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Social Contract

Volume 888: debated on Tuesday 18 March 1975

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asked the Secretary of State for Employment what proportion of pay settlements, in the public and private sectors, made since 1st October 1974, were in breach of the social contract.


asked the Secretary of State for Employment what proportion of pay settlements, in the public and private sectors, made since 1st October 1974, were in breach of the social con- tract; and which of the TUC pay guidelines, apart from the 12-months' rule, was breached most often.

We do not have comprehensive information of this kind about pay settlements which would make possible sufficiently precise answers to these Questions.

Does my hon. Friend agree that apart from the lack of availability of the figures the Government, on that rather sad and miserable day just before Christmas, blasted the biggest hole in the social contract when they announced a massive increase in the salaries of judges and top civil servants? Why, therefore, does my right hon. Friend get terribly het up over the low-paid workers like the pickets outside the House of Commons—who take home less than £30 a week—because they might be breaching some terrible guidelines?

On the first part of my hon. Friend's supplementary question, we had a debate on this subject some weeks ago in which I gave my views on the subject, and I do not wish to add anything further to that. On the dispute to which my hon. Friend refers, the guideline of the 12-months' rule was not laid down by the Government but by the General Council of the TUC and was approved at the congress of the TUC. We regard that guideline as being of great importance. Moreover, we believe that observance of that guideline can assist low-paid workers, because the Government have done their best to carry through and to assist in carrying through any guideline in the social contract accepted by the TUC designed specifically to assist low-paid workers.

With regard to the dispute that my hon. Friend mentioned, an answer to the claim is coming from the Government this week, and I hope that it will assist the situation.

Is it not outrageous that the right hon. Gentleman cannot give factual information to the House about the difference between public sector and private sector settlements? Why cannot he give information about the guidelines which are breached most often? If he does not have the information, or is not prepared to share it with the House, how can he go no pretending that the social contract is doing anything to help sustain a policy against inflationary wage settlements?

It is a question of what figures are available and what kind of figures should be kept by the Government in dealing with the situation. We do not believe that we should keep figures on the basis that, say, the Pay Board did, or previous Governments did, when they were carrying out a statutory policy. We do not think that that would be the right course. As I told the House on 23rd January, my Department is reasonably well informed about settlements covering two-thirds of the working population, but that information relates to only a small proportion of the total number of settlements concluded. As I have repeatedly made clear, it is neither necessary nor appropriate for me to say in every case whether it is inside or outside the TUC guidelines.

Is my right hon. Friend aware that the guidelines established by the unions provide priority for lower-paid workers, that the guidelines are imprecise, and that it will never be possible to determine whether each and every settlement is within the social contract or outside it?

My hon. Friend is correct on both points. Certainly, as soon as the guideline referring to low-paid workers was passed and accepted by the congress last September, the Government indicated that they would do their best to ensure that it would be observed. We regard it as one of the most important guidelines of them all, but we want all the guidelines to be accepted and observed.

As the Government look like running into difficulty with the electricity supply workers and the National Union of Railwaymen, should not they and the TUC sit down together again and decide how much the country can afford in pay settlements, rather than have the priorities first and the resources second? They should reverse that, otherwise they will have another year of great difficulty.

There are certainly some difficulties around. I am not seeking to deny that, or obscure it. But the nego- tiations of the electricity supply workers are still proceeding, and it would be most unwise of me to make any comment about them. The same applies to the railways. There is a meeting on Friday at which discussions will take place. One of the things which the Government have done as part of the social contract is to say that we should restore free collective bargaining, and we wish that to proceed in both those cases and in others.

Surely the right hon. Gentleman can give us the figures for the public sector, even if he cannot give us the figures for the private sector. How can hon. Members or people outside the House who are interested in the matter gain any idea whether the social contract is working if the right hon. Gentleman refuses even to give figures which are within his control?

I have had lengthy discussions with the right hon. Gentleman on this subject. I do not believe that it would assist in carrying through a sensible wages policy or in seeking to resist inflationary claims if the Government were to publish the results of each claim and pass their verdict on it. That would have the opposite effects to those which hon. Members might desire. That is the answer I have given the right hon. Gentleman on many occasions. It does not mean that we are concealing any figures, or anything of the sort.


asked the Secretary of State for Employment what discussions he has had with the TUC regarding the implementation of the Government's side of the social contract.

I and other Ministers have had frequent discussions with TUC leaders on the social contract, including the implementation of the Government's side.

Did the right hon. Gentleman read the article in the previous week's issue of the New Statesman by Wilfred Beckerman? Will he now admit that the trade unions, whatever their intentions, are no longer able to deliver their part of the social contract, however imprecisely it may be formulated? Instead of pretending that the emperor has some clothes on, will the right hon. Gentleman not give some thought as to how the unions can be enabled to take some of the power. and some of the responsibility which should go with that power, and how they can be given an interest in maintaining the degree of wage restraint which is necessary to ensure full employment?

I read the article by Wilfred Beckerman in the New Statesman. I attach a due amount of importance to any article I read in that journal. I have also read—and I attach even greater importance to it—the economic review produced by the General Council of the TUC. If the hon. Gentleman will read that document he will see how responsibly the members of the General Council and other trade unions have taken their responsibilities under the social contract. They are now seeking to observe the guidelines. We wish to see the guidelines observed as strictly as possible because we think that that can make a major contribution to overcoming our inflationary problems. Anyone who reads the economic review of the TUC will see how that organisation approaches the matter in a way that can be helpful to the country as a whole.

