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Lord McCarthy: My Lords, the Minister mentioned a figure of 12 per cent. From what source does the figure originate? Who supplies the figures?

Baroness Blackstone: My Lords, the figure of 12 per cent comes from the AUT. The Government's figure, which is based on the new earnings survey of male full-time staff only, and therefore is not a complete figure, is of an 18 per cent increase in real terms over the period. I recognise that it compares badly with the increases awarded to many other comparable non-manual workers in the public sector. But I must make clear and remind your Lordships that under current arrangements the question of salaries and indeed other terms and conditions for all staff in higher education is a matter for the employers to determine. The Government play no part in the negotiations between the employers and staff representatives and are not involved in the setting of pay levels in higher

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education. The Bett committee, about which I shall say a little more shortly, was established by the higher education employers, not by the Government. It will report to them and not to Ministers.

My noble friend Lord McCarthy has referred to the fact that the noble Lord, Lord Dearing, and his committee looked into the question of the sector's employment framework and considered options for the future determination of pay levels. The Dearing committee looked at a number of possibilities, including national pay bargaining, local pay bargaining, a standing pay review body and a statutory pay review body. The committee discussed the pros and cons of each of those options. When the Dearing committee published its report in July 1997 it did not recommend a change to the arrangements that I outlined earlier. It took the view that questions of remuneration should not be taken in isolation, rather that the whole issue of the terms and conditions of all staff in higher education should be looked at together. As my noble friend said, Dearing therefore recommended that an independent review committee should be established by the HE employers to look at the framework for determining the pay and conditions of service of all staff employed in the sector. The Universities and Colleges Employers' Association took forward that recommendation. It established a committee under the chairmanship of Sir Michael Bett at the beginning of last year.

I stress again that it is not a government review and that the committee's report and recommendations will not be addressed to the Government; rather it will report to the Universities and Colleges Employers' Association. As I understand it, the Bett committee has been considering a wide range of issues--pay levels, pay structures, terms and conditions of service and possible frameworks for determining pay and conditions. As part of its work, it has commissioned research and invited the views of a great many interested parties.

The noble Baroness, Lady Seccombe, asked about the Government's evidence to the committee. The Government's evidence is a public document. I shall be very happy to send her a copy rather than go through what we said at the time. Incidentally, we made no comment, one way or the other, on a pay review body.

Like other noble Lords, I have seen reports in the press in recent weeks as to the content and conclusions of the committee's report. Like them, I do not think that it would be appropriate for me to comment on what is really speculation. I understand that the committee is due to publish its report in the next two or three weeks. I say to the noble Baroness, Lady Sharp, that the report has not been delayed because of the views of the Treasury; it is a report to employers. It will then be for the employers and the representatives of university staff to discuss the committee's recommendations and agree a way forward. It is the Government's hope that the higher education sector will find that the report's conclusions provide a framework for taking forward negotiations on pay and conditions for future years.

But I must stress, as did the noble Baroness, Lady Seccombe, and my noble friend Lord Shore, that the report has not yet been published. The Government

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believe that it would not be wise to pre-empt the conclusions of the Bett committee and the negotiations on its recommendations by moving to set up a pay review body for academic and academic-related staff as my noble friend proposes. The Bett committee has been considering these important and complex issues for the best part of 14 months. I am sure that the committee has thought long and hard about what is the right way ahead for the sector when it comes to the methods of determining terms and conditions of employment. It does not seem right to me that, in advance of the report being published, we should now be discussing proposed legislation to introduce a pay review body for one section, and one section only, of higher education staff--a proposal that may or may not figure in the Bett report.

The normal method of determining pay is by negotiation between the employer and employees' representatives. The normal pay negotiating process--between the parties directly affected--gives the best opportunity to reach settlements that reflect the circumstances and requirements of the employer and of staff. There does not seem to me to be a compelling reason to override them in this case.

Alternative pay determination procedures, such as a pay review body, need to be considered only if there are factors preventing the proper operation of the collective bargaining process. These might include limitations on the ability of either side to participate in negotiations, or inhibitions placed on the negotiating process by sensitivities to any disputes arising. Those inhibitions would need to be on a scale which justified putting pay issues in the hands of a third party. I do not believe that such considerations apply here.

My noble friend Lord McCarthy mentioned equal opportunities, as did the noble Baroness, Lady Seccombe. Like many noble Lords, I have seen recent press reports about the pay of women in universities. The legal position is quite clear. Under the Equal Pay Act 1970, it is illegal for an employer to pay a woman employee less than a man for like work--that is, for work that is the same or of a broadly similar nature; for work rated as equivalent to that of a man, where there has been a job evaluation study; or for work of equal value to that of a man in terms of the demands made on them both under such headings as "effort", "skill" and "decision-making".

That legislation has been in place for many years. I expect individual higher education institutions to be taking action now to address any equal pay issues if necessary. The Equal Opportunities Commission's statutory code of practice on equal pay which was issued in 1997 will be helpful in that respect. Its recommendations give employers information and advice on how to review their pay structures to ensure that they are not discriminatory.

