Orders of the Day — Prices and Incomes Bill

Part of the debate – in the House of Commons at 12:00 am on 14th July 1966.

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Photo of Mr Frank Cousins Mr Frank Cousins , Nuneaton 12:00 am, 14th July 1966

May I, first, congratulate the three maiden speakers on their speeches? Whether they will congratulate me on mine is another matter, but I want them to understand that I am also making my maiden speech from the back benches—a somewhat unnerving experience when one has had the job of standing nearer to you, Mr. Speaker, than I am now. I have listened with care to what the three maiden speakers have said. I think that each of their speeches was slightly controversial—probably mine will be, too. It is set against the background of the very serious statement made by the Prime Minister earlier today.

My right hon. Friend said three things. The first was that we had to undertake an investigation of our economic affairs, and that this would be urgently done. It is rather late in the day for that to be regarded as priority No. 1. We have to consider the curtailment of our spending overseas, including some of our defence spending, which, I think all of us would accept, needs very close analysis. My right hon. Friend said that this position was aggravated on a short-term basis by the fact that we had to take a strong line over the seamen's dispute to ensure that the prices and incomes policy was maintained. I regard that as the most damaging of the three statements.

I regard it as almost improper if we are saying that what we did in the dispute was to stand out in order to maintain the norm of a wage adjustment which was not the basis of the settlement. It was above the norm. The settlement was above the recommendation of the Pearson Committee, and, in my opinion, justifiably so. This is a group of people who needed it and they are still, to a very considerable degree, below the level of national seamen's wage rates in most of the other serious maritime nations of the world.

I should like to say, in passing, that the right hon. Member for Barnet (Mr. Maudling) impressed me very much by suggesting that the adoption of the Bill was the introduction of slow Socialism. I re-read the Bill quickly to make sure that it was the same Bill as the one about which the right hon. Gentleman was talking. I did not find myself converted to the adoption of it because of its impending Socialist character. However, the right hon. Gentleman remedied matters later by referring to what he fancied would be an alternative. They were the old stock phrases which we hear from right hon. and hon. Members opposite, suggesting that we are giving the workers too much and should take away from them some of the social services which we regard as essential.

I listened with a great deal of interest to my right hon. Friend and colleague the First Secretary of State. He gave an admirable exposition of the intentions behind the Bill, demonstrating clearly how he intends to work it voluntarily, and went to some great pains to tell us how he would work Part II when it becomes necessary. My criticism of the Bill—I will not spend too much time talking about the Bill—is that that is exactly the situation which will develop for us.

May I deal with a point raised by the hon. Member for Louth (Sir C. Osborne). It is admirable to be told that he, too, is in favour of the incomes policy, and has been all the time. I have carried out a little bit of research into the activities of some hon. Members opposite in case any of them should want to challenge me on my stand in this matter. I do not know whether it is correct, but my information is that the hon. Gentleman's company gave itself an increase, through its directors, of 15 per cent. last year. I am also in favour of that kind of incomes policy.

May I make it clear that I am not making a resignation speech, or I should have spoken earlier, but inevitably I am bound to talk about some of the factors which contributed to my resignation. Before doing so, I should like to say a personal"Thank you"to the many right hon. and hon. Members on both sides of the House who have both written and spoken to me expressing their sincere regret for the fact that I had to take this decision—men who, apparently, for the first time—on one side of the House, anyway—recognised that I was Minister of Technology and that I was doing a fairly good job of work. It is a comforting thought to be remembered for what you did after you have gone rather than to remember the criticisms when you were attempting to show the House that there was a job of work to be done—and it did not include marching from Aldermaston.

Why did I have to take this step? I have a deep conviction that we are going the wrong way, that we are tackling the wrong problem. Therefore, we are bound to be using the wrong methods and finding the wrong solutions. I agree with the comment of my right hon. Friend the First Secretary that every one of the aspects of this matter is only part of the total. I want to make it clear, so that there is no misunderstanding on either side of the House, that I regard the economic crisis which brought about the major problem as something which we inherited in 1964 from the Conservative Government. I know that right hon. and hon. Members opposite do not hold that view, but I do. I can demonstrate that if anyone wishes me to do so.

The mistake which we are making is in assumimr, that our problem is to tackle an inflationary situation created by a wage cycle. I do not accept this. Ours is not a high-wage economy in any sense. Although we have all talked about the necessity of becoming a high-wage economy, we are not there. I hope to demonstrate that later.

