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Wages, Salaries And Dividends

Volume 649: debated on Tuesday 21 November 1961

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With permission, Mr. Speaker, I will now make a statement.

When announcing the series of measures introduced on 25th July in order to strengthen the economy at a time when sterling was under considerable pressure, the Government asked for a pause in increases in personal wages, salaries and other incomes. This was because for a number of years increases in money wages had persistently outstripped increases in production, with a consequent serious impact on costs and prices. The pause was also designed to give time for a long-term policy to be worked out, in consultation with both sides of industry, which would ensure a more satisfactory continuing relationship between incomes and production.

The policy of the pause has been maintained in the case of direct employees of the Government. It has been generally followed by local authorities and private industry. Here, the Government have had to depend upon those responsible for decisions being willing to follow the Government's advice: there can be no question of coercion. The same is true in the case of the nationalised industries, since the Government have no authority under the relevant legislation to issue a direction concerning a particular wage claim.

It is against this background that the recent decision in the electricity supply industry must be judged. The decision in that case rested with the Electricity Council, but the Government had left the Council under no doubt as to the importance which the Government attached to their policy about the pay pause. It is the case that previous settlements in the electricity supply industry have run either from the date of agreement or have been backdated, whereas the recent settlement dealing with a claim entered on 20th July, 1961, will not come into effect until 28th January, 1962.

Nevertheless, the Government do not regard this settlement as being consistent with the policy of the pay pause as announced by my right hon. and learned Friend the Chancellor of the Exchequer on 25th July. Accordingly, when my right hon. Friend the Minister of Power was informed, late on Thursday evening, that a final offer was about to be made, he expressed great disquiet and anxiety and emphasised the damage that a settlement in the terms proposed would do.

While there has been some improvement as a result of our short-term policies the economic situation remains serious, and it is still vitally important to prevent costs rising so as to avoid inflation and expand our exports. I must, therefore, urge all concerned, whether in nationalised industry, local authorities, or private industry, to make every effort to maintain a policy of restraint over wages, salaries and dividends.

Could the Prime Minister explain what is the purpose of this rebuke to the electricity supply industry? Would it not have been fairer to have presented its point of view in a statement in Parliament? Is the right hon. Gentleman proposing to take any steps about this? If the Government have no power in the matter, does not all this point to the impossibility of trying to carry out a policy of wage restraint without the full agreement of both sides of industry? Will the right hon. Gentleman say what steps have been taken, or are being taken, to work out the long-term policy to which he refers in his statement?

It is, of course, true, as the House knows, that the Government have no statutory powers to settle the wages of any except their direct employees. It might be urged that they should take powers over the nationalised industries, but should they then take powers over private industry and local authorities? In that case we are moving a long way from a free society, which it is our purpose to preserve.

I am, therefore, convinced that the right way is to trust—as the right hon. Gentleman the Leader of the Opposition suggests—to influence and to suggest ways in which we should try to get general understanding. I am impressed by the willingness of all sides of industry to join together in trying to work out such a policy. We cannot, in a free society, do it by taking full authority over the whole wage structure of the country. We can try gradually to work towards a general understanding of what is best for all, and the Government will not abandon their policy because of a set-back in a particular instance. They will continue with their campaign.

While recognising all the complex reasons which have led to the inconsistency between the policy of Her Majesty's Government and the award by the electricity supply industry, could my right hon. Friend the Prime Minister tell the House what steps are being taken to prevent a repetition of this kind of thing in the nationalised industries, notably in view of the large pay claims at present pending from railwaymen and coal miners, both of whom are employed by the nationalised industries?

We must rely on those who manage this industry—public servants—to carry out what they think to be right. I am not dismayed merely because there has been one instance which has not fully carried out our policy.

Have not the Government been in office for ten years? Are they now telling us that only now are they beginning even to think about a policy for wages, dividends and profits? The truth is that they are not abandoning a policy because they never have had one. They have had temporary expedients year by year which have totally broken down because there has been no indication of what is the Government's long-term policy. How does the Prime Minister reconcile the gross injustice between one group of workers and another?

No policy can operate successfully in a free society except by general acceptance and working together. The right hon. Gentleman the Member for Orkney and Shetland (Mr. Grimond) seems to be suggesting that we should move towards a kind of Fascist society, where we would impose our will. That is not my view. Taking the past ten years as a whole, we have made an enormous advance in the standard of living of our people. This represents a great advance on anything known in the past. I do not abandon hope, for I am a democrat and I believe in doing this by democratic means.

Am I not right in assuming that my right hon. and learned Friend the Chancellor of the Exchequer said at the time of outlining his policy that he had had conversations with the chairmen of the nationalised boards? If so, did the chairman of the Electricity Council tell my right hon. and learned Friend that he did not agree with the Government's policy? What was the relationship between the chairmen of the nationalised industries and my right hon. and learned Friend? Is it not very unfair that the chairman of the Electricity Council did not tell the Government about this at that time?

