Both reports have been presented as Command Papers and are available in the Vote Office this afternoon.
The first of these reports—the Review Body's fourteenth report—makes recommendations for the salaries of the higher Civil Service, senior officers in the Armed Forces, members of the judiciary and chairmen and members of boards of nationalised industries. The House will recall that in 1978 the Review Body made recommendations for these groups of public servants, which our predecessors accepted but decided to implement in three stages, on 1 January 1978, 1 April 1979, and 1 April 1980. Last year the Review Body recommended an updating of the second and third stages, which we accepted. The third stage has been in payment since 1 April this year. The present report is concerned with the increases required to bring that third stage up to date from the levels appropriate on 1 April 1979 to the levels appropriate on 1 April 1980.
The other report now submitted—report No. 15—makes recommendations for the salaries of Members of Parliament, Ministers and other paid office holders. Last year the Review Body made recommendations that the House agreed should be accepted but should be implemented in three stages, on 13 June 1979, 1980 and 1981. The first stage was paid to all those concerned. The second stage has been in payment since 13 June last for Members of Parliament but not for Ministers and other paid office holders. The Review Body's latest report is concerned with the increases required to bring the second and third stage payments up to date from the levels appropriate on 13 June 1979 to the levels appropriate on 13 June 1980.
The Review Body has arrived at detailed recommendations over the whole field on the basis of all the factors that are traditionally relevant. The Government are grateful to Lord Boyle and his colleagues for their thoroughness and attention to detail, and for all the time and effort that they have devoted to the review.
They recommended increases of 14·6 per cent. in the second and third stage payments to Members of Parliament, and similar increases for Ministers. The general level of the increases that they recommend for the four groups of public servants is about 19 per cent., though they propose larger increases than that for certain categories within these groups. If these larger increases are taken into account, the overall cost of the increases recommended for these groups of public servants would work out at about 26 per cent.
The Government are committed to accepting the recommendations of the Review Body, save where there are clear and compelling reasons to do otherwise. Indeed, my right hon. Friend the Leader of the House told the House some months ago that the Government would accept the recommendations of the Review Body for updating the second stage increases to hon. Members. I should like to explain to the House, Mr. Speaker, why, notwithstanding these commitments, the Government take the view that there are clear and compelling reasons, of a kind that the Review Body could not take into account, for not accepting the Review Body's recommendations in full on this occasion.
The overriding priority to which the Government's economic and monetary strategy is directed is the reduction of inflation. At over 20 per cent., the rate of inflation is unacceptably high, in absolute terms and in relation to the rate of inflation in most of the countries with which we compete in world markets. We shall not be able to make progress in resuming sound economic growth and in reversing the rise of unemployment until we succeed in reducing the level of inflation very substantially. By sticking to our monetary targets we shall bring the rate of inflation down. It is likely to be falling in the next few months, but unless the growth of earnings is broadly consistent with the rate of monetary growth the fall in inflation will be accompanied by a larger rise in unemployment.
Pay increases in the private sector are clearly beginning to respond to the combined pressures of tough market conditions and financial constraints. But the private sector cannot be expected to take the whole of the strain. Levels of pay increases in the public sector must likewise be reduced, if public expenditure is to be kept under control and our monetary objectives achieved. When we are looking to other groups in the public sector to accept pay settlements that fall below what might be suggested by any traditional comparisons with movements of other earnings or of prices, the Government think it right to expect people in positions of responsibility and leadership in Parliament and the public services to act in a way that we hope others in the country will follow.
This is the background to the Government's proposals, to which I now turn.
First, as to Members of this House, we are in the virtually unique position of determining our own remuneration. Our calls to others to show restraint and act responsibly will be judged by what we do ourselves. The Review Body has recommended a parliamentary salary of £12,300 from 13 June 1980 and £13,750 from 13 June 1981. These figures represent an increase of 14.6 per cent. The Government think it right to propose to hon. Members that they settle for a substantially smaller figure. We shall therefore invite the House to approve a resolution to provide a parliamentary salary of £11,750 from 13 June 1980. That represents an increase of £1,025 or 9.6 per cent., on the second stage salary of £10,725, which has been in payment since 13 June last. We propose also to provide in that resolution for an increase of the same percentage in the third stage salary, due to take effect on 13 June 1981, taking it from £12,000 to £13,150.
We propose that the secretarial and research allowance for hon. Members should be increased by 9.6 per cent. to £7,400, with effect from 13 June 1980.
