Ministerial and other Salaries Act 1975 (Amendment) Order 2011

Baroness Verma Excerpts

Tuesday 5th July 2011 Grand Committee

Moved By

[Baroness Verma]

That the Grand Committee do report to the House that it has considered the Ministerial and other Salaries Act 1975 (Amendment) Order 2011

Relevant documents: 19th Report from the Joint Committee on Statutory Instruments

[Baroness Verma]

My Lords, this is an order that my right honourable friend the Prime Minister has specifically requested to formalise in legislation the coalition Government’s policy on ministerial salaries, as announced on 13 May last year. The order was laid before Parliament on 21 March and agreed to in the Delegated Legislation Committee in another place on 21 June.

The order, which is intended to remain in force for the lifetime of this Parliament, will ensure that ministerial and other officeholder salaries are reduced in legislation as they have been reduced in practice since the coalition Government took office. The salaries and offices affected are specified in the amendment order and these salaries cannot be at any other rate during this Parliament without further amendments to the legislation. Lords Ministers can be assured that their salaries will remain as listed in the order until the Dissolution of Parliament.

The Government’s policy is that Ministers’ total remuneration is 5 per cent less than that claimed by equivalent Ministers in the former Government. In the case of Lords Ministers, “total remuneration” in the context of the order simply refers to their ministerial salary. For Commons Ministers, it refers specifically to ministerial and MPs’ pay taken together, with the reduction then applied solely to the ministerial salary element. Since entering office, therefore, Ministers have waived their entitlement to receive a full ministerial salary and have been receiving a reduced salary ever since.

The order also ensures that ministerial and other officeholder pension contributions and future accruals are brought into line with the reduced ministerial salary levels. Currently, Ministers and other officeholders receive reduced salaries but, because of the rules governing ministerial pensions, their contributions have to remain based on their entitled level of salary as set by the Ministerial and other Salaries Act 1975 as it stands. This has meant that departments have had to make up the shortfall in pension contributions between the reduced and the entitled levels of salary for Ministers and officeholders. The amending order will eliminate the need for departments to do this and will save the Government approximately £100,000 per year.

As I mentioned, ministerial and other officeholders’ salaries are currently governed by the Ministerial and other Salaries Act 1975, as amended. The salaries of all Ministers, the Speaker in each House and the six paid opposition officeholders fall under the remit of this Act. These individuals have been informed of this order and the changes that it will make to the Act. Currently, increases to ministerial salaries are linked to the average increase in the mid-points of the senior Civil Service pay bands. This order will effectively nullify the link during this Parliament but it will apply again after the Dissolution of Parliament.

I should point out that over several years ministerial salaries have not, in practice, remained in line with the legislation. Since 2008, Ministers in the former Government had waived any entitlement to increases in their salary. This order will therefore bridge the gap that has grown between the legislation and what is happening on the ground. Given the Government’s policy on a Civil Service and wider public sector pay freeze, it is right that Ministers show leadership during this time of financial constraint. Since taking office, this Government have saved around £700,000 on Ministers’ pay. Over a full five years, this will represent a £4 million saving. I commend the order to the Committee.

[Lord Maclennan of Rogart]

My Lords, I welcome the opportunity that the laying of this order gives to enable some scrutiny of the policy lying behind it.

The practice of making alterations to the levels of ministerial salaries is not new, and particular aspects of this order are worthy of consideration. It is perhaps remarkable that since 1975 there have been 30 previous examples of alterations to ministerial salaries. My noble friend the Minister has made it clear that to some extent this is, on this occasion, gesture politics. It is about signalling to those in the public sector that Ministers are also bearing some of the brunt of the financial situation that the country is in. It has to be said, however, that the savings to which my noble friend has referred are rather minuscule. It might reasonably be inquired as to whether such savings might have been better made by reducing the total number of Ministers, which seems inexorably to have increased over the past 100 years—notwithstanding the devolution of power and the apparent commitment of the present Government to decentralise power further. There has been no shedding of Ministers to accommodate that philosophy.

