§ The Minister of State, Civil Service Department (Mr. Barney Hayhoe)
With permission, I wish to make a further statement about the Civil Service dispute.
I regret to inform the House that the talks we have been holding with the Civil Service unions aimed at resolving the present dispute broke down on Friday. The talks had been concerned with both future arrangements for determining Civil Service pay and this year's increase. In response to the union's anxiety about arrangements for settling Civil Service pay in the future we told them that we were ready to set up an independent outside inquiry to advise on the best up-to-date arrangements.
Furthermore, since this was unlikely to report in time for the 1982 pay settlement, the Government would not set their cash limit for Civil Service pay next year in advance of negotiations with the unions. But the Government were not prepared to agree to the union's further demand that they should be guaranteed access to arbitration for 1982 should agreement not be reached in negotiation.
As to this year's increase, the Government originally offered 6 per cent. and this was subsequently raised in the course of negotiation to 7 per cent. to be financed within the 6 per cent. cash limit by savings in staff and administrative costs. But the unions insisted that they would not settle at this figure. They wanted more money this year.
The Government are satisfied that the 7 per cent. offer for this year together with the assurances that we have given for the future are both fair and reasonable. Indeed, more than 2 million workers in other public services have already settled at around this figure and, faced with the economic facts of life, many in the private sector with less security of employment have settled for less.
The unions have now announced their intention to take further disruptive action and to extend it into the social security and unemployment fields. The Government deplore this decision. They will, of course, do all within their power to minimise the damage and hardship which are caused to individuals and the country. To continue this dispute can only do damage to individuals, to the country and to the Civil Service; it can be of benefit to no one.
§ Mr. Alan Williams (Swansea, West)
I thank the Minister for his statement. In the context of next year, 1982, does he recognise that negotiations can have no meaning without a fallback provision for arbitration in the event of an impasse, as happened this year? Will the Government be using the 1981 negotiations to try to alter the basis of Civil Service pensions? In the context of escalation, which has come about after three months during which the unions have tried to ensure that the dispute had the minimum impact on the public, what contingency arrangements have the Government made to ensure that the unemployed and those in receipt of social security benefits are protected, as all hon. Members wish them to be?
It is now clear that the Government completely miscalculated the mood and anger within the Civil Service and, more important, that in acting on the Prime Minister's instructions they have mishandled the build-up and the escalation by unilaterally tearing up the Pay Research Unit procedure and by refusing arbitration?
22 Is 7 per cent. the absolute limit or maximum compatible with the 6 per cent. cash limits? Is there any headroom? If there is, why has the Minister not told the House? What is the precise figure? Is it not a fact that consistently Government's underspend by about 3 per cent. within their cash limits?
Will the Minister take the opportunity categorically to deny that the Prime Minister, with her well-known vindictiveness, intends to interfere with promotions and leave arrangements for civil servants who have been involved in strikes? The Civil Service would be demoralised if in two or three years people were still being punished for having stood up today against the Prime Minister for what they believed to be their rights.
Will the Minister deny the extraordinary story that, as a result of a bout of pettiness and silliness at being opposed, the Prime Minister intends to use the Honours List to punish strikers? Will the hon. Gentleman make it clear to the Prime Minister that that is a matter for the Royal Prerogative rather than for the Prime Minister? Does he agree that such action would embroil Her Majesty in the Government's industrial dispute? If there is any truth in that absurd and preposterous story, was there any consultation with the Palace before it was carefully leaked to the press for the weekend?
Finally, and most importantly, will the Minister now tell us—he has failed to do so repeatedly at the Dispatch Box—why the Government will not go to arbitration when the unions are willing to do so? Since the Government tore up the PRU report because the figures did not fit their prejudices, is their case so weak on pay for the civil servants that it will not stand the impartial analysis of independent arbitrators?
§ Mr. Hayhoe
The right hon. Gentleman asked whether it was possible to have meaningful negotiations in 1982 without a prior commitment to arbitration. Of course it is. We have said that those negotiations will be conducted without a predetermined cash limit so that meaningful negotiations can take place.
The right hon. Gentleman asked whether pensions would figure in the 1981 negotiations. I think that he meant to ask whether they would figure in the 1982 negotiations. We have already made it clear that they are not figuring in the 1981 negotiations but that that will be one of the factors which must be taken into account in 1982. We have said to the unions that both sides should be prepared to bring all relevant factors to those meaningful negotiations.
