Pay Increases (Hansard, 31 October 1989)

§ 4. Mr. Cousins
To ask the Secretary of State for Employment what has been the trend of pay increases for (a) chairs of major companies and (b) work forces in major manufacturing companies since 1980.

§ Mr. Nicholls
The Government do not produce information about pay increases for individual chairmen or work forces of companies. Average earnings of all employees in manufacturing increased by 120 per cent. between August 1980 and August 1989. No reliable information on directors' earnings is readily available. Pay is a matter for businesses to determine in the light of all the relevant circumstances.

§ Mr. Cousins
In that case, does the Minister accept that it was unfortunate to publish an article in October's Department of Employment Gazette which appeared to criticise the justification for some of the large salary increases for individual company chairmen, in particular singling out Lord King of British Airways and FKI Babcock who receives more than £550,000 from his two part-time jobs with those companies? Is not that an entirely unwarranted attack on an honest worker doing his best in the marketplace?

§ Mr. Nicholls
I am sure that Lord King will take great comfort from what the hon. Gentleman says. The Government, including my right hon. Friends the Prime Minister and the Chancellor of the Exchequer, have constantly made it clear that we are against unjustified pay increases. If, in the circumstances, a pay rise can be justified, so be it.

§ Mr. Cran
Does my hon. Friend agree that far too many in the British work force from top to bottom, are besotted with the desire to receive unearned pay increases? Would they not be better employed trying to close the productivity gap which still exists between Britain and some of our major competitors?

§ Mr. Nicholls
My hon. Friend has it exactly. It is remarkable that even after 10 years of a Conservative Government it is still possible for Opposition Members to indulge in a sterile class war every time high salaries are mentioned. If a pay rise can be justified in all the circumstances, that pay rise is a proper one.

§ Mr. Fatchett
But is it not true that many company directors have this year given themselves increases often running into three figures in percentage points? How can that be justified at a time when the Government insist that ambulance staff, who contribute so much to our society, should have forced upon them an increase below the level of inflation? Why should they take a cut in real wages while the top people are getting such large increases?

§ Mr. Nicholls
Any company making a decision about what its directors will be paid has to take into account a number of factors. It will have to consider whether a pay rise is necessary to attract staff of the correct calibre and whether the person will make a contribution which will 162 justify his salary. The hon. Gentleman cannot get to grips with the fact that many of the lowly or lower paid employees, whose interests he claims to represent, are better served by having companies run efficiently, and that that costs money at the highest level.