I wonder whether the setting of an example by Ministers will be regarded by those in the public sector as amounting to anything more than a row of beans, in the light of the fact that large cuts in the public sector are being made among civil servants and public authorities around the country. If savings of public funding can be made at that level, some thought ought to have been given to saving at the top in Whitehall. The question arises of why the Government have taken an inflexible view to this order, which does not match or mirror what has happened in the past? Circumstances change, and it is to be hoped that they will change within the lifetime of this Parliament. To set these proposals in stone, as apparently the Prime Minister has decided to do, does not seem to be a pragmatic approach to ministerial pay.

From the point of view of clarification, I should be interested to know what the true position is concerning the changes in the pension arrangements. My understanding is that this is not intended to be retrospective in its effect and that the raising of the contributions will take effect only when the order comes into force. I should be most grateful for my noble friend’s comments on some of these points.

--- Later in debate ---

[Baroness Royall of Blaisdon]

My Lords, I declare an interest as being in receipt of a ministerial or other salary. I have been for some time and I am very grateful to the Government.

I am also very grateful to the Minister for pointing out that the previous Government also had a policy of not increasing salaries. Of course, I am attracted—I would be, wouldn’t I?—by the idea from the noble Lord, Lord Maclennan, that, rather than reduce ministerial salaries, there should be a reduction in Ministers. I jest but I believe now, as I did when we were in government, that there are too many Ministers. I do not think that that should have an impact on salaries but I firmly believe that there are too many Ministers—in the other place, of course—although Ministers work phenomenally hard.

I am not sure what the noble Earl was getting at but I think that it is wrong in principle for there to be unpaid Ministers. A Minister is a Minister; they do a fantastic job and should be paid accordingly.

Of course, when everyone in the whole country is having to tighten their belts, it is right that those in receipt of ministerial salaries should do likewise. Resources are limited and we have to take our share of the pain. Although I would strenuously argue that the cuts to our public services in general are too deep and being made too fast, I do not think that that is the case in relation to ministerial salaries. The Prime Minister was correct when he acted as a sort of catalyst for this legislation.

[Baroness Verma]

Again, I start by thanking my noble friends and the noble Baroness for their broadly warm welcome for the order and for their questions about ministerial salaries. I should like to start by responding to the point made by my noble friend Lord Maclennan—whose name, I hope, I have got right this time—about it being gesture politics. The fact is that we need to show that we in government are prepared to take some of the bites that are going to affect every single citizen because of the financial difficulties that this country is in. I want to resist saying that it is gesture politics: we have a duty to show that we are willing to take some of the pain. It may not look as though it is a lot of the pain but those of us who work incredibly hard feel that it is only right that we all share in it, and the previous Government did the same.

I should also like to thank my noble friend for his kind words. Ministers in both this House and another place work very hard and often with gruelling hours on subjects that we have to get our minds around very quickly, as is the case today. This is not my normal remit—and I think that is true of the noble Baroness, too.

There are 13 unpaid Ministers in government, three in the Commons and 10 in the Lords. The former Administration had the same number of unpaid Ministers before leaving office, with nine from the Commons and four from the Lords. The Government believe that the number of Ministers should be dictated by need, and on this basis have carefully considered all the appointments that they have made. Because of the nature of the coalition Government and the challenge of delivering the programme for government, the Prime Minister did not think that it was possible to reduce significantly the number of Ministers at this time. However, the Government have reduced the number of Ministers who regularly attend meetings of the Cabinet. I hope that has answered my noble friend’s question.

[The Earl of Courtown]

Perhaps I did not explain well enough the point that I was really making. The Minister said that at the other end there are three Ministers not in receipt of a salary, and 10 noble friends at this end. At least down the other end they receive a parliamentary salary.

[Baroness Verma]

My Lords, I enter into territory that is way over my pay grade, and the safest option for me is now for me to retreat into a safer area. I shall respond to the question about pension contributions. It is correct that these measures are not retrospective; salaries in the amendment order come into effect when the order comes into force. On the question of unpaid Ministers who might be in receipt of pensions—no, it deals only with salaried Ministers. Unpaid Ministers are not entitled to a pension under the parliamentary pension scheme.

I am not getting much more inspiration from behind me on any further questions, so I undertake to write to noble Lords on any questions that have not been answered.

Motion agreed.