The second thing which is wrong is that we are confusing production and productivity. There are two distinctly different things. Politicians seem to have some difficulty in grasping this, but I am sure that industrialists do not. I do not know why industrialists who sit on either side of the House forget all that they know when they come here, but there is a considerable difference between an analysis of total production and an analysis of productivity. I will talk about that later.

We are using the wrong methods because we are approaching the matter as though we had a different form of society. We are ignoring the fact that we do not have a controlled society and that we have not, in fact, something which the State can determine. We approached not only the last election, but the election in 1964, and the conferences of the party which determined the policy on which we went to the electorate on the basis of a planned economy—the planned growth of the economy.

This included wages. We have gradually drifted unwittingly, and sometimes unknowingly, into an atmosphere in which we regard the possibility of a solution as being directly related to the ability to restrain wages. This is a wrong philosophy, and it has always been proved to be wrong. Right hon. and hon. Members opposite have tried it many times and have always failed.

Another mistake we have made is that we have done too much guesswork. We talk rather loosely about productivity and production; but there are no figures. I was concerned with this matter when the right hon. Member for Barnet was Chairman of the N.E.D.C. I sat under the chairmanship of my right hon. Friend the Member for Belper (Mr. George Brown) on the N.E.D.C. I saw the type of planning we did. Perhaps the right hon. Gentleman will recall that on one occasion I said within the body of the N.E.D.C. that I could get more information from outside than I could get from inside. I could get better facts related to the growth prospects of some of the major companies through my position as General Secretary of the Transport and General Workers' Union, and before I became a member of tthe Government, than I could get from examining the books.

As Minister of Technology, I set up a statistical department of my own to get some information on which I thought I might be able to rely. We have in the past said very clearly on both sides of the House—my right hon. Friends on the Front Bench have said this time and time again—that a new era of statistics is being created in order to have information upon which to make judgments about planned growth, a planned economy or anything else that needs forward thinking.

If this is so, we must recognise that when you make declarations without them there is a possibility that you will be wrong. We say that productivity is not rising fast enough. We use the sibilant phrase,"Productivity is not rising as fast as wages ". Which productivity? Which wages? We should all look at the isolated cases. We should all see whether there is some work not being done, whether we are not getting the productivity. Nobody would know this better than the man who has been in the Ministry of Technology. I shall tell the House a little about this later.

But the real issue in front of us is that our productivity in the areas where we should be considering it is not in any sense related to the kind of payments which are made. I do not want to be offensive to anybody who has had increases, and it ill becomes anybody to single them out, but there are lots of places where there have been high, very high, adjustments, and no intention to alter the pattern under which the adjustments are made. But that is not the fault of the trade unions.

At Government level we deliberately held down some productivity. We took the heat off the building industry very deliberately, and I think that it was right and proper that we should take it to the stage where there was no excess demand for the industry's total facilities, with inflated payments having to be made. We cannot blame anybody for that: we did it deliberately. We cannot say,"Look, productivity has gone down ". We stopped it. We closed uneconomic mines in some areas, and there was strong criticism from some of my colleagues for doing so. It was said that coal production had gone down and wages had gone up. These facts are unrelated. We are using our wrong norms in our assessment of our problems.

Inflation, as I see it, is determined by the real increases in purchasing power. I do not need to remind the Chancellor of the Exchequer that he has taken several steps over the past year and nine months designed to curb some of the inflationary tendencies. Most of them have been right, in my opinion. I suggested to my right hon. Friend on one occasion —I hope that it is not a breach of privilege to say this—that I was in favour of more direct taxation because the only way of getting people with high incomes into the group where they pay their share of the cost was to put on direct taxation and not indirect taxation.

Let us talk of the real value of the money we have got. It is said that we got about 8 per cent. last year. The real value in increased purchasing power was just over I per cent., and this includes the high income groups who took some more on top of their existing money.

I think that everybody favours the incomes policy. Most people favour this incomes policy provided that it does not apply to them. I have had the experience of being with the unions who have talked about their attitude towards the policy, and I have been with Ministers who have talked about their attitude towards it, too. Some rather curious decisions have come out of our intention to apply a balanced judgment on the amount of money that any particular group should get.

We all know about the increase for the doctors. I have gone on record as saying that they should have an increase, but they should have it in the knowledge that they should plan their efficiency and productivity so that it means something, so that there will not again be the criticism in the House or in the working groups that they take the money and do nothing about efficiency. There is talk over the whole range of payment by results. There is payment, but no results. It is no good for us to accept that if they are in a group earning £2,000 and upwards people need the incentives of high wages and if they are earning less do not need the incentive of high wages.

