Public Service Pay Awards (Hansard, 13 June 1985)

§ Lord Rochester
My Lords, I beg leave to ask the Question standing in my name on the Order Paper.

The Chancellor of the Duchy of Lancaster and Minister for the Arts (The Earl of Gowrie)
My Lords, the method of determining pay must reflect the individual situations of the parties involved, but methods can and do change with circumstances.

§ Lord Rochester
My Lords, is the noble Earl aware that in their annual report for 1984 the Advisory, Conciliation and Arbitration Service offered their help and advice in dealing with the criteria to be adopted in determining pay in the public services and the procedures which might be followed in case of disagreement?
In view of the dissatisfaction and disruption caused by the increasing disparity between pay settlements in the public services and those reached in other areas of employment, will the Government discuss this matter with ACAS?

The Earl of Gowrie
My Lords, I have a high regard for ACAS, and in previous ministerial incarnations I had quite a lot to do with the service. The fact is that the Government have a clear and persistent line themselves in respect of pay. All employers should pay what is required to recruit, retain and motivate within what they can afford. That applies in the total economy, whether private or public.

§ Lord Jacques
My Lords, is the Minister not aware that our people expect the Government to show an example as an employer—an example of the best? Where there is failure to agree wages, will the Government consider submitting the whole matter to pendulum arbitration? This is something of which we need experience.

The Earl of Gowrie
My Lords, I consider that the Government do provide a model of good employment in this regard. I remind the noble Lord that one sector of the public services—the teachers—have, to my great regret, refused to go to arbitration. So it is not always that simple. As noble Lords will be aware, in the last week or so many of the recommendations of the review bodies have been implemented to a very considerable degree by the Government.

§ Baroness Seear
My Lords, may I ask the Minister whether the recommendations of the Megaw Committee have been completely buried? I ask this question as an interested party, having been a member of that committee, which provided a formula for dealing with the pay of non-industrial civil servants.

The Earl of Gowrie
My Lords, the noble Baroness mentions a point that is very close to my heart as the Minister concerned with the day-to-day affairs of the Civil Service. My right honourable friend the Chancellor of the Exchequer has proposed that discussions about longer-term pay arrangements in respect of the Civil Service should be resumed. I hope very much that it will be possible for those arrangements to be in place in time for the 1986 pay review.

§ Lord Shinwell
My Lords, does the noble Earl not agree that market forces must operate in this connection? Pehaps an even more important point is that a non-trading sector of the public service might be more profitable than a trading sector, and would therefore be worthy of higher remuneration.

The Earl of Gowrie
My Lords. I do not wholly dissent from that point of view, but the fact of the matter is that one can never escape the market for very long. In respect of the non-trading public sector, the market operates in relation to levels of employment. The point of cash limits is surely that the more goes in pay the less there remains for other purposes—including recruiting more people.

§ Baroness David
My Lords, as teachers have been mentioned, I will refer to their case. The teachers did not go to arbitration because the Secretary of State said quite categorically that there would be no more money. There was no point in them taking that course.

The Earl of Gowrie
My Lords, as I understand it, the teachers were perfectly able to do so. My right honourable friend was not making an unreasonable point, because a 12.4 per cent. claim in the present climate is not an inconsiderable one.

§ Lord Plant
My Lords, in view of the Minister's reply to the question of the noble Baroness, Lady Seear, is he saying that it is contemplated that there will be some well understood basis for settling pay in the public service coming from the discussions which are now taking place? Morale in the public sector is very low and unless there is agreement on some acceptable basis of settling pay, conditions will deteriorate, to the detriment of the Government.

The Earl of Gowrie
My Lords, if we look back at the past 15 or 20 years of the history of this country, 1355 we will see that pay has never been an easy issue. There are various methods and techniques of trying to ease the difficulties which it causes. What we are trying to say is simply put in two sentences. First, recruitment, motivation and retention of personnel are key issues in respect of the determination of pay. Secondly, the more that goes out in pay, the fewer posts there will be.

Lord Bruce of Donington
My Lords, will the noble Earl then confirm formally that the fixing of arbitrary cash limits is, in the final analysis, the essence of the Government's wages policy?

The Earl of Gowrie
My Lords, I agree with every aspect of that except the use of the word "arbitrary".

§ Lord Molloy
My Lords, will the new procedures that might be developed embrace parts of the old principle whereby comparisons were made between work done in the public sector and similar work done in the private sector? Can the Minister say also whether it is possible now, under existing procedures, for nurses, for example, who are not happy with an award to make further representations on the basis of the offer that has been made to them?

The Earl of Gowrie
My Lords, the Government have gone a long way to implement the review body recommendations in respect of nurses. That fact has been very widely acknowledged. The fact remains that levels of pay are an important determinant of levels of employment. At the moment most people tell us, and I would certainly agree with them, that the major issue facing this country is the level of employment and not rates of pay.

§ Lord Diamond
My Lords, will the Minister bear in mind that motivation, which is part of his definition, does not depend on money alone? Will he also bear in mind that many of us feel that a little more open expression of appreciation of what the Civil Service does and a little less criticism would not come amiss from the Government?

The Earl of Gowrie
My Lords, I agree with the noble Lord, and I and my colleagues lose few opportunities to commend the public services in this country. One should not always take professional union representation as being a true indication of morale.

Lord Wallace of Coslany
My Lords, is the noble Earl aware that it is all very well for the Government to say that they have met the review body and the nurses, but in point of fact what they have done is to give with one hand and to take back with another? The charges to nurses for lodging, and other expenses, are to be increased by 5 per cent., thus cancelling out what the nurses will get this year.

The Earl of Gowrie
My Lords, as I have said, it has been widely recognised that the Government have gone as far as they possibly can in respect of the nurses, whose services we all so much appreciate. However, some staging is needed on grounds of cost if service levels are not to be substantially reduced, and I do not think that any of us want that, either.