§ 4.0 p.m.
§ LORD SHEPHERDMy Lords, it might be convenient for me now to repeat a Statement which has just been made in another place by my right honourable friend the First Secretary of State. It is as follows:
"With permission, Mr. Speaker, I should like to make a statement about the pay of the Armed Forces and of the higher Civil Service.
"As the House will be aware, the Government are committed to carrying out a review of the pay of the Armed Forces at two-yearly intervals in accordance with the procedure described in Cmnd. 945, dated February, 1960. The current review has been proceeding on the basis of Cmnd. 945 which provides first, that changes in the pay of Service officers would in future be governed broadly by the relative changes in the pay of comparable grades in the home Civil Service, and secondly, that changes in the pay of sailors, soldiers and airmen would be governed broadly by changes in the average earnings and wages in manufacturing and certain other industries as notified by the Ministry of Labour. Before reaching a decision about the current review the Government are requesting the National Board for Prices and Incomes to advise them whether the increase in pay produced by the application of these formulae are, in relation to total emoluments, consistent with Part I of the White Paper on Prices and Incomes Policy (Cmnd. 2639) and in particular with the criteria laid down in paragraph 15. The Board is being asked to pay special regard to the need of the Services to recruit and retain on a voluntary basis sufficient men to meet the commitments of the Services and the special features of Service life.
"The Board is being asked to report not later than 18th January, 1966, so as to allow the new rates of pay to be implemented on 1st April, 1966.
"I should also inform the House that the Standing Advisory Committee on the Pay of the Higher Civil Service has recently conducted a review and 1048 has recommended increases in salaries for the grades concerned. The Government are also requesting the National Board for Prices and Incomes to examine and report on the Committee's recommendations in relation to the considerations set out in Part I of the White Paper on Prices and Incomes Policy.
"I will, with permission, circulate the text of the Standing Advisory Committee's Report in the OFFICIAL REPORT. I am also placing copies of it in the Library this afternoon."
§ Following is the text of the Standing Advisory Committee's Report:
§ STANDING ADVISORY COMMITTEE ON THE PAY OF THE HIGHER CIVIL SERVICE
§ Seventh Report
§ I am writing to report to you the conclusions and recommendations reached by the Standing Advisory Committee on the Pay of the Higher Civil Service as a result of the further general review, the decision to embark upon which I reported when I wrote to you on 19th January last.
§ 2. We conducted our last general review of the pay of the Higher Civil Service in 1963. As a result of our recommendations the salaries of the Administrative grades in the Higher Civil Service were increased with effect from 1st August 1963 to the rates shown below, and the salaries of other classes and grades in the Higher Civil Service were correspondingly increased.
| National rates £ | |
| Joint Permanent Secretaries to the Treasury and Secretary of the Cabinet | 8,800 |
| Other Permanent Secretaries | 8,200 |
| Deputy Secretaries | 5,800 |
| Under-Secretaries | 4,700 |
| Assistant Secretaries | 3,050–3,900 |
§ At that time the London weighting payable over and above those national rates of pay for staff working in London was £65 for staff employed in Inner London (up to three miles from Charing Cross) and £60 for staff employed in Outer London (up to sixteen miles from Charing Cross). From 1st January 1964 these amounts were raised to £85 for staff employed in Inner London (up to four miles from Charing Cross) and £65 for staff employed in Outer London.
§ 3. In June 1964 the National Whitley Council reported to us a pay agreement of 6th February 1964, providing for the pay of most grades in the non-industrial Civil Service with salary scales whose maxima did not exceed that of the Principals' scale to be increased by 3 per cent. from 1st January 1964, 3½ per cent. from 1st January 1965 and 3½ per cent. from 1st January 1966. The agreement provided that for any grade which was on any of 1049 these dates the subject of a pay research survey (or was linked for pay purposes to such a grade) the payment of the central pay increase due on that date should be deferred, and only made if by the following 30th June negotiations on the survey had not produced either a settlement or a decision to go to arbitration. The Administrative and Executive Classes were being surveyed on 1st January 1964 so that the Principals and a number of other grades did not immediately become entitled to the first of the three increases. The agreement was not in fact reported to us until it had become clear that negotiations on the Administrative and Executive Class pay research surveys could not be completed by 30th June 1964 and that the central pay increase would therefore become payable to the Principals and the other grades concerned with effect from 1st January 1964.
