Incomes Policy

Oral Answers to Questions — Economic Affairs – in the House of Commons at 12:00 am on 7th July 1966.

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Photo of Mr John Biffen Mr John Biffen , Oswestry 12:00 am, 7th July 1966

asked the First Secretary of State and Secretary of State for Economic Affairs what proposals he has to align the incomes norm with the current and expected increases in national output.

Photo of Mr Norman St John-Stevas Mr Norman St John-Stevas , Chelmsford

asked the First Secretary of State and Secretary of State for Economic Affairs what further steps he now proposes to take to create an effective incomes policy, in view of recent decisions which run counter to it.

Photo of Mr David Howell Mr David Howell , Guildford

asked the First Secretary of State and Secretary of State for Economic Affairs, in view of the numerous wage settlements which continue to be made in excess of the guiding light, what steps he proposes to take to re-design that policy.

Photo of Mr Stratton Mills Mr Stratton Mills , Belfast North

asked the First Secretary of State and Secretary of State for Economic Affairs if he will seek to call a meeting of representatives of trade unions and employers to discuss the incomes policy.

Photo of Mr George Brown Mr George Brown , Belper

It is a matter of urgency for the nation to strengthen the effectiveness of the policy. We are taking every opportunity to urge this on all sections of the nation and to develop the policy in consultation with trade unions and employers.

Photo of Mr John Biffen Mr John Biffen , Oswestry

Is the right hon. Gentleman aware that that in no sense answers Question No. 2? Can he say whether the recorded progress of the gross domestic product and its expected course over the next 12 months justifies a norm of 3 to 3½ per cent., and if not, what is he doing about it?

Photo of Mr George Brown Mr George Brown , Belper

I have answered that earlier, but on this one I think that my Answer was probably better than the Question.

Photo of Mr David Howell Mr David Howell , Guildford

Surely the right hon. Gentleman must realise that it is a natural and normal thing for the trade unions to press for higher wages? Does not the right hon. Gentleman think that it would be better to concentrate our energies on reforming the wage structure rather than trying to freeze wages and hit the trade unions on the head?

Photo of Mr George Brown Mr George Brown , Belper

If it were as simple as that, it would have been settled under previous Governments. But it is not as simple as that, nor are we trying to freeze wages. What we are trying to ensure—and I would have thought that right hon. and hon. Gentlemen would have seen the point of this—is that personal incomes rise at a rate no greater than the rise in our national productivity.

Photo of Mr Stratton Mills Mr Stratton Mills , Belfast North

With regard to Question No. 37, as it is obvious that the Declaration of Intent has been somewhat superseded, will the right hon. Gentleman consider calling another meeting of trade unionists and employers to consider the former declaration and see whether it can be brought up to date?

Photo of Mr George Brown Mr George Brown , Belper

I thought that the hon. Gentleman's was the best Question of the four. That is why I said that we were developing the policy in consultation with trade unions and employers.

Photo of Mr Charles Haseldine Mr Charles Haseldine , Bradford West

Would not the right hon. Gentleman agree that instead of trying to fix artificial levels for wages and salaries, which is bound to lead to the continuing stagnation of the economy, he would be better advised to try introducing incentives to the economy which will lead to increases in personal earnings and, therefore, faster growth in the economy?

Photo of Mr George Brown Mr George Brown , Belper

Nobody is trying to establish an artificial level. The hon. Gentleman must surely at some stage get the point that if we take out by way of personal incomes more than we are together putting in by way of effort inflation is the answer. This is what I am trying to establish. As for the last part, I think that the hon. Gentleman was nearer the mark.

Photo of Mr Raymond Mawby Mr Raymond Mawby , Totnes

Is the right hon. Gentleman aware that we all agree with him on his last thesis? But would it not be better for him to concentrate more upon increasing national output rather than trying to restrict the amount of money which people should take out at the present low rise in national output?

Photo of Mr George Brown Mr George Brown , Belper

These things cannot be divorced in that way. We are, in a variety of ways and through the whole gamut of our economic policies, trying to stimulate industry—which means management as well as workers—to increase output and productivity. While we are getting that we cannot dodge the fact that we must try to keep outgoings in accord with input.

Photo of Mr Peter Hordern Mr Peter Hordern , Horsham

asked the First Secretary of State and Secretary of State for Economic Affairs whether he is satisfied that the present figure of 3 to 3½ per cent. as the norm is still appropriate; and if he will make a statement.

Photo of Mr Philip Goodhart Mr Philip Goodhart , Beckenham

asked the First Secretary of State and Secretary of State for Economic Affairs how long he will continue to recommend 3½ per cent. as the median figure for wage and salary increase in the public and private sectors; and when a new guiding light figure will be announced.

Photo of Mr George Brown Mr George Brown , Belper

Yes, Sir. But the norm will continue to be kept under review in the light of the general behaviour of national productivity.

Photo of Mr Peter Hordern Mr Peter Hordern , Horsham

Surely the right hon. Gentleman must have some idea of the state of the economy now? Does he not think that the norm should be either increased to reflect the rapid rise in earnings or decreased to reflect the depressing record of productivity?

Photo of Mr George Brown Mr George Brown , Belper

When one is dealing with questions of this kind I do not think that that kind of black and white approach is necessarily very good.

Photo of Mr Philip Goodhart Mr Philip Goodhart , Beckenham

In view of the large number of failures to maintain the norm in recent wage negotiations, does the right hon. Gentleman intend to have formal consultations with any trade union leaders before a new norm is announced?

Photo of Mr George Brown Mr George Brown , Belper

When I also consider, as the hon. Gentleman apparently does not, the number of great successes which we have had I get a balanced picture.

Photo of Mr Terence Higgins Mr Terence Higgins , Worthing

What would the norm be on the basis of the National Institute for Economics and Social Research forecast?

Photo of Mr George Brown Mr George Brown , Belper

Perhaps happily, the National Institute is not responsible for the nation's economy.

Photo of Mr Benjamin Whitaker Mr Benjamin Whitaker , Hampstead

Would my right hon. Friend tell us what plans he has for bringing professional and salaried earnings within the same norm?

Photo of Mr George Brown Mr George Brown , Belper

All incomes of all kinds are, of course, within the norm. This is something which we apply or try to get applied to the rise in the totality of incomes. We have provided, in paragraph 15 of the White Paper, with which my hon. Friend is very familiar, for the exceptional cases. To the extent to which people do not observe that, they are increasing the problems facing the nation and increasing the inflationary pressures on themselves. The principle applies to every possible personal income.