ARMED FORCES (PAY) (Hansard, 30 May 1968)

§ The Secretary of State for Defence (Mr. Denis Healey)
With your permission, Mr. Speaker, I should like to make a statement on Forces pay.
In accordance with the standing reference of Forces pay made to the National Board for Prices and Incomes under Section (3)(1) of the Prices and Incomes Act, 1966, the Board has made a First Report (No. 70).
2164 This recommends that pay should be increased by 7 per cent. with effect from 1st April, 1968, which is two years since the last increase; and that this increase should be treated as a global sum within which the Ministry of Defence should be free subject to the usual Treasury agreement, to make appropriate adjustments and minor changes in pay scales.
The Board also recommend that the out of quarters marriage allowance should be increased by 3s. a day for all ranks.
The Government accept these recommendations and these increases in pay and marriage allowance will be paid as soon as practicable.
The Government welcome the Board's intention to undertake a thorough-going review designed to examine the feasibility of evaluating service jobs and comparing them with those in civil life by methods which will reduce to the minimum the necessity for subjective judgment; and, as a related question, to examine the basic structure of Service pay and allowances, having regard to the implications of possible changes for manpower policies—Chapter 1, paragraphs 2 and 3 of the Board's Report.
The Government have asked the Prices and Incomes Board to complete its review within a year in order that, consistently with current incomes policy, any new system of pay that may be desirable in the light of this review, can be introduced as soon as practicable.
The review will take into account the questions in Chapter 4 of the Report regarding the pay of doctors and dentists in the Armed Forces.

§ Mr. Ramsden
The Government have replaced the well understood and well tried Grigg procedure by this standing reference to the Prices and Incomes Board. Is the right hon. Gentleman aware that the House will want to be reassured that the new system is as fair to the Services as was the old one in respect of pay, and, also, that it will produce the desired results in recruiting?
Does the 7 per cent. fully reflect the movement of comparable civilian rates, as the Grigg award would have done? Secondly, if it does not, ought it not to have done so, in fairness to the Services? Is not the right hon. Gentleman risking a dangerous recruiting situation, 2165 bearing in mind that at the moment recruiting is down by about 25 per cent. on the figures for last year?

§ Mr. Healey
I am grateful to the right hon. Member for his questions. I and the Government are determined that any new system which is adopted to replace the Grigg formula or, as I would prefer to say, to improve the Grigg formula— because the central problem is to find a better basis for determining the comparability than the rather crude system used under the Grigg formula—should be fair to the Services, and play its part in ensuring that we have the necessary number of recruits.
On the question of whether the present award reflects the Grigg formula, as the Report makes clear, it does not fully reflect the Grigg formula, and it must be regarded as an interim increase. When a new system has been fully worked out —and we have asked the Board to complete this within a year—in the light of that report the Government will make a decision on any further increases which may be required under the new formula which is adopted.

§ Mr. Orme
Could my right hon. Friend answer a question on the 7 per cent? Am I to assume that the two years referred to is at 3½ per cent. per year? Is this the basis on which he is recommending acceptance of the award? If so, will it be in order to take this as a principle for civilian employees in industry to aggregate on this basis? Would this justify engineers, who have not had an increase for three years—

§ Mr. Speaker
Order. The hon. Member cannot comment on issues outside the statement.

§ Mr. Orme
I am sorry, Mr. Speaker. I was trying to say that the Minister is justifying this within the scale of pay policy of the Government at the moment. With respect, I think that it is a justifiable point to make on aggregation that if this applies—and I am not disagreeing with it applying—to Her Majesty's Forces the same principle should be applicable to civilian personnel.

§ Mr. Healey
I do not see that it is for me to enter into questions regarding any award which may or may not be made in regard to other groups, including 2166 civilian groups, but my hon. Friend will be aware that 3½ per cent. is the ceiling under prices and incomes policy. By no means all groups of people are justified in obtaining the ceiling.
My hon. Friend will see that the Prices and Incomes Board considered very carefully the argument against making an award of this size, but it decided on the information provided by the Ministry of Defence that in this particular case the full ceiling permitted under prices and incomes policy was justified.

