HL Deb 07 July 1980 vol 411 cc868-84

3.37 p.m.

The LORD PRESIDENT of the COUNCIL (Lord Soames)

My Lords, with the leave of the House I will now repeat a Statement which is being made in another place by my right honourable friend the Prime Minister. The Statement is as follows:

"With permission, Mr. Speaker, I should like to make a statement on two recent reports by the Top Salaries Review Body.

"Both reports have been presented as Command Papers and are available in the Vote Office this afternoon.

"The first of these reports—the review body's 14th report—makes recommendations for the salaries of the higher Civil Service, senior officers in the armed forces, members of the judiciary, and chairmen and members of boards of nationalised industries. The House will recall that in 1978 the review body made recommendations for these groups of public servants which our predecessors accepted but decided to implement in three stages, on 1st January 1978, 1st April 1979, and 1st April 1980. Last year the review body recommended an updating of the second and third stages, which we accepted. The third stage has been in payment since 1st April this year. The present report is concerned with the increases required to bring that third stage up to date from the levels appropriate on 1st April 1979 to the levels appropriate on 1st April 1980.

"The other report now submitted—Report No. 15 —makes recommendations for the salaries of Members of Parliament, Ministers and other paid office holders. Last year the review body made recommendations which the House agreed should be accepted, but should be implemented in three stages, on 13th June 1979, 1980 and 1981. The first stage was paid to all those concerned. The second stage has been in payment since 13th June last for Members of Parliament, but not for Ministers and other paid office holders. The review body's latest report is concerned with the increases required to bring the second and third stage payments up to date from the levels appropriate on 13th June 1979 to the levels appropriate on 13th June 1980.

"The review body has arrived at detailed recommendations over the whole field on the basis of all the factors which are traditionally relevant. The Government is grateful to Lord Boyle and his colleagues for their thoroughness and attention to detail, and for all the time and effort which they have devoted to the review.

"They recommend increases of 14.6 per cent. in the second and third stage payments to Members of Parliament, and similar increases for Ministers. The general level of the increases which they recommend for the four groups of public servants is about 19 per cent., though they propose larger increases than that for certain categories within these groups. If these larger increases are taken into account, the overall cost of the increases recommended for these groups of public servants would work out at about 26 per cent.

"The Government are committed to accepting the recommendations of the review body, save where there are clear and compelling reasons to do otherwise. Indeed, my right honourable friend the Leader of the House told the House of Commons some months ago that the Government would accept the recommendations of the review body for updating the second stage increases to honourable Members. I should like to explain to the House, Mr. Speaker, why, notwithstanding these commitments, the Government take the view that there are clear and compelling reasons, of a kind which the review body could not take into account, for not accepting the review body's recommendations in full on this occasion.

"The overriding priority to which the Government's economic and monetary strategy is directed is the reduction of inflation. At over 20 per cent. the rate of inflation is unacceptably high in absolute terms and in relation to the rate of inflation in most of the countries with which we compete in world markets. We shall not be able to make progress in resuming sound economic growth and in reversing the rise of unemployment until we succeed in reducing the level of inflation very substantially. By sticking to our monetary targets we shall bring the rate of inflation down. It is likely to be falling in the next few months, but unless the growth of earnings is broadly consistent with the rate of monetary growth, the fall in inflation will be accompanied by a larger rise in unemployment.

"Pay increases in the private sector are clearly beginning to respond to the combined pressures of tough market conditions and financial constraints. But the private sector cannot be expected to take the whole of the strain. Levels of pay increases in the public sector must likewise be reduced, if public expenditure is to be kept under control and our monetary objectives achieved. And when we are looking to other groups in the public sector to accept pay settlements which fall below what might be suggested by traditional comparisons with movements of other earnings or of prices, the Government think it right to expect people in positions of responsibility and leadership in Parliament and the public services to act in a way which we hope others in the country will follow.

"This is the background to the Government's proposals, to which I now turn.

