I am writing to report to you the conclusions and recommendations reached by the Standing Advisory Committee on the Pay of the Higher Civil Service as a result of the further general review, the decision to embark upon which I reported when I wrote to you on 19th January last.
2. We conducted our last general review of the pay of the Higher Civil Service in 1963. As a result of our recommendations the salaries of the Administrative grades in the Higher Civil Service were increased with effect from 1st August, 1963 to the rates shown below, and the salaries of other classes and grades in the Higher Civil Service were correspondingly increased.
|Joint Permanent Secretaries to the Treasury and Secretary of the Cabinet||8,800|
|Other Permanent Secretaries||8,200|
At that time the London weighting payable over and above those national rates of pay for staff working in London was £65 for staff employed in Inner London (up to three miles from Charing Cross) and £60 for staff employed in Outer London (up to sixteen miles from Charing Cross). From 1st January 1964 these amounts were raised to £85 for staff employed in Inner London (up to four miles from Charing Cross) and £65 for staff employed in Outer London.
3. In June 1964 the National Whitley Council reported to us a pay agreement of 6th February, 1964, providing for the pay of most grades in the non-industrial Civil Service with salary scales whose maxima did not exceed that of the Principals' scale to be increased by 3 per cent. from 1st January, 1964, 3½ per cent. from 1st January, 1965 and 3½ per cent. from 1st January, 1966. The agreement provided that for any grade which was on any of these dates the subject of a pay research survey (or was linked for pay purposes to such a grade) the payment of the central pay increase due on that date should be deferred, and only made if by the following 30th June negotiations on the survey had not produced either a settlement or a decision to go to arbitration. The Administrative and Executive Classes were being surveyed on 1st January, 1964 so that the Principals and a number of other grades did not immediately become entitled to the first of the three increases. The agreement was not in fact reported to us until it had become clear that negotiations on the Administrative and Executive Class pay research surveys could not he completed by 30th June, 1964 and that the central pay increase would therefore become payable to the Principals and the other grades concerned with effect from 1st January, 1964.
4. In December, 1964 the Treasury, the Association of First Division Civil Servants and the Society of Civil Servants informed us that, following pay research surveys for the Administrative and Executive Classes, agreements had been reached to increase the Principals' salary scale to £2,100–£2,900 (national rates) and the Chief Executive Officers' salary scale to £2,400–£2,800 (national rates) with effect from 1st January, 1964, and invited us to recommend new salary scales with effect from 1st January, 1964 for the Higher Civil Service grades covered by these surveys, as follows—
|Principal Executive Officers||3,800|
|Senior Chief Executive Officers||2,950–3,300|
At the same time we were invited to recommend corresponding increases for other Higher Civil Service grades at comparable levels.
5. We accepted these proposals, and recommended accordingly on 19th January, 1965; our recommendations were in due course accepted and put into effect. In reporting them we stated that we thought that the new differential thus created between the Assistant Secretaries' maximum and the Under-Secretaries' rate was too small to be allowed to persist. We also took into account the steady narrowing of the differential between the Principals' maximum and the Assistant Secretaries' minimum as a result of the 1965 and 1966 central pay increases under the agreement referred to in paragraph 3 above: the Principals' maximum rose from £2,900 to £3,002 from 1st January, 1965, and will rise again to £3,107 from 1st January, 1966. It was in these circumstances that we decided that the time had come to embark on a further general review of the pay of the Higher Civil Service.
6. The Staff Side of the National Whitley Council have suggested to us that the problems created by the narrowing of differentials as a result of applying central pay increases up to the Principals' maximum but not to the Higher Civil Service could be avoided by applying central pay increases right to the top of the Civil Service. They point out that, at a time of relatively frequent movements of pay in the rest of the Civil Service, to adjust Higher Civil Service salaries only once every four or five years not only gives rise to constant difficulties with differentials between the Higher Civil Service and the rest of the Civil Service, but also means that members of the Higher Civil Service receive less total pay than they otherwise would and tends to have an adverse effect upon retirement benefits, which are calculated on average salary over the last three years of service. The National Staff Side suggest that, if it is felt undesirable to extend central pay settlements to the very highest ranks of the Higher Civil Service, they should at least be extended to grades and posts up to and including the Under-Secretary and there should be biennial reviews of salaries above that level.
7. The Treasury agree that, since central pay settlements are now given more frequently than was envisaged by the Royal Commission on the Civil Service 1953–55 (from whose recommendations the existing arrangements stem), there would be advantage if Higher Civil Service grades up to and including the Under-Secretary received the equivalent of central pay increases. They consider, however, that above that level there should be no commitment to annual or biennial reviews, since they believe as a matter of principle that the higher the grade in the public service the greater the desirability that its pay should move relatively infrequently, and then only as a result of weighty and specific investigation.
8. We accept that Higher Civil Service grades up to and including the Under-Secretary should in future receive the equivalent of central pay increases. The evidence which we have collected suggests that both in other public services and in employment outside the public service the salaries of senior staff now tend to move more or less in parallel with those of subordinate salaried staff, save at the highest levels in industry. On the other hand it seems to us that the special considerations which the Royal Commission indentified as entering into assessments of the pay of the Higher Civil Service are particularly important in relation to the highest ranks (those whose rate exceeds that of the Under-Secretary), and that at those levels salaries should not as a matter of course follow salary movements lower down. We consider therefore that central pay increases should not apply to grades above the level of Under-Secretary.
