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CONFIDENTIAL

Copy No \ o f 7 Copies

MOST CONFIDENTIAL RECORD

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CC(83) 21st

Conclusions



Thursday 30 June 1983

PARLIAMENTARY PAY AND ALLOWANCES Previous Reference: CC(83) 17th Conclusions, Minute 2

THE PRIME MINISTER s a i d t h a t the Top S a l a r i e s Review Body (TSRB), i n t h e i r

Report No 20 on P a r l i a m e n t a r y Pay and A l l o w a n c e s , had proposed t h a t t h e

s a l a r y o f Members o f P a r l i a m e n t should be i n c r e a s e d by 31 per c e n t , f r o m

£14,510 t o £19,000. The Report c o n t a i n e d p r o p o s a l s on p e n s i o n s , i n c l u d i n g

an i n c r e a s e i n t h e a c c r u a l r a t e f r o m /60th t o /50th and an i n c r e a s e i n

the c o n t r i b u t i o n r a t e f r o m 6 per cent t o 8 per c e n t . I t a l s o proposed

i n c r e a s e s i n allowances f o r Members o f P a r l i a m e n t and Peers, and l a r g e

i n c r e a s e s i n t h e s a l a r i e s of M i n i s t e r s . She had a l r e a d y made c l e a r t h e

Government's g e n e r a l a t t i t u d e t o the recommendations f o r M i n i s t e r s ; i t was

now necessary t o c o n s i d e r those r e l a t i n g t o Members o f P a r l i a m e n t . The

p r o p o s a l s on allowances and pensions were v e r y generous and, t o g e t h e r w i t h

p r e v i o u s pay i n c r e a s e s , c o u l d j u s t i f y a much s m a l l e r s a l a r y i n c r e a s e t h a n

t h e TSRB recommended. The 31 per cent proposed by t h e TSRB was q u i t e

unacceptable and would have a d i s a s t r o u s e f f e c t on o t h e r pay s e t t l e m e n t s .

There were two o p t i o n s : t o r e j e c t the Report a l t o g e t h e r and suggest a

f i g u r e s i m i l a r t o r e c e n t p u b l i c s e c t o r s e t t l e m e n t s ; o r t o propose as a

compromise an i n c r e a s e o f , say, 15 per c e n t , i n w h i c h case t h e pensions

c o n t r i b u t i o n r a t e might be s e t a t 9 per c e n t .

I n d i s c u s s i o n t h e f o l l o w i n g main p o i n t s were made ­ a. A p r o p o s a l by t h e Government t h a t t h e s a l a r i e s o f Members o f

P a r l i a m e n t should be i n c r e a s e d b y 15 per cent would c o n t r a s t

u n f a v o u r a b l y w i t h t h e 3.7 per cent i n c r e a s e i n t h e o l d age p e n s i o n

and w i t h o t h e r pay s e t t l e m e n t s i n t h e p u b l i c s e c t o r , w h i c h had been

i n t h e r e g i o n of 5 per cent and were expected t o be even lower i n t h e

f o r t h c o m i n g pay round. From t h a t p o i n t o f v i e w i t m i g h t be b e t t e r f o r

t h e Government t o propose a low i n c r e a s e , accept the r i s k o f a d e f e a t

i n t h e House o f Commons, and be prepared t o d i s t a n c e i t s e l f f r o m t h e

House's d e c i s i o n . I t was by no means c e r t a i n t h a t such a p r o p o s a l

would i n f a c t be d e f e a t e d .

b. I f a low o f f e r were made, emphasis c o u l d be p l a c e d on the o t h e r

p r o p o s a l s i n t h e TSRB R e p o r t , e s p e c i a l l y those on p e n s i o n s , w h i c h were

v e r y f a v o u r a b l e . I t was a l s o r e l e v a n t t h a t i n t h e p r e v i o u s

P a r l i a m e n t Members' pay had r i s e n f r o m £6,900 t o £14,510.

c. I f t h e Government proposed a low f i g u r e and was d e f e a t e d , t h e

a u t h o r i t y o f t h e Leader o f the House and t h e Chief Whip c o u l d be

damaged. Some o f t h e Government's s u p p o r t e r s had no a d d i t i o n a l

sources o f income, and Members o f P a r l i a m e n t , u n l i k e o t h e r p u b l i c

s e r v a n t s , had no s e c u r i t y o f t e n u r e . There was s u b s t a n t i a l support

f o r the TSRB recommendations. From t h a t p o i n t o f v i e w i t might be

p r e f e r a b l e f o r t h e Government t o propose t h e lowest f i g u r e t h a t was

l i k e l y t o be accepted by P a r l i a m e n t .

CONFIDENTIAL

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CONFIDENTIAL d. Whatever p r o p o s a l t h e Government made, i t was n o t c l e a r how f a r

i t c o u l d d i s t a n c e i t s e l f f r o m t h e f i n a l d e c i s i o n of t h e House of

Commons. The s i z e of t h e Government's m a j o r i t y c o u l d l e a d the p u b l i c

t o a s s o c i a t e t h e Government w i t h whatever d e c i s i o n the House made.

e. The Government's a t t i t u d e t o the TSRB's recommendations on

M i n i s t e r i a l s a l a r i e s would be d i s c u s s e d i n t h e f o l l o w i n g week. There

would be d i f f i c u l t i e s , p a r t i c u l a r l y f o r P a r l i a m e n t a r y S e c r e t a r i e s , i f

t h e House approved a h i g h i n c r e a s e f o r Members and i f M i n i s t e r i a l

s a l a r i e s were n o t i n c r e a s e d . A Member l o s t s u b s t a n t i a l t a x allowances

on becoming a M i n i s t e r .

f. I t was r e c o g n i s e d t h a t t h e q u e s t i o n o f M i n i s t e r i a l s a l a r i e s i n

the House o f Lords r a i s e d separate i s s u e s .

THE PRIME MINISTER, summing up t h e d i s c u s s i o n , s a i d t h a t i t would be

necessary f o r the Chief Whip t o take f u r t h e r soundings o f o p i n i o n among t h e

Government's s u p p o r t e r s b e f o r e a d e c i s i o n c o u l d be t a k e n . An a t t e m p t

should be made t o i n f l u e n c e them towards acceptance o f a f i g u r e around

4 per c e n t , by p o i n t i n g o u t t h e l e v e l o f awards t o pensioners and t o o t h e r s

i n t h e p u b l i c s e c t o r , and of a pension c o n t r i b u t i o n of 9 per cent ( t h e

e q u i v a l e n t of t h e 8 per cent e f f e c t i v e l y i n f o r c e i n the C i v i l S e r v i c e ) .

The v a l u e o f t h e recommendations on pensions and allowances should a l s o be

s t r e s s e d . I t was c l e a r t h a t a h i g h i n c r e a s e i n t h e s a l a r i e s o f Members of

P a r l i a m e n t c o u l d have an adverse e f f e c t on t h e Government's economic

strategy.

The Cabinet

­

1. I n v i t e d t h e Chief Whip t o take f u r t h e r soundings

of o p i n i o n among t h e Government's s u p p o r t e r s , as i n d i c a t e d

by t h e Prime M i n i s t e r i n her summing up of the d i s c u s s i o n .

2. Agreed t o resume t h e i r c o n s i d e r a t i o n o f Reports No 19

and 20 by t h e Top S a l a r i e s Review Body a t t h e i r m e e t i n g on

7 J u l y 1983.

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