Civil Service (Pay Inquiry)

HC Deb 29 June 1981 vol 7 cc577-84

The Minister of State, Civil Service Department (Mr. Barney Hayhoe)

With permission, Mr. Speaker, I should like to make a statement about the inquiry into Civil Service pay.

In the statement which I made to the House about the Civil Service dispute on 8 June, I explained that our talks with the Civil Service unions had concerned both this year's pay increase and the future arrangements for determining Civil Service pay. I made clear that the Government were satisfied that it would not be right to increase our 7 per cent. offer for the 1981 settlement, but that in response to the unions' anxieties about the future we had told them that we were ready to set up an independent outside inquiry to advise on the best up-to-date arrangements.

I want to emphasise our concern to establish new and acceptable pay arrangements as soon as practicable. To this end the Government have appointed the right hon. Sir John Megaw, a retired Lord Justice of Appeal, as chairman of an inquiry into non-industrial Civil Service pay. Membership of the inquiry is being discussed with Sir John Megaw and will be announced later. The inquiry will have the following terms of reference: Having regard to the public interest in the recruitment and maintenance of an efficient and fairly remunerated Civil Service, and in the orderly conduct of the business of Government and its services to the public; to the need for the Government to reconcile its responsibilities for the control of public expenditure and its responsibilities as an employer; to the need for good industrial relations in the Civil Service; and to recent experience of operating the existing arrangements for determining the pay of the non-industrial Civil Service: to consider and make recommendations on the principles and the system by which the remuneration of the non-industrial Civil Service should be determined, taking account of other conditions of service and other matters related to pay, including management, structure, recruitment and grading. I have already given the unions an assurance of our commitment to genuine negotiations in 1982 without predetermined cash limits. We will ask the inquiry to report by next summer so that the recommendations can be considered in good time before the 1983 Civil Service pay settlement.

The terms of reference for the inquiry take account of earlier discussions with the unions. They have been widely drawn to allow full consideration, without impediment, of all questions relevant to the determination of Civil Service pay. It is our earnest hope that the Service will see this as opening the way to a constructive and honourable resolution of the important long-term issues underlying the present dispute.

The setting up of this independent inquiry underlines in the clearest possible way the Government's concern to establish a fair and sound basis for the future determination of Civil Service pay. The public has a right to expect the Civil Service unions to respond now equally constructively by bringing their disruptive action to an end. I hope they will do so without further delay.

Mr. Alan Williams (Swansea, West)

Does the Minister not find it more than slightly grotesque that just over two years ago the Prime Minister—admittedly in the middle of an election campaign—was a most enthusiastic supporter of the Pay Research Unit system, but that by last autumn it had lost its place in her affections and was suspended, that by last week it had been dismantled, and that here we are this week setting up a new committee to re-establish the system under some other name?

Does not the hon. Gentleman realise that this record of dithering incompetence has wasted a full nine months during which the unit could have been working so that it could have reported in time for next year's pay round? As the new mechanism will not apply until 1983, does the Minister accept that it will mean a further two years during which Civil Service pay will be in a vacuum, with all the ingredients for a repetition of this year's chaos and bitterness?

How does the Minister reconcile his comment in the statement about "genuine negotiations" next year with the recent utterances of the Chancellor of the Exchequer about the pay round that he is already determined to implement? Will he not admit that the statement does absolutely nothing to help the situation that we are enduring this year and that it will do nothing to end the four-month old dispute which has been brought about by the arbitrary imposition of an incomes policy on one small part of the public sector?

Are not the Government running away from arbitration because they know that, contrary to the impression they have tried to give the lobby and the press, only 380,000 public sector workers have already settled at 7 per cent. or below and that more than 2 million have received settlements of more than 7 per cent? Although admittedly many of those are only slightly above 7 per cent., more than 500,000 have received settlements at more than 10 per cent. Does the hon. Gentleman agree that those figures do not include public sector workers in the mines and the gas, electricity, water and telecommunications industries?

Mr. Hayhoe

I know that more than 2 million workers in the public services have settled within the cash limit of 6 per cent., which is the same limit that the Government are determined to maintain for the Civil Service.

As to pay research, it ill behoves the right hon. Gentleman or any of his Opposition colleagues to abuse the Conservative Government for their record on pay research-based agreements. Like me, he knows that there have been five such settlements in the last 10 years, four of them implemented by Conservative Governments and only one implemented by a Labour Government.

