Orders of the Day — Budget Proposals and Economic Situation

Part of the debate – in the House of Commons at 12:00 am on 17th April 1958.

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Photo of Mr Frederick Lee Mr Frederick Lee , Newton 12:00 am, 17th April 1958

I will not pursue that too far, or the hon. Gentleman may find it even more complicated.

May I, first, congratulate my hon. Friend the Member for Kelvingrove (Mrs. McAlister) on an extremely able maiden speech? We hear so many learned discussions on all sorts of economic formulae that it is a splendid thing to hear a really good, sound address by a housewife. My hon. Friend made us understand the problems of her constituency and we are convinced of the rightness of the decision made by the electors of Kelvingrove to send her here to represent them.

The problems, economic and financial, of the nation are now crystallised in the Budget. We recall the great change-over which took place during the period when the late Sir Stafford Cripps was Chancellor of the Exchequer. The thing which puzzles hon. Members on this side of the Committee is that while we have heard statements tending to show that the Government are to some degree worried about the economic situation, they can come forward with a Budget which is without relevance to the economic problems facing the country. I find it difficult to discuss at great length issues which, of themselves, are trivial when we know so well that millions of people are concerned about their future security.

I was pleased that in the final stages of today's debate several hon. Members drew attention to the industrial situation, and I wish to say something about that. The hon. Member for Aberdeenshire, East (Sir R. Boothby) referred to the shipping industry. I recall that the Manchester Guardian reported some weeks ago that almost 1 million tons of merchant shipping was tied up round our coasts. This is a barometer of trade and when we see that kind of indication of a slowing down of our trade it is almost unbelievable that the Government should choose this moment to say, "We still intend to fight the battle of inflation. We do not believe there are any signs of depression at all."

My right hon. Friend the Member for Huyton (Mr. H. Wilson) said that we believe that the time has come for a repriming of the pump, when the Government should let up on many of the restrictive policies which they have carried out for the last two or three years, and that a fillip should be given to industry so that it could achieve greater production.

We have seen one remarkable thing in the debate. Three right hon. Gentlemen who addressed us from the Government Front Bench agreed that Tory freedom does not pay. They argued that if we now increased production and let the wheels go round faster the result would be a crisis for sterling. That is fantastic. Can it really be that the Government have now got us into the position where the one thing upon which we depend for our livelihood, an increase in production and in exports, is the very thing which could destroy sterling? That is a fantastic situation for any nation to face and is an indication that the basis of the Government's economic policy must be wrong.

I do not wish to go too deeply into the measures proposed in the Budget, but I welcome the statement of the Chancellor that changes will be made in the distribution of industry policy. I remember that in the unemployment debate on 24th February I suggested changes of this sort. We welcome the new approach to the distribution of industry policy, but I wish that the President of the Board of Trade were present. I would tell him that to do that kind of thing, while playing party politics on the other hand and saying, on television, that industries can be frightened away from Development Areas because of certain Opposition policies, will not help the Government to get firms to go to areas where they are badly needed. The President of the Board of Trade should confine his activities to doing the job for which he is paid rather than acting as a party hack on television.

The Chancellor pointed out that many pockets of unemployment are appearing in areas which are not now Development Areas. We see the need for special assistance in areas where there is heavy unemployment and which are not Development Areas. I hope that the Chancellor will not run away with the idea that we are satisfied with what is being done in certain Development Areas. In North-East Lancashire the textile industry is in very great trouble, but practically nothing has been done in that Development Area since it was scheduled. We are very conscious of the need for expansion, but we must carry out the policy laid down in the Distribution of Industry Act within the Development Areas. Between 17th February and 17th March there has been an addition of about 7,000 people to the unemployed in the Lancashire textile industry. What proposals have the Government for meeting the tragic situation in that industry?

The Chancellor said: If wage increases in general go beyond the national increase of productivity this is bound to damage the national interest. Therefore, the Chancellor wants to restrict wage advances to the levels of productivity while the President of the Board of Trade thinks that increased productivity will bring a sterling crisis. We are entitled to ask the Government what their real policy is. They go on restraining production.

We have had three speeches from the Government Front Bench in which each right hon. Gentleman has agreed that they are doing that. They have argued different reasons for it, but all agreed on it. They have curtailed the power of the workman to increase production and then say, "You can only have increased earnings if and when you increase production". It is a fantastic policy and we must ask the Government to clarify the position.

