Pay Norm

HC Deb 15 February 1979 vol 962 cc1302-4

15. Mr. Timothy Smith

asked the Chancellor of the Exchequer what is the current pay norm.

Mr. Healey

The Government remains committed to the policies set out in the White Paper "Winning the Battle Against Inflation" with the modification of the £3.50 underpinning for low-paid workers.

Mr. Smith

Is the right hon. Gentleman aware that he has not answered the question that I put on the Order Paper, which concerns the current pay norm and is not about the Government's supposed pay policy? Does he appreciate that the pay norm regarded as about 20 per cent. in the private sector and 16 per cent. in the public sector? What action are the Government taking to counter that view, which was created by the Government as a result of their 5 per cent. policy? Will the Government explain to the public that if some workers are to get more others must automatically get less?

Mr. Healey

I am tempted to ask the hon. Gentleman whether he is still beating his wife. The White Paper to which I referred laid down a 5 per cent. limit in normal cases, with £44.50 underpinning for very low-paid workers, provision for special cases and provision for self-financing productivity deals. These elements of flexibility were further increased by the statement by my right hon. Friend the Prime Minister in the House last month.

As to the going rate, or the average level of settlements in the private sector —to which, I suspect, the hon. Gentleman may belong—he should know that both the Department of Employment and the CBI data bank show that the average level of settlements in the private sector to date has been under 10 per cent.—about 8 per cent. if we include self-financing productivity deals. The hon. Gentleman does no good to the national interest by peddling this figure of 20 per cent., which has been achieved in only two cases in the whole of the private sector, 30 per cent. of which has already settled in the present round.

Mr. Spriggs

Will my right hon. Friend say what the cost would be if nurses and other National Health Service and public employees were paid an increase up to the level of two-thirds of the average wage?

Mr. Healey

I am not able, without notice, to give a specific figure. However, my hon. Friend must bear in mind that there is no point in raising the pay of low-paid workers to two-thirds of the average earnings if better paid workers then insist on restoring their differentials with the lower paid workers. That point was made with great force to me in my discussions with the TUC recently. It is because of the impossibility of improving the real condition of the low paid without dealing with the problem of differentials and relativities that the Government and the TUC have agreed to find a common solution to the problem.

Sir Geoffrey Howe

The Chancellor reminded the House of the original pay limits adopted by the Government, sub- ject to the modification made by the Prime Minister in January. Will he confirm—as it is important—that the cash limits to be published in a week or two will reflect precisely those pay guidelines? Will he also emphasise that if pay bargaining is to be consistent with those cash limits, problems of overmanning in the public sector must be tackled along the lines proposed by Mr. Frank Chapple.

Mr. Healey

I have made the point on many occasions that excessive settlements in the public sector are bound to lead to a reduction in manpower in the public sector. My views on cash limits were carefully explained to the House in general in the debate 16 days ago. The detailed cash limits will begin to be presented, as is normal, to this House in a week or two.