The right hon. Gentleman asked whether contingency arrangements were designed to protect people in receipt of benefits from the DHSS and the Department of Employment. The best protection is for the Civil Service unions to call off their proposed action. There will be no immediate effects for the majority of beneficiaries. However, no one should return his order book to the DHSS Newcastle upon Tyne central office. There are emergency plans in the DHSS and Department of Employment local offices to make payments where they have been disrupted by industrial action at the central computers. The emergency arrangements are being publicised by the Secretaries of State for Social Services and Employment.
The right hon. Gentleman asked whether the 7 per cent. offer was the maximum figure in relation to the 6 per cent. cash limit. I assure him that 7 per cent. is the maximum that the Government believe can safely be offered to 23 maintain the 6 per cent. cash limit policy. We have made it absolutely clear on numerous occasions—and there should never have been any doubt about it among the Civil Service union leaders—that the Government's 6 per cent. cash limit should not be breached.
The right hon. Gentleman referred to the question of arbitration and asked why it is being denied for 1981. The reason is clear. My right hon. and noble Friend made it perfectly clear to the Civil Service unions in August last year that cash limits would play a major part in the 1981 settlement. In October he confirmed that they would the the determinant for the 1981 settlement. I thought that the right hon. Gentleman would understand that Civil Service union leaders realised then that if the cash limit was to be the dominant factor arbitration could not play a part.
The right hon. Gentleman criticised what he saw as the vindictive and malicious policy of the Government. Any vindictiveness in the dispute must lie with the Civil Service unions. Their action is vindictive towards the community as a whole. I appeal to them to call it off.
§ Mr. Williams
I am grateful to the Minister for his reply. He covered many of my points to his satisfaction, but not to ours. Will he pursue my questions about leave, promotion and the Honours List?
§ Mr. Hayhoe
The right hon. Gentleman referred to press speculation during the weekend which appeared to suggest that the Government were determined to punish civil servants. Of course, the Government are not doing anything of the sort. I recognise, as the hon. Gentleman should recognise, that most civil servants continue to give loyal service to their Departments. They are keeping the business of Government running. It is right that we should pay tribute to their work.
§ Mr. John Peyton (Yeovil)
Does my hon. Friend think that the comments of the right hon. Member for Swansea, West (Mr. Williams) come rather oddly from someone who was a member of a Labour Administration who did not have a happy time when dealing with Civil Service pay? Will he make it absolutely clear that the habit of promoting and fostering grievances, and taking them out on the public at every turn by knocking those who can be most easily hurt, is the road to disrupting the whole community and to impoverishing the nation?
§ Mr. Hayhoe
I agree with my right hon. Friend that the Labour Administration, through the application of their pay policy, were responsible for reducing the level of Civil Service pay in real terms. They did so to such an extent that a substantial average cumulative increase of almost 50 per cent. during the past two years was granted throughout the Civil Service so that it should catch up and return to relativity with outside industry. That was a measure of the falling behind that occurred under the Labour Administration. This Government have put the matter right.
I agree with my right hon. Friend that, whatever sympathies individuals may have with those who criticise the Government's actions on Civil Service pay, there can be no justification for civil servants taking such disruptive action, which is clearly designed to damage the country and the community. The present threat to extend the action to damage the interests of those least able to protect themselves within the community is disgraceful.
§ Mr. J. Enoch Powell (Down, South)
Will the Government consider whether they can make a fresh start by recognising the inconsistency between their theory of the cause of inflation and the proper policy for dealing with it, and the attempt forcibly to alter real relativities of remuneration which have hitherto been considered to be right? Will they not learn from the experience of 1978–79 the folly and the outcome of attempting to deal with inflation by fixing money wages at a lower level than the current level of inflation?
§ Mr. Hayhoe
The Government's offer of 7 per cent., taking account of all the circumstances—I have explained some of them such as the relative job security, the conditions of employment and comparisons with outside industry—is fair and reasonable. On the more theoretical and philosophical aspects of the right hon. Gentleman's question, I heard his exchange with my right hon. Friend the Prime Minister last week, and I do not wish to add to her remarks.
§ Mr. Speaker
Order. I propose to allow questions on the statement to run until 4 o'clock. We must then leave the statement as there is a heavy programme before the House.
§ Mr. R. A. McCrindle (Brentwood and Ongar)
Does my hon. Friend agree that the escalation of the Civil Service dispute is bound to have a disproportionate effect on that section of society least able to survive the deprivation of its benefits? If that is correct, and if it is correct that the Government's principal weapon in mitigating that hardship is to authorise the hand-writing of Giro cheques while the computers are non-operational, is my hon. Friend aware of any Civil Service union attempting to intervene to prevent that from happening? Will not such action extend the hardship that child allowance beneficiaries, retirement pensioners and the unemployed are bound to suffer?
