HC Deb 25 April 1978 vol 948 cc1178-92

3.31 p.m.

The Prime Minister (Mr. James Callaghan)

With permission, Mr. Speaker, I shall make a statement about the pay of the Armed Services.

The Seventh Report of the Armed Forces Pay Review Body is published today and copies are available in the Vote Office. The Government are most grateful to the Review Body for all its work in producing this report.

The Review Body has concluded that the pay of the Armed Forces has fallen seriously behind in the period since April 1975 and the report states that increases in pay of between 19 per cent. and 38 per cent.—averaging 32 per cent.—are now required to restore the full military salary. It recommends that the full military salary should be restored at the earliest possible date, but it recognises the Government's expectation that increases which exceed the guidelines would need to be staged. It has recommended that this staging should be completed not later than 1st April 1980.

The Government accept the Review Body's recommendations on the levels of the military salary. These will be fully implemented to the current levels for 1st April 1980 in two approximately equal stages after this year and, as the Review Body recommends, the Government give a firm commitment to that effect.

In considering the levels of the military salary, the Review Body has had regard to the element which recognises the balance of disadvantage of Service life by comparison with civil life, known in the Services as the "X" factor. It has also taken into account allowances and charges.

The Government have reached conclusions on these various elements in the light of the Review Body's conclusions and the following arrangements will apply for the year from 1st April 1978. There will be an increase of 10 per cent. in the military salary together with an increase in the "X" factor within the amount recommended by the Review Body, which will add 3 per cent. in total. The extent to which these percentages will be implemented will vary from rank to rank as differentials are restored. In addition, the rate of Northern Ireland pay will be doubled to £1 per day. There will be certain changes in allowances and a standstill in charges for accommodation pending a further examination by the Review Body. These together will add a further 1 per cent. to the net bill.

My right hon. Friend the Secretary of State for Defence is arranging for a summary of the new pay scales to be placed in the Vote Office later this afternoon. I fear that they were not there at 3.30 p.m., but we shall get them there as soon as we can.

These arrangements now secure for the Armed Forces a firm assurance about their future conditions of service and will meet, I believe, the view expressed by the Review Body that their particular problems should be recognised.

The men and women who serve in the forces have many diverse and difficult roles, and they have undertaken a number of additional tasks, some of them very dangerous as in Northern Ireland. The country is grateful to them, and I should like to pay tribute once again to the professionalism and dedication with which they carry out their many responsibilities.

Mrs. Thatcher

I should like to put three points to the Prime Minister. The first is a general one. Is he aware that his statement shows that the Government have failed lamentably to provide the levels of pay that the Services need and deserve? Our people are deeply disturbed that the forces have been let down in matters of pay and this statement means that they will continue to be let down for some time to come.

Secondly, social benefits. Will the Prime Minister assure the House that, as a result of his statement today, members of the Forces will no longer need to apply for rent and rate rebates and other social benefits?

Thirdly, comparability. As average earnings for the nation as a whole are rising by about 14 per cent. a year and as forces' pay has fallen behind that of their civilian equivalents by some 32 per cent., is the Prime Minister aware that this award means that for another year the Services are going to stay as far behind as they are now? Why have the Government done nothing this year to reduce the gap which has led to so many resignations and sapped morale in the Forces? Is he aware that we welcome the promise to restore comparability in two years, but note that promises so far in the future cost this Government nothing? We shall restore comparability, and restore it more quickly.

The Prime Minister

The right hon. Lady has expressed her view, and she is entitled to it, but I notice that she said nothing about the impact and reaction of these matters upon the community as a whole. I believe that the great success that the Government have had has been in enjoining upon everyone the need to accept certain restrictions in order that we may go forward together—for example, as the firemen have done. I shall be interested to know whether what the right hon. Lady said about the Armed Forces applies also to the firemen in their forward commitment and elsewhere. If so, I promise her that, if she ever were in a position to do this, she would find herself either having to go back on her pledge or making a lot more trouble for herself. But it would not be the first time that a Conservative Government had gone back on their pledges. [Interruption.] The right hon. Member for Chesham and Amersham (Sir I. Gilmour) is too young to remember.

As regards rent and rate rebates, I realise that the right hon. Lady has not yet had the opportunity of reading the reports which will be in the Vote Office, but she will find there a statement to the effect that the Review Body hopes that nobody will believe that applications for rent and rate rebates are in any way wrong, improper or a confession of poverty. [Interruption.] The right hon. Lady had better wait and read the report. She could have had one with pleasure if she had wanted one. If that is a source of complaint, I ask her to make it formal. I believe that the right hon. Lady would say that I have never failed in my courtesy in sending her statements if ever she needed anything, and I should have been glad to supply her with one.

