§ 2.43 p.m.
§ The Lord President of the Council (Lord Soames)
My Lords, I regret to inform the House that the talks we have been holding with the Civil Service unions, aimed at resolving the present pay dispute, broke down on Friday. The talks had been concerned both with future arrangements for determining Civil Service pay and this year's increase, in response to the union's anxiety about arrangements for settling Civil Service pay in the future. I told them that we were ready to set up an independent outside inquiry to advise on the best up-to-date arrangements. Furthermore, since this was unlikely to report in time for the 1982 pay settlement, the Government would not set their cash limit for Civil Service pay next year in advance of negotiations with the unions. But the Government were not prepared to agree to the unions' further demand that they should be guaranteed access to arbitration for 1982 should agreement not be reached in negotiation.
As to this year's increase, the Government originally offered 6 per cent., and that was subsequently raised in the course of negotiation to 7 per cent., to be financed within the 6 per cent. cash limit by savings in staff and administrative costs. But the unions insisted that they would not settle at this figure. They wanted more money this year.
The Government are satisfied that the 7 per cent. offer for this year, together with the assurances we have given for the future, are both fair and reasonable. Indeed, over 2 million workers in other public services have already settled at around this figure, and, faced with the economic facts of life, many in the private sector, with less security of employment, have settled for less.
The unions have now announced their intention to take further disruptive action and to extend it into the social security and unemployment fields. The Govern- 5 ment deplore this decision. They will of course do all within their power to minimise the damage and hardship which is caused to individuals and the country. To continue this dispute can only do damage to individuals, to the country and to the Civil Service—it can be of benefit to no one.
§ Lord Peart
My Lords, I have taken careful note of what the noble Lord has said, and we regret that no settlement has yet been reached. This is the important point. I should like to know whether the noble Lord is still pursuing the matter with the unions; after all, we all want to avoid an all-out strike. I wish to ask the noble Lord, as I have done on a previous occasion, whether the Government are to think in terms of a new and ordered agreement system for determining Civil Service pay. This is vital. I had all this difficulty myself. I appreciate and understand the problems that the noble Lord is facing, but I wonder whether he cannot give something to the unions regarding the machinery and the possibility of other machinery beyond it.
§ Baroness Seear
My Lords, we on these Benches also wish to thank the Minister for repeating the Statement—
§ Baroness Seear
For making the Statement; one gets into the bad habit of saying," Repeating the Statement ". We are glad that he has not given way to pressure to increase the amount of money to be paid to the civil servants. We believe that it is extremely important that public opinion should be fully informed about what is really involved. Therefore I would ask him once more to repeat what the civil servants have received in the last three years, which I consider ought to be very widely understood. After all, there is nothing sacrosanct about the period of one year.
I should also like the noble Lord to tell us what would be involved in cash terms if the civil servants' demand for 15 per cent. were to be met. I believe that the public as a whole perhaps understand sums of money better than they understand percentage increases, since it is then easier for people to translate the sums of money into terms of hospitals not being built, nursery schools being closed, and school dinners not being paid for. This I think is the way in which the public would be enabled to understand why the Government are taking the stand that they are taking.
I should also like to ask the Government whether, however, it is not possible to speed up the report of the inquiry into future methods for settling civil servants' pay. It is, I think, disappointing—and it must be disappointing to the unions—to be told that it is unlikely that the report will be ready by 1982. I fully realise that it involves much work, though I believe also that they are matters of principle rather than of detail that have to be gone into. If it were regarded as a matter of the greatest urgency, would it really be impossible for the Government to bring it forward, so that it could influence the 1982 settlement?
§ Lord Soames
My Lords, I am grateful to the noble Lord and the noble Baroness for the questions that they 6 have asked. The noble Lord, Lord Peart, asked whether we were pursuing the matter with the unions. Alas! the unions have made clear to me that they do not intend to come to talk with us any more, in view of the fact that on Friday I told them that we could not agree to their request for arbitration for 1982—they asked for an immediate decision on that aspect—and that we could not increase the offer of 7 per cent.
The noble Lord next asked whether we were seeking the new and ordered arrangement, and this point was also taken up by the noble Baroness, Lady Seear, in her question. Yes, of course; this is what the inquiry is going to be into. We have not had an inquiry into these matters since Priestley, which was 25 years ago and which came up with arrangements that have lasted us more or less satisfactorily since, though in recent years the pay agreements have more often not been implemented than they have been implemented. Certainly the present sort of circumstances of levels of inflation and the like were never foreseen when the Priestley Report was made—I am glad to see the noble Lord, Lord Shepherd, who knows so much about these matters, nodding in agreement—and we need something new and up-to-date.
In answer to the noble Baroness about the timing—and I am most grateful for her support in this, because there are few Members of your Lordships' House who have a greater experience of pay in the public services and the public sector as a whole than Lady Seear, with her experiences on the TSRB, for which we are most grateful—she will appreciate that this takes some time. Of course, we start thinking and talking about the 1982 pay settlement, which is meant to come into effect on 1st April 1982, some time in advance of that —in other words, in the latter part of 1981—and as we are already in June 1981 I think it unlikely that we could come up with it in time.