§ Captain W. Elliot
Would not the Minister agree that the nature of the machinery at present in operation to review Service pay is such that any award is in the nature of a catching up operation and the Services can never be a pace setter? In those circumstances, is it not deplorable that the Government should shuffle of this responsibility to the Prices and Incomes Board instead of taking the decision themselves, thus leading to all this uncertainty and doubt which has bedevilled the Services over the last few months?

§ Mr. Healey
My impression, and I have seen a great deal of the Services in theatres abroad particularly in recent weeks, is that there has not been a great deal of uncertainty and doubt. The Services, having received an award due to them two years ago, believed that they would receive fair treatment on this occasion, as indeed is the case, but I recognise that there is a system which involves comparability on prices and incomes which have to be placed in a particular period.
As a personal opinion, I think that the question whether these increases should be awarded at annual or biennial intervals is a matter for close study. It will always be the Government's responsibility, having received a report, to decide whether or not to accept it and whether or not to modify or amend it.

§ Dr. Winstanley
Welcoming the Govment's ready acceptance of the recommendations, may I ask whether, in implementing these pay increases, the Minister will at the same time make appropriate adjustments to Service pensions, to prevent them falling further behind?

§ Mr. Healey
I think that I said in my statement that Service pensions are to be increased proportionately. That, of 2167 course, is the pensions of those who retire from a given date—

§ Mr. Healey
I am sorry. This was made clear in the Report, but not in the statement.

§ Mr. Dalyell
While making clear, as one who has not always agreed on defence policy with my right hon. Friend, that I would be one of those who believe that the men and women in the Services should have a proper reward for the service which they give the country, may I ask my right hon. Friend what his thinking is on the difficult problem of comparability of pay for skilled technical men, at a time when the Services need more and more of them?

§ Mr. Healey
This is the sort of question on which it would be very unwise for a Minister to make a snap judgment. The Grigg formula determined certain analogues which had to be applied. It is agreed on both sides of the House that that is not a perfect formula and requires revision both in the kind of changes in the trades in civilian life and in the structure of trades in the Services and in the light of the national economic situation, and so on. I welcome my hon. Friend's statement which, I think, would be echoed in all quarters of the House, whatever view on the size and rôle of the Services one holds—that when men join the Services they carry out these difficult and often ungrateful tasks and they should receive the rate for the job.

§ Mr. Powell
Pending the further review to which the Secretary of State referred, will he do something specially now for the medical and dental officers, in view of the way in which they have been treated in the last two years and the catastrophic recruitment situation?

§ Mr. Healey
Yes, Sir. Service doctors are to receive an increase of 7 per cent. along with all other serving officers, which, on the one hand, will retain the substantial differential which elevates them in income over other serving officers and, on the other, will do a great deal to restore the differential between them and doctors in civilian practice which the last award did something to reduce.

§ Mr. Raymond Fletcher
Does my right hon. Friend agree that the new procedure, as distinct from the Grigg formula, has a valuable advantage as it focuses public opinion on the complexity of the job the Service man has to do and the great degree of skill which he brings to that job?

§ Mr. Healey
I am grateful to my hon. Friend. That is the case.

Mr. Hugh Eraser
I wish the right hon. Gentleman good luck in improving Grigg. We thought it an improvement on previous matters and that it could not be improved upon. Can he assure the Services that there will be a further award next year? This is important because of the drop in recruiting, which, I think, is catastrophic.

§ Mr. Healey
I can assure the Services that we have asked the Prices and Incomes Board to make its report within a year so that we can introduce whatever changes in the light of that report are to be made as soon as practicable, but I obviously cannot go beyond that in making a firm commitment. There was another point made by the right hon. Member for Stafford and Stone (Mr. Hugh Fraser).

§ Mr. Hugh Fraser
The present recruiting figures are catastrophic.

§ Mr. Healey
The interesting thing is that the morale of the Services is very high. This is attested by the fact that the re-engagement figures have not deteriorated as much as recruiting. In the Navy these have actually improved during the last 12 months. This rather suggests the problem is the civilian view of what Service life is like. Hon. Members opposite share some responsibility for seeing that the civilian population have the same view of the Services as those who are in the Services.