"First, as to Members of the House of Commons. We are in the virtually unique position of determining our own remuneration. Our calls to others to show restraint and act responsibly will be judged by what we do ourselves. The review body has recommended a parliamentary salary of £12,300 from 13th June 1980 and £13,750 from 13th June 1981. These figures represent an increase of 14.6 per cent. The Government think it right to propose to honourable Members that they settle for a substantially smaller figure. We shall therefore invite the House to approve a resolution to provide a parliamentary salary of £11,750 from 13th June 1980. That represents an increase of £1,025 or 9.6 per cent., on the second stage salary of £10,725, which has been in payment since 13th June last. We propose also to provide in that resolution for an increase of the same percentage in the third stage salary, due to take effect on 13th June 1981, taking it from £12,000 to £13,150.

"We propose that the secretarial and research allowance for honourable Members of this House should be increased by 9.6 per cent., to £7,400, with effect from 13th June, 1980.

"Ministers and other paid office holders are not yet in receipt of their second stage payment. We shall invite the House to approve an order putting into effect the second stage payments recommended by the review body last year, increased as for Members of Parliament by 9.6 per cent., save in the case of Cabinet Ministers and my right honourable and learned friend the Attorney-General. For them the increase will be reduced to 5 per cent.

"The order will also provide for the same percentage increases to be applied to the third stage payments due to take effect next year.

"We propose to adopt the review body's recommendation that we should unify the parliamentary salary payable to Ministers in the House of Commons from three rates to a single rate, and we propose that that rate should be £6,930. Although junior Ministers in the House of Lords now receive a secretarial allowance of £1,000, which we propose to increase to £1,100, they do not receive any salary specifically in respect of their parliamentary duties. This is a very real problem, and we propose to consider how the arrangements for their remuneration should be revised to take account of it.

"The Government propose that Peers' expense allowances, which are related to relevant costs, should be increased as the review body recommends.

"I turn now, Mr. Speaker, to the four groups of public servants covered by the review body's 14th Report.

"The Government considers that they should be expected to accept no less a reduction, as compared with the review body recommendations, than Members of Parliament are being asked to make for themselves. The increase which we are proposing for honourable Members is about one-third below that recommended by the review body. We propose that the average increase for the four groups of public servants concerned should also be about one-third below the general increase of about 19 per cent. recommended by the review body. That will bring the overall cost of the increases to these groups down to about 12½ per cent. This will not be paid as straight percentage increases across the board to all those concerned; it will be so distributed as to mitigate the compression of differentials between the groups covered by the review body's report and those directly below them, and within those groups to preserve, though, of course, at lower salary levels, generally the pattern of differentials and relativities recommended by the review body.

"The Government propose that Peers' expense allowances"—

I think that I have already read that, and I apologise. I just hope that the Prime Minister did not make the same mistake.

"The result of distributing the total sum in this way will, in fact, be that most of those at the highest levels—the Permanent and Deputy Secretaries in the Civil Service, the equivalent ranks in the armed forces, and the chairmen of nationalised industries, will, like honourable Members and Ministers, receive percentage increases in single figures.

"The new salary rates for all four groups will be effective from 1st April 1980. The effect of implementing them will be to reduce the cost, as against full implementation of the TSRB 14 recommendations, by about 50 per cent.

"A special problem arises in the Civil Service. When other grades recently received increases following pay research, it was agreed that new salary scales for Assistant Secretaries and Senior Principals—the grades immediately below those covered by the review body's remit—should not be settled until the outcome of the review body's report was known. The results of pay research for the Assistant Secretaries would take the maximum of their scale above the rate we now propose for Under-Secretaries. In order to preserve tolerable differentials it will be necessary to set a lower scale for Assistant Secretaries from that which would result from the application of the pay research findings; there will also need to be a slight adjustment at the top end of the scale for Senior Principals.

"I shall, with permission, circulate in the Official Report schedules showing the current and proposed rates of salary for the main groups and grades concerned. Full details of the Government's proposals will be placed in the Library.

