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Ministerial and other Salaries Order 2008

I am grateful to the noble Lord, Lord Shutt, for asking me questions on which I am able to earn my pay. I was nearly covered with embarrassment by the noble Lord who spoke from the Conservative Front Bench. I suppose that I should have declared an interest; like other Ministers, I will benefit significantly from this increase, which has been identified as modest. The answers to the questions asked by the noble Lord, Lord Shutt, are quite straightforward. This order relates to 2007-08. It is governed, like any order that provides for increases, by the Ministerial and other Salaries Act 1975, which contains a formula that places MPs—ministerial salaries are linked to MPs—at the midpoint of a Civil Service grade. That produced an automatic uprating for 2007-08 of 0.66 of a per cent, or two-thirds of one per cent. The other increases increase the uprating from two-third of one per cent to 1.99 per cent, which is the pay rise for that year. As the noble Lord said, we are talking about modest amounts. The pay freeze applies to this year, 2008-09. The Cabinet agreed this morning that Ministers will not take a pay increase this year, irrespective of the decisions of Members of Parliament when they consider their position in a month or so’s time. The Government have enjoined Members of Parliament to have regard to the general expectation of settlements in the public sector of between 2 per cent and 2.5 per cent. That is what we confidently predict that Members of Parliament will pursue with enormous enthusiasm and great glee when the opportunity arises. Ministers will not be the beneficiaries of any increase that Members of Parliament vote themselves on such an occasion because of this self-denying ordinance for this year to illustrate the determination of the Government to control public sector pay in the battle against inflation that we all recognise is significant after today’s announcement by the Bank of England on the increase in the rate of inflation. We are talking about two different years. The Joint Committee was critical of the fact that, by definition, if I am talking on this order about 2007-08, there is a retrospective quality that we do not like in legalisation and eschew on every conceivable occasion that we can. The noble Lord will appreciate that the problem with regard to salaries is that a retrospective element is often part of the discussion framework where public pay is settled and in the private sector as well. In this case, it is clear that Members of Parliament are lagging behind in the decisions to be taken, and this order is considerably behind, applying, as it does, to last year. That is the retrospective element. We will seek to avoid it, but the Committee will appreciate that there is something unique about pay negotiations and, I hate to say it, Parliament has an interesting concept of pay negotiations. As the Committee will know, Members of Parliament have striven might and main. I can remember the Ministerial and other Salaries Act 1975 and the basis on which that has obtained for Members of Parliament ever since. I recall the desperate tribulation that occasioned the Act simply because there was no linkage to anyone prior to that. Members of Parliament decided the rate. That is a pretty hazardous thing for Members of Parliament to attempt, but it has one great virtue, critical though members of the public doubtless are of Members of Parliament deciding their own pay. I listened to the Lloyd George serialisation of Ffion Hague’s book on the radio this morning. Lloyd George entered Parliament in 1890—the noble Lord, Lord Shutt, will probably remember him. He gave up his earning power and had no salary at all. It is inconceivable that we would ever be able to run Parliament in a democratic age on the basis of the 19th-century concept that gentlemen of leisure served in Parliament and everyone else received their wise decisions. That is the background to all this. I have never known any debate, even this very small one, to contain anything but embarrassment for those at the Dispatch Box who are trying to reply to it. I apologise for being in that position, but I hope that I have answered the questions sufficiently satisfactorily to commend the order to the Committee.