Ministers and other paid office holders are not yet in receipt of their second stage payment. We shall invite the House to approve an order putting into effect the second stage payments recommended by the Review Body last year, increased as for Members of Parliament by 9.6 per cent. save in the case of Cabinet Ministers and my right hon. and learned Friend the Attorney-General. For them, the increase will be reduced to 5 per cent.
The order will also provide for the same percentage increases to be applied to the third stage payments due to take effect next year.
We propose to adopt the Review Body's recommendation that we should unify the parliamentary salary payable to Ministers in the House of Commons from three rates to a single rate, and we propose that that rate should be £6,930. Although junior Ministers in the House of Lords now receive a secretarial allowance of £1,000, which we propose to increase to £1,100, they do not receive any salary specifically in respect of their parliamentary duties. This is a very real problem, and we propose to consider how the arrangements for their remuneration should be revised to take account of it.
The Government propose that peers' expense allowances, which are related to relevant costs, should be increased as the Review Body recommends.
I turn now, Mr. Speaker, to the four groups of public servants covered by the Review Body's fourteenth report.
The Government consider that they should be expected to accept no less a reduction, as compared with the Review Body's recommendations, than Members of Parliament are being asked to make for themselves. The increase that we are proposing for hon. Members is about one-third below that recommended by the Review Body. We propose that the average, increase for the four groups of public servants concerned should also be about one-third below the general increase of about 19 per cent. recommended by the Review Body. That will bring the overall cost of the increases to these groups down to about 12½ per cent.
This will not be paid as straight percentage increases across the board to all those concerned; it will be so distributed as to mitigate the compression of differentials between the groups covered by the Review Body's report and those directly below them, and within those groups to preserve generally, though, of course, at lower salary levels, the pattern of differentials and relativities recommended by the Review Body.
The result of distributing the, total sum in this way will, in fact, be that most of those at the highest levels—the permanent and deputy secretaries in the Civil Service, the equivalent ranks in the Armed Forces. and the chairmen of nationalised industries, will, like hon. Members and Ministers, receive percentage increases in single figures.
The new salary rates for all four groups will be effective from 1 April 1980. The effect of implementing them will be to reduce the cost, as against full implementation of the Review Body's recommendations, by about 50 per cent.
A special problem arises in the Civil Service. When other grades recently received increases following pay research, it was agreed that new salary scales for assistant secretaries and senior principals—the grades immediately below those covered by the Review Body's remit—should not be settled until the outcome of the Review Body's report was known. The results of pay research for the assistant secretaries would take the maximum of their scale above the rate we now propose for under-secretaries. In order to preserve tolerable differentials, it will be necessary to set a lower scale for assistant secretaries from that which would result from the application of the pay research findings. There will also need to be a slight adjustment at the top end of the scale for senior principals.
I will, with permission, Mr. Speaker, circulate in the Official Report schedules showing the current and proposed rates of salary for the main groups and grades concerned. Full details of the Government's proposals will be placed in the Library.
For the groups covered by the Review Body's fourteenth report, who have completed their staging, the rates of salary now proposed will be used for the purposes of calculating pension entitlements. For hon. Members and for Ministers and other paid office holders, pension entitlement will be calculated on the revised third stage salaries.
With regard to the remuneration of nationalised industry board members, the Review Body, in its fourteenth report, questions the appropriateness of its role, and suggests that the Government should reconsider its remit in this respect. The Government share the doubts that the Review Body has expressed. We have therefore decided that this should be the last occasion on which the Review Body is asked to recommend on the remuneration of the chairmen and mem- bers of boards of nationalised industries. In future years, these salaries will be determined by the Minister concerned in each case, with the approval of the Minister for the Civil Service.
I am very well aware that in making the proposals that I have now described to the House the Government will be accused of going back on commitments and breaking agreements, and of failing in their obligations to the public servants concerned, on whose hard work, loyalty and integrity society depends. But they must have regard to their wider obligation to propose what we believe to be right. In present circumstances, the Government believe that these proposals would give fair levels of remuneration to hon. Members of this House and to the public servants to whom they apply, and at the same time measure up to the needs and expectations of those to whom we, in this House, are answerable and who, in the end, have to find the money.
Will the right hon. Lady at least understand that the House will accept that she is proposing a series of discriminations against the public service and that the proposals will have to be examined on that account? How, for example, can she reconcile what she has proposed in the statement for the chairman and others working for nationalised industries with the agreement in which she was glorying only a few weeks ago with Mr. MacGregor, appointed to the British Steel Corporation, when she herself enunciated the principle of "Grab all you can" as being the one that she supported? How does she reconcile that proposal with what she is now putting before the House of Commons?
