Vol. 533 No. 6
35 Mr. J. Mitchell asked the Minister for Finance the figure for the public sector pay bill for the year 2000 and each of the preceding four years; the extent to which the increase exceeded the rate of inflation for each year; the estimated public sector pay expenditure for 2001; the percentage increase it represents over 2000; and the extent to which it will exceed the estimated inflation rate for 2001. [9582/01]
My Department produces annually a booklet called Analysis of Exchequer Pay and Pensions Bill which gives details of developments of Exchequer pay and pensions. The booklet is also available on the Department of Finance's website.
The details cover the public service but excludes both the local authorities and the commercial semi-State bodies since these are not financed by the Exchequer.
The information in relation to the total public service pay bill is as follows:
|
1996 |
1997 |
1998 |
1999 |
2000 |
|
£m |
£m |
£m |
£m |
£m |
|
4,669 |
5,153 |
5,606 |
6,114 |
6,798 |
|
+5.2% |
+10.4% |
+8.8% |
+9.1% |
+11.2% |
The increases in the consumer price index in the same period were:
|
1996 |
1997 |
1998 |
1999 |
2000 |
|
1.6% |
1.5% |
2.4% |
1.6% |
5.6% |
The estimated public service pay expenditure for the year 2001 is £7,964 million which represents an increase of 17.2% over year 2000. The estimated consumer price index figure for 2001 is 4.5%
The comparison of the increase in the pay and pensions bill with the rate of increase in the CPI is, however, misleading. The pay and pensions bill increases because of a number of factors, not just pay rate increases. For example, developments in services which include any increase in the numbers employed will have an impact. The pay bill as a percentage of net current non-capital supply spending has remained between 49% and 51% in the period. As a percentage of GDP it has declined from 10.3% in 1996 to 7.9% in 2000.
Does the Minister accept that the question of pay is fundamental to the continuation of economic growth? Does he accept that in his time as Minister average growth has been almost 10% per annum? He will be also aware of the pressure for further pay increases, not just among teacher. What is his policy on pay now and what further growth in pay is expected in the next year or two?
I accept most of the points made by the Deputy. I accept it is an important issue in moving forward. The increase in net current spending in recent years is primarily as a result of the increased pay bill. For the sake of fairness to everybody, it is not just pay – it is a combination of increased pay and numbers. Therefore, the average increase in pay must be about 10% for the years I have been in charge but the numbers have increased considerably. The partnership agreements set out pay increases. The numbers employed in a number of areas have been increased. For example, in the major departments, the health sector accounts for 37% of the total pay bill and has shown the greatest increase in the period, the education sector accounts for about 30%, the security sector accounts for about 14% and the Civil Service accounts for about 15%. Therefore, health and education account for 67% of the total pay and pensions bill. When we increase money for the health area, in particular, it is not just an increase in pay there is also an increase in the number of persons. I can get the figures for the extra numbers employed in the health service since 1997. They are considerable. Therefore, the pay and pensions bill increases as a result of increased numbers and pay. As the Deputy rightly pointed out, in going forward we have agreed to the benchmarking process and will report by June 2002. Already we have agreed in the renegotiated PPF that 25% of any increase granted will be backdated to 1 December 2001. The straight answer to the Deputy's question is that it is a major burden on current expenditure. However, this is the result of a growing economy and increased numbers and increased pay which is negotiated freely by the Government and the other partners.
Notwithstanding the increase in pay and numbers, will the Minister accept there are many areas of public expenditure disimproving outcomes? He mentioned the health sector and the increase in numbers and pay in that area. Will he agree that for the average person on the street the health services have disimproved in the period since he became Minister for Finance?
In November 1999, at the pub lication of the abridged estimates volume, in response to a question from the assembled journalists I said quite openly that for all the extra money provided to health I did not see any great improvement at that time and I was hoping it would pay off in the future. I got myself into some considerable difficulty because people commented on that. I have to be honest—
Carlow Kilkenny): The Minister could get into difficulty with the Chair as well.
He should not stop now.
In some of those areas, particularly in the health area, the customer does not seem to be more satisfied even though there have been large increases in pay and in numbers during my time in office and we should be getting a pay off. I have been assured by my colleague, Deputy Martin, that I will see the pay off in the near future.
The Government is throwing money at problems without solving them. The Government is ineffective and mismanaging the economy.
Question No. 36 answered with Question No. 33.
