HL Deb 30 October 1995 vol 566 cc1274-9

Viscount Cranborne rose to move, That the draft order laid before the House on 23rd October be approved [29th Report from the Joint Committee].

The noble Viscount said: My Lords, this draft order provides for the annual uprating of salaries of Ministers and other office holders. The new salaries under this order are, as they were last year, the result of applying procedures described by my noble friend Lord Wakeham in 1993.

Ministers and officer holders in another place should normally receive the same percentage increase in their salaries as do Members of Parliament. I should explain to your Lordships that the increase for Members of Parliament is, in turn, linked to the settlement for middle ranking civil servants, which this year was 2.7 per cent.

The arrangement for Ministers and office holders in this House—because we do not receive a parliamentary salary—is that we should normally receive the same cash increase as our counterparts in another place, taking account of their combined ministerial and reduced parliamentary salaries. That principle will apply to all Ministers and office holders in this House who are covered by the order, including the Leader of the Opposition and the Opposition Chief Whip.

I should also reassure your Lordships that the increases are entirely in keeping with the Government's approach to public sector pay. The linkage with Civil Service pay, which is settled in full accordance with the guidelines, ensures that we apply to ourselves the restraint that we ask of others. That approach has helped to deliver realistic settlements throughout the public sector, and it is reflected in the increases effected in the order before your Lordships. I commend the order to the House. I beg to move.

Moved, That the draft order laid before the House on 23rd October be approved [29th Report from the Joint Committee].—(Viscount Cranborne.)

Lord Boyd-Carpenter

My Lords, I realise that, as my noble friend explained, the order follows the pattern of previous changes. However, I want to express my personal view that ministerial salaries, and indeed the remuneration of Opposition leaders, is out of line in comparison with the much higher levels now prevailing in the private sector. I suggest that consideration ought to be given to revising the formula, which my noble friend explained, under which the salaries are determined. It is a pity that those who have to undergo the stress and strain of office or of Opposition leadership should find that their remuneration is becoming very much out of line with that of people in responsible positions outside.

I realise that this is a difficult and delicate question for Ministers to handle. If the matter is to be considered further, as I hope it will be, they may feel that they should obtain the advice of Members of your Lordships' House and of another place who do not hold ministerial office.

The difference that now exists between the remuneration of chairmen and senior directors of a large number of companies and of Her Majesty's Ministers and Opposition leaders is now considerable. I believe that it is in the interests of good government in this country that the position should be reviewed.

Lord Avebury

My Lords, does this not indicate not so much that Ministers and those in Opposition who receive salaries are under-rewarded but that those in the private sector with whom the noble Lord, Lord Boyd-Carpenter, drew a comparison are grossly over-rewarded? Is this not a perfect example of the evil that results from the unrestricted greed of top people in the private sector, against which the Prime Minister himself has inveighed on more than one occasion, attempting, without success, to persuade them to exercise restraint? The Institute of Directors and others in responsible positions have tried to persuade those such as the chairmen of public utilities not to accept enormous increases or to take in addition to their salaries huge pay-offs in the form of share options and so on.

If comparisons are to be made between those directors and heads of large companies and Ministers sitting on the Front Bench, how would one create an equivalent for Ministers of the share options which are enjoyed by the fat cats in the public utilities? I suggest that the noble Lord, Lord Boyd-Carpenter, has made an extraordinarily dangerous suggestion and one which should be vigorously resisted by your Lordships.

Baroness O'Cathain

My Lords, I believe that it would be appropriate to draw attention to evidence which was given to the Nolan Committee by a Member of the other place, Sir Terence Higgins. This has nothing to do with fat cats, directors' salaries and share options. Sir Terence said that since he joined the other place in 1964 average earnings in the economy as a whole have increased in real terms by 80 per cent., MPs' salaries have stayed the same in real terms, and Ministers' salaries have reduced by between 35 per cent. and 50 per cent. in real terms. Those salaries have become completely out of kilter.

The problem is that the media have homed in on what even the noble Lord opposite referred to as fat cats. We are talking about average earnings. We want to ensure that the right people can afford to come to Parliament and accept ministerial positions. There are a great many people who cannot at the moment.

Lord Bruce of Donington

My Lords, while I admire the restraint of Her Majesty's Government and the noble Viscount the Leader of the House in these matters, I depart slightly from the point made by the noble Lord, Lord Boyd-Carpenter. Is the noble Lord aware that the restraint that has been shown by the Government in regard to their own salaries ought to be followed by action in the European Community, where commissioners and other civil servants in Brussels get roughly twice the remuneration of the British Prime Minister?

Lord Renton

My Lords, it might be helpful if a comparison were also made with others receiving salaries in the public service, such as members of the higher judiciary and the few remaining quangos which have not been privatised.

Lord Marsh

My Lords, I wonder whether the noble Viscount the Leader of the House can help the House. As a member of a party dedicated to market forces, can he give some indication of the amount of difficulty which the Government currently face in filling ministerial vacancies?

Lord Stoddart of Swindon

My Lords, to a certain extent I support what the noble Lord, Lord Boyd-Carpenter, said. However, I believe that he made the wrong comparison, as has been pointed out. Ministerial salaries are absurdly low compared with salaries paid in other public sector jobs, even to officials of this House. When one bears in mind that the chief executive of a relatively small local authority will receive more, excluding the parliamentary salary, than a Secretary of State, we have reached a ridiculous position.

