Orders of the Day — Civil Service (Dispute)

Part of the debate – in the House of Commons at 2:47 pm on 8 May 1981.

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Photo of Mr Barney Hayhoe Mr Barney Hayhoe , Hounslow Brentford and Isleworth 2:47, 8 May 1981

I shall not give way.

When we met the Civil Service unions on 23 April, we made three points. The first was that there could be no improvement on our 7 per cent. offer this year; the 6 per cent. cash limit will not be breached. There must be no doubt about that. Secondly, we said that the Government were ready to set up an authoritative independent inquiry into the future arrangements for determining Civil Service pay. Thirdly, we said that the Government would undertake that if the new arrangements could not be in place in time for the 1982 negotiations, they would enter into genuine negotiations next year, with no predetermined limit on the cost of the settlement.

Who can doubt that those are important and significant proposals for the future? I hope that more and more civil servants will recognise that those proposals offer a real basis for ending the present dispute.

I shall say something more in detail about the three elements. First, I shall refer to this year's settlement. I appreciate that people want more. Of course, one understands that. However, 7 per cent. is not an unreasonable offer against the background of recent settlements both in the public services and in the private sector. With two and a half million people unemployed, a 7 per cent. increase, on top of the much larger increases in 1979 and 1980, and with considerable job security, is not a bad offer. The public services cannot expect to be insulated from the economic circumstances of the country at large. Their pay accounts for a high proportion of public expenditure and must largely come from taxes and from the rates. I cannot believe that the need for restraint is not widely recognised and understood in the Civil Service, as it is outside.

The hon. Member for Fife, Central referred to job security. There is great job security in the Civil Service and there is also a process of job loss because we are slimming down the size of the Civil Service to our target of 630,000 in April 1984. That job loss is not at the expense of compulsory redundancy. There is hardly any compulsory redundancy in the non-industrial Civil Service. The job loss is achieved, not by people losing their jobs and being put on the dole, but by the use of natural wastage, by recruiting fewer people than are leaving for other causes.

I cannot accept that the Civil Service has been singled out for harsh treatment, as the hon. Member has suggested. Civil servants received increases which on average amounted to nearly 50 per cent., in cumulative terms, from their last two pay settlements. For example, over those two years cleaners have had a cumulative increase of about 30 per cent.; senior scientific officers have had a cumulative increase of 39 per cent.; principals have had one of 60 per cent. and data processors have had one of 63 per cent. The average figure over the whole non-industrial Civil Service is just under 50 per cent. Those figures come from the same source as the figures which state that two-thirds of the Civil Servants receive below average pay, which I have given to the House and which the hon. Gentleman collected. He cannot have it both ways. He must not select the statistics which he uses and question the validity and veracity of others, just accepting the ones he likes.

The hon. Member also said that a starvation rate must have existed two years ago. I hope that he is bitterly ashamed because that was under his Government. The average of 50 per cent. over the last two years was to restore Civil Service pay to the position from which it had been depressed by the incomes policy of the previous Administration.

This year, the need for restraint in pay settlements was clearly apparant. The same 6 per cent. cash limit provision for pay increases has been applied to other public service groups—the National Health Service and, through the rate support grant, all local authority workers. I accept that there are other workers who have had more, but I am arguing that 2 million workers in these public services have settled already at around the same level, with no industrial action.

I do not see how the Government could conceivably justify singling out the Civil Service for more. Nor do I see how the Civil Service unions can justify their strikes and disruptive actions aimed at achieving more. But I understand their concern about pay research.

When we took office in 1979 we hoped that the Civil Service pay negotiations would continue to be based on pay research data. This was the point made in the letter from my right hon. Friend's Private Office by one of her staff during the election campaign to a Mr. Finnie which has been much quoted. In that letter, there is a brief paragraph dealing with pay research. It is not a long, extensive treatise covering all the ifs and buts.

The Civil Service trade union leaders, who have been in touch with the Conservative Party in times of Opposition, knew that the position of the party on pay research was the position set out in the major speech by my right hon. friend the Secretary of State for Employment on 14 August 1978. In that authoritative statement, we made it clear that we could not give an unqualified promise to implement the Pay Research Unit's future findings.

Conservative Governments have a pretty good record of implementing pay research-based settlements. It is far better than that of Labour Governments. Over the last 10 years, pay research settlements have been implemented five times, four times by Conservative Governments. Pay research data were the basis of both the 1979 and 1980 settlements which brought Civil Service pay well up with the market from the depressed level at which it had been left by the previous Labour Administration. But it became clear to us that in present economic circumstances the amount of money that we could make available for the Civil Service pay settlement in 1981 would be tightly constrained.

Accordingly, my right hon. and noble Friend told the Civil Service unions in August last year that cash limits reflecting what the country could afford must be the major determinant for 1981. He confirmed in October that we would have to suspend the pay agreement for 1981. I do not believe that the unions seriously expected the Government to submit to the arbitration of a third patty the decision on how much the country could afford.

I have dealt with the comment which the hon. Gentleman made about the ILO convention. We are not in breach of ILO convention 151.

The present pay agreement based on pay research has lost public confidence. It had to go. According to a leader in The Guardian:It was a slow, secretive, civil service dominated system which guaranteed big—if belated—pay rises and deep—if unjustified—cynicism among public and politicians. It had to go. We want to establish a new, ordered and agreed system for determining Civil Service pay which will meet the legitimate interests of all concerned.

Let there be no doubt about the sincerity of our intentions. As a token of that sincerity, the Government are willing to set up an authoritative, independent inquiry to advise on these new arrangements. It could establish a sound basis for reaching agreement on a new and lasting pay system which would command confidence of both the public and the civil servants themselves. Our suggestion is a firm indication of the Government's good faith for the future. We are, of course, willing to consult the unions about the terms of reference and membership of this inquiry. But it should be set up soon, and it should work swiftly.

We cannot predict what a new pay system will look like in advance of the inquiry's recommendations, hut we believe that there must be some element of comparability, because the terms and conditions of service for civil servants cannot fall in general terms behind those being applied outside.

We want to see these long-term pay agreements in operation as soon as possible. But, with the best will in the world, I do not think that it is likely that they will be available for 1982. How, then, is Civil Service pay to be determined next year? I realise only too well the widespread anxieties that exist. I believe that the Government's proposals should allay these genuine fears.

It will not be a re-run of this year's experience, as has been suggested. We have undertaken to have genuine negotiations in 1982 in which each side will be able to raise whatever factors it considers relevant. We have made clear that although the cost of the settlement will be an important factor for the Government, we are prepared to enter into these negotiations without a predetermined cash limit. That does not mean that there is any question of the Government's abandoning cash limits. These will still have to be fixed to control departmental expenditure. But we envisage genuine negotiations on civil servants' pay in 1982.

I believe that the concern of the great majority of civil servants, not only those who took part in the action but a great number of those who supported it and of those who did not believe that——