HM TREASURY 7
                                          November 25, 1997
____________________________________________________________


 CHANCELLOR MEETS WITH PAY REVIEW BODY CHAIRMEN TO DISCUSS
                     PRE-BUDGET REPORT

Chancellor Gordon Brown today met with the Chairmen of the
Pay Review Bodies to outline the material he would be
presenting to Parliament in his Pre-Budget Report. He has
now formally submitted to the Review Bodies the Pre-Budget
Report document and a copy of his statement to the House,
to supplement the economic evidence published in September.
The supplementary material has also been made available to
the Remit Groups.

The new procedures established by the Pre-Budget Report
prompted the Chancellor to invite the Chairmen to see him.
He stressed that he had no wish to impinge on the
independence of their position in making recommendations to
the Government.  But he was mindful of the tight timetable
to which they were working and he wanted to alert them at
the earliest opportunity to the supplementary evidence they
would be receiving later in the day.  

The Chancellor emphasised the British economy's traditional
proneness to inflationary pressures.  But the decision in
May to grant independence to the Bank of England in setting
the level of interest rates now ensured that the
Government's inflation target would be met.  

This meant there was a choice for the country: paying
ourselves more now and risking higher interest rates later
on, or exercising pay responsibility now with the benefit
of securing more jobs in the future.  A responsible
approach by all those involved in pay bargaining, combined
with success of the Government's labour market reforms,
would allow the economy to grow faster than would otherwise
be possible.  

The Review Body Chairmen said they were grateful to the
Chancellor for alerting them to the new evidence and for
the acknowledgement of their independence.  They would, as
their terms of reference set out, seek to arrive at just
and fair recommendations in the light of all the material
available to them, which included the evidence of the Remit
Groups themselves and their representative organisations.

NOTES TO EDITORS

The earlier evidence to the Pay Review Bodies, published on
16 September, presented the Government's policy and
expectations on public sector pay and the economic
background to the work of the pay review bodies in framing
their recommendations for the coming year.

There is no public spending round this year. Pay costs will
need to be contained within existing spending plans. There
will be no access to the Reserve to fund spending on pay in
excess of those plans. 



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