On the proposal made by the right hon. Lady and the Government for Members of Parliament, does she not agree that it involves a direct breach of what was stated from the Government side of the House and from the Government Dispatch Box on behalf of her Government? Does she not agree that she has abandoned that undertaking altogether? Why, in those circumstances, should anyone believe what the Government have to say from the Dispatch Box in the future? When the right hon. Lady says that she is taking the figure of 9½ per cent. as the inflation rate under which increases are to be made, is she not working on the figure of the previous Government and not on the record inflation achieved by her own Government?
The right hon. Gentleman has, I think, raised three points. When we appointed Mr. MacGregor we took the view that the steel industry and the difficulties it was then facing, about which we now know even more, deserved the very best person that we could get. We took the decision to get the best person. I believe that that was the right decision.
The right hon. Gentleman says that we had a commitment. Yes, we did, and I explained that in the last paragraph of my statement. I thought that I had better take it directly, before the right hon. Gentleman pointed it out. We have an even greater commitment to the people of this country to recommend what we believe to be right. Thirdly, with regard to what this Government have done to increase the salaries of hon. Members, the figure that we are now recommending, of £11,750, is 70 per cent. more than that which obtained when we came into office.
I am not asking the Home Secretary.
Will the right hon. Lady explain what factors have arisen since 4 March which enable her to ask the House that she and her Government should be released from the positive assurances that she gave to it, without any modification whatsoever in this sense? What are those factors? When did they come to her attention? In future, may we have the assurance that whenever undertakings are given from the Dispatch Box she will explain all the reasons why they should not be believed?
Broadly speaking—the enormous increases in public sector pay that have followed on the various stagings and updatings and to which our attention was drawn by the Select Committee on the Treasury, and the difficulty of keeping public expenditure under control when such vast amounts are going out in public sector pay; secondly, the fact that public sector pay and the increases given are taken into account in the private sector in making their claims for the next pay round. I am asking the right hon. Gentleman, in his distinguished position of leadership, to give a lead. I hope that he will be able to do so.
We were quite prepared to give a lead when we were in Government, and we did so across the whole board. When we asked the House of Commons to accept those figures we asked it because that was what was being applied across the rest of the country. I am asking the right hon. Lady specifically what are the agreements reached since 4 March which persuade her that she is entitled, in the House, to commit her Government to a plain breach of faith?
I have already answered the latter point. With regard to the right hon. Gentleman's former point, his Government left the salaries of Members of Parliament at £6,897. This Government have already accepted increases of up to 70 per cent. and have proposed a further increase for next year which will bring those increases up to 90 per cent. Will the right hon. Gentleman point to any time when the then Prime Minister agreed to accept the decisions of the Review Body, whatever they were? He never did.
I am quite prepared to take, and am indeed taking, responsibility for what I recommend. I notice that the right hon. Gentleman is telling the country that 70 per cent. is not enough.
Do not these decisions represent a remarkable turn-round from the statement of the Chief Secretary only last week in the Liberal Supply day debate, that incomes increases had made no contribution to inflation? If the Government believe that some intervention is now necessary on pay, would it not be better to work out a coherent overall pay policy rather than a series of ad hoc pay policies affecting individual groups? Lastly, sticking within the right hon. Lady's 9·6 per cent. figure for Members of Parliament, could she not engage in some productivity bargaining and arrange for those who have strenuously opposed the disastrous economic policies of the Government to receive more and those who have slavishly supported them to receive less?
With regard to what the right hon. Gentleman said about my right hon. Friend the Chief Secretary, public sector pay is the biggest single factor in public spending. Apart from the nationalised industries, it amounts to about £32 billion a year. If we take large increases, that will be observed by others and may have an enormous multiplying effect throughout the economy. We are perfectly prepared to take decisions, and we ask the right hon. Gentleman to follow the lead that we have given.
Does not my right hon. Friend's statement confirm again the fact that the only satisfactory moment at which matters of this embarrassing kind should be decided is at the beginning of a Parliament? While I acknowledge that these matters, at any rate so far as Members of Parliament and Ministers are concerned, are for the House as a whole to decide, and while I acknowledge also that the Government are bound to give a lead, particularly in the serious economic situation that my right hon. Friend described—a lead that many of us will wish to follow—may I put some points to her?
