HC Deb 09 December 1992 vol 215 cc836-7
Mr. Mandelson

To ask the Secretary of State for the Environment if he will make a statement about the application of the policy on pay increases in 1992–93 for staff working in local authorities.

Mr. Howard

I expect local authorities to play a full part in achieving pay restraint to maximise the potential for investment and employment. The chairmen of the local authority associations have undertaken to do their very best to settle within the zero to 1.5 per cent. range.

Mr. Mandelson

How can the Secretary of State justify a policy that asks some of the lowest-paid in our community to pay the price for the Government's economic incompetence? When hon. Members are lobbied this afternoon by representatives of the National and Local Government Officers Association, they will know that many public sector employees—in the health service and local government—already receive wages below the Council of Europe's decency pay threshold. If belts must be tightened, would not it be fairer for the well-off to feel the pinch, rather than making those who are already low paid experience the pain from the Government's policies?

Mr. Howard

The fairest approach is for those in work to accept some sacrifice to maximise the opportunities to create jobs for those out of work. The fact that the Opposition fail to recognise and support that objective shows the extent to which they are out of touch. That objective behind our policy has won the support of the chairmen of the local authority associations to whom I referred.

Mr. Alexander

As public sector pay in local authorities accounts for 70 per cent. of the cost of local authorities, if people working in local government accept the public sector norms which the rest of us have accepted, does it not follow that the settlement announced only the other day means that local authorities should not need to raise their charges by any more than they received from the community charge last year?

Mr. Howard

My hon. Friend is absolutely right. It is a measure of the dimension of what can be achieved through that policy that every 1 per cent. on public sector pay costs an additional £800 million a year. If local authorities sought those savings by manpower reductions, 50,000 jobs would be put at risk.

Mr. Henderson

Given that the Secretary of State has already acknowledged that pay accounts for 70 per cent. of local authority costs, does he accept the assessment by the stockbrokers, Robert Fleming, that the suggested Government spending total for next year is less than 1 per cent. above what councils expect to spend this financial year? If that is the case and if inflation is only 3 per cent. in the next financial year, does he accept that, given his financial regime, capping and the 1.5 per cent. pay limit which he will impose on local authorities, the inevitable result will be cuts in vital services? If so, will he now withdraw his statement to the House on 26 November that no service cuts in local authorities are needed?

Mr. Howard

As long as the Labour party and its Front-Bench team continue to base their assertions on comparisons that do not compare like with like, they demonstrate how unfit they are to be taken seriously. We have to compare the total standard spending for next year with the total standard spending for this year, not compare the total standard spending with budgets. When the hon. Gentleman demonstrates that he has understood that, we shall take his arguments seriously.