HC Deb 08 May 1981 vol 4 cc458-64

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Brooke.]

2.32 pm
Mr. William Hamilton (Fife, Central)

The Civil Service pay dispute, about which we now have a short debate, has origins which are not too well known. I want to put them on the record—I hope accurately, even though briefly.

In October 1980 the Government unilaterally, almost overnight, threw overboard the machinery on which Civil Service pay awards had been made. The Pay Research Unit system of settling Civil Service pay was destroyed by the Government at a stroke—despite the Prime Minister's commitment of 18 April 1979, just before the general election. She said: The Conservatives protested very strongly at the suspension of the Pay Research Unit, and we welcomed the announcement of its restoration. We see no reason why the restored and revised research system should not continue to provide the basic data for pay settlements, as in the past. Not only has that commitment not been fulfilled, it has been flagrantly destroyed. The pay research system has been abandoned and the Government are refusing, and have steadfastly refused, to publish its findings—perhaps because they are too embarrassing in the present circumstances. Because they have not been published, the Civil Service trade unions are bargaining in the dark.

The Government subsequently barked out their order, "Six per cent. increase, take it or leave it". They later increased the offer to 7 per cent., but with no guarantees for the future. The Civil Service unions proposed arbitration, as is provided for in the procedure, but the Government rejected that, contrary to their undertakings incorporated in the ILO convention 151, article 8. That states: The settlement of disputes arising in connection with the determination of terms and conditions of employment shall be sought, as may be appropriate to national conditions, through negotiation between the parties or through independent and impartial machinery, such as mediation, conciliation and arbitration. Those are the terms of the convention that the Government signed 13 months ago, and of which they are now in breach.

On 22 February 1981 the Council of Civil Service Unions rejected the Government's 7 per cent. offer, gave notice of industrial action and spelt out to Ministers what it wished to negotiate on: first, more than 7 per cent.; secondly, guarantees for 1982; and, thirdly, further details of the Government's intentions on future pay negotiations.

On 3 March the unions put those three points to the Minister of State and his officials. The result was continuing inflexibility and no guarantees. The Government were staying put. It was obvious that the Government were ready for a showdown or complete capitulation by the civil servants. It was no wonder that, for the first time in history, all the Civil Service unions joined in hostility against the Government. But the Government were determined to make their incomes policy in the public sector stick, even if it meant substantial cuts in the standard of living of many thousands of civil servants.

It seems that the Government's calculations were based on certain suppositions. They judged that civil servants were unpopular, that they had little public sympathy and few friends. The Government have actively fostered the belief that civil servants are faceless, non-productive, over-paid, under-worked bureaucrats with inflation-proof pensions and job security. They also calculated that strike action would lay civil servants open to the charges of being unpatriotic, disloyal to their employers and greedy.

No one has done more to encourage those prejudices than the Prime Minister. What an unmitigated disaster she is proving to be. In her tediously harsh, hectoring, repetitive way, she has never stopped nagging about civil servants having job security. Yet she has thrown three million people on the dole, with more to come. She implies that civil servants should consider themselves lucky to have jobs. It may be that they are. The right hon. Lady has pointed out that civil servants enjoy index-linked, inflation-proof pensions. So does she, as a Member of the House, and so do millions of other people. The right hon. Lady also bellyaches about civil servants having had a 50 per cent. pay increase in the past two years and that therefore they are lucky to be offered 7 per cent.

Let us examine the Prime Minister's allegations and the facts. The allegation that civil servants have had a 50 per cent. pay increase in two years is not true. I have the latest figures from the Library. In the past two years, top civil servants had a 48.7 per cent. increase and clerical grades 46.9 per cent.

Even if those figures are right, there are other facts that the Prime Minister prefers not to publicise. Two-thirds of all non-industrial civil servants earn less than national average earnings. One-third earn less than £75 a week, which is the official poverty line.

I should like to quote from an article in the Glasgow Heraldof 5 May. Raymond Kirk, aged 18, a young civil servant living in Musselburgh, is one of 232,366 civil servants, one-third of the entire service, living below the poverty line. Raymond, who has a wife and child, takes home £45.29 a week. In addition, he draws £7 family income supplement because he is below the poverty line. There are hundreds of thousands in similar circumstances in the Civil Service. If they have had a 50 per cent. pay increase in the past two years and are still on those rates, I wonder what starvation rates they were on two years ago.

