§ Lord ORR-EWINGMy Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what categories of public servants are permitted to have increases in their "notional salaries" in excess of limitations imposed by the Government incomes policy so as to increase further their fully indexed pensions; and what categories in the private sector are allowed these same concessions.
Lord ORAMMy Lords, in the public and private sectors alike, pensions may be based, consistent with the pay guidelines, on salaries to which employers were committed prior to July 1975 even though payment of such salaries has been prevented by the pay policy. Few groups are in this position in the public sector or, so far as is known, in the private sector. I should add that this use of "notional salary" for pension purposes can produce a less favourable result than the alternative arrangement, which I understand is adopted in the private sector. This consists of basing pensionable pay on salary in any one of the last five years uplifted by the cost of living from the end of the year in question to the date of retirement.
§ Lord ORR-EWINGMy Lords, while thanking the noble Lord for what he has said, may I say that I am not sure that I would accept the last part of his reply? From my experience of industry, it does not appear to be accurate. Is it not a 124 fact that the Civil Service Pay Research Unit has to try to equate the facilities and assess the comparability of rewards and pensions in the public and private sectors? Therefore, would it not be more evident that they are being objective and just if, included in the manning of that Pay Research Unit, were not only civil servants but some representatives from industry, so that it was seen on all sides that it was being extremely objective and very accurate in its assessments as between public and private sector rewards and remunerations?
Lord ORAMMy Lords, I agree with the noble Lord about the duty of the body to which he referred to keep comparability; but I assure him that, with regard to comparing the public and private sectors in relation to indexed pensions, the provision applies equally to all employees. There is no differentiation between the public and private sectors. I take note of his point about representation on the body.
§ Lord ROCHESTERMy Lords, would the noble Lord agree that the expectation of prospective public servants of index-linked pensions, along with higher salaries, longer holidays and more secure employment, is one of the main reasons why in the last few years so many of our best university graduates have not proved willing to enter private manufacturing industry, on which the production of our national wealth finally depends?
Lord ORAMThat, my Lords, seems to be a much wider question. I accept that it is a factor that has to be weighed, but I think it is only one of quite a number. I hope the noble Lord is not suggesting that conditions for the public service should be greatly worsened in order to encourage recruitment into industry.
§ Lord SLATERMy Lords, is my noble friend aware that I made a statement in the House on one occasion that I thought the time had arrived when the Whitley machinery, for which the Government are responsible, should be re-examined and a new form of conciliation machinery established? May I suggest that that would cover the point on comparability raised by the noble Lord, Lord Orr-Ewing.
Lord ORAMMy Lords, I was not aware of my noble friend's specific suggestion in this connection, but clearly these points need to be kept under review.
§ Lord ORR-EWINGMy Lords, would the noble Lord bear in mind that we raised this matter during a considerable debate about 18 months ago? At that time the Government said that, because the rate of inflation was clearly going down to single figures by November 1976, it might not be necessary to make adjustments to the indexing of pensions? As that has not happened, and as at that time people on all sides suggested that there should be an independent element introduced into the Pay Unit, as is now proposed for the police service, would this not be a good moment to re-examine the whole matter to consider whether we can continue to afford some of the expensive concessions which are available in the public service but which are not available in the private sector?
Lord ORAMMy Lords, with regard to the rate of inflation, external factors have been involved here which are beyond the Government's control, and the forecast has, understandably, not been followed through. Whether or not that raises a procedural or constitutional question, I rather doubt; but, as I indicated in response to the earlier suggestion, I will pass on this suggestion.
Lord HAWKEMy Lords, would it not be possible to make a fair comparison between a sector in which it is almost impossible to get the sack and one in which it is only too easy to get it?