I am not making any particular point, except that the Review Body says that the system of rent rebates should continue, that it is in the interests of the forces that it should continue and that it should not be regarded as wrong or be used in some way as evidence of poverty if rebates are made in this way. [HON. MEMBERS: "Oh".] I suggest that, instead of shouting their heads off, Opposition Members should read the report and then they can question us again on the matter.

Mr. Alan Lee Williams

Will my right hon. Friend take it from me that many members of the Armed Services will accept this recommendation by the Government, understanding the economic situation and the need to maintain some kind of incomes policy? Does he agree that it would be disastrous for the Armed Services if this issue were to be exploited by the Opposition at a time when the Government's counter-inflation policy is working and the Armed Services and other groups realise that their responsibility towards that aim is recognised by the Government in the report?

The Prime Minister

I do not believe that the Opposition will be able to exploit this issue, because the country has too much common sense and will recognise the difficult series of decisions involved in reaching a conclusion of this sort. The majority of people in this country will believe that we have taken a sensible and fair decision, coupled with a firm pledge to bring the Armed Forces up to equivalent and comparable levels in the next two years.

These increases will mean that for a private I the increase in actual pay, as distinct from other allowances, is £6 to £8 a week. For a corporal it is £8 to £10 a week, and for a sergeant £9 to £11. These should not be sneezed at. They are quite substantial sums, especially when added to by some of the allowances and the increases in charges that will now be held back.

Mx. Powell

When the new rates are applied, as I assume they will be, to the Ulster Defence Regiment, will the Prime Minister ensure that special attention is given to the differential between that regiment and the rest of the Army? This differential has been widening in real terms recently and will be widened further as a result of his announcement.

The Prime Minister

I am not sure whether the last part of the right hon. Member's question is right, but I shall take it from him at the moment and I shall ask the Secretary of State for Defence to look into this matter.

Mr. English

Is there any particular reason for the Prime Minister announcing this pay increase, as distinct from the Minister of Defence? Will he say whether this complete breach of pay policy signifies, as many Members on this side of this House would welcome, the scrapping of the incomes policy?

The Prime Minister

There is no particular reason for my announcing this increase—only the precedent that Prime Ministers always do. As regards the position on pay policy, we have tried to give a square deal to the Armed Forces that is consonant with the recovery in which this country is engaged at present. I am not discussing in general terms the future of pay policy. There are differences of view about that. However, there can be no difference of view about the fact that, as a result of the restraint of the last two years, inflation is down to single figures and still coming down. The country recognises that even if my hon. Friend does not.

Mr. Hooson

Is the Prime Minister aware that I welcome the announcement, and that even though the increase is well above the 10 per cent. the country will accept it because of the particular circumstances of the Armed Forces? Will the Prime Minister agree that the finding of the Review Body now—that the Armed Forces had fallen way behind—is the same as the finding that the Review Body made in 1974—that the Armed Forces had fallen behind under the Conservatives? Does this not show that the Armed Forces suffer particularly from intermittent pay policies and that therefore this indicates the need for a permanent pay policy in this country?

The Prime Minister

The hon. and learned Member for Montgomery (Mr. Hooson) has correctly called attention to the fact that in 1975 the Armed Forces Review Body specifically commented that the Armed Forces had fallen seriously short as a result of pay policy in the years when the Opposition were in office. I was not going to bring that up, but it it quite clear and I am grateful to the hon. and learned Member for mentioning it. However, we should not have a competition between the two sides on who can do worse for the Armed Forces. The question is whether we can give them a square deal. The undertaking I have given will ensure that they are brought up to comparable status within two years and this will be generally accepted and welcomed. If there are better ways of determining the pay of public servants, I believe that we should certainly try to find them. I have noted with interest what Mr. Basnett and others have said about this matter. I have seen this over so many years. I do not think that the House would want any group of public servants, whether they be in the Armed Forces or elsewhere, to suffer on these accounts.

Mr. Donald Stewart

Does the Prime Minister accept that this is anything but a square deal for the Armed Forces? If they have fallen behind by 32 per cent. they should be paid 32 per cent. now. What will happen to the Government's promise to bring their pay up to comparable levels in two years' time? Will he agree that it is time Governments accepted that the Armed Forces and, indeed, the police as well, should be outside the restraints of incomes policy, whether it is voluntary or in accordance with guidelines? Will he not agree that the Armed Forces should be paid accordingly?