I should have thought that when we heard the Chancellor go on to say what I shall quote in a moment, hon. Members would have been extremely perturbed as to where the policies of the Government are sending them. The Chancellor said: It looks very much as though this fact has been ignored in a number of voluntary agreements within the past few months. He was speaking about wage advances being given when not related to productivity, and continued: It is no use those concerned in industry pressing the Government to follow a firm and consistent line in these matters if they themselves ignore, in practice, the precepts which they urge on others so strongly."—[OFFICIAL REPORT, 15th April, 1958; Vol. 586, c. 54.] There is a clear intervention by the Chancellor of the Exchequer in agreements entered into between trade unions and employers, agreements arrived at by the negotiating machinery in the industries concerned. Now the Government, even after those wage increases have been paid, go to the extent of charging the employers concerned with having failed to act in a proper and responsible way by agreeing to wage increases at all. I must say that right hon. Gentlemen opposite are fast reaching a point at which it will be completely futile for trade unions to go into negotiation at all. If they are to deploy their arguments and convince the employers of the justice of their case, only to see Government intervention, even after such wage advances have been paid, it will make for a most dangerous situation for British industry.

We now see 2 per cent. unemployment in Britain and there is no sign of any easing of the situation in areas where the amount is far and away greater than 2 per cent. The number in the North-West increased by more than 7,000 to 71,142 in the last month. In the debate on unemployment the Minister of Labour pointed out that the January returns are generally the worst and went on to say that February should be a little better than January, after which we got out of the bad season and people got back to work. Let us see what has happened. The February returns were more than 20,000 worse than the January returns, following which the returns of 17th March again increased.

There is no question now of it being purely seasonal unemployment. Taking the indications in the speech of the Minister on 24th February, we have now passed the period when unemployment should be at its worst, yet we see the position getting worse. I do not want to go through all the details, but it is running at 433,000. We know that in some of the worst areas, such as Northern Ireland, it again shows an increase to 10·7 per cent. and in many other areas referred to during the debate on unemployment as being particularly bad there have been no signs of improvement. It is against this background that the Government have presented a Budget by which they have shown that they are still more concerned about quelling inflation than facing the issues which so obviously require their attention.

To return for a moment to my point concerning the shipping which is now tied up, the Manchester Guardian, in showing that almost 1 million tons was tied up in March, reported that these were the worst figures for twenty-five years and that one had to go back to the great depression of the early 'thirties to find anything like a parallel.

Hon. Members opposite have been telling us that we must not say anything which may seem to indicate that a depression is coming. Goodness knows, we are in no way desirous of seeing depressions. Nevertheless, it is not good enough merely to ask that, when we see clear indications of this type, we should refrain from saying anything about them. If the recession in the United States continues, it may not be a question merely of our position becoming gradually worse. I believe that we could go suddenly into a very serious position.

The hon. Member for The Wrekin referred to our exports to the United States. We know that the motor industry is doing very well, and we congratulate it upon its achievements, but the dangers of the position in the motor industry are fairly obvious. Before long, we shall see the power lobbies in America demanding increased tariffs against British cars because America's own industry is in fairly bad depression. We shall see a lobby spring up not merely because British cars are getting in, but because America's own motor car industry is in such a bad situation.

Whilst we are happy to see the important contribution which the motor industry is making to our exports into the dollar areas, it is obvious that the American industry is now shaping up to the production of the small car. Once that happens, he would be a very brave man who would believe that he would keep the great levels of our exports which we now see in the dollar areas.

Serious differences exist within industry because of the policies of the Government. In this respect, I start with something which is almost a declaration of the policies of this movement, past, present and future. To us, the concept of discussion between the parties to a dispute and, in the event of failure to agree, consideration of the merits of the arguments of the contending parties by an impartial authority, is a central principle. We believe the machinery for avoiding disputes which now exists in most industries, although, in some cases, it is in need of modernisation, is the product of our dedication to the principle to which I have referred.

No knowledgeable person would underestimate the part which the creation of this machinery has played in ensuring a high level of industrial peace. Indeed, the Bulletin for Industry for March states: The time lost in strikes is about a tenth of that lost through industrial accidents and about a hundredth of that lost through sickness. Between 1951 and 1954, the time lost per person through strikes in the U.S.A. was eight times as much as in the United Kingdom; in Australia and Canada it was four and a half times as much; and in France, three and a half times. Only in the Netherlands, Sweden and West Germany were there better records And this, of course, during a period when a Tory Government have been in power. We have every right to be proud of our part in making this kind of record possible.

Surely, against a background like that, we are quite justified in asserting that only irresponsible fools or political knaves would attempt to suggest that in both the political and the industrial wing of the movement we would welcome strike action in any section of industry as a political weapon. Some of us have grim reasons for knowing that, in any strike, the principal victims are the strikers and their families, and no one has yet produced any evidence that strikers give up the right to draw wages out of a fiendish desire to exist in the worst circumstances imaginable.