I was grateful to the noble Baroness for her question about what has happened over the past three years; that is, 1979, 1980 and 1981. As to 1979 and 1980—the two years since this Government have been in office—in the first year we inherited from the previous Government, and implemented, the decision that they had taken to make a 25 per cent. increase on average for the Civil Service; and in 1980 there was an 18½ percent. increase on top of that 25 per cent., which was staged. That made an increase of the order of 50 percent.—just under 50 per cent., in fact it was—over two years. Granted that this was a catching up exercise—I have always said that; they had fallen behind before—the 1980 settlement brought them right up to date and the 7 per cent. on top of that which we are now offering is well in line with what others are getting, considering what has happened in relation to their salaries and the salaries of others over the last three years.
There might be room for some argument—this perhaps one could accept; there is always room for argument and discussion—but that that should be the kind of situation which calls for this sort of industrial disruption is something of a totally different order, and in my view and in the Government's view it is not warranted in any way at all. As to the cost of this, to grant 7 per cent. will cost £320 million, and to give the full 15 per cent., for which the unions have asked, would cost a further £370 million. In other words, it is of the order of £46 million per percentage point to 7 the Civil Service as a whole; and, of course, the industrial Civil Service is affected to some extent by the non-industrial Civil Service.
§ Lord Boyd-Carpenter
My Lords, is my noble friend aware that those who, like myself, have at one time been concerned with the responsibility for the Civil Service find the present attitude of the Civil Service unions inexplicable and depressing? Is he further aware that public opinion would be outraged if the civil servants, in pursuit of their own claim, were deliberately to damage the interests of the least fortunate section of our population, the unemployed and the old, and that in those circumstances, were such action to take place, public opinion would begin to wonder whether the 7 per cent. offer could continue open indefinitely?
§ Lord Soames
My Lords, I am grateful to my noble friend for what he has said. As to future plans and where we go from here, the Government will of course be giving thought to this when considering what action the unions in fact take from now on.
§ Baroness Wootton of Abinger
My Lords, can the noble Lord the Minister explain what is the ground for this Government's resolute opposition to arbitration in this case, the more so inasmuch as the arrangements which were made under the Priestley Commission are now considered to be out of date? Why are the Government not willing to allow this dispute to be sent to arbitration?
§ Lord Soames
My Lords, I made it clear as long ago as August of last year, 1980. I said to the unions at a meeting we had together that for the 1981 settlement cash limits as opposed to pay research had to be the dominant factor because of the overwhelming need in the national interest, in view of inflation rates and the like, for the Government to keep a firm hold of the increases in pay of those for whose pay they themselves were responsible. In August 1980 I said that it would have to be the major feature, and as time went on I then said that it had to be the determining feature; and because cash limits are the determining feature and only the Government can judge what they can give within those cash limits, and that cannot be judged by arbitration, it was decided that this year, in those circumstances, it could not go to arbitration.
§ Lord Shinwell
My Lords, the noble Lord the Leader of the House referred in his Statement to the comparison between the attitude of the Civil Service unions and that of what might be described as the grass-roots unions. In view of the reasonable attitude of the grass-roots unions, who have accepted the Government's declaration about wage policy, at any rate for the time being, is it possible to arrange for Mr. Prior, who deals with such matters, to withdraw the threats about encroaching further on the immunities of the trade union movement? Surely these grass-roots unions, because of their reasonable attitude, deserve some credit and ought to be left alone.
§ Lord Soames
My Lords, the noble Lord, Lord Shinwell, has referred to two totally different factors. What I think have had their effect on outside pay settlements are the economic facts of life of today. These are what have had their effect upon decisions by unions and individuals outside on what is a reasonable pay settlement for this year. As to whether or not further steps are to be taken by the Government in other matters, in terms of relationship between the trade unions and management, this is a totally different question.
§ Lord Peart
My Lords, may I ask the noble Lord a further question? Will he say what contingency arrangements the Government have made to deal with the escalating strikes? Also, what are we going to do to make sure that social benefits are definitely paid to sections of our community? These are important matters.
§ Lord Soames
My Lords, they are indeed most important matters. I can assure noble Lords that the Government have taken all steps possible within their power in the way of contingency planning, in the way of arrangements that have been made, to ensure that the minimum of damage is done to individuals as individuals or to the country as a whole. As to the details, perhaps the noble Lord will understand if I do not go into them. It would take rather a long time.
§ Lord Mishcon
My Lords, will the noble Lord the Leader of the House take it for granted that this question is meant only to be helpful? Reverting to the point that was made by the noble Baroness, Lady Wootton, does he not know that a refusal of arbitration, whether by a union or an employer, is taken by the public to be a sign of weakness by those who refuse an arbitration? Would he not accept that most employers, when they do go to arbitration, make the point that, as a result of either their lack of profits or the size of them, they cannot afford to make any higher offer? Could it not be a term of reference to any arbitrator that the Government's point about inability to afford more in the national interest is a matter which should be looked into by the arbitrator perfectly fairly?
§ Lord Soames
My Lords, I do not believe that one can put that in the terms of reference. The Government must decide what the cash limits will be. No arbitrator can decide such a thing; that can be decided only by the Government if they wish so to do. They cannot hand that over to any other body. Once they have decided what the cash limit is, then, again, only the Government can work out what can be afforded within that cash limit.