Even assuming that the claim of a 50 per cent. increase is right, what is so terribly generous about 50 per cent? I have the figures for other professions. The Library supplied them. they are much more truthful than some of the figures emanating from the Civil Service Department. In the past two years the net remuneration of doctors and dentists within the Health Service has increased by 57 per cent. and by more than 60 per cent. in hospitals. The remuneration of those in the Armed Forces has increased by 58.5 per cent. in the past two years. Those in the police force below the rank of superintendent have received an increase of 56.6 per cent. over the past two years.

The Prime Minister and the department are careful to select their years when they make comparisons. They have taken the past two years, but over the past five years Civil Service increases have been between 70 per cent. and 73 per cent. It is fair to say that they have been about 70 per cent. over the past five years. In the same period those in the Armed Forces have had increases amounting to 89 per cent. The police have received increases of 78 per cent. Doctors in hospitals have been given increases of 95 per cent. and High Court judges have been given 71.3 per cent. Few of the members of those professions are below the poverty line and virtually all of them have had increases in excess of those granted to the Civil Servants.

All that the civil servants have been doing over the past two years has been catching up. The purpose of the exercise of the Pay Research Unit is to enable civil servants to catch up with those engaged in comparable jobs outside. It is clear that the Government are seeking to impose a rigid pay policy in the public sector with no such imposition in the private sector. It will not apply to those with industrial muscle such as the coal miners, the water engineers or the power workers. The Government Actuary estimates that average earnings in 1981–82 will increase by 10.5 per cent. The Government are seeking to thrust on civil servants a 6 per cent. or 7 per cent. increase while all the indications are that average earnings over the spectrum will increase by 10.5 per cent.

That is precisely what the Prime Minister warned against during her recent visit to the United States. She was quoting a success story. It is rich of the right hon. Lady to go to America and to say how successful she had been in Britain. She was reported in Time magazine of 16 February as saying to President Reagan: Never, never, never, I beg of you, go the way of incomes policy in the sense that you say 'You can only have X per cent.' You build in all kinds of rigidities. Never go that way because you will spend the next two years unwinding the rigidities and they always unwind upwards. However, the right hon. Lady and her Government are now insisting—they have repeated this time and time again—that they will go no further than 7 per cent. for the civil servants. They might win the struggle. They boast prematurely about getting inflation down almost to the level that they started with two years ago. They have done so at the cost of untold misery, with millions on the dole and more to come. The price of winning against the civil servants is certain to be a lasting legacy of anger, bitterness and mistrust that will take years to eliminate. I ask the Government to unbend, to be a little more flexible and to set up another independent outside commission and/or submit the process to arbitration. There is much to be gained by the Government's showing flexibility. If they do, I think that there will be a response from the trade union side.

2.45 pm
Mr. Alan Williams (Swansea, West)

Because the civil servants' action is unpopular, there is a tendency to overlook the background to it. The public should understand that that background is a clear betrayal of commitments given by the Prime Minister during the election campaign. It is no good the Minister of State's referring to an earlier speech by the present Secretary of State for Employment. In the letter that I produced in the House recently, sent out from the Prime Minister's office during the election campaign, there were no provisos and no qualifications. There was certainly no references to the "ifs" and "buts" in an earlier and not all that well reported speech by the Secretary of State for Employment.

It is no good, either, the Minister's telling us that the system is out of date, because only two years ago the Prime Minister herself welcomed the return to the pay research system. She did not consider it out of date then.

It seems strange for the Minister to berate the civil servants who are in dispute on the grounds that some 2 million people in the public sector have already settled within the 6 per cent., when the Government are saying that a wider comparison—the established method of comparison, based on statistics about the pay of everyone—must be abandoned. The Government say, "For this pay round the only comparison that we want you to consider is one with those who accepted the lowest pay settlements of this round." There is no way in which that can be presented as justice.

The Minister may say that the system has been abandoned before. It has been suspended, but always in the context of a proper incomes policy applying to everyone. This is a limited incomes policy that applies only to part of the public sector—what is thought to be the weak part. Because the Government have played down the effect that the dispute is having on defence and the Government's financial resources, they are stimulating the pressures within the Civil Service unions for escalation, as we saw at yesterday's conference. There is a risk of an all-out strike for one week. There is also a risk that in the Department of Employment and the Department of Health and Social Security there could be action affecting the payment of benefits to those most in need. None of us, including the civil servants, wants that to happen.

