Leading Article: The silly muddle of MPs' pay

THE STORM over MPs' pay would belong in a teacup if it did not raise wider issues. On the details of the matter there is not much to complain about. MPs are paid rather poorly for the hours they work and the responsibilities carried by the more conscientious among them. Their pay has actually dropped in real terms over many years. They are, however, supposed to set an example by not seeking increases out of line with government policy or the reasonable expectations of voters.

So the issue now is not what they deserve but whether their rise of 4.7 per cent, amounting to about twice the rate of inflation, breaches the Government's guidelines and therefore - if we step from morality to practical politics - constitutes an invitation to other public sector workers to copy.

MPs thought they were removing their pay from the political arena when they agreed in 1992 that it should be pegged to the average pay of civil servants in grades 5 to 7 - an idea which in principle goes back to 1975. Their mistake was almost immediately to allow that link to break down, denying them any increase at all until January this year. They might have foreseen that when the time came to catch up they would appear to be getting too much.

If they had also been more sensitive to the present climate, and the demands of the signal workers, they might have postponed their increase again. But their pay is either pegged to the Civil Service or it is not. If it is, it should be allowed to keep up. If it is not, some other criterion should be sought.

This points to the wider issue, which is whether the present rather ramshackle mechanism for deciding public sector pay needs an overhaul. The independent review bodies that struggle annually to recommend fair levels of pay in the public sector have not done too bad a job, but the job is becoming more difficult. The old structures of public sector pay are being broken down by privatisation, performance-related pay, opted out hospitals and the gradual disappearance of the security that used to compensate for low pay. Decentralisation of pay bargaining - desirable on economic grounds and in the interests of greater managerial autonomy in the public sector - has also complicated the picture. Nor is it becoming any easier to measure productivity in many areas of public service.

The system will come under further strain as the private sector pulls out of recession and starts competing for certain types of skilled labour. Low inflation ought to make the task of the review bodies easier, but in fact it produces an economic landscape with unfamiliar and confusing features.

As MPs wade through their postbags and crank out their defensive letters, they should again reflect upon the need for appropriate machinery to evaluate pay in the public sector. When the current public sector pay freeze ends, these mechanisms will again be tested. Meanwhile, MPs should stick with their overdue increase.