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Cbi

Volume 933: debated on Thursday 16 June 1977

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Q3.

I refer my hon. Friend to the reply that I gave him on 17th February.

When my right hon. Friend meets the CBI will he remind it that employers have a responsibility to ensure that phase 2 is maintained and that companies should not aid and abet those who wish to break it? Will the Prime Minister also ask the CBI to do its best to co-operate with the Secretary of State for Prices and Consumer Protection in bringing in a firm policy for prices that will help to obtain the wage restraint that we want in the forthcoming year?

It is necessary that phase 2 should be observed. I know that there have been allegations that some seek to evade it, but I must remind the House and all those concerned with wage negotiations—whether employers or others—that phase 2 will not finally run out until the middle of next year, 1978, and that it is therefore important that everybody should co-operate in securing that.

As for price levels, I am glad to see that the level of wholesale input prices has shown a substantial reduction in the last month, and that will work through. In due course it should enable manufacturers and others to resist increases in prices beyond that limit.

As the CBI still maintains that any increase over 6 per cent. in phase 3 would be inflationary, while the TUC says that it is its objective to restore living standards, how real is the likelihood of obtaining an agreement on phase 3?

The discussions are going on but I am not yet able to say what will emerge from them. I do not know that the TUC has finally defined its attitude on this matter, but the Government see no reason why living standards should fall this year. What is in question is what, if any, can be the level of improvement. Living standards fell last year, but this year they ought to remain fairly stable and next year, if we obtain another phase of incomes agreement, they can begin to go up in real terms.

When the Prime Minister next meets the CBI will he remind that body that its policy of support for the Common Market has been a complete failure to the agriculture industry? That is evidenced by the situation in the pig industry. Will my right hon. Friend therefore advise his Cabinet to restore the direct subsidy to the pig industry— because the Common Market action has proved completely inadequate and will ensure that our pig industry will disappear?

I do not normally discuss the pig industry with the CBI, but I shall certainly ask my right hon. Friend the Minister of Agriculture to look into this matter and let my hon. Friend have a reply on it.

Can the Prime Minister give comfort to the CBI by telling that body about the reality of the hour— that the majority Bullock Report is now dead?

Discussions on this matter are continuing. I should like, if possible, to obtain an agreed decision on what should be done in order to forward the cause of industrial democracy. There would be a great improvement in labour relations if workers in industry had much more say in the decisions upon which their whole future rests. For that reason we have been pressing ahead with discussions. I should like to obtain agreement if it is possible.

When the Prime Minister meets the Chairman of the CBI, will he point out that his constant calls upon the trade union movement to show restraint would go over better if he added that he, too, was prepared to play his part and to get the CBI to back the other half of the agreement, that is, proper price control? The two go together, and the CBI has a heavy responsibility. Its chairman has a right to encourage the trade union movement to show restraint, but does not my right hon. Friend agree that the chairman should give an example and offer co-operation in the form of price control?

I think that Lord Watkinson would accept that there is a great responsibility on the members of the CBI to show restraint in price increases. Like everybody else, they have been affected by the level of inflation, with its consequent increases in costs. That is why it remains the Government's central purpose to reduce the rate of inflation. I am glad to say that I see no reason to depart from my expressed view that the rate of inflation will start to come down in the second half of this year. That will benefit industry, prices, wage earners, housewives and everybody in this country.