The Prime Minister

I understand the right hon. Member's view, but no section of the community can be outside the general welfare of the community. We are all one nation here and everyone has his or her part to play in it. In a very difficult situation the Government have gone as far as they can in meeting the legitimate demands and requests of the Armed Forces.

Mr. Ashley

Is the Prime Minister aware that his statement seems to me to rest on three fundamental principles—firmness, fairness and flexibility? Is he aware that these are far better bases for conducting industrial relations than the party political gamesmanship indulged in by the Leader of the Opposition on pay policy?

The Prime Minister

I am obliged to my hon. Friend. It is to be expected that the Opposition will make the most of what they can, but people will judge whether what is being said represents the real interests of the country. I am content to leave it to the country. I have stated the Government's position and I believe that it will be accepted by the great majority of people.

Sir David Renton

In view of the expected serious shortage of RAF pilots and the fact that it takes a long time and lots of money to train a pilot, will the Prime Minister say whether he considers that the very limited statement on the increased pay which he has announced will rectify that serious situation?

The Prime Minister

I think that it will. The increases that are proposed, for example, for the equivalent of captains and majors run into several hundreds of pounds, although they are of the order of 11 per cent., 12 per cent., and 13 per cent. This, coupled with the firm assurance about the next two years, will have a marked effect on the Armed Forces. It is not as easy as some hon. Members think to get comparable salaries outside for every grade.

Mr. William Hamilton

Will the Prime Minister tell us the total costs of the Government's proposals and how they will be included in the current Defence Estimates? Can he say, in view of the remarks of the Leader of the Opposition, how her proposal squares with the Conservatives' clear determination to propose very substantial tax decreases in the course of the Finance Bill?

The Prime Minister

I am happy to say that it is not my responsibility to answer for the dilemma of the Leader of the Opposition. We have looked into the question of cash limits, and I understand that these can be accommodated within the total figures that have been set out in the Estimates. Perhaps my hon. Friend would question the Secretary of State for Defence more closely.

Mr. Alan Clark

Will the Prime Minister agree, and was this not confirmed to him by my constituent Mrs. Fergusson of the Service Wives Committee, whom he met in Plymouth last Friday, that what causes most distress and resentment among Service families is the way in which their take-home pay is constantly eroded by deductions for housing, for subsistence and in some cases even for transporting their children to school? Does he not feel that this should be looked at very closely over the next two years?

The Prime Minister

I accept that this was put to me as being one of the factors that this group of ladies discussed with me. I took account of what they said. The hon. Gentleman will have noted that I said there would be certain changes in allowances which I believed could be accommodated—I have not gone into details and I am not sure that they cover the particular ones that were raised with me—but certainly these can be looked at over the next two years.

Mr. Michael Stewart

Has my right hon. Friend noticed that the Opposition are following their usual line on defence questions and are saying that they would spend more than the Government but without specifying how much? Does he also recollect that it is the declared Conservative policy that such extra expenditure should be met not out of taxation but by reduction of the social services? This means that although hon. Members opposite make a great deal of fuss about defence, they are not prepared to put their hands in their own pockets for it.

The Prime Minister

Yes. No doubt next week we shall be met with demands for reduced taxation, as I have read in the newspapers. That is bound to increase the borrowing requirement, to which the Opposition are also opposed. One day perhaps they may begin to clear up their own difficulties.

Mr. Goodhart

Is the Prime Minister aware that last year there were proposals to cut the take-home pay of Service men in Germany by 14 per cent. through a review of the local overseas allowance? This was postponed for 12 months. Will the Prime Minister give an assurance that Service men in Germany will not have this meagre increase clawed back later in the year by a change in the local overseas allowance?

The Prime Minister

I understand that local overseas allowance is not covered by this statement and is still under consideration.

Mr. Molloy

Does my right hon. Friend agree that the continued success of the fight against inflation is just as important to every Service man and his family as it is to every industrial worker and his family? Whilst it is right and proper that the Services should have their working conditions examined from time to time in the House of Commons, it is much more important that my right hon. Friend should seek the views of the TUC and the CBI in all considerations of any form of wage increase and not take too much notice of the criticisms of Conservative Members, who have now reached a level at which they even use the Armed Forces of the United Kingdom for political purposes.

The Prime Minister

Yes, Sir. My correspondence and my meetings show that those members of the Armed Forces who correspond with me or address me are as concerned with overcoming inflation as anyone else. They have found it extremely difficult to continue with their livelihoods during the last two years. I think that what is taking place now, together with a firm pledge for the future, will help them to meet this, and I believe that this is generally recognised.

Mr. Wall

In view of the widespread erosion of the morale of the Forces and the police and their importance to the security of the State, will the Prime Minister say whether he considers them to be a special case?

