HC Deb 20 December 1976 vol 923 cc259-65

2.48 a.m.

Mr. Nicholas Ridley (Cirencester and Tewkesbury)

I should like to raise the subject of the incomes policy implications of the rise in the salary of the Chairman of the British Transport Docks Board. Although I apologise to the Under-Secretary of State for Transport for asking him to reply to this debate at this hour, I must also express a little disappointment that it has to be him—I do not mean this personally—rather than a Minister from the Department of Employment, because it is a matter of incomes policy that I want to raise.

I am no lover of incomes policy, and I wish it every conceivable but, none the less, as a malevolent bystander. I must point out the problems that have arisen for those who believe in the credibility of the Government incomes policy from the events surrounding the raising of the salary of the chairman. In no sense do I wish to criticise the chairman or his conduct of the Board or in any sense the operations of that Board, or to doubt the worth of the chairman and the undoubted fact that this is about the only nationalised industry that is making some sort of a profit, and to that I pay a tribute. It is in no sense about the chairman himself that I wish to speak. I want to speak about the Government's incomes policy.

The matter arises from a mistaken report in The Times of 25th November, when we were told that the chairman had a new salary about 24 per cent. higher than his old one—an increase from £10,748 to £14,145. The report said that this had been arranged by terminating his existing contract and substituting a new one. These allegations were corrected next day in The Times, when we were told that such was not the case, but that in fact he had undertaken to work for four days a week as opposed to three and to take on the responsibilities of managing director as well as that of chairman.

Of course, in any normal world one would feel that he was grossly underpaid both before and after these new responsibilities were put upon him. At present, I would have thought that he was richly worth his salary, and probably a great deal more. But that aspect does not arise at present. I merely question how it can be that someone earning over £8,500 is to begiven ar ise of 24 per cent., whether he is doing more work, and more responsible work, or not. That, as far as I can make out, is in contradiction to the Government's incomes policy, which has laid down in uncertain and unequivocal terms that those earning over £8,500 a year are not to have an increase in any circumstances. I hope that the Minister will spell out what the rules are.

My concern is not just for this case, which is obviously important, but with others in similar ciircumstances, perhaps in the private sector, who do not quite know what is right and what is wrong and should clearly know what they can and cannot do. Admittedly, this case arises out of the previous incomes policy—the £6 a week limit—leading to another incomes policy. But, as I understand it, the same rules apply in relation to higher earnings, and the case I am raising really alters the situation. The document "The Attack on Inflation" introduced this phase of the policy. The title is a little hollow when we read that inflation is gathering pace again. The £8,500 limit is contained in paragraph 7: The Government consider that the upper limit for the £6 increase should be £8,500 a year rather than £7,000", which had been proposed by the TUC. The Government firmly applied the limit to the nationalised industries in paragraph 18, which said: The Government intend that the policy should he strictly applied by the nationalized industries… Paragraph 10 of the paper by the TUC spealt it all out much more clearly: The more prosperous can more easily bear the burden of helping the economy and should be prepared to take a cut in their current standards of consumption. Those with incomes over £7,000 a year should forgo any increase in their incomes in the present period of difficulties. The Government should apply this principle to the public sector. These vague statements, which appear to mean that people earning over £8,500 a year should not have any more, were amplified in the debate on Members' pay on 23rd July. The Lord President maintained that Members earning over this amount should not take the £6 a week increase. He said: hon. Members who have earnings from other sources which together with their parliamentary emoluments take their total earnings to £8,500 or more would be asked to forgo the £6 increase in full. That statement was based on the understanding upon which the House accepted the Remuneration, Charges and Grants Bill. In that debate I said that no one earning £8,500 a year or more should take an increase of any kind in the coming year. Guidance to that effect has been issued by the Department of Employment and the Department has advised that the obligation to comply with the pay limits where earnings are derived from more than one source rests with the individual concerned. This is the general way in which the Department have given advice and I am sure that hon. Members would not expect to be treated any differently. I would in fact expect to be treated differently, but hon. Members might have accepted that if everyone in the public sector had been treated similarly.

The Parliamentary Secretary to the Privy Council Office said in that debate: The hon. Member for Chingford asked about aggregation and the £8,500 limit. I understand that anyone receiving more than £8,500, whether from one job, two jobs or three, has been expected to comply with the limit"—[Official Report, 23rd July 1976; Vol.915, cc.2245, 2310.] What is the difference between someone with one job, two jobs or three, and someone working three days a week or four? This is a nice point of semantics, but I am certain that if an hon. Member told him that he had taken on another job which would take him over the limit, the Lord President would say ferociously that he could not have an increase.

