HC Deb 20 December 1974 vol 883 cc643-9W
Mr. Ioan Evans

asked the Prime Minister what decisions the Government have taken on the report of the Top Salaries Review Body.

The Prime Minister

The Review Body on Top Salaries has recently submitted its first substantive report on the salaries of senior civil servants, senior officers in the Armed Forces, the Judiciary, and the chairmen and board members of nationalised industries. The Government are grateful to Lord Boyle and his colleagues on the Review Body for the care with which they have carried out this task. The report will be published as a Command Paper on Monday 23rd December; in the meantime a limited number of advance copies are available in the Vote Office.

2.This review, which was begun in 1971, is the first substantive review covering all these salaries since 1969. Although the groups concerned have received interim increases recommended by the Review Body during this period, the Review Body's inquiries show that the increase in the salaries of these groups since 1969 has been markedly less than the increase in prices, or the increase in average earnings, or the average increase in comparable salaries in other employments. The Review Body has, therefore, recommended substantial increases in these salaries from 1st January 1975—July 1975 for some members of the Judiciary—though the rates of increase recommended are, as the Review Body states, lower than those that will have taken place in the community as a whole, and less in nearly all cases than those for comparable salaries, since 1969. The Review Body also points out that comparisons between increases in gross incomes at these levels and movements in other incomes can be seriously misleading, given the progressive increase in rates of tax on higher incomes.

3. The Government recognise that the salary rates recommended by the Review Body are appropriate rates on the basis of the principles on which the Review Body has conducted its review. The Government have, however, to consider the recommendations at a time of critical economic difficulty for the country, and to strike a balance between that and their responsibilities for the efficient management of the public service and their obligations as the employer of those who serve in it.

Civil Service, Armed Forces and the Judiciary

4. For the higher Civil Service, senior officers of the Armed Forces and the members of the Judiciary, the Government have decided to accept the salary rates recommended by the Review Body, but to implement the payment of the increases recommended in two stages, except at the lowest levels. In the Civil Service the differential between the maximum of the Assistant Secretary's scale and the Under-Secretary's salary has already virtually disappeared; and the Assistant Secretary's salary is due for a further increase very shortly. For this reason the increase recommended for the Under-Secretary will be implemented in full from the due date. It is also necessary to preserve a reasonable progression of salaries above that level. These requirements will be met by applying the following arrangements:

  1. (i) For salaries which would under the Review Body's recommendations be increased to £13,000 or less, the recommendations will be implemented in full as to amount and effective date.
  2. (ii) For salaries which would under the Review Body's recommendations be increased from a present rate of less than £13,000 to a new rate of more than £13,000, the whole of the amount of the recommended increase up to £13,000 and half of the amount of the increase above £13,000 will be paid from the recommended dates and the remainder will be paid from a date 12 months later.
  3. (iii) For salaries at a present rate of more than £13,000, half the recommended increase will be paid from the effective dates recommended by the Review Body, and the other half from a date 12 months later.

5. A complete schedule of the existing and proposed salaries is being circulated in the OFFICIAL REPORT. It will be seen that the immediate effect of the Government's decisions in the higher Civil Service is actually to reduce the differential between the Under-Secretary and the Deputy Secretary in the higher Civil Service, and at those levels where the staging proposed is fully effective—the three grades of Permanent Secretary— the weighted average increase from 1st January 1974 to 1st January 1975 is 13.2 per cent.

6. The application of the arrangements I have described to the Review Body's recommendations for the other groups— senior officers in the Armed Forces and members of the Judiciary—will ensure the maintenance of the established links between salary levels in those groups and salary levels in the Civil Service.

7. Arrangements will be made to ensure that for the purpose of calculating entitlement to pension rights the salary rates recommended by the Review Body for these three groups should apply in full with effect from the effective dates recommended by the Review Body. This will ensure that pension rights are fully preserved.

Chairmen and board members of nationalised industries

8. The increases recommended for chairmen and board members of nationalised industries raise wider questions about the levels of incomes at chairmen and board room level in private industry, with which these nationalised industry salary levels are compared. The Government accept the Review Body's judgment that the chairmen and board members of the major nationalised industries are at present earning substantially lower salaries than their counterparts in private industry. In the Government's view, however, the social justification for some of the very high incomes paid in private industry would be questionable, whatever the economic circumstances of the country, and however great the responsibilities the individuals concerned are asked to bear; and this is particularly so when regard is had to the fringe benefits and benefits in kind which many of those concerned enjoy, to a greater extent than their counterparts in public service. In current economic circumstances, when the great bulk of the employed population, on much lower income levels, are being asked to accept increases which fall within the guidelines set by the TUC in accordance with the social contract, it would be particularly difficult to justify the sort of increases that would result from applying to these incomes a percentage increase even as large as that of the rise in prices. It is of the essence of the social contract that, if those who are least well paid are to be enabled, within available resources, to improve their relative position, those who are most highly paid should accept the need for extreme restraint.

9. The Government, therefore, call upon those concerned in the private sector, and in other parts of the public sector than those covered by the Review Body's report, to exercise the greatest possible degree of restraint in the determination of salaries at these top levels.

