If the right hon. Gentleman will allow me to finish this passage I will give way. As our society develops, more and more of the population work in such services, and this is a mark of progress, for in a primitive society most people are engaged in merely keeping alive. The more advanced and complex the society the more compact is the base and the more elaborate is the superstructure. It must be clear that while the Government are able, and indeed may feel obliged, to enforce their views upon the public services for a limited period, it would not be tolerable that a widening gap should develop between rates of pay in the public and private sectors. Therefore, the Incomes Commission must have regard to both forms of employment.
It will function broadly like this. First, let me take the private sector, with which I group for present purposes the nationalised industries and those public services, in local government for example, for which the Government have no direct management responsibility. Here the Commission will consider specially important pay claims or disputes which may be referred to it by the agreement of the parties concerned. But there may well be cases from time to time in which, although one side or the other is reluctant to agree to the reference of a claim to the Commission, the Government may nevertheless form the view, on representations from one of the panties, or on wider grounds, that the Commission should consider the question in the public interest.
I cannot believe that in practice the parties would not give weight to the Government's expressed view, and I cannot believe that either side would disregard it. But if it did, the public would form its own conclusion. But the question whether any formal provision is desirable to cover cases of this sort is, I adroit, a difficult one, and before we take a final decision we shall have more detailed consultations than have so far taken place with representatives of employers and trade unions. In the public services the procedure would be the same. The Commission will be there to examine important claims referred to it by both parties. Arbitration will, I repeat, be respected.
Now let us consider a settlement reached in the private sector which appears to the Government ox to the Commission itself damaging to the national interest—damaging either because the increase in pay is excessive or because the repercussions on other industries are likely to be harmful, or for any other reason. Then the Commission will, at the request of the Government, have the right and the duty to carry out a retrospective examination of the settlement. It will not alter the settlement. The terms will stand. But it will be considered, and the report will be positive and constructive.
For example, it might well draw attention to the level of efficiency in the industry concerned, both of management and of labour; to the increase in prices, especially in a sheltered industry, which would follow the settlement; what would be the effect upon exports in the unsheltered industries; and also whether there were questions of restrictive practices on either side of the industry. In other words, it should be not merely restrictive but positive, not negative but constructive, and should be able to make positive proposals for improvement. It must act rapidly, as courts of inquiry set up by the Minister of Labour have shown themselves able to do.
Many of our industrial weaknesses— for instance, restrictive practices—are very difficult to remedy by any general law. But they can be influenced by public opinion if the public are allowed to know what is going on. In effect, this instrument will bring these issues to the bar of public opinion. Apart from claims for higher wages and salaries that are put forward from time to time, often following in the wake of an increase in the private sector, there are already in existence in the case of certain professions and services—the higher Civil Service, doctors and dentists—independent committees which provide the Government with advice on pay. The Government have entered into certain undertakings in relation to them. It will be desirable in due course to consider, in consultation both with the advisory com- mittees and the representatives of the professions concerned, what form of association with the Commission could usefully be developed for the future.
It has also in the past—and this is another whole field for its operations— been the practice of all Governments to refer from time to time the question of pay or status of particular classes of public servants to Royal Commissions or committees appointed for this purpose ad hoc. There are a number of such. While the reports of these bodies have been valuable, the procedure is in this sense unsatisfactory, for each inquiry is undertaken entirely on its own without regard to anything except the problems of a particular service. An ad hoc committee, therefore, has little opportunity to see these problems set against the wider background. We intend that special inquiries of this type shall be undertaken at the Government's request by the Incomes Commission.
As I say, since the Commission will not be merely negative but positive, it should also benefit some of those whose special claims are sometimes overlooked in the struggle between the great organised forces. The Commission must, therefore, be so constituted as to work largely by influence and by the steady growth of its authority, and that is similar to the development of many of our institutions.
I should inform the House that in recent weeks there have been purely informal contacts on this policy between the Government and representatives of trade unions and of employers. This morning I saw representatives of both sides and gave them an outline of the Government's proposals. Of course, there will be further full discussions with all concerned both in the public and private sector—[An HON. MEMBER: "They are not with you."] That may be so, but this is a great national question, and I would ask them to give it serious thought.
I realise that there are people who will feel that such a Commission has no place in the highly-developed system such as we have got of industrial bargaining. But to accept that view would be to abandon an incomes policy and to resign ourselves to the inevitability of the old classical method of monetary policies, stop and go—call it what you will. There are others who will say that the Commission has insufficient power, that it should have the right to assess and impose wages. In my view, that is wholly contrary to the concept of a free society, and I hope that the House and She country will feel that we have struck about the right balance.