§ Rear-Admiral Morgan Giles
Although we have not the details of the increase yet, can the right hon. Gentleman answer some specific questions? First, because of the reference to the P.I.B., which presumably involves the disappearance of the Grigg formula, will he assure the House that whatever is involved Servicemen will be given a date each year, or each two years, on which 2169 they know that their Service pay will be reviewed? The great merit—

§ Mr. Speaker
Order. Questions must be brief.

§ Rear-Admiral Morgan Giles
The second point was—[HON. MEMBERS: "No."] The second point on this 7 per cent. is that the Secretary of State said that the awards were definitely retrospective. The 7 per cent. does not appear to equate to the extent to which average earnings have risen in the last two years. From July, 1965, to July, 1967, according to the Minister of Labour Gazette, they rose 104—

§ Mr. Speaker
Order. We cannot debate this issue now. Mr. Healey.

§ Mr. Speaker
Order. The question has been long enough. Mr. Healey.

§ Rear-Admiral Morgan Giles
Mr. Speaker. I am asking the Secretary of State, as quickly as I can, a few specific questions on the announcement he made to the House. Am I not in order to include more than two points?

§ Mr. Speaker
The hon. and gallant Member must understand that Mr. Speaker's job is to protect the business of the day, the right of an hon. Member to put questions, and the right of other hon. Members to put questions. Mr. Speaker must insist on questions being of reasonable length. I think that the hon. and gallant Member has had a reasonable length of question.

§ Mr. Healey
On the second question asked by the hon. and gallant Gentleman, he will see the answer if he reads the Report, which has been in the Vote Office since 3 o'clock.
As for his first question, I echo what was said earlier by another hon. and gallant Gentleman. Undoubtedly, the Grigg formula was a great improvement on the previous way of fixing Service pay. I hope that the new formula will be an improvement on the Grigg formula —not a departure from it, but an improvement on it. I cannot at the moment say whether it will include a fixed date at a yearly or two-yearly interval. This is all for the Prices and Incomes Board 2170 to determine in the light of the evidence that it receives from, among others, the Ministry of Defence and representatives of the three Services. I take his point that it is essential to give the men and women in the Services the knowledge that they will receive a fair increase in their incomes at fair intervals.

§ Mr. Heath
Will the Minister address himself to the question of recruitment, not re-engagement? Just now he said frankly that this award put the Serviceman at a disadvantage compared with his civilian equivalent, and he is falling further behind. At the same time, recruitment for the first five months of this year is about 25 per cent. down. How will an award of this kind get him the recruits that he must have? Is it not clear that the Prices and Incomes Board settles these matters on the basis of an incomes policy without regard to the need for recruitment?

§ Mr. Healey
That is not so. The right hon. Gentleman would do well, before making these wild accusations, to read what the Board says in its Report. In fact, it took carefully into account the needs of the Government's prices and incomes policy, on the one hand, and the needs of the Services, on the other. It makes it clear in its Report that if it had taken only the former into account it would not have made an award as high as 7 per cent. It was only because it took the special needs of the Services into account that it made the proposal, and the Government accepted it.
It will do a great deal to stimulate recruitment. But the one factor that affects recruitment is partisan propaganda, whatever its source, that there is no future in the Services. Some hon. Members opposite have a good deal of responsibility for giving that impression to the civilian. It is one which I am proud to say is not shared by the Services.

§ Mr. Heath
Is the Minister satisfied that the award will get him the recruits that he needs?

§ Mr. Healey
No, Sir. I am not satisfied. Nor have any Government ever been satisfied that monetary reward will necessarily always produce the number of recruits in the categories required at any given time. The important matter is to give people who might be attracted to a 2171 Service career not only the sense that they will receive sufficient monetary recompense for their services, but also the feeling that the job is worth while and has a future. All of us have responsibilities here, and some are carrying them better than others.

§ Rear-Admiral Morgan Giles
On a point of order, Mr. Speaker. Would it be in order for the Minister to deal with the second of the two points that I was able to ask him, about the 7 per cent.?

§ Mr. Speaker
It is for the Minister to answer in the way that he wishes.

§ Mr. Speaker
Order. Point of Order. Mr. Biggs-Davison.