§ Mr. Hayhoe
I agree that the proposed escalation, which I hope will not take place, will adversely affect those within the community who are often the most vulnerable.
On the question of hand-writing cheques, as far as I am aware when computers have been taken out the arrangements have worked satisfactorily in most offices. Only a small number of offices—22 out of 1,000—have been closed to the public, and their staff are continuing to write Girocheques. A few offices—three in Scotland and one on Merseyside—are closed because staff are on strike. Currently, the manual procedures are working well. If the strike continues difficulties will increase simply because of the passage of time.
§ Mr. Donald Stewart (Western Isles)
Why does the Minister imagine that because other workers have settled for about 7 per cent. that is a significant argument? Civil servants can point to others who have settled for a substantially higher figure. Is the hon. Gentleman aware that the Government's case is extraordinarily weak because of their refusal to go to arbitration and to tie themselves to arbitration in future?
§ Mr. Hayhoe
The right hon. Gentleman has got it wrong. The 6 per cent. cash limit applies to the public services, where the taxpayer or ratepayer directly provides the resources for paying wages. That limit is being held. 25 When I said that more than 2 million people had settled within the limit, I was referring to local authorities, teachers, and Nationall Health Service staff. It would be a betrayal of what they have done, and the settlements that they have made without industrial action, to say that those who make the community suffer should be rewarded. It would be an absurd sense of proper responsible action for the Government to reward those who damage the community. We have no intention of going down that road.
§ Mr. Terence Higgins (Worthing)
Is my hon. Friend aware that he is right to stand firm on the present cash limit offer and to resist the claims for arbitration because there is no known case of an arbitrator having the nerve to come down absolutely in favour of one side? The present offer is as much as can be afforded in the current circumstances.
Is my hon. Friend further aware that there is little point in standing firm on the cash limits this year if he is prepared to negotiate with no predetermined cash limit next year? As the offer has not been accepted by the unions, will he withdraw it?
§ Mr. Hayhoe
We are standing firm on the cash limits for this year. I think that my right hon. Friend does not know the full history of civil Service arbitration. It is not true to say that in every instance the arbitrator has split the difference. In recent years there have been occasions when arbitrators have firmly supported the Government's view on issues in dispute.
Having said as far back as August 1980 that cash limits would be the major determinant, it was clear that arbitration, which could vary those cash limits, was not available and was not relevant. The Government have been right to offer the Civil Service unions the possiblility of genuine negotiations next year without a predetermined cost of the settlement. That offer has been made, and it was a fair one for the Government to have made in all the circumstances.
§ Mr. David Winnick (Walsall, North)
Is the hon. Gentleman aware that full responsibility for the dispute, its escalation and the undoubted difficulties that will be caused by the dispute's escalation lie fully with the Prime Minister, who has set out to humilate this group of public servants, many of whom are on low pay? Will he comment on the reports that have appeared in a number of newspapers that, while Lord Soames was willing to reach a compromise with those negotiating on behalf of the unions, it was the Prime Minister who made it clear that there could be no compromise? Is he aware that the Civil Service unions are determined not to surrender?
§ Mr. Hayhoe
I draw some comfort from the hon. Gentleman's words, because he nearly always gets things wrong. He seems to be pursuing his own vendetta against the Prime Minister and using the Civil Service dispute as the vehicle for his absurd allegations.
§ Sir David Price (Eastleigh)
My hon. Friend spoke about averages. Will he tell the House how many different categories of public seervants are involved? Will he publish in the Official Report the pay record of the different categories? It seems to some of us that it is asking rather a lot to try to negotiate jointly for clerks in the DHSS, for example, and air traffic controllers. Would it not be a good thing to try to get negotiations nearer to where the individual action takes place?
§ Mr. Hayhoe
There are many different grades and categories involved in this year's negotiations. All the grades and categories within the non-industrial Civil Service are included—over half a million civil servants. Over the past two years there has been a cumulative average catching-up increase of nearly 50 per cent. Necessarily, that average conceals wide variations. It ranges from 30 per cent. to more than 60 per cent. I know that my hon. Friend is particularly concerned with the scientific Civil Service. Senior principal scientific officers would get twice the amount that they received last year if they accepted 7 per cent. for this year.
§ Mr. David Penhaligon (Truro)
Is the hon. Gentleman aware that many would concur with the Government's observation that civil servants underestimate the value of their job security? However, would not the Government have been on far better ground if they had set up a body to try to revalue that job security and had incorporated that revaluation in the PRU settlement? There are many who would have found that comprehensible and understandable.