§ 4. In December 1964 the Treasury, the Association of First Division Civil Servants and the Society of Civil Servants informed us that, following pay research surveys for the Administrative and Executive Classes, agreements had been reached to increase the Principals' salary scale to £2,100–£2,900 (national rates) and the Chief Executive Officers' salary scale to £2,400–£2,800 (National rates) with effect from 1st January 1964, and invited us to recommend new salary scales with effect from 1st January 1964 for the Higher Civil Service grades covered by these surveys, as follows—
| National rates | |
| £ | |
| Assistant Secretaries | 3,300–4,300 |
| Principal Executive Officers | 3,800 |
| Senior Chief Executive Officers | 2,950–3,300 |
§ 5. We accepted these proposals, and recommended accordingly on 19th January 1965; our recommendations were in due course accepted and put into effect. In reporting them we stated that we thought that the new differential thus created between the Assistant Secretaries' maximum and the Under-Secretaries' rate was too small to be allowed to persist. We also took into account the steady narrowing of the differential between the Principals' maximum and the Assistant Secretaries' minimum as a result of the 1965 and 1966 central pay increases under the agreement referred to in paragraph 3 above: the Principals' maximum rose from £2,900 to £3,002 from 1st January 1965, and will rise again to £3,107 from 1st January 1966. It was in these circumstances that we decided that the time had come to embark on a further general review of the pay of the Higher Civil Service.
§ 6. The Staff Side of the National Whitley Council have suggested to us that the problems created by the narrowing of differentials as a result of applying central pay increases up to the Principals' maximum but not to the Higher Civil Service could be avoided by applying central pay increases right to the top of the Civil Service. They point out that, at a time of relatively frequent move- 1050 ments of pay in the rest of the Civil Service, to adjust Higher Civil Service salaries only once every four or five years not only gives rise to constant difficulties with differentials between the Higher Civil Service and the rest of the Civil Service, but also means that members of the Higher Civil Service receive less total pay than they otherwise would and tends to have an adverse effect upon retirement benefits, which are calculated on average salary over the last three years of service. The National Staff Side suggest that, if it is felt undesirable to extend central pay settlements to the very highest ranks of the Higher Civil Service, they should at least be extended to grades and posts up to and including the Under-Secretary and there should be biennial reviews of salaries above that level.
§ 7. The Treasury agree that, since central pay settlements are now given more frequently than was envisaged by the Royal Commission on the Civil Service 1953–55 (from whose recommendations the existing arrangements stem), there would be advantage if Higher Civil Service grades up to and including the Under-Secretary received the equivalent of central pay increases. They consider, however, that above that level there should be no commitment to annual or biennial reviews, since they believe as a matter of principle that the higher the grade in the public service the greater the desirability that its pay should move relatively infrequently, and then only as a result of weighty and specific investigation.
§ 8. We accept that Higher Civil Service grades up to and including the Under-Secretary should in future receive the equivalent of central pay increases. The evidence which we have collected suggests that both in other public services and in employment outside the public service the salaries of senior staff now tend to move more or less in parallel with those of subordinate salaried staff, save at the highest levels in industry. On the other hand it seems to us that the special considerations which the Royal Commission identified as entering into assessments of the pay of the Higher Civil Service are particularly important in relation to the highest ranks (those whose rate exceeds that of the Under-Secretary), and that at those levels salaries should not as a matter of course follow salary movements lower down. We consider therefore that central pay increases should not apply to grades above the level of Under-Secretary.
§ 9. If the limit for central pay increases is raised as we propose, the technical problems created by narrowing of differentials as a result of central pay increases will no longer arise in the area directly above the Principals' maximum. They will to some extent be recreated in the area directly above the Under-Secretaries' rate. At that level, however, the number of grades and posts affected is much smaller and the gaps between rates are wider. Some temporary narrowing of differentials is therefore easier to accommodate at that level.
§ 10. Since the pay of the Higher Civil Service is determined under different arrangements from the pay of the rest of the non-industrial Civil Service, it would not be 1051 appropriate to include Higher Civil Service grades up to and including the Under-Secretary in National Whitley Council central pay agreements. We therefore recommend that in future central pay increases for grades up to and including the Principal should be reported to us, on the understanding that when central pay increases are received by Principals we shall normally recommend similar increases for grades and posts in the Higher Civil Service whose fixed rates or scale maxima do not exceed the Under-Secretary rate, which wilt involve appropriate adjustments for grades and posts between under-Secretary and Deputy Secretary level. In considering our recommendations on new rates of pay we have assumed that this recommendation will be accepted.
§ 11. It does not seem to us to be necessary or desirable to fix the frequency of reviews of other Higher Civil Service salaries. Under the present arrangements reviews of the pay of the Higher Civil Service can be undertaken either at the Government's request or on our own initiative; the Government are free to request, and we are free to initiate, reviews at any time they, or we, think right. We therefore recommend no other changes in these arrangements. It is clear, however, that the pay of Assistant Secretaries, Principal Executive Officers and Senior Chief Executive Officers will have to be reviewed when the results of pay research surveys for the Administrative and Executive Classes are known, and we expect (without seeking to bind the Government or ourselves in any way) that those reviews may well provide suitable occasions for reviewing the pay of the Higher Civil Service as a whole.