If the Government think that they have a case, the honourable thing for them to do is to arbitrate, in keeping with their commitments to the International Labour Organisation and the agreements that have so far existed between them and the Civil Service unions. If the Government's case is right, they have nothing to fear from arbitration.

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

Unlike the right hon. Member for Swansea, West (Mr. Williams) and the hon. Member for Fife, Central (Mr. Hamilton), I want first to pay a tribute on behalf of the general public to all those civil servants who have continued to give loyal and dedicated service to their Departments and to the community during the dispute. I know that many are profoundly disturbed by the disruptive action that is being taken by a small minority and by the calls for wider and extended action that are emerging as the Civil Service unions' conference seasons gets under way. We must remember that those who talk so often at those conferences will not be representing the views of many of their fellow workers.

Union leaders say that their action is directed against the Government. What nonsense! Actions to impede the collection of taxes or the repayment of VAT to small businesses and others, actions to interrupt air travel or to prevent Royal Navy submarines going on patrol, hurt the country and the community. I am glad that departmental contingency plans are working well and that essential work is continuing.

But damage is being done, not least to the reputation and the high standards of the Civil Service itself. Once the dispute is over we shall all have a great deal to do to rebuild morale and restore sensible working relationships. The sooner we can start this positive, constructive work, the better.

To end the dispute, there should be talks with the union leaders. I want there to be no doubt about the Government's willingness to talk. We are ready to talk to the Civil Service unions at any time. Surely all but the most militant must accept that this is a much better and more fruitful approach than pursuing disruptive industrial action that can only harm the Civil Service and cause unnecessary hardship to the public.

Mr. Alan Williams

rose——

Mr. Hayhoe

I shall not give way.

When we met the Civil Service unions on 23 April, we made three points. The first was that there could be no improvement on our 7 per cent. offer this year; the 6 per cent. cash limit will not be breached. There must be no doubt about that. Secondly, we said that the Government were ready to set up an authoritative independent inquiry into the future arrangements for determining Civil Service pay. Thirdly, we said that the Government would undertake that if the new arrangements could not be in place in time for the 1982 negotiations, they would enter into genuine negotiations next year, with no predetermined limit on the cost of the settlement.

Who can doubt that those are important and significant proposals for the future? I hope that more and more civil servants will recognise that those proposals offer a real basis for ending the present dispute.

I shall say something more in detail about the three elements. First, I shall refer to this year's settlement. I appreciate that people want more. Of course, one understands that. However, 7 per cent. is not an unreasonable offer against the background of recent settlements both in the public services and in the private sector. With two and a half million people unemployed, a 7 per cent. increase, on top of the much larger increases in 1979 and 1980, and with considerable job security, is not a bad offer. The public services cannot expect to be insulated from the economic circumstances of the country at large. Their pay accounts for a high proportion of public expenditure and must largely come from taxes and from the rates. I cannot believe that the need for restraint is not widely recognised and understood in the Civil Service, as it is outside.

The hon. Member for Fife, Central referred to job security. There is great job security in the Civil Service and there is also a process of job loss because we are slimming down the size of the Civil Service to our target of 630,000 in April 1984. That job loss is not at the expense of compulsory redundancy. There is hardly any compulsory redundancy in the non-industrial Civil Service. The job loss is achieved, not by people losing their jobs and being put on the dole, but by the use of natural wastage, by recruiting fewer people than are leaving for other causes.

I cannot accept that the Civil Service has been singled out for harsh treatment, as the hon. Member has suggested. Civil servants received increases which on average amounted to nearly 50 per cent., in cumulative terms, from their last two pay settlements. For example, over those two years cleaners have had a cumulative increase of about 30 per cent.; senior scientific officers have had a cumulative increase of 39 per cent.; principals have had one of 60 per cent. and data processors have had one of 63 per cent. The average figure over the whole non-industrial Civil Service is just under 50 per cent. Those figures come from the same source as the figures which state that two-thirds of the Civil Servants receive below average pay, which I have given to the House and which the hon. Gentleman collected. He cannot have it both ways. He must not select the statistics which he uses and question the validity and veracity of others, just accepting the ones he likes.