The right hon. Gentleman also asked about the Prime Minister's comment. I have dealt with that in the past, and I shall do so again. The Government said that they welcomed the restoration of pay research, which I remind the House was suspended by the Labour Government. It was their suspension of these agreements which led to Civil Service pay falling so far behind that the sense of frustration and anger among civil servants built up. We gave that welcome on the basis of the considered statement by my right hon. Friend the Secretary of State for Employment in August 1978, when he welcomed the return of pay research but went on to say: Naturally, we cannot give blanket approval in advance to the way the new pay research unit is working nor an unqualified promise to implement its future recommendations. I believe that we have kept absolutely in line with the comments that we made at the last election and before. I hope that the Chancellor of the Exchequer's comments about the next pay round will receive support from both sides of the House—that is, that pay in the coming round should be more in line with the growth of the productive capacity of the country. That is the only way in which industry can become competitive and allow us to get on top of inflation.

Several Hon. Members

rose—

Mr. Speaker

Order. I remind the House that this is a Supply day and substantial numbers of right hon. and hon. Members from Yorkshire and Humberside have intimated to me that they hope to participate in the debate. I shall allow questions to run until 4 o'clock, but no longer.

Sir William Clark (Croydon, South)

First, will my hon. Friend confirm that the inquiry will take into account the security of employment that civil servants enjoy that is not enjoyed by the private sector? Secondly, will the Government look at the inadequacy of the contributions made by civil servants to the index-linked pension scheme, which is not available in the private sector?

Mr. Hayhoe

It is not for me to interpret the terms of reference. I have read them to the House and it is for Sir John Megaw and his colleagues to work on them.

Mr. Richard Wainwright (Colne Valley)

The terms of reference of the inquiry refer to the existing arrangements for determining the pay of the non-industrial Civil Service". How does the Minister intend to describe to the inquiry the existing arrangements for determining that pay? In order to give the best possible start to the inquiry, can the Minister confirm that as soon as the inquiry is set up the Government will retire from their present posture of utter and absolute intransigence?

Mr. Hayhoe

The terms of reference refer to recent experience of operating the existing arrangements for determining pay. The inquiry will be taking account of the recent experience.

Mr. William Hamilton (Fife, Central)

Does the Minister of State think that his statement will help to resolve the current dispute? Will the Government accept unconditionally the inquiry's recommendations, whatever they may be? If not, in view of the past behaviour of the Government, will not that represent utter and complete humbug?

Mr. Hayhoe

The number of interventions made by the hon. Gentleman on this subject contain more humbug than anything that has come from the Government. I believe that the statement will help. The hon. Gentleman's question suggests a lack of knowledge of the widespread and deep concern throughout the Civil Service about achieving an agreed and ordered system for determining future pay which has public confidence. It is widely accepted that the old arrangements had lost public confidence and therefore changes had to be made.

The Government are not committed to giving unconditional acceptance of the recommendations of the inquiry any more than are the unions. The report of the inquiry should help considerably in establishing a system which will be fair to the taxpayer and to the civil servants and which will command public confidence. I hope that it is the wish of most hon. Members that we should move to such a system.

Mr. Terence Higgins (Worthing)

As the Minister has said that the Government are prepared in future to negotiate Civil Service pay with no predetermined cash limits, are we to understand that it is to be treated as a special case or will the same apply to nurses employed by the National Health Service, teachers employed by local authorities and so on? Similarly, is the pay for those in the nationalised industries to be negotiated with no predetermined external financial arrangement?

Mr. Hayhoe

My right hon. Friend has slightly misquoted what I said. I said that we had given an assurance of a commitment to genuine renegotiation in 1982 without predetermined cash limits. That undertaking has been given in the past, and I repeat it today.

Mr. K. J. Woolmer (Batley and Morley)

Is the Minister aware that expressions such as "fairness", "orderly conduct" and "the need for good industrial relations" come ill to his lips for the civil servants involved in the dispute for the past few months? Does he recognise that his statement will have no bearing on the wish of the civil servants to reach a settlement of this year's dispute that shows that the Minister is flexible and that he cares about industrial relations, which are sinking to a desperately low level and will not be improved just by promises of benefits in two years' time?

Mr. Hayhoe

The offer of 7 per cent. is fair and reasonable, taking account of all the circumstances. The action which is being and has been taken by the Civil Service unions involves only a small minority of civil servants—under 1 per cent.—and is wholly unjustified. In view of the statement I have made, it would be even more unjustified if the civil servants were to continue their disruptive action.

Mr. Ian Wrigglesworth (Thornaby)

Is the Minister aware that his statement will do little to restore faith in the Government's intentions about their own employees? Does he not accept that, after the attacks made on the Civil Service by the present Administration since they came to office, it will take much more than a promise of an inquiry, which will not report for another year, to determine a system of pay that should have been decided a long time ago, if the system was to be changed?