"For the groups covered by the review body's 14th Report, who have completed their staging, the rates of salary now proposed will be used for the purposes of calculating pension entitlements for all those concerned. For honourable Members of this House, and for Ministers and other paid office holders, pension entitlement will be calculated on the revised third stage salaries.

"With regard to the remuneration of nationalised industry board members, the review body in its 14th Report questions the appropriateness of its role, and has suggested that the Government should reconsider its remit in this respect. The Government share the doubts which the review body has expressed. We have therefore decided that this should be the last occasion on which the review body is asked to recommend on the remuneration of the chairmen and members of boards of nationalised industries. In future years these salaries will be determined by the Minister concerned in each case, with the approval of the Minister for the Civil Service.

"Mr. Speaker, I am very well aware that in making the proposals which I have now described to the House, the Government will be accused of going back on commitments and breaking agreements, and of failing in their obligations to the public servants concerned, on whose hard work, loyalty and integrity society depends. But they must have regard to their wider obligation to propose what we believe to be right. In present circumstances, the Government believe that these proposals would give fair levels of remuneration to honourable Members of this House and to the public servants to whom they apply, and at the same time measure up to the needs and expectations of those to whom we in this House are answerable and who in the end have to find the money."

My Lords, that concludes the Statement.

Following are the schedules referred to above:

Current Salary(a) £ Propose Salary £ Percentage increase %
MPs (Backbenchers) 10,725 11,750 9.6
Cabinet Ministers(b) 22,325 23,500 5.3
Ministers of State (Commons) 14,812 16,250 9.7
Ministers of State (Lords) 14,955 16,400 9.6
Parliamentary Secretaries (Commons) 11,262 12,350 9.7
Parliamentary Secretaries (Lords) 11.405 12,500 9.6

(a)Current Salary includes second stage of 1979 pay increase.

(b)Excluding Prime Minister, Lord Chancellor and Lord President of the Council.

Current Salary £ Proposed Salary £ Percent-age increase%
Higher Civil Service and Senior Armed Forces Officers
Head of the Home Civil Service 31,000 33,500 8.1
Permanent Secretary to the Treasury
Secretary of the Cabinet
Admiral of the Fleet
Field Marshal
Marshal of the Royal Air Force
Permanent Secretary 28,500 31,000 8.8
Air Chief Marshal
Second Permanent Secretary 26,000 28,500 9.6
Deputy Secretary 22,500 24,500 8.9
Vice Admiral
Lieutenant General
Air Marshal
Under Secretary 18,000 20,500 13.9
Rear Admiral
Major General
Air Vice-Marshal
Percentage increases for group as a whole 12.6
Current Salary £ Proposed Salary £ Percentage increase %
Lord Chief Justice 37,000 40,000 8.1
High Court Judge etc. 28,500 32,000 12.3
Circuit Judge etc. 19,500 22,000 12.8
Masters and Registrars of the Supreme Court etc. 17,250 19,500 13.0
Percentage increase for group as a whole 12.6
Current Salary £ Proposed Salary £ Percentage increase %
Nationalised Industries, Chairmen and Members
British National Oil Corporation:
Chairman 53,500 58,500 9.3
Members 29,250–37,750 33,000–43,000 13.4
British Steel Corporation, Post Office:
Chairmen 48,500 53,000 9.3
Members 28,500–34,500 31,500–39,500 12.7
British Aerospace, British Airways Board, British Gas Corporation, British Rail, British Ship-builders, National Coal Board, Electricity Council
Chairmen 44,000 48,000 9.1
Members 23,250–28,750 26,000–32,750 13.0
British Airports Authority, Cable and Wireless, Civil Aviation Authority National Bus Company, Scottish Development Agency:
Chairmen 31,000 34,000 9.7
Members 18,500–22,500 20,500–26,000 13.4
Percentage increase for group as a whole 11.6

3.51 p.m.


