CAB129-52 — Page 108

Page 108

Printed for the Cabinet. June 1952

CONFIDENTIAL

C. (52) 190

CABINET OFFICE RECORD COPY

Copy No.

66

11th June, 1952

CABINET

NATIONAL HEALTH SERVICE: DANCKWERTS AWARD

MEMORANDUM BY THE CHANCELLOR OF THE EXCHEQUER

The Award gives the general practitioners the arrears of pay-back to the beginning of the Health Service in 1948-which Mr. Justice Danckwerts thinks they should have had on the basis of the Spens Report which the previous Govern- ment accepted. These arrears amount to some £27 million for the period July 1948 to March 1952. We must also take into account the cost of applying the Award in the current year, which will be about £10 million, in addition to the existing Estimate provision. Thus the gross total which we should have to find this year as a result of the Award is £37 million.

2. This is a heavy blow, especially in view of all the other factors such as wage and price increases which are also tending independently to reduce the estimated Budget surplus this year.

3. I have, therefore, been considering whether the burden on the Budget might be lightened by taking the line that we cannot pay off the arrears in full at once, but would propose to pay them over a period, say, the five years 1952-57, at the rate of something like £5 million a year. This would mean that I should have to find some £15 million this year (£10 million for 1952–53, plus, say, £51⁄2 million of arrears) instead of £37 million.

4. Apart from the Budgetary aspect, payment of these arrears by instalments over a period, by making it clear that the Government are not in a position to splash money about on the doctors, might have a good psychological effect in helping to keep other wage and salary claims within reasonable limits.

5. The Minister of Health and the Secretary of State for Scotland have represented to me, however, that a decision to postpone payment would be strongly resented by the medical profession. The B.M.A. have been persuaded with some difficulty to use their influence against any demand that doctors' remuneration should be on a sliding scale linked to the cost of living, and the Health Ministers are reluctant now to become involved in a further dispute on this subject. In addition, payments of the arrears by instalments would give rise to a number of administrative difficulties. In the circumstances I do not propose to press this suggestion.

Effect of the Award on other Classes of Staff

6. The Award raises certain other serious wages policy considerations. It will probably be claimed that the Danckwerts Award is an indication that the salaries of other professional grades in the public services should be increased to rates 100 per cent. above the rates in force in 1939. Such a claim, if accepted, would have most serious reactions. The class immediately affected is consultants in the National Health Service. At present whole-time consultants are paid salaries ranging from £1,700 at age 32 to £2,750 at age 40, but these rates may be supple- mented by Distinction Awards ranging from £500 to £2,500 per annum. The full effective salary range is thus from £1,700 to £5,250. The application of Danckwerts principles would increase those rates to £2,750 at the minimum and to £7,130 at the maximum. There would inevitably be further reactions--first on University

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