§ 12. The Treasury and the National Staff Side have invited us to frame our recommendations on this occasion and in future for salaries at and above the level of the Deputy Secretary on the basis that London weighting will not be payable at these levels and that salaries should take account of this fact. They point out that only a very few posts at these levels are outside London to all intents and purposes the effective rate of pay for almost all of those concerned is the amount payable to those employed in Inner London. We agree that the arguments for a system of London weighting on national rates hardly apply to staff at these salary levels virtually all of whom work in London. Accordingly we recommend that London weighting should from 1st September, 1965, cease to be payable to Deputy Secretaries or to staff in any other grade or post on a flat rate or with a scale maximum which is the same as or more than the Deputy Secretary's rate. In considering our recommendations on new rates of pay we have assumed that this recommendation will be accepted.
§ 13. We decided to embark upon this review mainly on account of the compression of differentials between Principals, Assistant Secretaries and Under-Secretaries and between grades at corresponding levels in other classes, and our main concern in this review has been to restore a workable pattern of salary relationships in the Higher Civil Service. We have also taken the opportunity of collecting 1052 information about how salaries in other public services and in broadly comparable employment outside the public service have moved since our last general review. We acknowledge gratefully the help we have received from those of whom we have made inquiries for this purpose.
§ 14. We have also had regard to the general economic situation in which our recommendations are made. We are not specifically required to do so by our terms of reference: indeed we recognise that one of the purposes of establishing the Committee was to provide a source of independent advice to Governments who might on occasion find it difficult to balance their obligations as employers of senior civil servants against their wider responsibilities for management of the economy. On this occasion, however, we have felt that our view of the economic problems confronting the country must lead us to modify views based on other considerations about the pay of the highest grades of civil servants. We believe that our recommendations will establish a pattern of salary relationships which can be regarded as workable and tolerable for the time being; but the new rates, particularly at the highest levels, do not fully reflect our assessment of what would constitute fair and reasonable remuneration for the grades in question, because in our judgment at those levels in the Civil Service what is appropriate to the general state of the economy must for the time being override other considerations. We should not, however, think it right for those concerned to be indefinitely penalised by a decision taken in the light of a particular economic situation, and we therefore intend to review the salaries of these grades earlier than would otherwise be the case.
§ 15. Taking all these considerations into account we recommend the following new rates for the administrative grades in the Higher Civil Service, to take effect from 1st September, 1965—
| £ | ||
| Joint Permanent Secretaries to the Treasury and Secretary of the Cabinet | 9,200 | (*) |
| Other Permanent Secretaries | 8,600 | (*) |
| Deputy Secretaries | 6,300 | (*) |
| Under-Secretaries | 5,250 | (National) |
| Assistant Secretaries | 3,500–4,500 | (National) |
| * In accordance with our recommendation in paragraph 12 the rates marked with an asterisk will not attract London weighting: these will be the rates payable to the staff concerned whether they are employed in London or elsewhere. |
§ 16. We have received a submission from the Society of Civil Servants inviting us to recommend that Principal Executive Officers should be paid on a scale rather than on a flat rate and that the level of their pay should be raised in relation to that of Assistant Secretaries. We have carefully considered both this submission and a counter-submission by the Treasury, but we have come to the conclusion, having regard to the definition of our scope and functions laid down by the Royal Commission on the Civil Service (Cmd. 9613, paragraphs 386 to 389), that these are not sufficiently major matters to warrant our intervention, arid we therefore make no recommendations on them.
§ (Signed) FRANKS.
§ The Rt. Hon. Harold Wilson, O.B.E., M.P., 10 Downing Street,
§ London, S.W.1.
EARL JELLICOEMy Lords, I am grateful to the noble Lord for repeating this Statement, but I cannot honestly say that I am glad to hear it. What is more, I doubt very much whether the Armed Forces, to whom we paid tribute in this House only two days ago, will be particularly glad to hear it. So far as the Armed Forces are concerned, I find this Statement at best puzzling, and at worst disturbing. So far as the Higher Civil Service is concerned, there is a very long Report from the Standing Advisory Committee, which we have not yet had a chance to read. Therefore, I should like to confine my questions to that part which relates to the Armed Forces.