My Lords, I thank the noble Lord for the Statement. It is a long Statement, and very detailed, and I can well understand why a slip occurred now and then—a Freudian slip, of course. Never mind, the noble Lord has presented what I think is a formidable report, and one that must be studied by all Members of the House. It is a long and detailed report. Here and there it fulfils promises. On the other hand, I believe that there will be difficulties in another place. I am not going to comment too much on another place on this issue, but I am sure that there will be a charge of lack of faith.

Of course, it is always the public sector which really suffers generally in this matter. I personally think that our public servants—and here I have regard to Members of Parliament and noble Lords—are people who really do not exploit the community in any way, and have not been properly recognised over a long period of time. Somehow there is still an attitude of mind in this country that public servants, politicians and others, are overpaid. For what reason I cannot understand.

I am not going to comment now on each detailed item. There will be problems. There is the question of the Civil Service. I am sure that the noble Lord the Lord President, who is responsible for the Civil Service, will have difficulties here. No doubt we shall have to wait and see. I hope that he does not, but I think that he will. There was an agreement about the review body, how it should be altered, but I still think that the new proposals may not work. The idea of having a Minister responsible to the department for pay cuts right across the whole concept that we have had regarding the Civil Service for a long period of time.

I welcome, though, many of the things which affect Members of this House, especially the increase in allowances which are necessary for the reasons which are obvious—the increase in the cost of living. I am glad that this has been tackled openly. I hope that noble Lords will carefully read the document. I am not going to comment any more now on this. We must carefully read the document, and then at some other time we shall have to discuss the details.


My Lords, we are grateful to the noble Lord the Leader of the House for repeating that Statement, and also, no doubt, to the noble Lord, Lord Boyle, who has the invidious task of presiding over the committee which makes these recommendations. We resist from these Benches the temptation to congratulate the Government on the first faint glimmerings of an incomes policy which appear to show through this document. It is perhaps sufficient if we say that in the present difficult financial situation it is hard to see how the Government could come to any other broad conclusions except those to which they have come in the course of this Statement.

May I refer briefly to two of the recommendations. First, may I say how much we from these Benches welcome the proposal that consideration will be given to the remuneration of those who are junior Ministers and who serve in your Lordships' House. They face an intolerable burden and it will, I know, have the approval of all parties and those of no party in your Lordships' House if steps are taken to ameliorate that burden.

Secondly, no doubt I should say that noble Lords will want to welcome the fact that the increase in costs which is involved in our coming to the House is recognised in the course of this Statement. Perhaps the noble Lord the Leader of the House will think it worth stressing that the modest sums that are received by your Lordships in the course of working very long hours in this House are not in any way by way of remuneration or reward, and that they are no more than the reimbursement of money actually spent in attending the House.


My Lords, I am grateful to the noble Lords, Lord Peart and Lord Wigoder, for their comments. May I just pick up one or two points. Yes, of course commitments have been made to the Civil Service. The Prime Minister referred in her Statement specifically to Assistant Secretaries and Senior Principals. Also commitments have been made to the House of Commons by this Government. But the situation has changed and the Government regard it as their duty, when it is necessary, to make the necessary adaptations and openly to say, "All right, we are sorry. In the national interest we feel it right that we must go back on these commitments".

I am the first to agree with the noble Lord, Lord Peart, who has indeed himself fulfilled the job of Minister responsible for the Civil Service, on the enormous debt that we owe to the Civil Service for all that it does for us. Here I come to the point made by the noble Lord, Lord Wigoder, who queried in a rather quizzical manner whether this was the first step of an incomes policy. In no way is it this. But what it is is the Government realising that they have to live up to their responsibilities in the national interest in regard to the salaries and wages of those to whom they are directly responsible. It is no good saying we are going to leave this entirely to the private sector. The Government themselves must share this, and must be ready to ask those who are in positions of leadership to give a lead in this regard. It is this theme that runs through the whole Statement of my right honourable friend the Prime Minister.