Since Members of Parliament are being asked to accept a reduction in the recommended figure of 15 per cent., and since their remuneration and that of Ministers has been too low for too long, can we not peg the pension figure to what Boyle now recommends? Secondly, cannot my right hon. Friend and the Leader of the Opposition, aided if need be by representatives of the Back Benches, in the interests of the House as a whole now come to a formal and final agreement to remove this matter in future from discussions in the midst of Parliaments?
Last, but by no means least, so far as those in the public service are concerned, while one acknowledges again that pay is a substantial amount of total Government expenditure, all of which has to be found by the taxpayer, is it right that we should say to those who accept the huge responsibilities of leadership in the Civil Service, the nationalised industries, the Armed Forces and elsewhere, that they must be singled out and their families penalised merely in order to give an example to the rest of the nation?
I am grateful to my right hon. Friend. On his first point, about the matter being settled at the beginning of a Parliament, I doubt whether that could resolve matters for the whole of a Parliament without some revisions during its course. As for the pension figure, we have agreed that pensions shall be determined by relation to the updated third stage—updated by 9.6 per cent. We shall of course catch it up by next year. It would of course have a great effect on any dependants were we to suffer any tragedies among us during this year. That is why we agreed that pensions should be related to pay of £13,150. With regard to a formal and final agreement, I have considered—indeed the Review Body considered—all questions of linkage. I think that it came to the same conclusion as we have come to; in the end it is hon. Members who determine their own pay, and there is no way of escaping that. With regard to public servants, we are talking about the top public servants, dealt with by the Top Salaries Review Body. I believe that it is right to ask people in that position to give a lead to others. I hope that that lead will be followed.
Mr. J. Enoch Powell:
Does the right hon. Lady believe that the small reduction that is proposed in the remuneration of hon. Members and of Ministers will result in any diminution in the supply offering for places in this House or in her Government?
Is my right hon. Friend aware that the figure of 70 per cent. that she gave in answer to a supplementary question is open to gross misinterpretation by those outside the House? The fact is that over, say, the last decade, if the public at large had followed the example of hon. Members, we should probably have no serious inflation problem at all. If we are to agree to my right hon. Friend's recommendations it is important that we should publicise as widely as possible the great degree of restraint that has been shown by the House in the past, and which is now proposed again.
The 70 per cent. is the obligation that the Government accepted for the House. If we go back over a decade, 15 years, 20 years, or to 1964, we must take into account the substantial increases in allowances since that time. We used to have to bear on our salaries some of the things that are now taken into account in allowances. If we are looking back over a period, for the benefit of those who have not been in the House for that period, those factors should be taken into account. It should be borne in mind that the average amount taken in allowances exceeds the parliamentary salary.
Does the Prime Minister realise that our main objective is to take this issue out of the House? We established a committee to deal with the matter. We are not top salary earners. We referred the matter to the Review Body and we gave it a clear commitment about our attitude towards its recommendations. It has made its recommendations and we should accept them. Is the right hon. Lady aware that her intervention is especially mean, because the Boyle committee points out that the award is substantially below inflation and substantially below other comparative salary earners?
On the right hon. Gentleman's first point about taking the matter out of the House, whatever is recommended, by whatever means, the final decision is taken in this forum. I do not see that there is any way of getting out of taking that decision. If we are the 635 leaders of the nation we should not try to get out of taking that decision. The chairman of the review body recommended less for us than for other groups. There are not the same differentials for Members of Parliament, or the increments that occur in some groups in the public sector. That is why he considered the other groups in such detail, and why we have preserved his pattern of differentials and recommendations, albeit at reduced salary levels.
Is not the most important commitment that my right hon. Friend has given that to bring down the level of inflation? As there is very good reason to believe that the level of inflation will turn down in coming years, will my right hon. Friend have a second look at the rate of increase proposed for hon. Members' remuneration in 1981? Should that not be lower than that for 1980? Is there not good reason to suggest that it should not be 9·6 per cent., but 5 per cent.?
I am grateful to my right hon. Friend. The position is that the three stages were, by resolution of the House, without any further resolution, automatically put into payment on the appropriate date. If we leave the third stage as it is, about £12,000 will come into payment automatically in June 1981. We thought it right to recommend that that £12,000 should be updated by 9·6 per cent. to preserve the differential with the second stage this year. We are the only group that has not yet received the third stage. The second stage of ministerial salaries was never put into any order, and we have to provide for both the second and third stages. The percentages applied to the third stage will be those that I have indicated. That is right and proper. The question will then arise whether those sums should be updated.
