§ 3.37 p.m.
§ LORD WINTERBOTTOMMy Lords, with the permission of the House, I should like to repeat a Statement on the pay of the Armed Forces which is being made in another place by my right honourable friend the Secretary of State for Defence. This is the Statement:
"The Government have received the National Board for Prices and Incomes Third Report on Forces Pay and have accepted the Board's recommendations.
"Last year the Board recommended the creation of a comprehensive salary structure which would not differentiate between single and married Servicemen. This 'military salary' would include compensation for the withdrawal of items which had previously been provided free in lieu of salary. It was also proposed that the Services should, because of the special conditions of their employment, receive an additional emolument. This was to be known as the X-factor. Payment of the military salary and the X-factor was deferred until new rates of pay could be determined in the light of a job evaluation exercise. This has now been completed.
"Job evaluation and the evaluation of the X-factor will increase pay by £75 million in a full year. This represents an increase of 15 per cent. over the present value of the Services' total real emoluments, that is to say, the 70 pay and allowances which they receive in cash and the value of the food and accommodation which they receive in kind.
"It is important to recognise—as does the Board—that these recommendations involve some substantial changes in the relative positions of the Forces and civilian pay. Job evaluation has shown that, by comparison with the civilian sector, the Armed Forces have been underpaid. To bring up Forces' pay to levels comparable with civilian employment cannot, as the Board made plain, be a justification for pay increases elsewhere.
"The Defence budget cost of ending differentiation between single and married men's rates of pay is £52 million in a full year, after allowing for the recovery of charges for food and accommodation from single men. Single men will not only have to pay charges but also to pay for them out of income on which they will have paid £11 million in tax. Thus the real benefit to single men and cost to the Exchequer in fact amounts to £41 million rather than £52 million. The establishment of parity between single and married men will at last rectify an anomaly in the Forces pay structure which has no parallel in other occupations.
"A number of improvements in allowances will also be introduced. These cost about £5½ million in a full year. £75 million for job evaluation and the X-factor, £41 million to give single men parity with married men, and £5½ million for allowances, add up to a real increase in Service emoluments totalling £121½ million a year. The total cost to Defence Votes will be greater—£135½ million—because the increases will in fact be sufficient to compensate the Services for the £11 million in tax to which I have already referred, and also for a similar tax element in increases in rents recommended by the Board for married quarters and hirings—another £3 million.
"The Board in their report have suggested that, in the light of the size of the total increases, the Government should consider paying some of the larger ones by instalments, particularly the once-for-all increase required to 71 bring the emoluments of single men up to married rates. We have accordingly agreed that, while the increases recommended for married men on the basis of job evaluation and the Board's assessment of the X-factor should be paid in full with effect from 1st April this year, the increases for single men and women will be paid in two instalments.
"With effect from 1st April this year single men and women, like married men, will get the full increases based on job evaluation and the X-factor. They will also get an increase sufficient to pay their food and accommodation charges after the payment of tax. Finally they will get a first instalment (on average about a quarter) of the total increase of £41 million to end differentiation between themselves and married men. The balance of this £41 million—about £31 million—for single men and women will be paid from 1st April, 1971.
"The detailed pay scales which will apply both to single and married personnel are in the Board's report. Tables of the adjustments for single men and women until 1st April, 1971, are also available in the Vote Office.
"I believe that the application of job evaluation and the radical revision of Service pay that the standing reference to the N.B.P.I. has made possible provide a basis for the military salary which can be supported with confidence on grounds both of efficiency and fairness."
LORD ST. OSWALDMy Lords, I should like to thank the noble Lord for repeating that Statement, and in particular and more personally I should like to thank him for the effort he made to pass a copy of it to me rather earlier than is usual, without which I should have had even more difficulty in coping with it. It is a very complicated Statement depending on fairly elaborate actuarial calculations. It would be un-gracious and erroneous to pretend that we could make any better assessment than the Government have made of how it is going to work out in practice; but it would seem that nobody can have any very clear or confident idea of how it will work out in practice for the individual Service men and women involved. 72 Clearly, I think we ought to look at the changes in detail and see what the effect will be. However, we can welcome the fact that there is no longer any distinction in pay between married men and unmarried men. The single man, it seems to me, benefits quite considerably. I find it difficult to see that the married man benefits in any considerable way, but perhaps the noble Lord can correct me on that point.
