Civil Service Dispute (Hansard, 5 March 1981)

§ The Lord President of the Council (Lord Soames)
My Lords, with the leave of the House I should like to make a Statement about the Civil Service dispute.
I want to take this opportunity to explain to the House and to the country the present situation regarding the threatened Civil Service strike on Monday. The Government have offered to non-industrial civil servants an increase of 7 per cent. from 1st April, together with a clear statement of our desire and intention to establish for the future a new, ordered and agreed system for determining Civil Service pay.
For 1981–82 all the public services are operating within cash limits set on the basis of factors of 6 per cent. for pay and 11 per cent. for prices. For the Civil Service, where the Government is the direct paymaster, it will be possible, albeit with considerable difficulty, to squeeze a pay increase of 7 per cent. from the resources available within the cash limit. That is simply as far as we can go. Other groups like the local authority manual workers and the teachers in England and Wales and in Scotland are settling at about the same level within the constraints imposed by the cash limit. It is evident from this that there is no question of discrimination against the Civil Service.
There are many people in private industry who would feel that such an offer at this time could be classed as a good one, given the general economic climate and the relative job security that civil servants enjoy.
I know that civil servants are concerned as much about future arrangements for determining Civil Service pay as they are about this year's cash offer. In August last year I explained to the union leaders that, given the overriding need in the broad national interest for increases in pay to be very restricted, the emphasis in 1981 would have to be on cash limits, reflecting what the Government felt the nation could afford. It was not therefore possible for the Government to operate the existing pay research arrangements in the normal way and in October I suspended them.
A further cause for concern is the pay research system itself, which is now more than 25 years old. Over the years it has become top heavy and cumbersome and somewhat mechanistic in its operations. It no longer commands general confidence. What is now needed is a thorough overhaul—and this is something I believe to be recognised by the unions as well as by ourselves.
I recognise that civil servants fear that the imposition of increases based on cash limits this year, coupled with the suspension of the present arrangements for pay research, could mean that the Government intend that Civil Service pay should be imposed by fiat each year. But this is not the case. I told the union leaders on 23rd February—and I quote: The Government intend to review the arrangements for determining the pay of non-industrial civil servants with the object of establishing as soon as practicable an ordered and agreed system which takes account of all relevant factors and which will command the widest possible acceptance". 1509 Evidently that review has to take place before we can see clearly how the new system will be shaped. We have made every effort to clarify the Government's position and, so far as possible at this stage, to explain our intentions to the union leaders. Recognising their concern about such matters as independent fact-finding, comparisons with terms and conditions of service outside, and arbitration, we have made clear to them that these as well as other relevant factors like job security would be covered in the review. We will welcome further discussions as the review proceeds.
The Government therefore find it hard to understand how in these circumstances the union leaders justify their recourse to the extreme step of recommending industrial action to their members. I hope that the union leaders will think it in the best interests of the Civil Service for them to concentrate on making their contribution to the thinking on the new system rather than calling for industrial action from which the country is bound to suffer.

§ Lord Peart
My Lords, may I thank the noble Lord for his Statement. I agree with his latter remarks but I should like to put some questions to him. When I was in that position, in charge and with the same responsibilities, I was always ready to answer questions which came from the Benches behind me. First, why are the Government, who are opposed to pay policy, imposing one on one of the most reasonable and responsible groups in the country? I deplore the action that is being taken but I still believe that common sense can prevail if there are more meetings and negotiations. Then I should like to know what is the new and ordered and agreed system for determining civil service pay? How is it going to differ from pay research and a principle of fair comparison? That was the system which we built up over a long period of time. Finally, will this review and the new system be operative for the 1982 Civil Service pay settlement? Those are the few questions to which I should like to have answers.

§ Lord Rochester
My Lords, from these Benches we should like to join in thanking the noble Lord the Leader of the House for having made the Statement. Our main feeling is one of great regret that members of the Civil Service should be contemplating strike action, in view of their very special responsibilities to the state. We are anxious, as always on these occasions, to say nothing that would make the situation in any degree worse. On the main issue of the overall increase in pay to be granted, I think that on behalf of my noble friends I should offer the Government our support and join with them in their plea to the union leaders, even at this late stage, to withdraw the recommendation that their members should take industrial action and instead ask them to join with the Government in trying to work out some new arrangements for pay determination within the service.
There is just one question which is somewhat troubling us. Is the noble Lord satisfied that the salary structure within the Civil Service in terms of differentials within the various grades is altogether appropriate, and to the extent that he may not be satisfied can he assure us that this matter, too, is receiving his urgent attention?

§ Lord Soames
My Lords, may I thank both noble Lords for their, on the whole, welcome for the Statement I have made, and particularly Lord Rochester for his support for what we have said. To answer him first, on his question about differentials, I do not think differentials are ever altogether right, and this situation has not perhaps been helped by the fact that there was a pay research system which recommended pay levels for the Civil Service as a whole and then there was the TSRB, a different body, which recommended the pay levels for the higher echelons. This is the same problem as exists in the Services as well. Differentials have been a problem, and it is something which undoubtedly we must consider.
In answer to the noble Lord, Lord Peart, he says that we have been strict in imposing pay limits on the Civil Service and asks why have we done that. As I think I said in my statement, we have imposed cash limits upon the pay of not only the Civil Service but also the National Health Service, and, where the Government are concerned with their rates support grant, on local authorities as well. This is, of course, because we believe it to be in the national interest. Pay is a very high proportion of total Government expenditure, particularly in these fields. Further, I am sure it has not escaped the noble Lord that pay increases generally in this round since September have been on average under 9 per cent. So again I say I cannot see sufficient of a difference here. There have been many settlements indeed well below 7 per cent., and many have been very glad to have any at all. I think it was the Government's duty, and their responsibility to the country in the present economic times, to keep pay increases to the public services within strict limits, and that is the answer.
The noble Lord asked whether the new system will be in place by 1982. This was a question the unions asked me. I hope the House will understand when I say that we are launching ourselves into a review of the present system. The noble Lord says it has served us well over 25 years; but it has become frightfully technical and mechanistic. I think everybody, the unions and the Government and indeed the country as a whole, has slightly lost confidence in the system as it is. We need to take a fresh look at it and how it works. The last thing I want to do is to give any assurance that I could not live up to by assuring noble Lords that the new arrangements would be ready by 1982; but we will not let the grass grow under our feet.

§ Lord Orr-Ewing
My Lords, during my noble friend's discussions with the Civil Service, did the Civil Service ask why they should be set cash limits when the Armed Forces and the police were not set any such limits?

§ Lord Soames
My Lords, the answer to my noble friend is that this question did arise. I think it is recognised generally that the Armed Services and the police are a special case. They run considerable personal risks and dangers. Also the Armed Services and police are required to abide by a discipline code and to obey orders. This is a different situation.

§ Lord Nugent of Guildford
My Lords, is it not also the case that they are both considerably under strength?

§ Lord Soames
My Lords, I am not sufficiently cognisant of the exact figures to reply to that point at the moment. I am not sure about the police. I think the Armed Services certainly are.