I am grateful to my right hon. Friend for putting the reduction of inflation among his top priorities, and also for giving a lead.
Is the Prime Minister aware that since 1975, when the House voted that pay should be linked to the assistant secretary level, pay for Members of Parliament has fallen by 30 per cent. in real terms? Because of that, Lord Boyle insisted that before he undertook the review he should have an assurance that the Prime Minister would implement his recommendations. She gave that assurance in unqualified terms in a letter to Lord Boyle last July. Do words still have meaning for the right hon. Lady, or was that just a plain lie?
I tried to explain to the House why, although we gave that commitment, I felt it necessary to recommend to the House a lesser amount. I am recommending to the House a lesser amount. It is for the House to decide whether it wishes to accept that. If the House wishes to say that it must receive the total amount, the House is responsible and accountable to the constituents, who, in the end, provide the money.
Lord Boyle's report has been available in the Vote Office for more than an hour. The last paragraph of that report states:
In making these recommendations we have had in mind the same considerations as in previous Parliamentary reviews. To go further would in our view be unjustified in itself, would extend well beyond our terms of reference and indeed would encroach upon the prerogative of Government and Parliament.
It is the prerogative of Government and Parliament to which we are turning today.
Is my right hon. Friend aware that there will be widespread support on the Conservative side of the House for the proposition that we cannot expect other sections of the community to show restraint in incomes unless we, as Members of Parliament, also show restraint?
I am grateful to my hon. Friend for his remarks. The Government's proposal is reasonable, having regard to all the circumstances. I hope that, having decided that some of our employees should go into single figures and having recommended that hon. Members should go into single figures, that lead will be followed. It is important that it should be followed.
Is it the case that the salary of the Prime Minister's office is about 15 per cent. of that of the chief executive of the Playboy Club? Is the right hon. Lady aware that on the Labour side of the House her estimate of her true worth will be generally accepted? What we cannot understand is why she thinks that the chairmen of our nationalised industries are worth less to the country than the chairman of a gambling club?
Will my right hon. Friend bear in mind that both Ministers and hon. Members are underpaid in relation to any other comparable Parliament? Nevertheless, most of us are prepared to take our usual place at the bottom of the queue so as to set an example in the public sector. However, the least that we can expect is that Members' pensions should still be geared to the notional figure based on Lord Boyle's report instead of to the lower figure now proposed by my right hon. Friend. That would be in accordance with precedents during the past few years. It would help to sugar the pill that we are being asked to swallow.
Hon. Members' pensions are geared to £12,000, which is the figure for the third stage. We are updating that figure to 13,150, which increases the £12,000 by 9·6 per cent. We are gearing the pensions to that figure. To go beyond that would presume upon the results of next year's updating. I do not think that that would be wise. It is right to gear the pensions to the figure that we shall place in the motion that will be put before the House for its approval.
Is the Prime Minister aware that many Back Benchers are concerned about inflation and its effects on the poor? Will she therefore give an assurance that if Back Benchers agree to take 9·5 per cent. she will bring forward the pensioners' pay rise from the last week of November to the first week of that month, so that they will have had to wait only 52 weeks instead of 54 weeks? If we play our part, will she do the same?
Was my right hon. Friend not correct in saying that ultimately the House must always decide what the pay and pensions of hon. Members should be? Was not the Boyle Commission an attempt to take the decision away from the House, and are we not now seeing the result of that? Would it not have been intolerable, in present national circumstances, if we had insisted on our last pound of flesh?
|Current salary* £||Proposed salary £||Percentage increase Per cent.|
|MPs (Back Benchers)||10,725||11,750||9·6|
|Ministers of State (Commons)||14,812||16,250||9·7|
|Ministers of State (Lords)||14,955||16,400||9·6|
|Parliamentary Secretaries (Commons)||11,262||12,350||9·7|
|Parliamentary Secretaries (Lords)||11,405||12,500||9·6|
|* Current salary includes second stage of 1979 pay increase.|
|† Excluding Prime Minister, Lord Chancellor and Lord President of the Council.|
|Current salaries £||Proposed salaries £||Percentage increase Per cent.|
|British National Oil Corporation:|
|British Steel Corporation, Post Office:|
|British Aerospace, British Airways Board, British Gas Corporation, British Rail, British Shipbuilders, National Coal Board, Electricity Council:|
|British Airports Authority, Cable and Wireless, Civil Aviation Authority, National Bus Company, Scottish Development Agency:|
|Percentage increase for group as a whole||—||—||11·6|