Perhaps it would be for the convenience of the House, following on the question asked by the noble Lord, Lord Wigoder, if I said what are the new recommendations by Boyle which have been accepted for Peers' expense allowances. Overnight subsistence, £23; day subsistence and incidental expenses, £11; secretarial costs, postage and certain additional expenses, £10. As the noble Lord, Lord Wigoder, said, this is the view of Lord Boyle of one thing and one thing only; it has nothing to do with a salary. Noble Lords come to this House and give of their time without any salary at all. This is nothing more nor less than what is seen by Lord Boyle and his board as being necessary to pay the expenses incurred by noble Lords in fulfilling their duties in this House. It is that, and nothing more and nothing less.


My Lords, will the noble Lord accept that in the nationalised sector the awards that have now been made give rise to certain anomalies? The going rate for increases in many of the nationalised industries at the moment is around 20 per cent. That applies right through up to management level, whereas board members and nationalised chairmen are being awarded 12 per cent. It makes board membership extremely unattractive to executives in various nationalised industries.

Will the noble Lord accept also that the anomaly has been further compounded by the fact that recent appointments in nationalised industries, notably the chairman of the British Steel Corporation and now more recently the chairman of the BNOC, have placed the rest of the nationalised sector out of line, and the present award does nothing to correct that anomaly? Can I have the noble Lord's assurance that the transfer of nationalised industry chairmen and board members from the Boyle regulations to the new review situation will be implemented fairly soon?

4 p.m.


My Lords, in answer first of all to the last question asked by the noble Lord, Lord Taylor, yes, this is the last time that the salaries of the chairmen and board members will be recommended by the Boyle Review Body. Their next round, which will not be before this time next year, will be settled by the Ministers who have a certain measure of responsibility for each particular nationalised industry in consultation with the chairmen, with an overall view, as it were, being kept by the Minister in charge of the Civil Service, to ensure that it is not too much out of line, bearing in mind that indeed the responsibilities of some are greater than others. It may well be that they will not be the same; they are not now and they will not be necessarily the same.

As for the differentials and the problems that arise there, there are, of course, difficulties. The nationalised industries are not the only field where people working below the board get paid more than members on the board of the company. This happens from time to time in the private sector. You can find it in many companies, and indeed it is also most certainly found in Government where I am glad to say that permanent secretaries get more money than their Ministers. Indeed, junior Ministers get paid much less at the moment than a Principal in the Civil Service. This is the way the cookie crumbles, as it were. If they do not like it, I am afraid there is only one solution for them and that is to go. But we do not want them to go and we think that on the whole they will soldier on and continue to do this. But the way to cure this difficulty, frankly, is not for the board members to go up by 25 per cent. but for the others to come down in their wage increases and in their salaries from now on.


My Lords, may I ask my noble friend two questions also on the subject of the chairmen and the boards of nationalised industries on one aspect of which he has just replied to the noble Lord opposite? Am I right in understanding what he has just said and what was said in the Prime Minister's Statement as indicating that the Government on this occasion have not avoided the difficulty which arose in 1975 when the decision of the Wilson Government left a number of full-time executive board members being paid something like £2,000 or £3,000 less than their immediate subordinates, with an immediate effect, of course, of restricting promotion or so-called promotion from below to those boards? On this occasion has this been avoided?

My second question is: while congratulating and applauding the decision to take the chairmen and members of nationalised industry boards out of the Boyle remit, I should like to ask whether the noble Lord really feels and considers, as the Government do not control the pay of anybody else in the nationalised industries, that it is necessary for Ministers, as he has indicated, to exercise direct control over these or whether it would not suffice simply to preserve a reserve power in case some nationalised board or chairman were really silly?


My Lords, I am grateful to my noble friend, Lord Boyd-Carpenter, for the questions he has asked. Where differentials of salaries are concerned, no, the problem has not been cured and indeed to have cured it would have required an increase of salaries to executive board members which would have been beyond what the Government think would be right in the present circumstances.

On the other hand, what we have done is to put the emphasis on board members and whereas the increase of salaries to board chairmen will be of the order of between 9 and 10 per cent., that for board members will be between 12½ and 13½ per cent. So, within what was available in terms of percentage increase, we have put the weight on the executive board members for the very reason which my noble friend has stated, in order to do our best with differentials, given the circumstances.

