The Rt. Hon. Sir John Major KG CH

Prime Minister of Great Britain and Northern Ireland 1990-1997

Chief Secretary (1987-1989)

Mr Major’s Parliamentary Answer on Pay Rises – 8 June 1989

Below is the text of Mr Major’s response on Pay Rises made on 8th June 1989 in the House of Commons.

Mr. Cohen To ask the Chancellor of the Exchequer what information he has on the pay rises awarded to directors in the last period for which figures are available, if he will indicate the economic effect of all workers having a similar pay rise this year; and if he will make a statement.

The Chief Secretary to the Treasury (Mr. John Major) Pay is for the parties involved to agree and it is not for the Government to intervene.

Mr. Cohen What a cop-out answer! How does the Chancellor justify an average increase of 23 per cent. for top directors when inflation is 8 per cent. and workers are having to accept much less than that? How does the Chief Secretary justify a 20 per cent. increase for ICI bosses, 34 per cent. for Unilever’s boss, 43 per cent. for Barclay’s boss, 47 per cent. for Cadbury’s boss, 48 per cent. for BP’s bosses, 58 per cent. for Sun Alliance bosses, 100 per cent. for Legal and General’s bosses and 100 per cent. for P and O’s? Is not the reason that the Conservatives and those directors have the same incestuous class interest? Regardless of the economic effect, there is Government condemnation for workers’ pay rises and a free-for-all for top directors.

Mr. Major I am bound to say that I think that the hon. Gentleman has a rather limited view of directors. Contrary to his vivid expression, the vast majority are able, efficient and effective, and we need the best management. Notwithstanding that, I have never justified wage or salary increases that are unjustifiable, and I do not do so now. It is not, however, for me to determine what is or is not justifiable in that respect.

Mr. Bill Walker Does my right hon. Friend agree that there are only two resources in any company – money and people – and that it is the way in which those resources are managed and deployed that results in profitability or loss in operation? It is only right that those who create the profits should, as a result of the shareholders’ wishes, be properly remunerated.

Mr. Major My hon. Friend makes his point extremely clearly, but I repeat that I am not directly responsible for or concerned with the matter. Pay is a matter for those who negotiate and determine it, and it is not for the Government to intervene.