§ Mr. Hayhoe
When the negotiations started with the unions this year we said that the pay agreement and pay research would not apply and that the cash limit would be the determinant. We have made it clear that we are prepared to set up an independent authoritative inquiry to find ways of determining Civil Service pay in future. I have already said in the House and to the Civil Service trade union leaders that one of the factors that must be considered is relative job security. It is an important factor. It is absurd that many Civil Service trade union leaders try to set it on one side and say that it does not matter.
§ Mr. Geoffrey Johnson Smith (East Grinstead)
What is the main reason put forward by the Civil Service trade union leaders for arguing that their members should have more than 7 per cent., bearing in mind the economic conditions now facing the country and the fact that they have had a catching-up exercise in the same way as Members of Parliament? Could it be that the Civil Service trade union leaders have overplayed their hand by asking for 15 per cent. in the first place?
§ Mr. Hayhoe
The Civil Service unions came together and agreed upon a claim which was basically a 15 per cent. increase with a minimum underpinning of a flat-rate sum for the lower paid. I believe that they overplayed their case and that their claim was out of tune with what was happening generally in the country. They have damaged their case by the way in which they have pursued that claim. I hope that they will have second thoughts and will realise that it is in the long-term interests of civil servants and of the Civil Service as an institution that the action should be called off, that we get back to normal working and that we begin what must be the long and difficult job of repairing the damage that the dispute has done.
§ Mr. William Hamilton (Fife, Central)
Is the Minister aware that civil servants cannot understand why the Government should have no regard for a 6 per cent. cash limit when it comes to the police and the Armed Services when he is asking them, in the light of inflation rate of 12 per cent., to accept without a fight a radical reduction in their standard of living? No self-respecting worker would 27 concede that case without a struggle with the Government. Is there any prospect of further talks in the immediate future?
§ Mr. Hayhoe
The hon. Gentleman used the term "no self-respecting worker". Surely no self-respecting hon. Member should underestimate what those in the police and the Armed Services do for the community and the sacrifices and dangers that are implicit in their jobs. A further contrast is that the police and those in the Armed Services do not go on strike. The contrast that the hon. Gentleman seeks to draw is a mistaken one.
§ Dr. Brian Mawhinney (Peterborough)
My hon. Friend has mentioned emergency arrangements that have been made by the Secretaries of State for Social Services and Employment. Will he ask our right hon. Friends to make details of those arrangements available to all hon. Members so that we may talk about them and publicise them in our constituencies and thereby protect those who are most likely to suffer and who are least able to withstand the suffering that will be caused by a minority of civil servants?
§ Mr. Hayhoe
I am grateful for my hon. Friend's comments. I shall seek to follow his suggestion. I know that the disputes at passport offices have been causing considerable hardship. Emergency arrangements have been made that reduce the effect of the action that is being taken.
§ Mr. Robert Hughes (Aberdeen, North)
Does the Minister have no concept of the resentment within the Civil Service at the scrapping of the Pay Research Unit system? How can he say that it is right this year to scrap that system and then say that next year the Government will discuss some further arrangements? Would it not be 28 better to go to arbitration this year and to take that into account when it comes to setting up new arrangements? If that is not done, the damage and mistrust caused by the Government within the Civil Service will have repercussions far beyond the present dispute.
§ Mr. Hayhoe
Whatever the resentment within the Civil Service may be, we must recall that when the one-day strike was called only 52 or 53 per cent. of civil servants responded to it. I find that the resentment within the community is against the Civil Service, which is perceived as pushing beyond reason its case for more money this year.
§ Mr. Kenneth Lewis (Rutland and Stamford)
Is my hon. Friend aware that, by their own choice, the Government are in a rough, tough situation of free collective bargaining? Therefore, is it not extremely difficult for the Minister concerned with the Civil Service to negotiate if the Cabinet makes a predetermined decision? While it is right for the Government to stand firm on the cash limits, is it not important that the Minister should have flexibility in his negotiations?
§ Mr. Hayhoe
My hon. Friend is right. I take it that he fully supports my comments about the arrangements which are being made for the negotiations in 1982. With regard to this year, it was the careful and considered judgment of the Government last year that it would not be possible, in the economic difficulties confronting the nation at this time, for there to be general, free negotiations. We told the Civil Service unions that the cash limits would be the determinant, and much flowed from that. I am sorry that the Civil Service union leaders and many of their members did not believe that the Government were determined to hold to that policy. All that I can do this afternoon is to reiterate that we shall stand firm on the 6 per cent. cash limit. It will not be breached this year.