effectively, allowing headteachers to have more discretion over who they employ and how they reward them, and making sure we have the best teachers.

“Until now, I think in this debate most people have focused on the difficulty for businesses and private organisations to hire people in areas where public pay is much higher than private pay.

“This is another angle on the argument, saying look at the other side of it.”

Dr Evan Harris, vice chair of the Liberal Democrat Federal Policy Committee, said some of the findings were “preposterous” from a logical point of view and must not be reported unquestioningly.

Emphasising the latest research paper had not been peer-reviewed, he said he was “absolutely not” convinced by the recommendations, pointing out that the number of patients surviving a heart attack would rely on a multitude of local factors.

He warned that if the changes in national wages were made, “you are going to see inevitable attempts to cut pay more than you see attempts to increase pay.”