The hon. Member also said that a starvation rate must have existed two years ago. I hope that he is bitterly ashamed because that was under his Government. The average of 50 per cent. over the last two years was to restore Civil Service pay to the position from which it had been depressed by the incomes policy of the previous Administration.

This year, the need for restraint in pay settlements was clearly apparant. The same 6 per cent. cash limit provision for pay increases has been applied to other public service groups—the National Health Service and, through the rate support grant, all local authority workers. I accept that there are other workers who have had more, but I am arguing that 2 million workers in these public services have settled already at around the same level, with no industrial action.

I do not see how the Government could conceivably justify singling out the Civil Service for more. Nor do I see how the Civil Service unions can justify their strikes and disruptive actions aimed at achieving more. But I understand their concern about pay research.

When we took office in 1979 we hoped that the Civil Service pay negotiations would continue to be based on pay research data. This was the point made in the letter from my right hon. Friend's Private Office by one of her staff during the election campaign to a Mr. Finnie which has been much quoted. In that letter, there is a brief paragraph dealing with pay research. It is not a long, extensive treatise covering all the ifs and buts.

The Civil Service trade union leaders, who have been in touch with the Conservative Party in times of Opposition, knew that the position of the party on pay research was the position set out in the major speech by my right hon. friend the Secretary of State for Employment on 14 August 1978. In that authoritative statement, we made it clear that we could not give an unqualified promise to implement the Pay Research Unit's future findings.

Conservative Governments have a pretty good record of implementing pay research-based settlements. It is far better than that of Labour Governments. Over the last 10 years, pay research settlements have been implemented five times, four times by Conservative Governments. Pay research data were the basis of both the 1979 and 1980 settlements which brought Civil Service pay well up with the market from the depressed level at which it had been left by the previous Labour Administration. But it became clear to us that in present economic circumstances the amount of money that we could make available for the Civil Service pay settlement in 1981 would be tightly constrained.

Accordingly, my right hon. and noble Friend told the Civil Service unions in August last year that cash limits reflecting what the country could afford must be the major determinant for 1981. He confirmed in October that we would have to suspend the pay agreement for 1981. I do not believe that the unions seriously expected the Government to submit to the arbitration of a third patty the decision on how much the country could afford.

I have dealt with the comment which the hon. Gentleman made about the ILO convention. We are not in breach of ILO convention 151.

The present pay agreement based on pay research has lost public confidence. It had to go. According to a leader in The Guardian: It was a slow, secretive, civil service dominated system which guaranteed big—if belated—pay rises and deep—if unjustified—cynicism among public and politicians. It had to go. We want to establish a new, ordered and agreed system for determining Civil Service pay which will meet the legitimate interests of all concerned.

Let there be no doubt about the sincerity of our intentions. As a token of that sincerity, the Government are willing to set up an authoritative, independent inquiry to advise on these new arrangements. It could establish a sound basis for reaching agreement on a new and lasting pay system which would command confidence of both the public and the civil servants themselves. Our suggestion is a firm indication of the Government's good faith for the future. We are, of course, willing to consult the unions about the terms of reference and membership of this inquiry. But it should be set up soon, and it should work swiftly.

We cannot predict what a new pay system will look like in advance of the inquiry's recommendations, hut we believe that there must be some element of comparability, because the terms and conditions of service for civil servants cannot fall in general terms behind those being applied outside.

We want to see these long-term pay agreements in operation as soon as possible. But, with the best will in the world, I do not think that it is likely that they will be available for 1982. How, then, is Civil Service pay to be determined next year? I realise only too well the widespread anxieties that exist. I believe that the Government's proposals should allay these genuine fears.

It will not be a re-run of this year's experience, as has been suggested. We have undertaken to have genuine negotiations in 1982 in which each side will be able to raise whatever factors it considers relevant. We have made clear that although the cost of the settlement will be an important factor for the Government, we are prepared to enter into these negotiations without a predetermined cash limit. That does not mean that there is any question of the Government's abandoning cash limits. These will still have to be fixed to control departmental expenditure. But we envisage genuine negotiations on civil servants' pay in 1982.

I believe that the concern of the great majority of civil servants, not only those who took part in the action but a great number of those who supported it and of those who did not believe that——

The question having been proposed after half-past Two o'clock and the debate having continued for half an hour, Mr. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.

Adjourned at one minute past Three o'clock.