CONTROVERSIAL plans to introduce “local pay” for teachers, nurses and civil servants were in trouble yesterday, when Nick Clegg poured cold water on the idea.

The deputy prime minister ruled out any changes to pay scales that would widen the North-South divide, saying: “Nothing has been decided.”

Mr Clegg also agreed there was a danger the policy – which Chancellor George Osborne has vowed to push through – could “penalise some of the people working in some of the most difficult areas”.

The comments appeared to open up the prospect of the Lib Dems blocking a policy that many Conservatives believe is essential to economic revival in the North-East and Yorkshire.

The measure – which threatens some workers with long-term pay freezes – is necessary because higher publicsector salaries are “crowding out” private firms, which struggle to recruit, the Treasury argued.

The Northern Echo revealed that teachers, paramedics and – if included within the policy, police officers – would be hit hardest, because they currently enjoy the biggest “pay premium” in comparison with average salaries.

And women in the publicsector face far more pain than men, under the Government’s plans to wipe out higher salaries than paid by private firms.

But, quizzed yesterday, Mr Clegg said: “Nothing has been decided and I feel very, very strongly, as an MP in South Yorkshire with a lot of people in public services, we are not going to be able simply, willy-nilly, to exacerbate a North-South divide.

“There has been ludicrous scaremongering, particularly by the trade unions, when there is no proposal on the table at all, and, in very specific cases, it was done by a previous government.”

That was a reference to local bargaining in the courts service – introduced by Labour, to consolidate numerous different pay schemes – which Mr Clegg said the Government was looking to extend.

But he added: “People should be reassured we are not going to rush headlong in imposing a system from above, which – if it was done in the way sometimes described – would be totally unjust, because it would penalise some of the people working in some of the most difficult areas.”

The comments came as more than 50 MPs, led by Sedgefield’s Phil Wilson, tabled a parliamentary motion, warning local pay would “set hospital against hospital and school against school”.

The motion – signed by at least four Lib Dem MPs, including Redcar’s Ian Swales – attacks “unfair discrimination against nurses, teachers and civil servants according to where they live, when they are doing the same job”.

And it calls on the Government to “suspend this policy until a full and independent assessment takes place”.

To add to the confusion, Health Secretary Andrew Lansley defended local pay in a speech to nurses yesterday, prompting Mr Wilson to say; “The Coalition is all over the place on this.”