My right hon. Friend has just said that the trade unions are carrying out their part of the social contract. He will be aware of the considerable concern that is felt due to the rising level of unemployment. Will my right hon. Friend say whether he regards a total of 1 million unemployed as a breach of the social contract on the part of the Government?

I think that the present level of unemployment is too high. I think that the level of unemployment that prevailed when we came into office last February was already too high. I do not accept in any sense the statements made by leading Opposition spokesmen that these are dubious statistics and give a false impression of the dangers of unemployment. Of course we wish to guard against unemployment. That is one reason why we are asking everybody to observe the guidelines as strictly as possible. The more strictly those guidelines are observed, the better we shall be able to overcome our unemployment problems, as well as some other problems.

In view of the firm reference made by the Secretary of State to advice recently tendered by the TUC suggesting an increase in public spending of over £900 million a year, may we assume that he would regard an increase in taxation in the Budget as a breach by the Government of the social contract?

Nobody will know better than the hon. Gentleman that I cannot anticipate the Chancellor's Budget Statement. If I were to answer the hon. Gentleman's question now, I should be doing so in some respect. I do not intend to be tempted in that direction at all. What I was saying was in reply to a question which was put to me about reading matter, and I was giving some advice on that score. On this occasion the hon. Gentleman would do better to read the TUC economic review than the New Statesman.

Does my right hon. Friend agree that if in the next year we have the levels of wage settlements which we have seen in the last year, the increase in unemployment will be an inexorable process which we shall not be able to halt.

My hon. Friend is perfectly correct, in the sense that if wage settlements are at much too high a level they may increase the dangers of unemployment. If wage settlements in particular industries are based at too high a level, that again could cause unemployment. But there are many other causes of unemployment—world-wide causes—which must be dealt with by other measures. Therefore, the question must be put in proper perspective. I do not accept the idea that in the present situation wages alone are the cause of unemployment.

Is the right hon. Gentleman aware that he is now indulging in double talk? On the one hand he says that he deplores the high level of unemployment, but on the other he says that he is perfectly satisfied with progress on the social contract. Does he not realise that in so far as he has failed over the social contract he is now responsible for allowing unemployment to rise? When will he make that clear to the nation?

I did not know the right hon. Gentleman was such an enthusiastic supporter of the social contract. It is a novelty for him to say that the social contract, as he interprets it, would be the salvation of the country.

I was not engaging in double talk. I was stating what surely everybody in the House will accept—namely, that in the present economic situation if wage settlements are pressed beyond the guidelines in the social contract they may contribute to the dangers of high unemployment. I also said that there are other causes of unemployment to be taken into account.


asked the Secretary of State for Employment if he is satisfied with the operation of the social contract.


asked the Secretary of State for Employment whether he is satisfied that the social contract, as currently interpreted, is not leading to higher unemployment and rising inflation.


asked the Secretary of State for Employment if he is satisfied with the working of the social contract; and if he will make a statement.

A great deal of progress has been made on both the Government's side and the trade union's side in fulfilling the social contract. But firmer adherence to the spirit of the TUC guidelines is vital to reducing the danger of higher unemployment and keeping down inflation.

I sympathise with my right hon. Friend's problems, but will he comment on one basic dilemma? The power workers are now demanding free collective bargaining as part of the social contract but are using that freedom to demand terms which clearly are outside the social contract. Does my right hon. Friend agree that if the power workers or any other trade union group pursue this line they will destroy the social contract and seriously damage the Government?

For the same reasons that I have already given, I shall not comment on negotiations now in process in the electricity supply industry. That would be a most foolish course for any Minister to take at such a moment. Those negotiations are not yet concluded. If it is the fact that the restoration of free collective bargaining leads to some other difficulties as well, those difficulties are far more likely to be overcome in this way rather than by returning to the old statutory system.

Why does not the Secretary of State acknowledge what everybody at home and abroad acknowledges, namely, that the social contract as now administered is the cause of inflation and rising unemployment? Why does he not face up to his responsibilities and admit it and do something about the situation, before it is too late?

The hon. Gentleman has not even troubled to examine the facts. I deny absolutely the suggestion that the social contract is in any sense the cause of inflation. We want to secure a stricter allegiance to the guidelines laid down in the social contract. We believe that the social contract, with all its different aspects, still offers much the best way of trying to overcome the danger of inflation.

My right hon. Friend said that the statutory incomes policy led to the conflict and confrontation of last year and that this had been replaced by the social contract. Has any suggestion been made by the Conservative Party as to what should replace the social contract? If the Conservatives have no alternative, will they stop sniping at the TUC's efforts to try to reach an understanding with the workers which will get us out of our difficulties?

I do not think that my hon. Friend is fair to the Conservative Party, which has been far too busy replacing its Leader to undertake the task of replacing its policies.

Is the right hon. Gentleman aware that the failure of the social contract is placing intolerable burdens on retired people? [HON. MEMBERS: "Oh."] Certain Labour Members may make noises, but that is a fact. Will the right hon. Gentleman have a word with Mr. Jack Jones, who displays great sympathy towards the pensioners, and tell him that the best way to help the pensioners is for the Transport and General Workers' Union to observe the terms of the social contract?

One of the most essential parts of the social contract was the raising of pensions. The Government undertook that course. It was an integral part of the social contract.