New Clause. — (Reduction in Cost of Civil Servants.)

Part of Orders of the Day — Selective Employment Payments Bill – in the House of Commons at 12:00 am on 4th August 1966.

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Photo of Mr Iain Macleod Mr Iain Macleod , Enfield West 12:00 am, 4th August 1966

I beg to move, That the Clause be read a Second time.

What you have suggested, Sir, will be convenient.

I propose to address my brief remarks to new Clause 1, with some passing references to new Clause 2. The purpose of these Clauses is to achieve a reduction in the number, and, therefore, in the cost of the Civil Service and of comparable office staffs of local authorities. Government expenditure is an extremely topical subject, particularly in the light of recent statements by the Prime Minister.

What we are saying to the Prime Minister by these two new Clauses is, "Physician heal thyself". He and other Ministers have given so much advice to employers all over the country that it would be a good thing if they now listened to some advice. They have dished out so much medicine that it would be a good idea if they swallowed some of their own, and these two new Clauses would achieve just that.

It is unlikely that people will believe that the Government are fully involved in the economic crisis, which is perhaps the worst that the country has ever faced, unless the Government and the Civil Service are prepared to show that they will share in the sacrifices and in the redeployment that others are being asked to make. We offer them the opportunity by these two Clauses.

Treasury Ministers will realise that the drafting of the Clauses is not in the least important. It is the intention that counts. Indeed, we have had to torture words to get within order, on Clause 1 in particular, but after what they have done on the Prices and Incomes Bill the Government should be the last to complain about that.

However, I shall make some points on the words that we have used. First, why 6 per cent.? Because that is the approximate cost of what the Selective Employment Tax would be in relation to the annual cost of a civil servant. Second, why do we leave out the Ministry of Labour? Because the Ministry of Labour, quite wrongly in my view, will have to carry the burden of working this absurd tax as best it can until the Treasury and the Inland Revenue take over a tax which they should never have sub-contracted in the first place.

Third, we put down that there should be a total reduction, that is to say, we do not ask for the reduction of 6 per cent. in every Department. The Government, if they wish, are free to say that the reduction cannot be made in many Departments. In that case, the House is entitled to ask for more severe treatment for the Departments which the Government regard as less valuable. The Clause would apply to about 430,000 civil servants, excluding the Post Office, which is usually excluded when calculating the non-industrial Civil Service, and 6 per cent. comes to a little over 25,000 people.

We suggest that the Government should complete this exercise by 5th September, 1967. In other words, we give them a year to make this examination, which is being carried out by firms and employers in a vastly shorter time. The Government should take on the burden of study and of proof which every company and employer is inevitably taking on.

I am a non-executive director of a firm which is both a bank and, through one of the most important hire-purchase firms in the country, a wholly-owned subsidiary, vastly interested in hire purchase. The cost of the tax to the whole of our group in the United Kingdom would be no less than £140,000. Naturally, these figures were available to us at our first board meeting after the Budget, and, in due course, we found ourselves hit in three different ways. First, we were hit through the Selective Employment Tax, then, because we are very large investors in Australia, Eire and New Zealand, and, thirdly, because of the hire-purchase restrictions.

Because the firm to which I refer, Lombard Banking Limited, is labour-intensive, the figure of £140,000 a year, an enormous sum, is also an extremely high percentage of our profits. It follows that we must spend a great deal of time considering what, if anything, we can do about this new impost of taxation.

Owing to the operation of the Guillotine, the questions, not so much of hire purchase, but of finance, banking and insurance and all the other questions that affect the City of London, for example, have not been discussed. There are many other illustrations of how iniquitous the Guillotine is. That it has proved quite impossible to discuss these matters, except in passing, shows the contempt with which the Treasury Bench persists in treating the House in this matter.

4.15 p.m.

I now return to my illustration. We studied every conceivable possibility, as every firm has done. Could we make ourselves more efficient? That is what the Government want to us to do. Would it be possible to use a smaller labour force in some of our operations, through the use of computers? I add, in passing, that one of the absurdities of the Bill is that in many cases in manufacturing industry if one installs computers and thereby makes oneself more efficient, one may well move out of the manufacturing category and into the service category. I cannot think of anything more ludicrous.

I also wonder whether there are prestige Departments, or parts of Departments, that one was prepared to carry in ordinary years, but that one should look at again in the context of a serious economic crisis. I can give one illustration straight away to the Financial Secretary. On 7th March, 1966, a Written Question to the Chancellor of the Exchequer asked how many public relation officers and Press officers have been appointed during the lifetime of the present Government; and what has been the cost to public funds. The Answer from the Financial Secretary was: 50, … at an approximate cost in salaries of £75,000."—[OFFICIAL REPORT, 7th March, 1966; Vol. 725, c. 434.] The hon. and learned Gentleman could do with a bit of redeployment there to start with, because that is one field in which he should apply the suggestions implicit in new Clauses 1 and 2. This exercise is being carried out everywhere. Why should not the biggest employer of labour in this country, the Government, do exactly the same thing?

The most horrifying statistic that has been given to me is that at the present rate at which the non-industrial Civil Service is rising, an annual rate of over 3½ per cent.—and I think from the Financial Secretary's Answer on Tuesday that it has gone even higher than this—it follows that, if all Government employment increased at this rate, the whole of the working population would be employed by the Government in less than 50 years.

There is, therefore, a clear duty on the Government to put their own house in order, to go through the Civil Service, Department by Department. I am amazed that the Financial Secretary has not accepted the Clause already, because this is the job of the Treasury.

The present Treasury is intent on wasting money, on pouring out £133 million in premiums which nobody wants, intent always on giving approval to additional numbers of civil servants. It should be examining far more ruthlessly every request, from wherever it comes for an increase in the non-industrial Civil Service. But this is not the attitude of the Treasury at all.

Yesterday, my hon. Friend the Member for Dorset, North (Sir Richard Glyn) asked the Financial Secretary what was the increase in the number of civil servants employed full time and part time in the Treasury since October, 1964. My hon. and gallant Friend put this supplementary question: Can the hon. and learned Gentleman say whether the Chancellor of the Exchequer has considered making a substantial reduction in the number of employees in this Department with a view to setting a good example to other employers of non-productive labour? The answer from the Financial Secretary was: No, Sir, particularly as the increase was mainly designed to strengthen the divisions which advise Departments on the improvement of management services and efficiency."—[OFFICIAL REPORT, 2nd August, 1966; Vol. 733, c. 241.] We can think what we like about the end of that sentence, but what horrifies me is the way it opens—"No, Sir". He has not even considered it. That was the question—had he considered it? But, apparently, he will not consider the fact that there has been an enormous increase in the staff of his Department.