I do not know whether the judges considered an efficiency approach to the problems. I know that they got their money. I know that the generals did, also, and I think that they were entitled to an adjustment. They had been a long time without it. Ministers took one, and, as my right hon. Friend the Member for Belper (Mr. George Brown) said, it was only after a time that Ministers took half the adjustment proposed by an independent body.

But this is not the issue. The issue is how I explain this kind of thing to the kind of people I represent in Nuneaton and in the Transport and General Workers' Union, when I talk about the intention of considering the responsibilities and consequences over the whole range. I am on record in many places as saying that I will not have wage restraint, whoever wraps it up and brings it to me in whatever kind of parcel. I have said this publicly, and I reaffirm my intention of resisting a wage restraint policy, which is what we are gradually getting to.

Hon. Members will gather that I rather oppose the Bill. I oppose it on several counts. It does not tackle the question of total production. It does not tackle the question of anything that was in the Declaration of Intent. I know that my right hon. Friend the Member for Belper will forgive me for this, but I am sure that when he went to Brighton, and sold the story of the need for a declaration of intent on productivity, prices and incomes, it was one of the greatest achievements of his career—and he is a man of very considerable ability, let us all understand that.

My right hon. Friend has believed in it, and waged the war, if that is the right phrase for it, of trying to make a policy of prices, productivity and incomes work. But the influences that have been brought to bear are not the ones he originally anticipated. It was assumed that there would be an energetic approach to the whole question of productivity, but we have had a limited, a scattered, a particular approach in various areas, and there has been a demand for payment for this.

I suggest that the policy we have followed during the past two years has not done even what we are now saying it has done. It has not protected the lower-paid, it has not given them a new era to look forward to, it has been unselective in its responses, it has picked people out and they have been picked out on all sorts of queer criteria, perhaps because it was not opportune to contest the matter, that it was inexpedient to resist a particular claim, that there was a threat of what action they would take, and that they were not the right group to take it on. We cannot go on like that. We have to determine what it is that we are trying to do.

What are we trying to do? We are trying to set up a Government agency, a National Board for Prices and Incomes, to fulfil a role it was never created for, and cannot possibly fulfil. The debate this afternoon frightens me even more than my discussions before, because it is apparently now likely to be the national wage regulating body over the whole range of our incomes. Sometimes T think that when we are talking about this we do not recognise what our society is. Our society is set, thank heavens, primarily on the voluntary basis. I say this as, I hope, a real social democrat. I know that I have been accused of all sorts of things, including totalitarian instincts. But, basically, I think that all people are entitled to assume that the power of the State will not be used to make them do things that collectively they disagree with.

I have heard comments about the failure of the voluntary system and the need for the creation of Part II of the Bill. At the last election, I used a pamphlet provided by the Labour Party which spoke of how much progress had been made with the voluntary system. My right hon. Friend has gone round the country expressing the belief—he has reaffirmed it today—that anyone who assumed that we would get everything solved in a few months was absolutely crazy.

All right. Why not go along with the voluntary part? Why not accept that we should divide the Bill into two parts? I think that there are problems with Part I. For example, one has to have definition on the question of legal entitlement to compel people to do things even in front of a Board of that kind. But these are debatable matters. Part II, on the other hand, I see no justification for at all. The Bill does not touch any of the problems which are dear to the hearts of people on this side of the House.

What about the whole balance of payments situation? At least the hon. Member for Louth made a point, which I should have made if he had not, on the need for quotas. There is a much greater need for quotas and a much greater need to consider import saving prospects. There is a much greater need to consider how we can improve the production effort in this country.

The Bill does not touch another basic principle. If you are to have controls, and if you assume that we want controls —I think that this is the only bit that the right hon. Member for Barnet got near to—there is a way to get them. Take into public ownership the major sections of industry. If this is the theme and purpose, I withdraw my opposition. I would say,"Go ahead with the Bill ", accepting that it includes the policy of public ownership within it. But it does not. Its main provision is to control the power and authority of the voluntary system which has been created by understanding between employers and employees on what wages should be.

The Bill provides for sanctions. Sanctions are proposed at all levels, but this distracts us from the real problem which is the efficient use of manpower. Payment by results and productivity bonus schemes, in my opinion, are designed for the very object of making labour a dear commodity, one which has to be used carefully, which provides efficiency, making it available for the areas where there is such a pressing demand that inflationary situations are created in areas where it is not required. I say that with serious knowledge of what I am talking about as a trade union leader. I do not see that it can be good to have some of the"spiv"arrangements which are there just now.

