Terrible idea. One of the few benefits of teaching in Sunderland (to use the example given) is that your pay packet would go a little further that in Surrey. If teachers (insert any profession) were to get paid more to live in Surrey then who in their right mind would stay in Sunderland?
I think a policy such as this would lead to poorer areas, which are less attractive to live in, being hit hard by workers who would no longer get any financial incentive for putting up with living in those less tasteful areas. If the workers then leave to chase higher salaries, the area will take a further nose dive.
Terrible idea. Bills are higher in Surrey because people there will pay it. Osborne will just stoke the fire and pour more tax payers money into an area which doesn't need it.
There needs to be something to entice workers to the poorer areas!