It has been bruited about in some quarters that we have now moved into a situation in which a strike in a certain type of nationalised industry could be interpreted by a new and far less distinguished Sir John Simon as a strike for political motives. Any such accusation would be a most monstrous perversion of the truth, and should be treated with complete contempt.

I want to look back at the origin of the policies about which we now complain. I remember that on 20th February, 1956, I protested at this Box against a statement made by the British Employers' Confederation on negotiations in nationalised industries. The Confederation argued that the nationalised industries were conceding wage increases far greater than responsible negotiators in private industry could give because, they said, they were simply passing on the price rises to the public.

I drew attention to that statement then, and suggested that it might be as well, at that early stage, if the Government caused the Confederation to be informed that it would be much better if it minded its own business, and kept out of negotiations between the nationalised industries and the trade unions.

I returned to that theme on 12th November, 1956, and pointed out that instead of heeding that advice the Government had, in fact, taken note of what the Confederation had said, had sent for the chairmen of certain nationalised industries and had told them that they must not increase the prices of their goods. I called it a … maladroit manner of ensuring that they would not have the wherewithal to increase wages."—[OFFICIAL REPORT, 12th November, 1956; Vol 560, c. 653.] That was the next step in the Government's determination to stop all advance in the nationalised industries. I was so disturbed that, on 9th July, 1956, I wrote a letter to The Times, and in view of what has happened since, I think that that letter is worth quoting. I said: The Government's maladroit handling of our industrial problems has landed the nation in a critical situation. By permitting the British Employers' Confederation and the Federation of British Industries to bully them into their price standstill in the nationalised industries they have, in fact, broken down the whole machinery of collective bargaining in those industries. A less charitable mind would find it hard to believe that this result had been achieved by nothing worse than ignorance.Collective bargaining has been built up on the premise that each side has the power to respond to a convincing and adequate argument presented by the other party to the exitsing agreements within a given industry. To take the sort of action which is deliberately designed to preclude managements from paying increases is to ensure that there is no point in negotiating. Even a recourse to arbitration is a waste of time, as the arbitrators are bound to have regard to the fact that the employers are unable to meet the increased costs which an award favourable to the trade unions would entail; and that such an award would be contrary to Government policy.It is quite clear that the Government has imposed its will upon the boards of the nationalised industries without first obtaining any type of agreement with the unions whose members are employed in such industries. As several of these unions have now given notice of their intention to submit claims for increased pay, may I pose the following questions:

  1. (1) In the event of a wage claim being turned down because of the ban on price rises, against which body does the trade union concerned proceed?
  2. (2) In the event of an official strike taking place in one of these industries, will it be construed as political action against the Government?"
I think that we have practically reached that position now. It was cemented when the former Chancellor, the right hon. Member for Monmouth (Mr. P. Thorneycroft) made his statement on 29th October in which he involved not only the Government and private employers but independent arbitrators in his phrase "those who adjudicate about wages".

Our concern arises for this reason. Some of us do not believe that the Government's present attitude as portrayed in the Budget arises from an analysis of the economic situation. It arises far more from the danger of what may happen to them if they are seen to rescind anything which the right hon. Member for Monmouth laid down as policy. Therefore, it is not an objective analysis of the economic situation. It is, rather, one of those issues which are internal to the Tory party itself.

We are not saying—we never have said—that the Government have not the right to take an active interest in wage questions. In debates in the House I have argued that such an interest may well be a condition of any Government's ability to govern. However, we believe that there is a need for a constructive approach to such difficulties as wage rates in those nationalised industries which cannot pay average wages because of their inability to make profits, and so on. Our complaint is that the Government are forcing the workers in those industries to subsidise those undertakings.

We have previously asked that the Government should bring together with themselves the trade unions and the boards of the nationalised industries in order to think again and to analyse the problem—I confess at once that it is a very important problem—constructively in the hope of getting a new approach to collective bargaining and to arbitration itself in these very difficult types of industry.

The Government argue that their policy is designed to prevent further inflation. The fact is that it is not merely to prevent inflation. Experience has shown that the purchasing power of the workers is not being held; it is now actually decreasing. The British Transport Commission agrees that railwaymen require an increase of about 3½ per cent. to restore them to the level of last March.

Thus, we see that by political action the Government are able to attack the living standards of these workers and then claim that any resistance will be interpreted as an attempt to usurp the power of the Government. I recall that at the 1952 Labour Party Conference the National Council of Labour rightly went on record as saying that we will never in any conditions use industrial action for political ends. I believe it was argued that one day the Tories would use political action for industrial ends. We have now seen that take place.

