Pay Review Bodies (Hansard, 6 February 1997)

§ The Prime Minister

The 1997 reports of the five pay review bodies have been published today. Copies are available in the Vote Office and the Library of the House. The reports are substantial documents representing the considerable commitment of the chairmen and members 699W of the review bodies, and the Government are grateful to them for their contribution and for the time they have devoted to this work.

Pay settlements for these groups have to be consistent with the Government's approach to public sector pay. Specifically, under this approach, the cost of pay settlements should be met from existing spending plans, without recourse to the reserve. This position was re-affirmed in the Chancellor of the Exchequer's statement on public sector pay on 17 September 1996 and in the Government's evidence to the pay review bodies.

Last year, the Government accepted the recommendations of the pay review bodies, but introduced staging because they represented a significant step up in the level of public sector pay settlements and because the staging helped to accommodate the costs within spending plans.

In evidence to the pay review bodies, the Government proposed that recommendations this year should be lower than last year to drop back from those high levels and to reflect lower inflation and the absence of other pay pressures in the economy generally. Our continuing determination to control costs in the public sector means that spending plans have again been tightly drawn. The recommendations this year have to be considered in that context.

The main pay recommendations are as follows:

The Armed Forces pay review body has recommended a range of increases in daily rates of between 3 and 3.4 per cent. Taking all aspects of pay, including new bonus arrangements, the average increase is 3.3 per cent.
The Doctors and Dentists review body has recommended general increases of 3.4 per cent.
The review body for Nursing Staff, Midwives, Health Visitors and Professions Allied to Medicine has recommended an increase of 3.3 per cent. in national pay scales.
The School Teachers review body has recommended a 3.3 per cent. increase in teachers' pay.

The Senior Salaries review body has recommended:

(a) increases of 2.75 per cent. in the minimum and maximum values of each of the pay ranges for the senior civil service. Within the ranges, Departments will determine individual salaries on the basis of performance. The Government expect the cost of the settlement to be absorbed by the final savings arising from staff reductions following senior management reviews;
(b) increases for senior military officers in the range 2.75 to 6 per cent. averaging 3.7 per cent., including changes in pay structures;
(c) restructuring of judicial pay, following a two-year review, with pay increases in the range 3 to 7 per cent., averaging 6 per cent.

Separately, for armed forces personnel within the AFPRB's remit, there is a pay addition of 1 per cent. carried forward from last year's report to reflect the outcome of the quinquennial review of the value of armed forces pensions in comparison with the private sector. Similarly, the DDRB has recommended a pay addition of 0.35 per cent. to reflect narrower pension differentials with the private sector, with a further 0.35 per cent. next year.

The basic pay increases average some 3.3 per cent. This is lower than the corresponding average of 4 per cent. last year. This is a move in the right direction, but the 700W recommendations are still high considering the general level of public sector pay settlements in the past year, and higher than the retail prices index. It would be difficult to meet the costs from existing spending plans without squeezing services.

The Government have always said that they will accept recommendations of the pay review bodies unless there are compelling reasons not to. We intend to accept the recommendations this year but, as last year, we intend to stage their introduction. Staging the recommendations for the coming year will make it possible to accommodate the costs within spending plans without prejudicing the planned level of service delivery. In addition, staging reflects our view that settlements should be lower this year both generally throughout the public sector and specifically for the pay review body groups.

We shall implement a first staged payment of 2 per cent. on 1 April, with the balance of the recommended increases to be paid from 1 December. This meets the requirements on affordability and the approach to public sector pay, while implementing the increases recommended by the review bodies in full by the end of this year.

The staging arrangements will apply to all groups. They will extend to the recommended increases in the minima and maxima of the senior civil service pay ranges and the awards Departments will determine for the senior civil service within the framework set by the SSRB recommendations.

We welcome the NPRB's continuing support for the principles of local pay determination, and we will consider further the NPRB recommendations on the future structure and coverage of the local pay arrangements.

We note the AFPRB recommendations for changes in certain allowances which are related to the proposals of the independent review of the armed forces manpower, career and remuneration structures. My right hon. Friend the Secretary of State for Defence is considering the Government's response to the review.

The separate pensions-related adjustments in this year's recommendations by the DDRB and those in last year's recommendations by the AFPRB will be paid as recommended from 1 April.

The pay of Members of Parliament is linked to the pay ranges for the senior civil service. It follows that Members of Parliament and Ministers should be treated on the same basis as other groups, with an increase of 2 per cent. from 1 April and the balance on 1 December.

The SSRB report includes the outcome of its two-year review of judicial pay. We are grateful to it for this work. The recommendations give some members of the judiciary significant pay increases, but this is supported by the findings of the review. We intend to accept the recommendations as proposed, subject to the same staging as other groups.

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The table summarises the main pay recommendations of the review bodies
	Main pay recommendations	Paybill costs
	Per cent.	£ million	Per cent.
AFPRB: Armed forces	¹3–3.4	181	3.3
DDRB: Doctors and dentils	²3.4	230	3.4
NPRB: Nursing staff, midwives, health visitors and professions allied to medicine	[...]3.3	271	3.3
STRB: School teachers	3.3	376	3.3
SSRB: Senior salaries/Senior civil service	⁴2.75	—	—
Senior military	2.75–6.0	—	3.7
Judiciary	3.0–7.0	10	6.0
¹ There is also an additional 1 per cent. on pay as part of the staged pensions-related adjustment agreed last year.
² DDRB has also recommended an additional 0.35 per cent. this year and next, as a staged pensions-related adjustment.
³ Recommended increase in national pay rates.
⁴ Increases in pay band minima and maxima. Recommendations for the senior civil service affect the pay framework within which Departments will set individual pay rates.