The Prime Minister

No, Sir. We have deliberately avoided using the term "special case". We take each case on its merits, and that is what we have done on this occasion.

Mr. MacFarquhar

In view of my right hon. Friend's answer to the Liberal spokesman, the hon. and learned Member for Montgomery (Mr. Hooson), a few minutes ago, will he initiate discussions with Mr. David Basnett and other TUC leaders designed to take the pay of non-industrial public servants out of the political and wage-bargaining arena, perhaps by indexing them to manufacturing wages?

The Prime Minister

I have had many years' experience of negotiating wage increases, and I am not sure that that would be an appropriate thing to do. But I should be very happy indeed to discuss with Mr. Basnett any of his views to try to get a basis which will be acceptable, which will not add to inflation and on which other people cannot build.

This is a very complex problem. It is one to which the House, I hope—perhaps in less of a partisan spirit than seems to exist this afternoon—will devote its attention, because there is no doubt that on occasions the public services use the private services to build on, and the converse can happen, too, and set off another wage explosion. I am determined that that shall not happen, no matter what is said.

Several Hon. Members


Mr. Speaker

Order. I remind the House that before we come to the Wales Bill, which is under a timetable motion, there is a Ten-Minute Bill and a point of order, so I propose to bring these questions to an end at 4 o'clock.

Mr. Viggers

Does the Prime Minister accept that local overseas allowance is not, in fact, part of pay at all but an allowance for living abroad? When can we expect a further statement on this matter, bearing in mind, for example, that local overseas allowance in Gibraltar has been frozen for two years for the Services whereas those personnel in the Foreign Service have had rises ranging from 54 per cent. to 86 per cent. and, indeed, receive London allowance as well for living in Gibraltar?

The Prime Minister

I have listened to what the hon. Gentleman said, and I am sure that he will put it in due course to the Secretary of State for Defence, who has also heard what he said.

Mr. Dalyell

Does the Prime Minister accept that most fair-minded people will see this as a fair package for the Armed Forces? However, did he hear the leader of the Scottish National Party say that there should be a 32 per cent. award straight away? What should we in Scotland say to firemen, police and others about such a proposal? Might not this be best left to the proposed Defence Committee of the Scottish Assembly?

The Prime Minister

I thought that it was a way of trying to get votes for an independent Scotland so that the Armed Forces of Scotland would be so well paid. The right hon. Gentleman the leader of the SNP nods his agreement to this. But I have a feeling that the people of Scotland are not as easily taken in as all that.

Mr. Emery

Will the Prime Minister clarify his statement on comparability? If, using the averages, the 13 per cent. paid this year will reduce the discrepancy from 32 per cent. to 19 per cent., and if in the next two years the comparability factor means that there will be another, say, 12 per cent. per annum, which is 24 per cent. by April 1980, plus 19 per cent., is the Prime Minister giving an absolute undertaking for all further Governments that 20 per cent. increases, if they are averaged over the two years, will be given to the forces in the next two years?

The Prime Minister

I shall not go into the figures—[HON. MEMBERS: "Oh."]—because no one knows what the figures will be—except the howling mob opposite. I am taking the hon. Gentleman seriously. I do not take some of his hon. Friends so seriously. They seem to be more intent on making party points about it.

However, taking the hon. Gentleman's question, I made it clear, and I should like to repeat it, that the Government give a firm commitment to the effect that the increases will not only overtake the arrears that now exist—if that is the proper term for them—but will take account of increases that are gained during the next two years. That is another reason for us keeping increases to the minimum that we can, because these will be very substantial improvements.

Mr. Ron Thomas

Does my right hon. Friend agree that it would have been better to concentrate help where it is needed most, amongst the ordinary worker in uniform rather than the chiefs of staff, who have already had a £750 hand-out under the Budget? Does he also agree that the paternalistic approach of the Armed Forces Pay Review Body needs to be replaced by effective trade union organisation and collective bargaining machinery to deal with the many problems faced by members of the Armed Forces?

The Prime Minister

My hon. Friend will no doubt be interested to learn that the chiefs of staff are excluded from this report. As regards a trade union, having witnessed the events of the last few weeks, I have a feeling that the Armed Forces do better without a trade union than they would do with one.

Mr. Bidwell

Does my right hon. Friend agree that on the Government side of the House we all believe in decent pay for the Armed Forces, both now and in the future, and we hope that in the future it can be substantially improved? Does he agree, however, that the total defence expenditure is quite a burden on the British economy and that we must look forward to the possibility of advancing detente policies in order to reduce our burden and to make it possible to pay these men much better than they are going to be paid? Does my right hon. Friend agree that it does not help the process of detente for third-rate lectures in Austria by the right hon. Lady the Leader of the Opposition on what is supposed to be Marxism—

Hon. Members


Mr. Speaker

Order. I propose to extend the time for these questions by two minutes. I did not hold a fair balance in the questions. But if questions are very long, it is easy to cut out the other side.