Both the British Transport Commission and the Forster Tribunal agree that the pay of railwaymen is very low, and both refuse advances because there is no money in the "kitty". In other words, we have reached an absurd position in which the Government apply the same principles to employment as they do to their Premium Savings Bonds—if one is lucky in picking the right industry in which to work one gets a decent return, but if one picks the wrong one, then that is just too bad. We cannot run great industries in that way. I ask the Government, at this period when things are so tense, to take our advice and bring the parties together to obtain a new look on the whole matter.

The claim that the trade unions are seeking to challenge the power of the Government, and resisting their policy with regard to wages, is grotesque. The Government are invading territory to which no other Government in modern times has ever claimed access in peace time. In other words, the Government are the aggressors while the unions are charged with trying to usurp the power of the Government if they resist the encroachments. The effect of the Report of the Railway Staff National Tribunal is to show that now the basis of discussions and even arbitration is not justice but inability to pay. So we have reached a position where trade unions functioning in such industries know that going to arbitration is equivalent to giving up and accepting defeat.

In trade union circles, it is far better to be turned down by an interested party—in other words, by the employer—than by one which possesses at least the outward appearance of impartiality. If we press the position where obvious stress is being laid upon so-called independent tribunals we must not believe that this will encourage trade unions to tolerate the conception of arbitration which we have seen for so long. I know the answer. The Government always say that the nationalised industries are in a different position because we are the employers. That makes the matter worse, because it means that as employers the Government claim the right to nobble the arbitrators while as a Government they condemn the trade unions for the results achieved, which is giving the worst of both worlds to the trade unions concerned.

One may wonder what will happen to independent members of, for instance, wages councils. They are the people who, having to take notice of what the Government are doing, may refuse to agree to advances to lowly paid workers when those advances are obviously necessary. Voluntary arbitration is enshrined in the conciliation Acts of 1896 and the Industrial Courts Act, 1919. The conception of voluntary arbitration has played a great part in creating our great record in strikes about which I was speaking.

One is compelled to ask: if we see voluntary arbitration discredited, where do we go from there? Could it be that we should see a more rigorous use by the Government of the Industrial Disputes Order, 1951? I hope that the Government realise that it is a most dangerous thing to continue, as they have done, to lessen the confidence of organised labour in arbitration of a voluntary type, because it cuts off, as it were, any possibility of getting fresh thinking on a dispute once the two parties have broken it.

I think that the Government have become obsessed about wages being the villain of the inflationary piece. Professor Robbins has been quoted in other contexts, and I have been reading what he says in his Lloyds Bank Review. He says: For the greater part of the time, profit prospects were good, earnings were rising faster than wage-rates, and the volume of vacancies remained higher than the volume of applications. As I see the picture, the rise of wage-rates was, for the most part, the consequence rather than the cause of the situation. In other words, he does not believe that the inflation from which we have been suffering has been caused in any marked degree by wage demands by the trade unions.

One of the objectives that the Government have had in mind—and one can almost see it in the first few words of the Economic Survey—is to blame the economic effects of Suez and the inflation in the economy upon the trade union demands for wages. They say, in the introduction to the Economic Survey: There were several promising developments in the United Kingdom economy during 1957 but the year as a whole was dominated by the crisis of confidence in sterling which came to a head in August and September. In the earlier part of the year the economy appeared to be generally in balance; the economic results of the closing of the Suez Canal were less serious than had been expected. But by the middle of the year it was clear that the wage increases granted in the earlier months were greater than the economy could absorb without a further rise in prices. I do not want to pursue the economic argument, but the Government's argument is at least suspect when people like Professor Robbins show that in the first part of the year we had a good surplus in our export position. It is not good enough for the Government to vent their spleen upon the trade unions when so much of our trouble comes about as a result of the Government's industrial and economic policies. I believe that the time has come when we on this side of the Committee must tell the Government that we are so utterly and sincerely desirous of seeing production increase and seeing us get back to I position where there is no longer the gradual loss of our share of the world markets which has gone on every year that this Government has been in office that we believe that the only answer to the problem is to allow the British economy to get into a healthy condition in which we can vastly increase our production, and in which the men and women in industry know that they can increase their earnings as a result of that increased production. We believe that only by that method will it be possible to sustain a high standard of life for the 50 million people in the islands.

We believe that with the Government's inability to see this, they demonstrate the rightness of Socialist Middlesex and Socialist London. The people are giving them the true answer, which is that only by getting rid of Toryism can we hope to sustain a proper standard of life in Britain.