May I say why I find the Statement puzzling, and in particular the reference to paragraph 15 of Cmnd. 2639? May I remind your Lordships of some of what paragraph 15 says? It says:
Exceptional pay increases should be confined to the following circumstances…Do the Government feel that these biennial increases in Service pay are exceptional? Are they not, in fact, regular increases, following the regular and approved Grigg machinery?Then there are the criteria in subsections (1), (2) and (4) of paragraph 15. Subsection (1) says:
Where the employers concerned"—this is a justification for a wage increase—make a direct contribution towards increasing productivity in a particular firm or industry…What possible relevance have the Armed Forces to that particular criterion? Subsection (2) talks of: 1054Where it is essential in the national interest to secure a change in the distribution of manpower…Do the Government feel that the Prices and Incomes Board can in fact be the arbiters of our correct Service manpower? Subsection (4) talks of:Where there is a widespread recognition that the pay of a certain group of workers has fallen seriously out of line with the level of remuneration for similar work…My Lords, what workers in this country do work similar to that of the Armed Forces? I should be grateful for anything which the noble Lord can say to tell us what relevance this paragraph of this Command Paper has to the Armed Forces.Finally, my Lords, I said that, at worst, I found this Statement disturbing. I find it disturbing if, in fact, behind this Statement, the Government are proposing to retreat from Grigg. Can the noble Lord assure us that there is not in fact going to be a retreat from the Grigg principles; and would he agree with me that, if there were, this would seriously affect morale in the Armed Forces and recruiting to them?
§ LORD SHEPHERDMy Lords, I am sure that noble Lords on all sides of the House share in the tributes that we have paid on regular occasions to the Armed Forces, and I am also quite sure that the Armed Forces would not wish, in the present circumstances, to be considered or treated differently from the working people of this country. The noble Earl will be aware that we are trying to establish, for very obvious reasons, an incomes policy. The recommendations that have arisen through discussions between the Treasury and the Defence Department are such that the Government feel that, in all the circumstances, it would be right to send them to an independent body. The noble Earl is quite right: it is hard to reconcile the relationship between soldiers, particularly those on active service, and the workers; but the Government still feel that the criteria in paragraph 15, and particularly subsection (4), are relevant.
However, to make the position perfectly clear as to what the Government have in mind, I would repeat the words of the Statement:
The Board is being asked to pay special regard to the need of the Services to recruit1055and retain on a voluntary basis sufficient men to meet the commitments of the Services"—and perhaps the noble Earl will not mind being reminded of the last words—and the special features of service life".I am quite sure that the Board will look into this matter with expedition, and will see that a just assessment is made.
EARL JELLICOEMy Lords, I am grateful to the noble Lord for his further reply, but does this not mean that the Prices and Incomes Board are in fact going to be the arbiters of Service pay and, therefore, of some of our Defence commitments? And can he give us the fundamental assurance that the Government agree with Grigg: that it is essential that inflation should not be allowed to eat away the real value of Service emoluments? Can the noble Lord confirm that the Government agree with that principle?
§ LORD SHEPHERDYes, my Lords. I think I should remind the noble Earl that in 1960, I think it was, the Government, of which I believe he was then a distinguished member, felt it necessary to alter the Grigg proposals, when they spread the recommendations over two years. That was a case in which they acted, as a Government, arbitrarily. This Government is not acting arbitrarily: they are sending it to an independent body. But, as the noble Earl will recognise—he has been in this House long enough to know—it is, in the end, the Government and Parliament that make the decisions.
EARL JELLICOEMy Lords, I agree with that, but may I remind the noble Lord that when the last Government took that decision in 1962 it was not a departure from the Grigg principle; it was, rightly or wrongly, splitting it into two stages. May I remind him of what his right honourable friend, the present First Secretary, said on that occasion. He said:
Here the Minister has cheated in one important respect. I make the charge deliberately, for the whole basis of the. Grigg Report was that there should be a biennial review.He went on to say:The Minister has unilaterally broken what I regard as an honourable agreement.Can the noble Lord confirm, in the light of those statements, that the present Gov- 1056 ernment are not going to depart from Grigg?
§ LORD SHEPHERDThe Government are not acting unilaterally in this matter. It has been referred to the Board. We shall await the Board's Report and then, perhaps, if the noble Earl is still of the same mind about it, he can raise the subject in a debate.
§ THE LORD PRIVY SEAL (THE EARL OF LONGFORD)My Lords, may I, with great deference, suggest that this is already becoming a debate? It may be doubtful whether it would not be better to proceed.
EARL JELLICOEMy Lords, may I say, with great deference to the Leader of the House, that the career and financial prospects of 400,000 men and women in our Armed Forces are at stake here? I think it would be a very good thing if we had a debate at greater length, but I agree that it should be on another occasion.