As for the question of the extent to which Ministers should interfere with the salaries of board members in the future, this will of course be for the Minister concerned, together with the chairman. The objective here, and the reason indeed, as noble Lords will see when they come to read the report, and the motives which brought Lord Boyle to suggest that they should be taken out and which brought the Government to be of the same view, were because we wanted market forces to apply to greater effect. This was the main reason, and my noble friend can, I hope, take some comfort from that.


My Lords, without commenting on any of the detailed proposals which have been revealed to your Lordships' House by the Leader of the House, may I ask him whether, despite his denial to Lord Wigoder, any suggestion of an incomes policy was conveyed by the Statement which he read to the House? Did it not contain an implicit admission of the fact that, where the Government is the employer, directly or indirectly, even the most pronounced monetarist would agree that it would be folly not to have an incomes policy?

May I ask him also whether the measures which have been proposed, austere though they are, do not constitute a recognition that in a small way, whatever they do to inflation, they will certainly have a tendency to retard the increase of unemployment?


My Lords, hopefully it will do more than that. Hopefully it will encourage others to settle for less high wage increases and that will have a major effect on unemployment. I see what the noble Lord is trying to say, and I am not going to accept it because we have a very broad span of increases which have been reported to this House in the public sector in recent times, from 14 per cent. to the nurses down to 5 per cent. to Cabinet Ministers. If that is an incomes policy, it is a very broad one.

What I think we are doing is not pursuing an incomes policy but pursuing—properly so—a sense of responsibility.


My Lords, I may have missed it, but may I ask the noble Lord whether Her Majesty's Government intend to implement the belated recommendation in the Boyle Committee's Report that members who served in the House of Commons for a considerable length of time before 1964 should have a pension as of right; and whether he realises that most of us are now dead, and that if he waits for very much longer we shall all be dead?


My Lords, I do not know about the noble Lord but I am alive and no, I am afraid this does not form a part of the Boyle Report, though I know that the point raised by my noble friend is taken. But it is not taken by Lord Boyle: he was not invited so to do.


My Lords, I failed to gather from the Statement by the noble Lord what is the estimate of the accumulated savings to be effected as a result of the decision taken by the Government. I think we ought to know.

Is the noble Lord aware that the Statement is, in my opinion, far from draconian in the sense that it is really disastrous?— because I recall 1931, when the unemployment benefit was reduced by 10 per cent. and the salaries of Members of Parliament which at that time were only £400 a year were reduced by 20 per cent. and there was a similar reduction for the Civil Service, Cabinet Ministers and all the rest at that time. So it is not as serious as some would suppose.


Taking the first point first, my Lords, I have a figure of £6 million of savings in my head. I must own up to your Lordships, in that whether that applies to Report No. 15 or Nos. 14 and 15 together, I am not absolutely certain, but No. 14 is certainly where the large money is. As I say, the figure I have in my mind is £6 million and I do not think that is far out for the total. As to whether or not it is draconian, it was not seeking to be draconian. As I said and can only repeat, what the Government thought they were doing was performing their duty given the circumstances and fitting in the natural desires of those concerned—in effect trying to match that on the one hand with the national interest on the other.


My Lords, may I ask the noble Lord to make it quite clear that the expenses of Members of this noble House are purely to cover their own expenditure when living in London and so on, so that people are therefore not misled either by ignorance or by malicious statements coming from another place?


I do not know from whom such statements would come, my Lords, or whether I would have any influence over them in what I say, but of course what the noble Lord asserts is absolutely correct; it has already been said by the noble Lord, Lord Wigoder, and I have confirmed it. This is purely for expenses incurred and there is no element in it of salary whatever.

Viscount SIMON

My Lords, as the noble Lord has given an estimate of the saving, may I ask whether that is a gross figure or whether it takes account of the taxation?


That was a gross figure, my Lords, or at least I hope it was.