In the case of the Chairman of the British Transport Docks Board an increase was clearly acknowledged by the Government to be in order. This requires explaining. The ground rules have never been spelled out. I know of no document which gives precise guidance. Perhaps that is because the Government want it to be fudged; they want to be able to allow people to use their discretion. Perhaps this particular case has such approbation from the Government—this nationalised industry is actually profitable—that they thought they would give a little reward in this case, and they bent the rules to permit it.

But this is the essence of the evils of Socialist planning of incomes—that some people can have the rules bent for them but others cannot. If this is what incomes policy means to the Government, they had better think again: it is not good enough. If an ordinary worker on the shop floor can take other work or do more work and breach the pay limits, he is surely entitled to the same treatment as the Chairman of the BTDB. But under the £8,500 limit different rules apply. What we do not know is what rules apply over that limit.

I do not believe in any of this. I did not accept the £8,500 limit. I made it clear that I would take the increase of £6 a week and give the money after tax to charity. So I do not suggest that hon. Members should be treated differently or better than they are. I merely say with some feeling that if we are to have this nonsense, if we are to suppress differentials and hold down the incomes of those with responsibility and skill and those who earn more than others—which I am not in favour of doing—it must be seen to be patently fair.

One of my motives for raising this subject is to get the Government to put the particular circumstances of this case on the record. I have no doubt that that will be of assistance to the Chairman of the BTDB, since he will not then be subject to any misunderstanding. But, equally, the Minister must convince the rest of the higher earners that the rules which apply are applied equally throughout the whole public sector. That is why I should like him to spell out the rules closely and carefully, so that we may be certain that there is equal dealing on all sides.

3.2 a.m.

The Under-Secretary of State for Transport (Mr. John Horam)

As the hon. Member for Cirencester and Tewkesbury (Mr. Ridley) has said, I am not departmentally responsible for the operation of the Government's incomes policy, so I cannot go into details about how it works. But he asked me a straight question and I should like to give him a straight answer in relation to the position of Sir Humphrey Browne, the Chairman of the British Transport Docks Board.

The hon. Gentleman asked how a person earning more than £8,500 a year could apparently receive more money when this was specifically not allowed under the previous phase of the incomes policy. The answer is that Sir Humphrey Browne has not been earning more money at any stage. He became Chairman of the BTDB in May 1971. Mr. Stanley Johnson was then the managing director, and Sir Humphrey was called upon to devote three days a week to his Docks Board duties. In effect. it was a part-time job.

On 1st January 1976, following the retirement of Mr. Johnson, Sir Humphrey Browne became Executive Chairman as opposed to Chairman and took on some of the functions—not all the functions, as the hon. Gentleman said—previously falling to the managing director. The additional functions involved him in four instead of three days' work a week, and his salary was modified accordingly.

The rules for the determination of salaries in this case are that part-time nationalised industry chairmen's salaries are calculated pro rata to the relevant full-time rate, which in this case is £17,600 a year plus thresholds. That rate has remained unchanged since 1974. That is why the salary appeared to increase from just over £10,000 to just over £14,000. He was simply being paid pro rata for an extra day's work consequent on his taking up part of the job of being managing director.

It is misleading, therefore, to describe Sir Humphrey, as The Times erroneously did on 25th November, as beating the freeze on top salaries. His salary has not changed in any way.

The analogy that the hon. Gentleman drew with Members' salaries does not hold. Members of Parliament, certainly those here tonight, would not consider themselves in any way part-timers. The job cannot be divided in the same way as that of a part-time chairman or a part-time member of a board, whether in the private or the public sector, can be divided. Therefore, the analogy that the hon. Member put forward does not hold in this case. The situation with regard to Sir Humphrey Browne is plain. In no sense can he be said to have beaten the pay freeze on top salaries.

Mr. Ridley

That is not a good enough answer. The Minister must be aware that few workers have had increases of £3,300, whether or not they have done increased work or taken on extra responsibilities. I do not want the hon. Gentleman to go over the history—I went over it in my speech—but will he tell us what are the guidelines that will enable us to determine whether people earning over £8,500 a year may have an increase? That is the one thing that the Minister has not dealt with, by the device which I warned the House he would use, saying that he was not responsible for that part of the case that I wished to raise, but which is stated on the Order Paper for today: The implications for incomes policy of the rise in the salary of the Chairman of the British Transport Docks Board. That is the point that has been raised, and the Minister has not dealt with it. He has said that Sir Humphrey has had a rise, and good luck to him. I agree—good luck to him; but may we be told what are the rules in relation to rises in this incomes bracket?

Mr. Horam

The hon. Member accurately stated the rules. I did not answer the question by attempting some subterfuge in relation to their technicality. I replied in a straightforward manner by saying that there had been no increase in the case of Sir Humphrey Browne. He has not had an increase in salary. His salary has remained the same since 1974. Therefore, on those very simple terms, the hon. Member's case does not hold.