Mr. Healey said on June 16:
The new proposals.… will represent a very substantial increase in pay for the Services above what they could have expected if the Grigg formula had been maintained." —[OFFICIAL REPORT, Commons, 16/6/69; col. 42.]I should like to take that as read, but I have not been able to work it out as a calculation myself. After taxation and drawbacks of ration and accommodation payments, what net percentage increase does the Serviceman get, and how does this compare with increases claimed by civil servants, teachers and nurses? The Forces have always been two years behind their counterparts in industry. I wonder whether the noble Lord can tell me to what date the new rates of pay are related in industry?Is the X-factor relevant to all Servicemen at a flat rate, or on a sliding scale? Clearly a fighter pilot is more vulnerable, for instance, to the element of danger than a mechanic maintaining the machine on the ground or the administrative staff at the airfield. This is what the United States Services call "hostile fire pay" and it is mentioned in the P.I.B. Report as being very difficult, if not impossible, to define in British terms. I am sure we should find it equally difficult, but I do not quite see why. I wonder whether the noble Lord could tell us.
Are the new pension rates for those now serving related in any way to the new pay scales, on the same percentages as the old Grigg formula? The question which runs through my mind at the moment, on reading this Statement and the documents attached, is how much of the new Service pay is related to the X-factor as opposed to basic salary; because it appears to me that the basic salary has been left the same. The X-factor has been taken into account to meet what the noble Lord describes as the underpaying until now of the Services, but in fact it brings them back to 73 what their basic pay would have been but for this.
LORD SHACKLBTONMy Lords, I wonder whether I might interrupt the noble Lord. The House is always in great difficulty on these occasions because the Government are talking about something which they know about and nobody else knows about. In this case the noble Lord shares some information with the Government but the rest of the House does not. If I may say so with the greatest respect—because I know he is deeply interested in these things—were I not myself aware of what the noble Lord is talking about, because I have read the papers, I should not know whether he was talking double-Dutch or something else. That is no reflection on him. This is a genuine difficulty. With great respect, I feel that these very technical questions could perhaps best be dealt with on another occasion.
LORD ST. OSWALDMy Lords, I was about to bring these remarks to an end. I was not expecting the noble Lord, Lord Winterbottom, to answer all these questions across the Floor, but I thought he would like them to be on record so as to be able to answer them with more time to spare. I think they are important questions and I cannot say that I regret having put them today.
§ LORD BYERSMy Lords, I do not want to add to the confusion by participating in this private debate, but I would say that if the Statement is fair to the Armed Forces we support it.
§ LORD WINTERBOTTOMMy Lords, as my noble Leader has pointed out, this is a very complicated subject. I should like to highlight one or two quick points. This is not, as someone said in the House on another occasion, an "Irishman's rise"; it is an "Englishman's rise." The Grigg formula would have given the Forces just over £30 million; the present formula, taking the staging into account, gives them £121 million. The job evaluation, plus the X-factor which applies right across the board, is giving the Armed Forces £75 million in a full year, which is an increase of 15 per cent. The X-factor represents 5 per cent. of a man's pay.
As regards the other points, my right honourable friend has specifically said 74 in the Statement that the Armed Forces were in a special category. Job evaluation proved that their skill was significantly under-rewarded, and that has been put right in the present pay scale. There are doubtless other professions which are under-rewarded, but they do not in fact influence our decision on this matter. This stands on its own feet. As regards pensions, there will of course be a relationship of pensions in the future with this new pay scale. The sums are being worked on now, and I understand that my right honourable friend will be making a Statement on this subject in another place in the not too distant future—and it will of course be repeated here. I personally am satisfied that the Armed Forces are getting a very significant increase in their monetary remuneration as a result of this scheme.
§ VISCOUNT MONCKTON OF BRENCHLEYMy Lords, may I ask some reasonably simply questions? First, have the Government yet been able to make an arrangement whereby the extra tax paid by the Forces will come back to save the Defence Vote appearing to be over great? Secondly, there has been a feeling among the Forces that since the Prices and Incomes Board report on this there have been cuts made. Hearing the Minister today, I presume this is not so. A firm statement made by the Government would help all the Services. Perhaps we might also be told why the single man has been denied his increase now, and why it is to be paid in two instalments?
§ LORD WINTERBOTTOMMy Lords, the noble Viscount has made two points, the second of which I will answer first. It was simply that, due to a major reconstruction of Service pay, the actual burden on the Defence Budget would have been extremely heavy indeed. Job evaluation and the X-factor and some additional allowances have been paid in full. The young unmarried man or woman is getting one-quarter of the £41 million which is necessary to bring the unmarried up to the same level as the married. They are in fact getting the rest at April 1, 1971. They are now getting a very substantial increase in their take-home pay (if I may put it that way) even after all these sundry tax adjustments. This the noble Viscount will see when he gets his copies from the 75 Printed Paper Office. I should like to send him the arithmetic of all this, to show where tax comes in in relation to the total. The noble Viscount perhaps noted one distinction between what the Forces received and the burden on the Defence budget. I will send the noble Viscount the arithmetic and I think he will find that it reflects a reasonably sympathetic decision.