Pay Review Bodies (Hansard, 29 January 1998)

§ The Prime Minister

The 1998 reports of the five pay review bodies have been published today. Copies are available in the Vote Office and the Library of the House. I am grateful to the Chairmen and Members of the pay review bodies for the work they have put into them.

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The Government have twin objectives: to run a stable economy in which inflation is low and there is long-term prosperity; and to reward the effort and dedication of those working in many of our most important public services, including schools, hospitals and the Armed Forces, while leaving as much money as possible for front line services.

In the evidence the Government submitted to the pay review bodies, we stressed the need for their recommendations to be affordable to ensure that Departments can maintain the delivery of services within their agreed spending plans. We also made it clear that pay increases throughout the economy should be compatible with the Government's overriding economic objective of stable growth and long-term prosperity. Responsible decisions now on pay, in both the private and the public sectors, will help to secure jobs and prosperity in the future.

Against this background, in considering the recommendations of the independent pay review bodies, the Government have sought to strike a balance between ensuring that the pay settlements for these important public sector groups are fair; that they are affordable within Departments' existing spending plans; that they are consistent with the Government's inflation target of 2.5 per cent; and that they are responsible in terms of the long-term stability of our economy.

The main pay recommendations average some 3.9 per cent. The Government believe that this is high in relation to inflation, both the headline rate (3.6 per cent.) and the underlying rate (2.7 per cent.). It is also significantly higher than the average of 3.3 per cent. for last year's recommendations, which were introduced in stages by the previous Administration to accommodate the public expenditure costs.

After careful consideration the Government have decided to accept this year's main pay recommendations in full. However, to ensure that Departments can accommodate the costs without damaging front line services and to ensure that these awards do not lead to unwelcome increases in pay pressures throughout the economy more generally, we have decided that it is essential to stage their introduction. Full implementation will therefore be achieved by December this year following a first-stage increase of two per cent. for each group from April.

The main pay recommendations are as follows: The Armed Forces Pay Review Body (AFPRB) has recommended increases of 3.75 per cent. in the basic military salary for all ranks and classes except Privates Classes I, II and III and Lance Corporals Class III, for whom they recommend increases of 4.2 per cent. The Review Body on Doctors and Dentists Remuneration (DDRB) has recommended general increases of 4.2 per cent. except for General Medical Practitioners, for whom they recommend increases of 5.2 per cent. The Review Body for Nursing Staff, Midwives, Health Visitors and Professions Allied to Medicine (NPRB) has recommended increases of 3.8 per cent. in national pay scales. The School Teachers Review Body (STRB) has recommended increases of 3.8 per cent. in teachers' pay. 309W The Review Body on Senior Salaries (SSRB) has recommended:

(a) increases of 3.5 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.
(b) new pay ranges for senior military officers within which the pay of individual officers will be determined according to job weight.
(c) increases of 3.5 per cent. in judicial salaries.

The effect of staging is that, on average, the rates to be paid from April 1998 are 3.3 per cent. higher than those paid from April last year, and the rates to be paid from December 1998 will be 3.9 per cent. higher than those paid from last December. The average first-year increase will be 2.7 per cent. in 1998–99, compared with the rates of pay in force at the end of 1997–98. But since those rates did not apply throughout the year, the more appropriate comparison is between the pay received in the corresponding months of each year. The Government believe this represents a fair deal for these hard working and dedicated public sector staff, on whom the whole country depends.

In addition, the Government are separately taking action to improve training and development, and address concerns about recruitment and retention, in nursing and other professions allied to medicine. We are providing for an extra 1,300 training places for nurses this year, launching a national recruitment campaign and implementing more family-friendly employment policies.

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 and senior military officers within the framework set by the SSRB recommendations.

Pay increases for MPs and Ministers are linked to the pay ranges for the senior civil service, which means their awards will be treated in the same way as other groups. They will, therefore, receive an increase of 2 per cent. on 1 April. The balance of the 1998 recommendation will be paid on 1 April 1999; in the same way, 0.75 per cent. is due on 1 April 1998, resulting from the staging of last year's awards, which other groups received in December 1997.

As agreed last year, Cabinet Ministers will in 1998–99 forgo, for a second year, the substantial increases recommended by the SSRB in 1996 to which they would be entitled.

The Reports are substantial wide-ranging documents. This response addresses the main pay recommendations. Many other detailed recommendations will also be accepted, although some will require further consideration and discussion as necessary. In particular the NPRB recommendation for additional discretionary increments will need to be addressed as part of wider NHS pay discussions; and the DDRB recommendation for the enhancement of GMP's net remuneration will need to be considered and discussed as proposed.

The Government have asked the SSRB to resume work, which had been temporarily deferred, on the pay of Lords Ministers outside the Cabinet.

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The following table summarises the main pay recommendations of the Review Bodies.

	Main pay recommendations per cent.	Paybill costs £ million
AFPRB — Armed Forces
Privates Classes I, II and III and Lance Corporals Class III	4.2	45
basic military salary	3.75	179
Total		224
DDRB—Doctors and Dentists
General medical practitioners	5.2	80
Other doctors and dentists	4.2	202
Total		282
NPRB—Nursing staff, midwives, health visitors and professions allied to medicine	3.8	351
STRB—School teachers	3.8	446
SSRB—Senior Salaries
Senior civil service	¹3.5	—
Senior military	0 to 3.5	—
Judiciary	3.5	6
Total—all groups	3.9	1,309
¹ 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.