The Prime Minister

I might ask why I should suffer, Mr. Speaker.

Defence is, of course, a burden on the budgets of every country, including the developing countries, whose increase in the arms burden is so severe. Therefore, it is right that we should try to get a measure of disarmament as soon as we can. But I am bound to say that until we can, I do not think it would be the proper balance to increase the pay of the Armed Forces to the point at which they would go into battle knowing that all their rent was paid but without having the equip-merit to fight.

Mr. Charles Morrison

Regardless of whether anyone thinks that this award is fair and regardless of incomes policy, why does the Prime Minister think that this award will stop the loss of manpower from the Armed Services? In particular, why will it stop the loss of expensively trained pilots, already referred to by my right hon. and learned Friend the Member for Huntingdonshire (Sir D. Renton), when they can receive far greater awards in civil airlines in different parts of the world?

The Prime Minister

I think that some of these detailed questions ought to be put down to the Secretary of State for Defence, because I do not wish to get some of these very complicated matters incorrect—though I am told that in the case of some of the pilots to whom the hon. Gentleman refers there is a substantial increase. But I would sooner he got the exact details from my right hon. Friend by putting Questions to him.

I think that when people come to look at this and see the increases that are involved, which are substantial, and they recognise that there are attractions and advantages in Service life—none of which has been mentioned during the last few weeks coupled with the firm assurance that has been given, they will recognise that this makes a reasonable career for a young man. With that I am satisfied.

Mr. Pattie

Is the right hon. Gentleman not aware that the current exodus of Service personnel relates to the previous inadequate pay awards and that this award will cause the present stream to become a flood? Does he not realise that the country can appreciate that if miners and power workers were leaving their industries at the rate at which Service men are leaving the Services, a deal of 30 per cent., and the rest, would be cobbled together?

The Prime Minister

I am not sure that the hon. Gentleman is right. I have the figures of redundancy, premature voluntary release and medical discharge, and they do not bear out some of the wilder accounts we have been hearing over the last few weeks. I hope that some hon. Members will put down some Questions to ask for the actual figures. They are bound to be very revealing.

Mr. Skinner

On the subject of rent rebates, does my right hon. Friend recall that when the Housing Finance Act, which was euphemistically called the "fair rent Act", was introduced in 1972, the Tories said that it could affect up to 40 per cent. of council tenants and therefore was not designed to fit the needs of those who were merely on the poverty line? Will he also appreciate that his little difficulty this afternoon has been caused mainly by the fact that he is operating against the backcloth of an incomes policy? Will he bear in mind the fact that while a few Liberals and a few trade union leaders may support a phase 4, there are millions of trade unionists who say that they want nothing more to do with an incomes policy and that it would be better if the Government got out of the middle of that ring?

The Prime Minister

I was not aware that I had discussed a phase 4. What I am discussing is a perennial problem, which will remain with us whether we have an incomes policy or not—that the Government are a large employer and must take a view about their public sector and the public services. The Government therefore cannot get out of the ring on these matters. They should take a view and negotiate. One day my hon. Friend will discover this, when he is doing the negotiation himself.

As for the first part of my hon. Friend's question, I repeat what I have said before—that it would be wrong to assume that what was done under the Act to which my hon. Friend referred has a direct relationship to the system of rent and rate rebates in the Armed Forces—if I understand correctly the report of the Armed Forces Pay Review Body. There, it is related to the size of family and other questions. If I have that report aright, I hope that we shall get away from saying that, ipso facto, someone applying for this relief is poverty-stricken or is below the level which is appropriate. I understand that that is not the case, so we should not encourage that view.

Sir Ian Gilmour

The Prime Minister has this afternoon shown a remarkable ignorance of this whole subject. Perhaps that explains why he has not given the forces a square deal. Is he aware that what he said about keeping these increases within cash limits is totally wrong? Is he further aware that the Secretary of State for Defence confirmed the other day what everybody else knows—that a pay increase is outside the defence budget?

The Prime Minister

I of course take due note of the strictures of the right hon. Gentleman. I will observe them duly and I am humbly sorry if he thinks that I have not managed to satisfy him this afternoon. However, I have to satisfy not just the right hon. Gentleman but the whole community. That is the responsibility I have and that is what I am discharging today.

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