9. If the limit for central pay increases is raised as we propose, the technical problems created by narrowing of differentials as a result of central pay increases will no longer arise in the area directly above the Principals' maximum. They will to some extent be recreated in the area directly above the Under-Secretaries' rate. At that level, however, the number of grades and posts affected is much smaller and the gaps between rates are wider. Some temporary narrowing of differentials is therefore easier to accommodate at that level.
10. Since the pay of the Higher Civil Service is determined under different arrangements from the pay of the rest of the non-industrial Civil Service, it would not be appropriate to include Higher Civil Service grades up to and including the Under-Secretary in National Whitley Council central pay agreements. We therefore recommend that in future central pay increases for grades up to and including the Principal should be reported to us, on the understanding that when central pay increases are received by Principals we shall normally recommend similar increases for grades and posts in the Higher Civil Service whose fixed rates or scale maxima do not exceed the Under-Secretary rate, which will involve appropriate adjustments for grades and posts between Under-Secretary and Deputy Secretary level. In considering our recommendations on new rates of pay we have assumed that this recommendation will be accepted.
11. It does not seem to us to be necessary or desirable to fix the frequency of reviews of other Higher Civil Service salaries. Under the present arrangements reviews of the pay of the Higher Civil Service can be undertaken either at the Government's request or on our own initiative; the Government are free to request, and we are free to initiate, reviews at any time they, or we, think right. We therefore recommend no other changes in these arrangements. It is clear, however, that the pay of Assistant Secretaries, Principal Executive Officers and Senior Chief Executive Officers will have to be reviewed when the results of pay research surveys for the Administrative and Executive Classes are known, and we expect (without seeking to bind the Government or ourselves in any way) that those reviews may well provide suitable occasions for reviewing the pay of the Higher Civil Service as whole.
12. The Treasury and the National Staff Side have invited us to frame our recommendations on this occasion and in future for salaries at and above the level of the Deputy Secretary on the basis that London weighting will not be payable at these levels and that salaries should take account of this fact. They point out that only a very few posts at these levels are outside London; to all intents and purposes the effective rate of pay for almost all of those concerned is the amount payable to those employed in Inner London. We agree that the arguments for a system of London weighting on national rates hardly apply to staff at these salary levels virtually all of whom work in London. Accordingly we recommend that London weighting should from 1st September, 1965, cease to be payable to Deputy Secretaries or to staff in any other grade or post on a flat rate or with a scale maximum which is the same as or more than the Deputy Secretary's rate. In considering our recommendations on new rates of pay we have assumed that this recommendation will be accepted.
13. We decided to embark upon this review mainly on account of the compression of differentials between Principals, Assistant Secretaries and Under-Secretaries and between grades at corresponding levels in other classes, and our main concern in this review has been to restore a workable pattern of salary relationships in the Higher Civil Service. We have also taken the opportunity of collecting information about how salaries in other public services and in broadly comparable employment outside the public service have moved since our last general review. We acknowledge gratefully the help we have received from those of whom we have made inquiries for this purpose.
14. We have also had regard to the general economic situation in which our recommendations are made. We are not specifically required to do so by our terms of reference; indeed we recognise that one of the purposes of establishing the Committee was to provide a source of independent advice to Governments who might on occasion find it difficult to balance their obligations as employers of senior civil servants against their wider responsibilities for management of the economy. On this occasion, however, we have felt that our view of the economic problems confront- ing the country must lead us to modify views based on other considerations about the pay of the highest grades of civil servants. We believe that our recommendations will establish a pattern of salary relationships which can be regarded as workable and tolerable for the time being; but the new rates, particularly at the highest levels, do not fully reflect our assessment of what would constitute fair and reasonable remuneration for the grades in question, because in our judgment at those levels in the Civil Service what is appropriate to the general state of the economy must for the time being override other considerations. We should not, however, think it right for those concerned to be indefinitely penalised by a decision taken in the light of a particular economic situation, and we therefore intend to review the salaries of these grades earlier than would otherwise be the case.
15. Taking all these considerations into account we recommend the following new rates for the administrative grades in the Higher Civil Service, to take effect from 1st September, 1965—
|Joint Permanent Secretaries to the Treasury and Secretary of the Cabinet||9,200||(*)|
|Other Permanent Secretaries||8,600||(*)|
* In accordance with our recommendation in paragraph 12 the rates marked with an asterisk will not attract London weighting: these will be the rates payable to the staff concerned whether they are employed in London or elsewhere.
We recommend that rates of pay for other classes and grades in the Higher Civil Service should be revised from the same date to give corresponding increases at comparable salary levels. These recommendations take account of the central pay increases that are due under the agreement of 16th February, 1964, to come into effect on 1st January, 1966, for grades up to and including the Principal, and we do not intend to recommend any further adjustment of pay in the Higher Civil Service on that account.
16. We have received a submission from the Society of Civil Servants inviting us to recommend that Principal Executive Officers should be paid on a scale rather than on a flat rate and that the level of their pay should be raised in relation to that of Assistant Secretaries. We have carefully considered both this submission and a counter-submission by the Treasury, but we have come to the conclusion, having regard to the definition of our scope and functions laid down by the Royal Commission on the Civil Service (Cmnd. 9613, paragraphs 386 to 389), that these are not sufficiently major matters to warrant our intervention, and we therefore make no recommendations on them.