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PUBLIC RECORD OFFICE

Reference :-

PEPIC.O. 882/11

PUBLIC RECORD OFFICE, LONDON

ALLY WITHOUT PERMISSION OF THE BE REPRODUCED PHOTOGRAPHIC. COPYRIGHT PHOTOGRAPH-NOT TO

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We can either present Your Lordship's decision to them in this form at once, or we can allow them to discuss that decision, and then present to them, for acceptance or rejection, without any amendment whatsoever, Your Lordship's final decision, reached after consideration of their opinions upon the original proposal. A favourable atmo- I therefore incline to sphere can often be obtained by allowing a man to have his say, even when he is aware from the outset that he has practically no chance of success. the opinion that, in spite of the delay involved, the second of the two methods proposed ahove would be the better, and the more likely to result in the acceptance of the Scheme.

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10. The abandonment of the proposal to provide in the Order in Council for carrying into effect the approved recommendations of the Commission will have one obvious advantage. It will also 1 fear have one equally obvious disadvantage. will clearly result in a far less hostile reception than might otherwise have been expected of the announcement that a Commission is to be appointed. It should, I think, entirely remove Sir Wilfrid Woods' apprehension that that announcement will swell the ranks of the opponents of the new Constitution. But it will also be a dis- appointment to the Services. For this latter reason I should not have recommended this course had I not been convinced by Mr. Jackson's arguments that the proposal put forward by Sir Herbert Stanley, on my advice, in his despatch of 7th April, is impracticable.

11. 1 propose now to consider the terms in which the decision to appoint a Salaries Commission should eventually be announced. I suggest that Your Lordship should announce that, having studied the report in the debate in the Legislative Council on 13th March, 1930, on Mr. Kannangara's motion :-

That the salaries of Public Servants be fixed on a rupee basis and to meet local requirements with the addition of an overseas allowance in the case of non-Ceylonese officers recruited from abroad"

you have reached the conclusion that the time has come to carry out the recommenda- tion of the Donoughmore Commission in this regard, and to introduce the systern referred to in that motion. You do not consider that a locally appointed Committee could be expected to deal adequately with this question, and have therefore decided to appoint a Commission, whose duty will be to revise the salaries, allowances, and conditions of service of Public Servants graded in the Civil List on a rupee basis to meet local requirements with the addition of an overseas allowance in the case of officers domiciled elsewhere than in Ceylon or India. You have carefully considered the two provisos subject to which Mr. Kannangara's motion was accepted by the Council, and you have come to the conclusion that to bind the Commission by those provisos would, in some cases, result in inequitable treatment of European officers. The Commission will, however, bear those provisos in mind. In particular, they will bear in mind that sterling salaries are paid in Ceylon at 1s. 4d. to the rupee. If, therefore, overseas allowances were to be made fully pensionable European officers whose basic salary plus overseas allowance remained, as a result of the recommenda- tions of the Salaries Commission, at the present rate, would (for so long as the present rate of exchange prevails) receive an enhanced pension. You are not prepared to accept any recommendation which would, in the case of overseas officers, alter, with the effect of enhancing their pension, the present disproportion between the rupee salary drawn in Ceylon and the sterling salary on which pensions are calculated. In this connexion they will also take into account not only what proportion, if any, of the overseas allowance, should he pensionable, but what proportion, if any, should he drawn while on leave. It will, however, be necessary for them also to take into account, and make provision for, an alteration in the present rate of exchange. The recommendations of the Commission will be forwarded to you through the Governor and your decisions thereon will be communicated to the Legislative Council, who will be giyen an opportunity of submitting to you, through the Governor, any recommen dations which they wish to make. Further, you intend, in the new Order in Council, to provide that the Governor may make regulations, subject to your approval, regarding the proportionate pensions to be drawn. in accordance with the recom- mendations of the Donoughmore Commission, by officers who, in consequence of the introduction of the new Constitution, elect to retire prematurely. The Commission will frame these regulations for the consideration of the Governor.

