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Ministerial and other Salaries Act 1975 (Amendment) Order 2011

My Lords, this is an order that my right honourable friend the Prime Minister has specifically requested to formalise in legislation the coalition Government’s policy on ministerial salaries, as announced on 13 May last year. The order was laid before Parliament on 21 March and agreed to in the Delegated Legislation Committee in another place on 21 June. The order, which is intended to remain in force for the lifetime of this Parliament, will ensure that ministerial and other officeholder salaries are reduced in legislation as they have been reduced in practice since the coalition Government took office. The salaries and offices affected are specified in the amendment order and these salaries cannot be at any other rate during this Parliament without further amendments to the legislation. Lords Ministers can be assured that their salaries will remain as listed in the order until the Dissolution of Parliament. The Government’s policy is that Ministers’ total remuneration is 5 per cent less than that claimed by equivalent Ministers in the former Government. In the case of Lords Ministers, ““total remuneration”” in the context of the order simply refers to their ministerial salary. For Commons Ministers, it refers specifically to ministerial and MPs’ pay taken together, with the reduction then applied solely to the ministerial salary element. Since entering office, therefore, Ministers have waived their entitlement to receive a full ministerial salary and have been receiving a reduced salary ever since. The order also ensures that ministerial and other officeholder pension contributions and future accruals are brought into line with the reduced ministerial salary levels. Currently, Ministers and other officeholders receive reduced salaries but, because of the rules governing ministerial pensions, their contributions have to remain based on their entitled level of salary as set by the Ministerial and other Salaries Act 1975 as it stands. This has meant that departments have had to make up the shortfall in pension contributions between the reduced and the entitled levels of salary for Ministers and officeholders. The amending order will eliminate the need for departments to do this and will save the Government approximately £100,000 per year. As I mentioned, ministerial and other officeholders’ salaries are currently governed by the Ministerial and other Salaries Act 1975, as amended. The salaries of all Ministers, the Speaker in each House and the six paid opposition officeholders fall under the remit of this Act. These individuals have been informed of this order and the changes that it will make to the Act. Currently, increases to ministerial salaries are linked to the average increase in the mid-points of the senior Civil Service pay bands. This order will effectively nullify the link during this Parliament but it will apply again after the Dissolution of Parliament. I should point out that over several years ministerial salaries have not, in practice, remained in line with the legislation. Since 2008, Ministers in the former Government had waived any entitlement to increases in their salary. This order will therefore bridge the gap that has grown between the legislation and what is happening on the ground. Given the Government’s policy on a Civil Service and wider public sector pay freeze, it is right that Ministers show leadership during this time of financial constraint. Since taking office, this Government have saved around £700,000 on Ministers’ pay. Over a full five years, this will represent a £4 million saving. I commend the order to the Committee.