asked Her Majesty’s Government:

What advice they have given to companies in the private sector on pay increases.

My Lords, pay levels in private sector companies are a matter for those companies.

My Lords, I am grateful to the Minister for that very clear Answer. What is the Government’s view on the contrast between average wage increases and the escalating pay rises once again enjoyed by company directors in 2007, when a record 1,445 directors received a salary of more than £1 million? That is 40 per cent more in number than in 2005. That is basic pay, before bonuses, share options or other perks. Does the Minister think that this annual contribution to rising social inequality by corporate executives who sit on one another’s remuneration committees is a suitable practice today? Would it not merit at least a word of advice to some of the super-rich gentlemen who fly around the globe with the Prime Minister?

My Lords, I remind my noble friend that I was one of the gentlemen who flew around the world with the Prime Minister; I just wish that I was super-rich.

I remind noble Lords that since 1997 nurses have had a 44 per cent increase in their pay; for hospital doctors the increase was 69 per cent; for ambulance staff it was 97 per cent; and for police officers it was 44 per cent. Let us please get this into perspective. Every day, people remind the private sector of its responsibility to set an example to include all in society. Every day, it is aware of its responsibilities. Please do not let us put up a sign over UK plc that people cannot aspire for the sky. We need an economy that the world wants to come to where people earn as much as they can from working as hard as they can and bringing their skill to this country.

My Lords, does the Minister accept that the House agrees with his first Answer, that this is a matter for the private sector? Does he further accept that we live in a world in which it was a Tory Prime Minister more than 30 years ago who referred to the unacceptable face of capitalism? Does he not agree that it is the role of the Government to give some form of moral leadership in condemning the often obscene salary increases that go to increase the gap between the poor and the rich?

My Lords, I distinguish for the noble Lord the difference between advice and condemnation. It is the role of the Government to advise and to work with the private sector in getting it to go that way; it is not for government to condemn the private sector in this respect.

My Lords, what is the effect on inflation of excessive pay increases in the private sector?

My Lords, I remind my noble friend that inflation comes from excessive pay increases when they are not linked in any way to productivity. That is as relevant in the public sector as it is in the private sector. The pay increases of private sector so-called fat cats—there are very few such fat cats but people always exaggerate—are so often linked to bonuses and bonuses only ever come out of enhanced productivity.

My Lords, I welcome back the noble Lord, Lord Jones. I have missed him. I have been struggling in Grand Committee for two full days without him, so I am delighted to see him back. I welcome him back to the growing list of part-time Ministers that this Government are throwing at this very important department of state on behalf of the people of this country. Does he anticipate any public sector strikes this year linked to pay?

My Lords, I thank the noble Baroness for her consideration. I shall see her in Grand Committee in about an hour’s time. On whether I expect any strikes, I sincerely hope that we see responsible action, as we often do in the private sector, on pay—there used to be strikes, but no longer. I hope we see it in the public sector too because responsibility plays both ways.

My Lords, a moment ago my noble friend said that it was the function of the Government to provide advice to the private sector. What advice have the Government provided?

My Lords, so much of the advice that the Government provide to the private sector is done in private. If noble Lords want a big sign put up over this country that says, “We don’t want to see people being paid a great deal of money, just go and do it in Germany, France or America”, then we will be going the right way about it if we start giving public advice where it is not welcome.

My Lords, can the Minister enlighten the House as to what he finds so abhorrent and unacceptable about the Labour Party that he is not prepared to join it, while being a member of a Labour Government?

My Lords, first, that is not relevant to the Question; and, secondly, I would just say that that is my business.

My Lords, I am sure that my noble friend the Minister believes in democracy at all levels. What role do shareholders play in deciding on the payments of these very high salaries to directors, including bonuses?

My Lords, I remind my noble friend that they do not get very high salaries; they get very high pay because of bonuses. Bonuses come out of increased profits for shareholders. Shareholders have an interest in ensuring that these so often talented people earn more money for the company. In 2009, there will be an obligation on companies to go much further into their pay policy and how they reach their levels of pay. This Government have put that into legislation, and I am sure that the House would agree that that is a good thing.

My Lords, the noble Lord will have noticed that in the private sector the latest figures show that wages have been rising by 3.7 per cent per annum. That, of course, has been done by free collective bargaining. Why is it that the Government are seeking to remove from public employees the right to free collective bargaining, which is enjoyed by the private sector? That is a most strange thing for a Labour Government—or a so-called Labour Government—to do.

My Lords, I see no evidence of an absence of free collective bargaining. I am very anxious to ensure that everyone in both the public and the private sectors earns as much as the country can afford. I remind the House that if the country does not earn the money, then tax is not paid; and if tax is not paid, we do not get schools and hospitals. That is a virtuous circle; it is not rocket science.