Whatever party is in power, the jobs of the Prime Minister of this country and his government are very important. Many people try to play down the importance of government, but Ministers run the country. They deserve a decent salary and should be seen to be paid a decent salary. Therefore, I hope that, as has been suggested, the situation will be reviewed with a view to ensuring that the Prime Minister and all his Ministers are properly remunerated for the job that they do. The same applies to Members of the House of Commons.

Lord Barnett

My Lords, while I agree with much that the noble Baroness, Lady O'Cathain, and the noble Lord, Lord Boyd-Carpenter, said, I have even greater anxiety for the public sector generally. I declare an interest as a trustee of the Victoria and Albert Museum. There the funding has been frozen for some three years. That is causing enormous anxiety and will almost certainly result in the redundancy of some crucial staff. That factor applies equally in organisations such as the citizens advice bureaux, for which the grant has been much reduced. I have an interest to declare there. My daughter is a senior executive.

I hope that the noble Viscount the Leader of the House will recognise that the issue involves more than Ministers. I believe that he referred to realism as regards what is happening in the public sector generally. The issue involves more than realism. In many parts of the public sector there is literally no choice: bodies have to accept the government grant. In that context, the net result is that it involves major consequences for the public sector staff. I hope that the noble Viscount will deal with that issue.

Viscount Cranborne

My Lords, having listened with great interest to your Lordships' exchange of remarks, I am pulled emotionally in more than one direction. On the one hand, there is what I hope is a Gladstonian respect for economy in public finances; and on the other a perhaps unworthy desire to enlist my noble friend Lord Boyd-Carpenter, and the noble Lord, Lord Stoddart, in particular, as my personal shop stewards. However, with your Lordships' permission, I shall resist the temptation to go down that path.

I recognise—it is a remark that I have made before in your Lordships' House—that taking a long perspective, let alone the somewhat shorter viewpoint that my noble friend Lord Boyd-Carpenter took, ministerial salaries have fallen way out of line with other salaries, and not only in the private sector. We are all aware that Lord Palmerston was able to live in what I believe is now the In and Out Club purely because of his ministerial salary as Foreign Secretary of £5,000 a year—in the days when £5,000 a year was £5,000 a year. I suspect that on a rather larger ministerial salary in nominal terms, my right honourable friend the Secretary of State for Foreign and Commonwealth Affairs would be hard pressed to live in the same state in Piccadilly today.

Nevertheless, no matter how admirable the concern for adequate rewards may be—it is an anxiety which has been articulated today in all sections of your Lordships' House—the formula, whether or not it has shortcomings, has one enormous benefit: at least for the moment it takes the difficult and sensitive question of ministerial pay out of the immediate cockpit of adversarial politics. I believe that that is a prize well worth striving for and achieving. Perhaps the good natured character of the remarks in your Lordships' House today are evidence to that.

I could be tempted down many paths as a result of the coats that your Lordships trailed before me. I hope that noble Lords will forgive me if I resist that temptation. I merely remark to the noble Lord, Lord Barnett, that the public sector generally can pay more if it makes sure that the gains made in productivity and efficiency justify that. We are all aware that museums find that a somewhat more difficult factor than other areas. I am the first to accept that. I also congratulate the noble Lord on the splendid hereditary principle which clearly obtains in the Barnett family: not only is the noble Lord an ornament to the public service, his daughter clearly is too.

I hope that your Lordships will feel that noble Lords on these Front Benches in particular, and indeed noble Lords in receipt of public salaries on the Front Benches opposite, provide remarkably good value for money—except in my case, where I note that the press has made some unhelpful remarks about the size of my pay increase. I merely point out that despite that, a Cabinet Minister in the House of Lords is still a great deal better value, in money terms if not in terms of actual performance, than a Cabinet Minister in another place. Perhaps we can take pride in that.

Setting aside party political controversy, it is worth noting—I hope that I spare the blushes of my noble friends on the Front Bench—that your Lordships have a dedicated Front Bench team who are worth more than every penny of their ministerial salaries.

Lord Dean of Beswick

My Lords, before the Leader of the House sits down, perhaps I may point out that other sums of money are drawn by Ministers and those on the payroll in the form of expenses. The noble Viscount the Leader of the House may recall—perhaps it arose just before he took office—that in your Lordships' House I raised the matter of the ridiculous overnight allowance paid to Members of your Lordships' House. It is not a salary. I believe that I received the general support of Members of your Lordships' House. While I do not think that a firm undertaking was given, there was an understanding that the matter would be kept under review. Nothing has occurred since then apart from what I class as a pitiful allowances increase. If one travels to London on government allowances in any capacity other than as a Member of your Lordships' House, one receives a much larger overnight allowance. When will the Government consider some of the problems regarding Back-Benchers? Why are they restricting the increase only to those on the Front Bench? In any political party, not only those on the Front Bench but many Back-Benchers do a great deal of work.

Viscount Cranborne

My Lords, with your Lordships' permission, I do not believe that noble Lords will disagree in any way with the latter part of the noble Lord's sentiments. Everyone knows the dedication with which regular attenders of your Lordships' House contribute to the work of Parliament.

However, I refer the noble Lord to a recent discussion which took place, as I am sure he knows, in the Finance and Staff Sub-Committee—the noble Lord shakes his head; the proceedings of that Committee are available to your Lordships—in which the issue was thoroughly investigated.

I believe that the matter goes a little wider than the terms of the order. If the noble Lord wishes to discuss the matter further on the Floor of the House, channels are available to him to do so.

On Question, Motion agreed to.