HL Deb 27 April 1994 vol 554 cc659-62
Lord Craig of Radley

asked Her Majesty's Government:

What plans they have for introducing performance-related pay for servicemen and women, and whether such a concept would be applied to all ranks.

The Parliamentary Under-Secretary of State, Ministry of Defence (Viscount Cranborne)

My Lords, we have no such plans at present, although the Armed Forces Pay Review Body and the Senior Salaries Review Body are examining the concept.

Lord Craig of Radley

My Lords, does the Minister recall that in the 1994 Senior Salaries Review Body report, the Government are quoted as saying that their view was that performance pay was inappropriate for the Armed Forces? Does not the Minister agree that the system of promotion is widely accepted and universally approved as a method of rewarding performance? Most importantly, do the Government accept that that process of promotion, which is founded on comprehensive annual reports on every individual by his most immediate superior, and a formal promotion board drawn from the individual's own service, is extremely fair and a key to the services' reputation for integrity and incorruptibility in such matters?

Viscount Cranborne

My Lords, I associate the Government with the latter part of the noble and gallant Lord's remarks, with which I am sure all of your Lordships will also wish to be associated. I refer the noble and gallant Lord in particular to paragraph 40 of the recent report issued by the Armed Forces Pay Review Body, with which I am sure the noble and gallant Lord is familiar, in which it is made plain that the pay review body would very much like to consider the concept. It recognises in paragraph 125 of the same document the difficulties attendant on systems of that kind. I suggest to the noble and gallant Lord that it would be wise if that independent and respected body —respected in particular by the armed services—were allowed to examine the concept and then report to the Government. In due course, we could then make our own judgment on its conclusions.

Lord Campbell of Croy

My Lords, is it correct that the aim of the proposals is to recognise the past achievements and experience of those who cannot expect further promotion because steps are not available, such as warrant officers? In that case, would it not be sensible to give the proposal a description which is more accurate and easily understood?

Viscount Cranborne

My Lords, that is certainly one approach which would have to be taken into account by the Armed Forces Pay Review Body in its considerations. My noble friend will be aware also that a number of private sector firms have examined systems of varying kinds. Many of them have reached the conclusion that individual performance review is not preferable to team performance review and that team performance review may be more effective for the Armed Forces. I suspect that that may invite a greater degree of approval from the noble and gallant Lord than would the performance review of individuals.

Lord Dean of Beswick

My Lords, does not the Minister agree that, while the Armed Forces capability is reducing substantially, it appears to lay people like myself that they have ever-increasing areas of responsibility because of what is taking place in various parts of the world today? Should not those men and women who are now taking on increasing responsibilities be rewarded more adequately than they are at present?

Viscount Cranborne

My Lords, I believe that the noble Lord, Lord Dean, whose interest in defence matters I welcome and recognise, has put his linger on the reason why the Armed Forces Pay Review Body welcomed the idea of looking at that concept. I am sure that the noble Lord will be as interested as I am in the results, because he clearly understands the motivation for such a step.

Lord Hailsham of Saint Marylebone

My Lords, is it not at least arguable that performance related pay would be inconsistent with the general ethos to be attached to a uniformed and disciplined service?

Viscount Cranborne

My Lords, I know that that is one view, and it is certainly a view which is held strongly in certain parts of all three armed services. Nevertheless, I ask my noble and learned friend to recognise that equally there are circumstances in which people of the same rank have different responsibilities and different jobs. If we are to retain the high quality people whom we already have the good fortune to have in the armed services, increasingly, we shall have to recognise that we must devolve greater levels of responsibility down to lower ranks, and that those greater levels of responsibility need to be recognised by higher rates of pay. That is one approach that we shall examine. I emphasise to my noble and learned friend that as yet we are entirely open-minded and unpersuaded either way.

Lord Mayhew

My Lords, does not the noble Viscount agree that the motivation of servicemen is in many ways different from and better than that of civilians? Do I understand the noble Viscount to say that the idea of performance-related pay for servicemen has not come from the new, wholly civilian review set up under the chairmanship of Mr. Michael Belt? Will the Minister inform the House which senior military officers are participating in Mr. Bett's review, and at what level?

Viscount Cranborne

My Lords, as to the first part of the noble Lord's question, I must answer—I am sure to his satisfaction—with an unequivocal yes. As to the second part, I believe that both he and I have discussed the matter previously in your Lordships' House. I can repeat to him the fact that the views of the Armed Forces Pay Review Body will be of paramount importance, if only for the reason that its independence ensures that it enjoys the trust of servicemen and women themselves —a trust which we were in danger of losing back in the 1970s and which we must be very careful about losing again.

Lord Williams of Elvel

My Lords, is the noble Viscount aware that we on these Benches very much resent what he just said about the trust of the Armed Forces in the 1970s? Will the noble Viscount very kindly take that point on board? Further, will he acknowledge that the Armed Forces Pay Review Body has appointed so-called "independent consultants" and that the name of those consultants and the fee that they are to be paid to establish something which, to my mind, is a load of absolute rubbish, have not been disclosed by the Government; nor, indeed have their terms of reference been disclosed? Until the Government come a bit cleaner on the matter, we shall continue to take the very hostile view that we have.

Viscount Cranborne

My Lords, I am always distressed when the noble Lord, Lord Williams, and I fall out over such matters, especially in view of the noble Lord's very considerable military experience, which certainly tops my own. However, I must tell the noble Lord that it is incontrovertible that there was a period in the not-too-distant past, before the Armed Forces Pay Review Body was set up, when the trust which, rightly, the Armed Forces should have in their pay arrangements was at risk of being lost. The Armed Forces Pay Review Body has restored that trust. It is something which any government—especially this Government—lose at their peril.

It is only right that a body like the Armed Forces Pay Review Body should take the lead in reviewing terms and conditions of service. It will then be certain in the minds of servicemen and women that the results will be independent and certainly not influenced by political or other considerations.

Baroness O'Cathain

My Lords, when the review body examines the whole concept of performance pay, will it take note of the experience in the private sector? To my certain knowledge, the whole concept of performance-related pay has been brought in as a buzz-word to hide a certain amount of avariciousness. It is extremely difficult to try to come to the right decisions with performance pay reviews; indeed, I have experience of the latter in three areas. It is most important that the point made by the Minister as regards the analysis of the team should be taken into account. Can the Minister say whether there is a chance that the House could actually look at whatever system might be proposed before a decision is taken?

Viscount Cranborne

My Lords, I am extremely grateful to the noble Baroness, who, I know, has considerable experience in the matter. I am the first to acknowledge that the experience in the private sector of a number of companies—mostly very substantial companies, both British and European—has been, at best, patchy. It is for that reason that I tried to emphasise to the House this afternoon that our views are entirely open on the matter. I should certainly very much like to give your Lordships an opportunity to discuss the concept a little later when the Armed Forces Pay Review Body has had a chance to report.

Noble Lords

Next Question !

The Lord Privy Seal (Lord Wakeham)

My Lords, I believe that the House would now like to move on to the next Question.

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