Public Sector Pay Policy (Hansard, 23 February 1994)

§ The Parliamentary Under-Secretary of State, Department of Employment (Lord Henley)
My Lords, yes. The Government's approach to public sector pay in 1994– 95 was set out in the Chancellor of the Exchequer's statement of 14th September last year and reflected in the: expenditure programmes announced in the Budget on 30th November. The Government are satisfied that all parts of the public sector will accommodate the costs of pay settlements within those expenditure totals.

§ Lord Barnett
My Lords, is the Minister aware that I accept the need for the Government, in their management of the economy, to be concerned with pay levels in the public: sector? However, will he in turn accept that if there is a pay bill freeze rather than a pay freeze, given that typically two-thirds of running costs relate to pay, there will inevitably be wage cuts and job cuts, despite the fact that "Downing Street sources" said recently that there will not be job cuts? Does the noble Lord accept that those job cuts are inevitable?

§ Lord Henley
My Lords, I do not accept that that is inevitable. We feel that any pay increases should be offset by efficiency improvements. That is what we have asked the Civil Service and the rest of the public sector to do. There is absolutely no freeze on pay settlements and the normal pay determination arrangements are not pre-empted.

§ Lord Boyd-Carpenter
My Lords, is my noble friend aware that those of us who have some past experience in this matter are full of admiration for the way in which the Government are handling the issue?

§ Lord Henley
My Lords, I am most grateful to my noble friend. My noble friend is aware of the importance of the need to keep public expenditure and public sector costs under extremely firm control. Therefore, the current pay realism must continue. We hope that low settlements will become the norm rather than the exception.

§ Lord Ezra
My Lords, are the Government satisfied that they have worked out effective ways in which to identify and reward improved performance in the public sector, even in those areas where that cannot be measured in financial terms?

§ Lord Henley
My Lords, we shall continue to pursue our long-term objectives of increasing flexibility within the public sector pay system and strengthening the link between performance and pay. We are satisfied that there is sufficient flexibility in the system to allow for that.

§ Lord Dean of Beswick
My Lords, does the Minister think that that policy is justified bearing in mind that nurses in the health service are on a ridiculously low income for the job that they do and that at the same time many jobs are being created in the new health trusts and the chairmen are awarding themselves salaries of over £ 60,000 per year? Where is the fairness in that policy?

§ Lord Henley
My Lords, as I understand it, nurses have been offered a pay increase. The important factors to bear in mind when considering pay levels are the need to recruit, retain and motivate staff within what is affordable in the system. I see no evidence of a shortage of nurses in the health service.

§ Lord Barnett
My Lords, I too have experience of a job similar to that held by the noble Lord, Lord Boyd-Carpenter. Does the Minister agree with the statement of the then Chief Secretary to the Treasury, the noble Lord, Lord Lawson, in his autobiography who, when talking about pay rules, said that he found such a course to be a well-trodden road to disaster?

§ Lord Henley
My Lords, the noble Lord is another former Chief Secretary to the Treasury and he will be well aware of the importance of the need to keep public sector expenditure under control. That is why we have announced that while there should be no formal limit on public pay sector policy, we expect all pay increases to be paid for within current budgets and within efficiency improvements which can be brought about.

§ Lord Cledwyn of Penrhos
My Lords, do quangos come within the public pay sector?

§ Lord Henley
My Lords, all public pay is affected by the statement made by my right honourable friend the Chancellor of the Exchequer.

§ Lord Eatwell
My Lords, does the noble Lord agree that by imposing that pay policy on public sector 631 workers, many of whom are low paid, the Government are forcing those low-paid workers to subsidise the public services enjoyed by the rest of us?

§ Lord Henley
My Lords, I simply do not agree with that.