I have gone along with the theme of planned growth of incomes. I do not think that we can, in this modern society, walk away from it. But to be told, as I have been told by Minister colleagues and by articles in the Press, that the choice is between this pay policy and the dole leaves me stone cold. If this is the basis of our consideration of what our Government should be, that we have only the choice of a statutorily enforceable restriction on wage movements or the dole, we have failed. Where is our planned growth of incomes policy'? Where is our approach to modernisation'?

What was the purpose of the Ministry of Technology. [Laughter.] I ask this deliberately, because the Prime Minister has said repeatedly that the purpose of the Ministry of Technology was to help to create modernisation in British industry, and modernisation means efficiency, greater output, and greater productivity in total. If the answer is that, if we do not have a wages policy, we shall have the dole, we had better look at our own approaches to these problems.

I hope that as a result of this debate the Government will reconsider their Bill. I hope that they will reconsider it because one of the real needs is that we get away from the idea that we are in the inflationary system which has been suggested. I understand, Mr. Speaker, that it is quite proper for me to quote from a newspaper article. Mr. Paul Bareau, writing in the Sun on 24th January, made an observation about our position in both the production and wage tables. We were third from the bottom in percentage rise in wages from 1960 to 1965, with only two countries below us, Canada and America. We were right at the bottom in the production table. This is the sort of thing which makes nonsense of our assumption that the solution is to cut back on wages. Mr. Bareau goes on to say that these facts demonstrate that our need is to drive up production.

Let is consider what we mean, if we are not careful, by some of the things we are saying. The wages policy will save us. All right. Let us accept it. Let us say that no one in future is to have more than 31 per cent., or let us say that no one is to have any more. What have we solved? We heard the Prime Minister today saying that we shall have to reconsider our whole attitude towards spending, both public and private. If this is so, the stopping of the wages adjustment cycle does not do anything. We need to get production up. We need to get our wage schemes related to payments by results.

I do not know whether industrialists in the House will challenge this, but I think that it is clear to everyone that the cost per unit of production is the important thing, not the wage rate of the person doing it. If a man on a stamping machine steps up his output by 500 units an hour by a new process, and if those units are sold at ld. apiece, he will have to be given £1 an hour increase so that he may have half the value of what he is doing. But we do not do this. We recognise that the whole spread of production levels among all manufacturing industries in the drive which ought to take place will improve our total standard of living.

Whether we like it or not, that is what the policy says. The policy says,"We want a bigger cake and the way to get the bigger cake is to control wage levels so that everybody gets a fair share ". How nice it would be. We shall have a different division of the same kind of cake. But I do not want a different division of the same kind of cake. I want a division of a larger cake. I want a division of it created by the direct association of employers and employees at the negotiating table in improving the efficiency of output.

I am told that the Bill is not a very penal Bill. Of course, it is not very penal. Of course, you can get round to the stage of arguing that a union like the Transport and General Workers' Union could stand and face it. But I put it in a different setting entirely. I am bothered about the economic affairs of the country, not about whether we can make the Bill ineffective. I am bothered about whether this helps us to do the job. I say to my right hon. Friend, who was an officer of my union—he talked about"our union"earlier—that one of the things we have to remember when we are talking about penal clauses is that the very nature of our kind of trade union will be effectively damped if we have penal clauses which frighten men on the workshop floor.

I will give an illustration. As many hon. Members know, I handled a major docks problem just before I came into the Government. There was a fear on the Saturady night that a set of negotiations wl-jch had gone on for many months had reached breaking point and that we would have a national dock strike. I never fancy a national dock strike, because it is a great tragedy for us, as the House will understand. At 10 o'clock that Saturday night, we resolved it. I had to go on television to broadcast to my own people to go back to work. They did not want to; they wanted to stop out to prove that they had taken the decision to come out. But they went hack to work, as the House knows.

Just imagine having to tell them now, when we had got the solution, that we would have to refer it to the Prices and Incomes Board, that my right hon. Friend would have a look at it for a month and, if he thought so, for four months, and, if he agreed at the end, they would be paid. It would be ridiculous.

Look at what happens in engineering negotiations. I have heard officers of the A.E.U. say that it takes 17 months anyway to get a claim through, so why worry about the other four months? In my view, the members of that organisation should worry about the 17 months, not about the other four. We want to speed up the processes of negotiation. We want to persuade the unions, the members of unions, that there is an urgency about this problem, not an urgency for restriction but an urgency for economic progress. If we do not do that, it really will not matter.

I have been told that I ought not to worry about the Bill— after all, it is not such a bad Bill and everyone knows it will not work.