A key issue in determining the levels of pay within the sector is affordability. It is important that pay costs should be met within the resources available to the sector and that institutions should be able to manage and control their pay bills. I thought that the noble Baroness,

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Lady Sharp, was a little hard on the employers given the very severe constraints under which universities have been operating for quite a long time.

I have explained fully the reservations that I have about the Bill. I recognise the wish of some people in the sector for a pay review body of that type. But I am not altogether persuaded that such a body would be right for higher education. I also believe, as I have already made clear, that it would be unwise to pre-empt the conclusions of the Bett committee's report which is due to be published pretty soon. Of course I shall not oppose the Second Reading of the Bill, but I shall have to disappoint speakers in the debate by saying that the Government cannot give it their support.

3.59 p.m.

Lord McCarthy: My Lords, I thank everyone who has participated in an interesting run round the course of this complicated issue. Three out of four speakers supported me, which is not bad. Naturally I agreed with virtually everything they said. The noble Lord, Lord Wallace, pointed out the growing shortage of British academics. It is partly pay, but it is also the growing shortage of scholarships for graduate education. In my own college we have no British graduates in economics because they cannot get scholarships, even when they get firsts. Nevertheless, it is a sign of the deterioration in the situation and I am glad that he pointed it out.

I agreed with all four points made by the noble Lord, Lord Shore, about the explosion in size and workload, and the relative loss of pay. As for the 1.1 per cent, my figures come from figures given to me by the NUT. It is simple enough to calculate. Everyone knows the rates of pay of the various categories of academics and all we have to do is put it over the RPI to see what happens. But before we go into Committee, I undertake to look at the figures again. Even if it were 12 per cent, it would be a significant loss, which the Minister does not deny. It would be a loss for which one cannot find many comparable examples in other professional groups.

I agree with the noble Baroness, Lady Sharp. I did not know that two-thirds of FRSs now live abroad and I can see why. There is a small number of academics, something like 5 per cent., who still do extremely well. They are distinguished and spend the entire summer at Harvard or somewhere similar. Of course, if they are FRSs, they do even better. If they have Nobel awards, they do better still. But that is not the academic profession. We do not compare what actors earn with what Tony Hopkins earns and most academics are nowhere near that grade of people.

The noble Baroness, Lady Seccombe, mostly asked questions of the Minister so they do not necessitate replies from me. However, she asked whether this was the right time for me to introduce such a Bill. The difficulty for anyone trying to change anything, particularly in this country, is that they have to make the point over and over again. It may well be--though my information is that it is not the case--that Sir Michael will deal with the long-term problem. My

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information is that Sir Michael understandably will deal with the short-term problem. I am talking about the long-term problem. If we are trying to improve the long-term situation in this country, it will take a long time and that is why we are starting this afternoon.

I turn to what the Minister said. I begin with agreement. I agree that we are not in terminal decline. We have not reached the point where the surgeon says, "There's nothing to be done, it's just a question of time. Would you like me to take her off the machine?" We are not in that situation, but we are getting quite close.

There are three broad categories of universities in this country. I will not give names, but there are those at the top, those in the middle and those at the bottom. The ones at the top will survive. They may not be quite as flashy as MIT but they will survive and in comparative terms the academics there are protected. It is in the middle and at the bottom--those universities which have only just gained that status and have expanded most--where morale is lowest, pay is worse and external opportunities are non-existent because of caseload. That is where something must be done; otherwise, we may go into irreversible decline.

The Minister said that some money would be forthcoming. I did not understand her to say that some of that money would be earmarked for pay in any sense. If only the Minister could say--not necessarily this afternoon but later--that some of that new money would be specially directed to correcting these anomalies! More and more of the money has not gone to pay but to other things. The proportion that goes to pay has been in decline. Therefore, to say that there is new money does not really help.

The Minister said that the Bill was an interesting idea. I am glad that the Minister is interested. I very much agree with the noble Baroness, Lady Sharp, that we cannot exonerate the vice-chancellors. Quite apart from the fact that they pay themselves twice or three times as much as professors and control their own pay, they have not done as the National Health Service management did. Without making a fuss, the NHS management fought for the implementation of pay review for nurses and other groups. One may say that they had it to fight for. However, I believe that the vice-chancellors of this country have been supine in agreeing with everything the Government have said. They could have sided with their employees and said that the Government should put in more money, because it is the Government who control the total sum.

It is no good saying that the Government play no part in the negotiations when in effect they tell the vice-chancellors that there is no more money in the kitty. That was what Dearing meant when he said that the system was in chaos and there was no negotiation or movement. He said that somebody outside the bargaining arena determined the total sum, not a pay review board but the Secretary of State and, behind him, the Treasury.

The Minister then reviewed the Bett Committee. I only hope that that committee says what we hope it will say in relation to pay review. I remain convinced-- I believe that if it reflects upon it the House will also be

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convinced--that there is nothing to be done but to wait for pay review. If pay review were as interventionist and difficult as the Minister suggested today the Government would seek to abolish teachers' pay review. The Government know very well that that would ruin relationships with teachers. No government abandons and abolishes pay review because it works, and one day it will work for academics. In the meantime, I ask the House to give the Bill a Second Reading.

On Question, Bill read a second time, and committed to a Committee of the Whole House.

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