Does the Minister also accept that after the words of the Chancellor of the Exchequer at the weekend—against the background of a dispute that has continued for some months—the Civil Service will, understandably, be more than suspicious of what the Minister has said, because it will not believe that genuine negotiations can take place against a background of no cash limits when the Chancellor is talking about pay settlements next year of about 3 per cent. to 4 per cent.?

Mr. Hayhoe

I think that the inquiry will help to resolve the dispute because, as I have said, many civil servants were worried about the arrangements for the future. What we have announced will be generally welcomed by them. It also gives the lie to much misleading propaganda that has been put around about the Government's intentions in future pay arrangements for the Civil Service. I repudiate the hon. Gentleman's comments about attacks on the Civil Service. Why does he not listen to the radio programme "No, Minister" on Sunday evenings? He will then discover that Minister after Minister is making sensible and constructive comments about the considerable contribution that our Civil Service makes to the running of the country. I have frequently said from the Dispatch Box that we should acknowledge how lucky we are to have a Civil Service with the integrity and record of incorruptibility of the British Civil Service.

Mr. Raymond Whitney (Wycombe)

Will my hon. Friend assure the House that the Government will give careful consideration to the membership of the inquiry? We are aware of the direct link between the composition of such bodies and their conclusions. Will my hon. Friend undertake to point out to the inquiry that in the view of many people, who are aware of the details of such negotiations, the Pay Research Unit operated more effectively during the first 10 to 14 years of its life, when the Treasury conducted the Government side of the case, which in recent years has been conducted by the Civil Service Department?

Mr. Hayhoe

It is worth recalling that when the Pay Research Unit and the pay agreement were first set up as a result of the "deliberations of the Priestley Commission" in the days of the so-called 13 wasted years of the Conservative Administration in 1955 unemployment was running at 232,200, or 1.1 per cent. of the work force, and the retail price index increased by 2 per cent. in 1956. Conditions were very different in those days. In times of rapid inflation, with very much higher unemployment, it is right that we should look again at ways of determining Civil Service pay.

Mr. Charles R. Morris (Manchester, Openshaw)

Is the Minister aware that there is a wide area of public opinion which believes that civil and public servants are entitled to a level of remuneration broadly comparable with that enjoyed by people undertaking similar work in the private sector? Will he assure the House that, in the submissions which his Department will be making to the inquiry, the questions of fair comparisons, job security and Civil Service pensions will be included?

Mr. Hayhoe

Yes, I can give that assurance. Comparisons have a part to play in establishing Civil Service pay rates and we have made that clear, just as considerations of job security, supply and demand, recruitment and retention should all be taken into account. I have reiterated a basic principle of fairness—fairness to the civil servant and fairness to the taxpayer, and a system which commands public confidence. That is what we seek.

Mr. Peter Emery (Honiton)

Will my hon. Friend accept that we shall support him absolutely on his stand of 7 per cent. but that his reply to my right hon. Friend the Member for Worthing (Mr. Higgins) was slightly convoluted? Does he really mean that in future we are to negotiate with cash limits or that the Civil Service will be able to negotiate without cash limits?

Mr. Hayhoe

I repeat the assurance which has been given on behalf of the Government by my right hon. and noble Friend the Lord President of the Council—that the Civil Service pay negotiations for 1982 will be carried out without predetermined cash limits.

Mr. Michael English (Nottingham, West)

Why have the hon. Gentleman's superiors destroyed all prospect of anyone believing that it will be an independent inquiry by appointing as its chairman someone who has an inflation-proof pension with a 15-year accrual rate—far better that anyone in the Civil Service gets?

Mr. Hayhoe

I do not think that the hon. Gentleman's comments will in any way impugn either the integrity or the fair-mindedness of Sir John Megaw. Although I do not know him personally, I understand that the Leader of the Opposition in another place served under him in the gunners in the war. That seemed to commend Sir John Megaw to the leadership of the Labour Party in another place.

Mr. Peter Hordern (Horsham and Crawley)

Will my hon. Friend confirm that the expression used in the terms of reference to the effect that the inquiry will be taking other conditions into account is the same as that used in the Priestley Commission report 25 years ago? Is it not clear that after a quarter of a century the other conditions which have not been taken into account are the relative job security in the Civil Service, index-linked pensions, and above all the national interest in securing for the Civil Service no more than the nation can afford to pay?

Mr. Hayhoe

Very unusually, my hon. Friend has got it wrong. The phrase at the end of the terms of reference— taking account of other conditions of service and other matters related to pay, including management, structure, recruitment and grading"— arises practically directly from paragraph 55 of the Priestley Commission's report, in which it complained that its terms of reference did not go wide enough to include these very matters. We have made sure that that criticism of the narrowness of the terms of reference of the Priestley Commission will not apply to the terms of reference that we have set up for this inquiry.