10.My right hon. Friend the Secretary of State for Employment announced on 22nd October 1974 that the Royal Commission on Income Distribution and Wealth had been asked to undertake an inquiry on higher incomes. The Royal Commission's report can be expected to provide a comprehensive review of the considerations applicable to high incomes, whether in the private or the public sector, and will, therefore, afford a basis on which the Government can consider policy towards high incomes generally. The Government will be discussing with the Royal Commission the possibilities of its accelerating this inquiry so as to be able to complete its report much earlier than originally intended, and will be willing to provide the commission with any additional staff and the facilities required to enable it to do so.

11. In the meantime the Government propose to postpone decisions on the Review Body's recommendations for chairmen and board members of nationalised industries. This will permit further consideration of this group of salaries, taking account of the Royal Commission's report and of any decisions taken by the Government following that report.

Annual reviews

12. The need to stage the increases recommended by the Review Body for the higher Civil Service, senior officers in the Armed Forces, and members of the Judiciary stems from their size; and that in turn reflects the long interval that has elapsed since these salaries were last substantively reviewed. When out-

SENIOR GRADES IN THE HIGHER CIVIL SERVICE
Current salary £ Salary payable from 1st January 1975 £ Salary payable from 1st January 1976 (Rate recommended by Review Body) £
Head of the Home Civil Service 17,350 20,175 23,000
Permanent Secretary to the Treasury
Secretary to the Cabinet
Permanent Secretary 16,350 18,675 21,000
Second Permanent Secretary 15,350 17,175 19,000
Deputy Secretary 11,100 14,000 15,000
Under-Secretary 9,000 12,000 12,000
Senior Officers of the Armed Forces
Admiral of the Fleet 16,350 19,675 23,000
Field Marshal
Marshal of the Royal Air Force
Admiral 14,850 17,925 21,000
General
Air Chief Marshal

side salaries are increasing as rapidly as they have increased in recent years, it is clearly unsatisfactory that so long a period should elapse between reviews of salaries of public servants. The Government therefore propose to invite the Review Body in future to review these salaries annually. It is proposed that the next review should produce recommendations in respect of all the groups covered by the present report for rates of salary appropriate from 1st April 1976. This will bring the effective date of new rates for the senior civil servants covered by the Top Salaries Review Body into line with the effective date for pay increases in other parts of the non-industrial Civil Service. Since that date will fall either three months after or, in the case of some members of the Judiciary, three months before the dates upon which the second stage of the present increases will fall due for implementation, some transitional arrangements will be required and it may at that stage be necessary to consider some further staging of whatever increases the Review Body then recommends.

Ministerial salaries

13. Finally, I should like to refer to ministerial salaries. My right hon. Friend the Lord President told the House yesterday that the Government had decided to refer the pay and allowances of Members of Parliament to the Review Body. The Review Body will be asked to consider ministerial salaries under the same reference; but whatever the Review Body's recommendations may be, the salaries of Cabinet Ministers will not be changed before 1st January 1976.

SENIOR GRADES IN THE HIGHER CIVIL SERVICE
Current salary £ Salary payable from 1st January 1975 £ Salary payable from 1st January 1976 (Rate recommended by Review Body) £
Vice-Admiral 11,350 14,000 15,000
Lieutenant-General
Air Marshal
Rear-Admiral (Combatant) 9,350 12,000 12,000
Major-General (Combatant)
Air Vice-Marshal (Medical and Dental) 9,450
The Judiciary
Lord Chief Justice 19,100 23,050* 27,000*
Lord of Appeal in Ordinary 17,850 21,175* 24,500*
Master of the Rolls 17,850 21,175*
Lord President of the Court of Session 16,350 20,425*
Lord Chief Justice (Northern Ireland) 15,600 19,550* 23,500
President of Family Division 17,850 20,175* 22,500*
Lord Justice of Appeal 16,350 19,425*
Lord Justice Clerk (Scotland) 16,100 19,300*
High Court Judge 16,350 18,675* 21,000*
Judge of the Court of Session 14,350 16,675* 19,000
Puisne Judge (Northern Ireland) 14,100 16,550*
Lord Justice of Appeal (Northern Ireland) 14,100 16,550*
President, Lands Tribunal 12,950 14,500 16,000
Sheriff Principal of Lanarkshire 11,200
Recorder of London 14,100 14,800 15,500
Chief National Insurance Commissioner 12,950 14,250
Common Serjeant, Member of Lands Tribunal, National Insurance Commissioner, President of Industrial Tribunal, Judge Advocate General, Sheriff Principal of the Lothians, Chairman Scottish Land Court, Recorder of Belfast. 10,400–12,100 13,500 14,000
Circuit Judge, Sheriff A, Master of Court of Protection, Chief Metropolitan Magistrate†, County Court Judge (Northern Ireland). 9,950–10,350 13,000 13,000
Senior and Chief Master and Registrar, Regional Chairman of Industrial Tribunal, Chairman of Foreign Compensation Commission, Registrar of Court of Criminal Appeal. 9,380–9,950 12,500 12,500
Chairman of Industrial Tribunal 8,950 11,750 11,750
Metropolitan Magistrate† 8,950
Master and Registrar of the Supreme Court 8,950 11,000 11,000
* Effective date of increases 26th July 1975 and 26th July 1976.
†Effective date of increases for Chief Metropolitan Magistrate and Metropolitan Magistrate 17th July 1975 and 17th July 1976.

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