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Tim L a n k e s t e r Esq 10 Downing S t r e e t LONDON SWT

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J u l y , 1979

You

w r o t e t o me

on 16

J u l y about e x e c u t i v e

n

.

•

perks.

As f a r as t a x measures a r e c o n c e r n e d , my M i n i s t e r has had a m e e t i n g

w i t h Revenue O f f i c i a l s and has c o m m i s s i o n e d a f u r t h e r p a p e r w h i c h

w i l l be s u b m i t t e d t o him s h o r t l y . T h i s w i l l c o v e r the p o s s i b i l i t y

of s u b s t a n t i a l i n c r e a s e s i n t h e amounts o f t a x a b l e b e n e f i t f r o m

company c a r s and a more e f f e c t i v e c h a r g e on the p r o v i s i o n o f p e t r o l

f o r n o n - b u s i n e s s use, as w e l l as c o n s i d e r a t i o n of o t h e r a r e a s where

the t a x c h a r g e c o u l d be made more e f f e c t i v e . The Revenue a r e a l s o

c o n t e m p l a t i n g , i n t h e l o n g e r t e r m , r e q u i r i n g e m p l o y e r s t o deduct

t a x f r o m b e n e f i t s and, p o s s i b l y , recommending the a b o l i t i o n o f the

t h r e s h o l d of £8,500 e a r n i n g s below w h i c h many b e n e f i t s are not at

p r e s e n t t a x a b l e ; the a d d i t i o n a l b u r d e n w h i c h t h i s might p l a c e on

e m p l o y e r s c o u l d a c t as a f u r t h e r d i s i n c e n t i v e t o making payments i n

a n o n - c a s h f o r m . Any t a x changes w i l l , o f c o u r s e , a p p l y e q u a l l y t o

the n a t i o n a l i s e d i n d u s t r i e s as t o the p r i v a t e s e c t o r . The Revenue

w i l l be m e e t i n g a d e l e g a t i o n f r o m the CBI s h o r t l y t o d i s c u s s some

of these matters.

The p r o v i s i o n of p e r k s i n the n a t i o n a l i s e d i n d u s t r i e s , most of w h i c h

are i n c i d e n t a l l y members of the CBI, i s not a m a t t e r f o r the T r e a s u r y

but f o r the C i v i l S e r v i c e Department and the s p o n s o r d e p a r t m e n t s .

I hope t h a t t h o s e d e p a r t m e n t s and o t h e r s d e a l i n g w i t h p a r t s o f

the p u b l i c s e c t o r where p e r k s are p r o v i d e d w i l l comment on t h e present,

p o s i t i o n and on any g r o s s d i s p a r i t i e s between d i f f e r e n t p a r t s o f the

public sector. But I t h i n k we s h o u l d t a k e s t o c k of what i s known

b e f o r e t a k i n g up t h i s a s p e c t , as opposed t o the t a x a s p e c t w h i c h

a f f e c t s the p r i v a t e and p u b l i c s e c t o r e q u a l l y , w i t h the n a t i o n a l i s e H

i n d u s t r i e s or o t h e r p u b l i c b o d i e s .

I am c o p y i n g t h i s l e t t e r t o the r e c i p i e n t s of y o u r s and t o the

P r i v a t e S e c r e t a r i e s t o the L o r d P r e s i d e n t and the G o v e r n o r o f the Bank o f E n g l a n d .

R J BROADBENT

Private Secretary





J

CONFIDENTIAL

Civil Service

Department

Whitehall London SW1A

2AZ

01-273 4400

1 August

1979



8f

Tim L a n k e s t e r E s q

Private Secretary

10 Downing S t r e e t

LONDON SW1

EXECUTIVE PERKS

We have seen y o u r l e t t e r o f 16 J u l y t o R i c h a r d B r o a d b e n t and h i s

r e p l y o f 20 J u l y . I do n o t t h i n k t h a t we can g i v e you much h e l p .