The chairman of this particular board was well aware of the Government's views. That he made a settlement not altogether in accordance with our views I regret, but it would be a dangerous and revolutionary measure if the Government tried to make themselves responsible for the precise wage agreements of all the nationalised industries.

Will the Prime Minister tell us what the chairman of the Electricity Council said to the Minister of Power and why he decided to make this agreement? Is the right hon. Gentleman aware that his answer to my earlier question absolutely confirmed the view which is strongly held on this side of the House, that the Government: have got themselves into an impossible position with their pay pause because of its unfairness between different: groups of workers? Would it not be wise, at this stage, to drop the pay pause as such and to start free and frank negotiation with the unions and employers and, in so doing, at least to try to give the impression that the Government are anxious to achieve social justice in the community?

I quite understand the right hon. Gentleman's view. It is exactly those negotiations and discussions which are going on. But these claims come in from time to time, dated on this day or another, and they must be dealt with. In my view, the main purpose and interest of all concerned, including especially the wage earners, is that wages should maintain their real value.

Does not my right hon. Friend think that further claims from the nationalised industries will inevitably point to the precedent of the electricity settlement and that claims in the private sector will inevitably point to the settlements made in the nationalised industry?

On a point of order. Is it not the practice in this House for a Member who is a director of a company which has increased its dividends recently to declare his interest in that company?

No. In my recollection, the practice of declaring an interest does not apply to Questions. It applies to hon. Members making speeches.

In answer to my right hon. and learned Friend's question, may I say that I hope that those who are responsible will take the view that it is their duty to support a policy which the Government have honestly put forward as being in the national interest—above all, in the interests of wage earners as well as other people. Whether they follow it we have not the statutory power to enforce, but we have the power to influence, and I hope that they will take note of this situation and will follow what is in the national interest.

We note the Prime Minister's desire to keep a free society and that when the chairman of a board decides that a wage increase is due he is reprimanded by the Prime Minister.

The Prime Minister will know that the chairman of the Electricity Council suggested that the increase should take place from 1st April. We also know that the Minister of Labour is signing wages council awards from 2nd April. First, are the Government saying that the pause should last until then and that it will then finish? Is the right hon. Gentleman aware of the great damage which is being done to industries such as the electricity industry, in which wages are earnings? In other words, to get an advance at all, men must leave this type of industry and go into industries where earnings are higher than wages. May I ask the Prime Minister whether his statement is one of intimidation and what will happen if another nationalised industry accords an advance to its workers?

I understand that the chairman put forward on his own authority what he thought was a fair solution. That he was driven from it by pressure does not alter the fact that he thought 1st April was the right day.

On the hon. Gentleman's second point, my right hon. and learned Friend the Chancellor of the Exchequer has said, I think today in the House, that he has not made up his mind. When it will be possible to achieve what we all want, namely, advances, not merely in money wages which are at once countered by a rise in prices, but in real wages which are of benefit to the recipient, depends on the circumstances.

I do not understand that there is a grave problem in this industry, but that it is carrying on effectively. Of course, so far as there is in some parts of the country what one might call overfull employment, the pull of labour on us is another problem which we have to face, particularly in certain parts of the country.

With great respect to the right hon. Gentleman, he is not seized of what I was saying. In the electricity supply industry, the majority of workers have not a payment-by-results scheme. The wage, in fact, is the gross earnings. In other industries, people are on a piece-work bonus, although the wage is the same, and they can earn much more. That is most dangerous to this type of industry, because it will lose men who will go elsewhere to get more money.

If we were to say that wage agreements have no meaning because of the bonus given by employers to attract employees, then we are in a bad situation.

On a point of order. Since the Prime Minister has taken over the portfolio of the Chancellor of the Exchequer, and has answered Question No. 26, would it not be in order to ask him a supplementary question?

That is not a point of order. As usual, I am in the hands of the House about this matter. I realise the importance and interest in this subject, but I do not think that we can debate it now without a Question before the House.

May I put one supplementary question to the Prime Minister? [HON. MEMBERS: "Why?"] Because the Prime Minister has not answered the questions that I put to him, and I shall put them again.

The first is this: what did the chairman of the Electricity Council say? Is it not a fact that there is a serious shortage of labour in the electricity supply industry? How can the Prime Minister divorce this from a wage negotiation? Secondly, will he tell us precisely what consultations are going on at the moment about the long-term policy on this matter?

Whether or not the chairman of the electricity supply industry or the group of boards which form the industry thought there was a shortage of labour, had he thought it necessary to make a different offer to attract labour he would have made a different offer. He made an offer on 1st April. He was pushed from his date, and, obviously, it was not his judgment that it was necessary to put the date forward. It could not have been his judgment, otherwise he would have made it on his own.

Discussions are going on and I hope that it will be possible for the Chancellor of the Exchequer to make a general announcement about the arrangements he has made with the T.U.C. and with the employers' associations as to the broad management of the economy. Although that might not be directly associated with the wage structure, there should come out of it a better understanding of the circumstances in which the economy is working.