Mr. David Winnick (Walsall, North)

Why should the Civil Service and the unions believe a word about the Government's future good intentions when the Government have acted in such a despicable way this year towards the civil servants in their pay negotiations? Is it not interesting that what was said from the Opposition Benches about a fortnight ago has been proved right? We said that the civil servants, with no great history of militancy behind them, were not willing to surrender and were fighting on for what they believed to be a worthy cause.

Mr. Hayhoe

I do not accept for one moment the charge that the Government have not treated the Civil Service with fairness in regard to the offer of 7 per cent., based upon the 6 per cent. cash limit. As I have said before, over 2 million other workers in public services have settled without industrial action at around this figure and within that cash limit. It would be a betrayal of what those workers have done if the Government were now to increase the very fair and reasonable offer which they have made, based upon the 6 per cent. cash limit.

Mr. Nigel Forman (Carshalton)

Is my hon. Friend aware that the position at which the Government have now arrived, standing firm on the 6 per cent. cash limit, with the offer of a genuinely independent inquiry, is the right one and will be accepted as such by the many civil servants in my constituency? But will he confirm that some of the wider aspects, such as the introduction of new technology into the Civil Service, will be properly looked at since there is great scope there for manpower savings and greater efficiency?

Mr. Hayhoe

I accept that there is scope for manpower savings and greater efficiency in the Civil Service. Indeed, there is a great deal of co-operation from the Civil Service in improving efficiency and in slimming down manpower. As my hon. Friend will know, in the lifetime of this Government, Civil Service manpower has already been slimmed down by over 40,000, quite apart from the additional civil servants who have been needed to cope with the rise in unemployment.

I accept what my hon. Friend says, that the combination of the pay offer for this year, the promise concerning negotiations without predetermined cash limits for 1982, and the details of the inquiry, surely provide an honourable basis upon which those people who have been causing hardship to the community by their disruptive action should cease that the disruptive action and return to normal working. I wish that the message could go out from all parts of the House that that is what we expect from all civil servants.

Mr. Alfred Dubs (Battersea, South)

Does the Minister understand that the civil servants feel badly let down by the Government because they have unilaterally torn up an agreement which has been operative for some years? He said a few minutes ago that the old system had lost public confidence. What evidence has he for that assertion? Finally, has he considered the possibility that the inquiry might recommend a return to the Pay Research Unit system?

Mr. Hayhoe

The evidence I have for my statement that the existing arrangement had lost public confidence is based on comments in this House and editorial comments in a wide variety of newspapers. The only major newspaper in the country which has expressed support of the old arrangements is The Scotsman. Practically every other newspaper has been critical, whatever the political structure of the newspaper. [Laughter.] In view of the laughter from the Opposition Benches, I should add the words "except for the Morning Star", which presumably Opposition Members have in mind. I do not believe that any fair-minded test of public opinion would lead to the view that the old arrangements for establishing Civil Service pay—the Pay Reserch Unit and the pay agreements as they operated in recent years—were satisfactory. Any reasonable test shows that they had lost public confidence.

Mr. Teddy Taylor (Southend, East)

As the report will not be available until the 1983 pay round, will the Government consider the possibility of an element of arbitration in the 1982 negotiations? As other groups of public employees have got more than 7 per cent. out of a 6 per cent. cash limit, will the Minister say whether 'the Government would be willing to discuss the possibility of giving more within the 6 per cent. cash limit?

Mr. Hayhoe

It seems to the Lord President of the Council and to me that now is not the time to determine arbitration arrangements for 1982. We have said that there should be genuine negotiations and we trust that those negotiations will lead to a reasonable and fair settlement for the Civil Service. In our talks with the unions we have neither ruled out nor ruled in arbitration for 1982.

Mr. Cryer

Will not this latest Clegg commission be regarded by many civil servants who are engaged in the current dispute as a ploy to hoodwink them? Is not this announcement far too late to remedy the damage to industrial relations which the Government's intransigence has brought about within the Civil Service? Is it not true that the Civil Service, having learnt a lesson from the miners, believes that industrial muscle only will batter the Government into accepting arbitration, especially in view of the 18 per cent. wage increase given to Members of Parliament a few weeks ago?

Mr. Hayhoe

Any reference to the Clegg commission with regard to this committee of inquiry is wholly misplaced. The Clegg commission was concerned with determining the amounts of pay settlements in situations arising from the disastrous policies pursued by the Labour Administration. This inquiry is concerned not with determining amounts, but with putting forward recommendations about the arrangements for determining Civil Service pay in the future.