The main a r e a s o v e r w h i c h t h e CSD e x e r c i s e s s p e c i f i c and d e t a i l e d

c o n t r o l o f r e m u n e r a t i o n , expenses and a l l o w a n c e s - t h e c i v i l

s e r v i c e , t h e armed f o r c e s and t h e j u d i c i a r y - do n o t o f c o u r s e

e n j o y t h e " e x e c u t i v e p e r k s " common i n i n d u s t r y a t l a r g e , and s u c h

p e r k s as t h e y m i g h t have a r e t a k e n i n t o a c c o u n t i n t h e pay r a t e s .

The CSD does n o t e x e r c i s e d e t a i l e d c o n t r o l i n t h e o t h e r major

p u b l i c s e r v i c e s , s u c h as l o c a l a u t h o r i t i e s , p o l i c e , f i r e s e r v i c e s ,

t e a c h e r s o r t h e n a t i o n a l h e a l t h s e r v i c e . A l t h o u g h we w o u l d be

s u r p r i s e d i f e x e c u t i v e p e r k s were p r e s e n t i n any s u b s t a n t i a l degree

o n l y t h e r e l e v a n t d e p a r t m e n t s a r e i n a p o s i t i o n t o g i v e an

a u t h o r i t a t i v e view.

As f o r t h e n a t i o n a l i s e d i n d u s t r i e s , CSD has no r e s p o n s i b i l i t y a t

a l l f o r the r e m u n e r a t i o n , e t c , of the s t a f f . The M i n i s t e r f o r t h e

C i v i l S e r v i c e i s r e q u i r e d t o a p p r o v e t h e r e m u n e r a t i o n p r o p o s e d by

s p o n s o r d e p a r t m e n t s f o r t h e c h a i r m e n and b o a r d members, b u t even

h e r e t h e r a t e s o f pay a r e d e t e r m i n e d e s s e n t i a l l y by t h e R e v i e w Body

on Top S a l a r i e s who t a k e a c c o u n t o f any p e r k s i n making t h e i r

assessments. There i s t h e r e f o r e no scope t h r o u g h t h e pay c o n t r o l

m a c h i n e r y f o r t h e CSD t o i n f l u e n c e t h e l e v e l o f p e r k s i n t h e s e

industries.

We doubt t h e r e f o r e w h e t h e r we can c o n t r i b u t e a n y t h i n g t o t h e

s t o c k t a k i n g p r o p o s e d by t h e T r e a s u r y . As f a r as t h e CSD's a r e a s

o f c o n t r o l a r e c o n c e r n e d t h e i s s u e i s n o t one o f c o s t , as p e r k s

a r e a l r e a d y t a k e n i n t o a c c o u n t i n pay. R a t h e r i t becomes one o f

p r e s e n t a t i o n i n r e l a t i o n t o t h e Government's a p p r o a c h t o t h e

e x i s t e n c e o f p e r k s g e n e r a l l y . As s u c h , i f i t i s i n t e n d e d t o

d e v e l o p a " c a s h n o t k i n d " a p p r o a c h , we w o u l d have t h o u g h t i t

d e s i r a b l e f o r t h e T r e a s u r y i n t h e c o n t e x t o f t h e t a x changes t o

exhort departments, i n c l u d i n g those r e s p o n s i b l e f o r the n a t i o n a l i s e d

i n d u s t r i e s , t o do what t h e y c a n t o e n s u r e t h a t r e w a r d s a r e g i v e n as

f a r as p o s s i b l e i n c a s h r a t h e r t h a n i n k i n d .

1

I am s e n d i n g c o p i e s o f t h i s l e t t e r t o R i c h a r d B r o a d b e n t ( M i n i s t e r

of S t a t e ( C ) , T r e a s u r y ) Andrew D u g u i d (Department o f I n d u s t r y ) ,

G e n i e F l a n a g a n (Department o f T r a n s p o r t ) , Tom H a r r i s (Department

of T r a d e ) , B i l l B u r r o u g h s (Department o f E n e r g y ) , D a v i d Edmonds

(Department o f t h e E n v i r o n m e n t ) t h e P r i v a t e S e c r e t a r y t o t h e

G o v e r n o r o f t h e Bank o f E n g l a n d and M a r t i n V i l e ( C a b i n e t O f f i c e ) .

J BUCKLEY

Private Secretary

2