12. I believe that to frame the announcement in these terms will be perfectly fair to the services and will go a long way towards avoiding the intense agitation which Sir Wilfrid Woods apprehends. Your Lordship will observe that I have made one important departure from Sir Herbert Stanley's original recommendations in that I love not adhered to his suggestion that overseas allowances should be fully pen-

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sionable. I have to thank Sir Wilfrid Woods for drawing my attention to the fact that this proposal would involve an all-round increase in pensions, an increase for which I see no necessity. It would, in fact, be possible to introduce a perfectly simple non-pensionable overseas allowance system which would, so long as the present rate of exchange prevails, leave European officers exactly as they are now, and, while reducing Ceylonese pay, would not reduce Ceylonese pensions. As Your Lordship is aware pensions are calculated on sterling salaries, and leave-pay is drawn in sterling, while sterling salaries are paid in Ceylon at 1s. 4d. to the rupee. If, therefore, all sterling salaries were to be converted into rupee salaries at 1s. 6d. and to this were to be added a non-pensionable overseas allowance of 12 per cent., not to be drawn on leave, European officers would be in exactly the same position in regard to salary, leave-pay, and pensions, as they are now, while Ceylonese ollicers would draw 12 per cent. less salary. Such a system would have the merit of extreme simplicity (except that it would make no allowance for future fluctuations in the rupee rate of exchange), but I doubt if a 12 per cent. overseas allowance would be sufficient. 13. I have not considered it desirable to tie the hands of the Commission by laying down that any reduction in salaries shall apply to future entrants only. They may prefer to suggest that such reduction should not apply to officers at present in the service for a limited time, but should apply, for example, upon promotion to a higher grade, or to the next grade but one to that in which they are now serving. They should, I think, be left free to make what recommendations they wish in this regard.

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14. In the eleventh paragraph of his despatch of 7th April Sir Herbert Stanley asked for Your Lordship's authority to invite the Legislative Council to make provision for carrying out certain recommendations of the Salaries Committee in respect of officers of the Department of Medical and Sanitary Services and in respect of certain Judicial Staff. In your telegram No. 56 dated 18th June,* Your Lordship conveyed that authority and in my despatch No. 507 dated 23rd June† I intimated that provision would be included accordingly in the Estimates for 1930-31. I have since reconsidered my decision to include this provision in the Estimates, and have not done so. appeared to me that it would be a tactical error, now that it has been decided to appoint a Salaries Commission to take any action on the Salaries Committee's report on Civil List salaries. Further, although Medical Officers are not recruited from abroad, and it might therefore be held that the introduction of an overseas allowance scheme should not affect them, there is no doubt that in considering their salaries the Committee were to some extent influenced by the rate of sterling salaries in other technical departments in which officers are recruited from abroad. These salaries have been fixed with a view to the needs of such officers, and it is possible that the Salaries Commission may recommend a decrease in the salary of Cevlonese officers in such departments. It is therefore by no means certain that the Commission will approve in their entirety the proposed increases in the salaries of Medical Officers. I have accordingly informed iny Executive Council that, as the report is still the subject of correspondence with Your Lordship I do not propose to take this action, although it has received their approval. No objection was raised by any member of the Council. I suggest that, when Your Lordship's decision to appoint a Commission is announced I should at the same time make a statement on the lines suggested in paragraph 7 (3) of this despatch.

15. It remains for me to consider the possibility envisaged in the sixth paragraph of this despatch, namely, that the Select Committee on the budget may press for the appointment of a Cadre Commission. I have for some time been of the opinion that considerable retrenchment might be effected by a reorganization of the superior staff of certain departments, notably the Public Works Department, and it is my belief that such retrenchment could best be effected by the appointment of a Cadre Com- mission. A Committee of the Legislative Council would clearly not be equipped for a task of this magnitude, and if the task is to be undertaken the only alternative to a

· Cadre Commission is a Committee of officials, which would not, I consider, be so satisfactory. I have only been deterred from making a suggestion in this regard by the fact that any attempt at extensive reorganization would produce a certain amount of dislocation in the administration, and that it would be unwise to run the risk of such dislocation on the eve of the introduction of the new Constitution. Further, a few months' experience of the working of that Constitution may provide us with fresh ideas as to the possibilities of reorganization. For these reasons I felt myself unable

* No. 17.

+ C. 73230/9/30 [No. 29]: not printed.