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Orders of the Day — Economic Situation

Part of the debate – in the House of Commons at 12:00 am on 18th March 1974.

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Photo of Mr Michael Foot Mr Michael Foot , Ebbw Vale 12:00 am, 18th March 1974

It would be most churlish on my part if I did not acknowledge the kind and almost unqualified words which the right hon. Member for Carshalton (Mr. Carr) used at the beginning of his speech. He seemed to envisage an almost endless series of speeches from me from this Dispatch Box. I shall be happy to get through this one without difficulty; it is in that spirit that I approach the matter.

It would also be improper if I did not welcome the rest of the benignant tone in which the right hon. Gentleman spoke, particularly when he described the rest of the Queen's Speech as relatively innocuous. I seem to recall that the right hon. Gentleman was the father of the Industrial Relations Act. The Queen's Speech proposes to repeal that Act. Never was a father so impassive in the face of the prospective slaughter of his pride and joy.

The right hon. Gentleman spoke about blinding lights on the road to Damascus. Guiding lights maybe, and we shall come to that in a moment. I have not been able to get on to the road because it is so crowded. We shall come to that aspect of the matter also in a moment.

I hope that the House will have noted not only the omission by the right hon. Gentleman of any reference to the Industrial Relations Act—and I propose to say something further about that later—but also no reference, in any extensive form at least, to the coal strike and the settlement of the miners' dispute. I hope that I may take the absence of any reference to that settlement as another essay in congratulations from the right hon. Gentleman.

However, the Leader of the Opposition was not quite so reticent, and perhaps I may say a few words on this subject because it touches upon the whole question concerned with the Pay Board and prices and wages. We shall come to that later, and I promise to try to deal with the questions asked by the right hon. Member for Carshalton almost in the words in which he put them to me.

I am entitled, I believe, to say a few words first on the subject of the miners' dispute because it may be this subject which has caused misapprehensions on the Opposition benches. I take as my text, if I may, the remarks of the right hon. Gentleman the Leader of the Opposition at the beginning of this debate on the Queen's Speech when he said: The miners' settlement was made, apparently, without regard to the relativities report. It is widely reported that the Secretary of State"— That's me. I find it difficult to recognise myself sometimes!— said 'This can be dismissed and thrown out of the window'."—[OFFICIAL REPORT, 12th March 1974, Vol. 870, c. 65.] I do not know where the right hon. Gentleman got the idea that that was widely reported. I have looked up the newspapers since to try to see where he could have discovered that. The nearest thing that I could discover was in the Financial Times, which said that I opened the door to a settlement. I do not know whether that was a crime, but I did it, or others helped me to do so. But as for throwing the relativities report out of the window, as far as I can recall I have not been guilty of a single act of defenestration since I have been in office. I hope that the right hon. Gentleman will never again repeat those words.

It is a matter of some importance; so perhaps I may tell the right hon. Gentleman the Leader of the Opposition, the House and the rest of the country that I did not make any statement because I was old-fashioned enough to believe that I should make my first report on this matter to the House. I have not spoken on television or to the newspapers about it. I thought that I must report to the House. Perhaps if I had done it earlier I should have saved the right hon. Gentleman a lot of bother, but that is not my business.

Now let me deal with the relativities report. During the first hour or minute of getting down to work on Tuesday morning the question that was put to me was whether the report was to be published. I said that it must be published as speedily as possible, and that meant the following day, but I added—I had good advisers, of course—that we could not wait until tomorrow to get on with this business, as the country had to be got back to work as speedily as possible. Therefore, I said that even before the report was published—and I was told that it could not be done until the following day—we must have that report in the hands of all the negotiators. So far from throwing the relativities report out of the window, I said that it must be in the hands of the negotiators so that they could start the negotiations with the utmost speed.

I then called in the negotiators of the National Union of Mineworkers and the National Coal Board and said to them "There is the report, but, of course, it is not essential that you should settle this issue on the basis of that report". I said that because I was convinced that if I had said the issue should be settled on that basis there would have been no settlement, but I added the hope that they would take that report into account and that they might find it of assistance in their negotiations. I said too, that I did not believe—and nobody could have denied it because it was a matter of fact—that the dispute could be settled within stage 3, and it could not have been.

I then said that in my opinion it was a matter of supreme national interest that the strike should be settled as quickly as possible and that the country should be got back to work. I said that I was doing what we were pledged to do; namely give them the possibility of free negotiation.

The right hon. Gentleman said, when he interrupted during the debate on the following day, that that was a blank cheque. There was no question of a blank cheque from the beginning of these negotiations until the end. What we did was what we said we would do. We said that we would enable the people who really knew the industry to negotiate, and that is what they did, all the following day. It is all very well for any hon. Members to laugh at that. If any right hon. Gentleman wants to dispute anything that I am saying he can ask the negotiators.

So I say that the credit for that achievement must go to the negotiators on both sides, who, I trust, would be ready to argue that some glory was reflected back on the great Department of State to which I happen to have the honour to be temporarily attached. Of course I am glad to do so, because many of my trade union friends have told me over many years—I am the first to acknowledge that I have a lot to learn, but this is one of the things that they have told me—that one of the most valuable assets that we have in industrial relations in this country is the experience, intelligence and, I would say, imagination of the Department of Employment, the old Ministry of Labour as it used to be called. The more that we can make that experience available to British industry the better. That is why we got a settlement—not because we threw anything out of the window.

It was very important to get a settlement speedily. If we had loitered, there might still be a strike on. If we had loitered, we should still have been heading for the million or more unemployed which was the prospect if that dispute had continued for very long. As it is, on the last count, last Thursday, the number of people temporarily unemployed still as a result of the three-day week is down to 95,000 compared with 600,000 a week before. That is a good start, is it not?

Moreover, since last week, following the Monday when the miners went back to work—without anything like the trouble that people had prophesied—there has been an increased recruitment to the mines. That is one of the things that we were working for. I do not set too much store by it because when I went to my own constituency at the weekend I spoke first to the chairman of my constituency, a miner, David Morgan, who spent 34 years in the pits. "Yes," he said, "it is a good settlement, but we still do not know whether it is good enough to get all the men we need back in the pits, particularly the technicians, who can still, maybe, get more elsewhere." That was the caution; that is what we have to deal with. I do not say that we have solved the problem of the coal industry, but I do think that we have made a start. So I hope that every hon. Member now agrees that it was a wise settlement.

Now let me come to the Opposition amendment, or, if the Leader of the Opposition would rather, the "repercussive effects" of the settlement. I have to eat this sort of phrase as a kind of porridge at breakfast now. It was a strange affair last week. At the beginning, in his first speech, apart from his reference to the mining dispute, first the Leader of the Opposition offered his good wishes to the Government in language which was strangely tender, we thought. Then, within a day or two, we were confronted with this gruff and more characteristic amendment—the shortest and sharpest honeymoon since Lord Byron. He described his, however, as a "treaclemoon" and perhaps that is what we have been engaged in for the last few days.

We were confronted, immediately I arrived in this office, not only with the coal strike and another matter of paramount importance to which I will come in a moment but with the question of what was to happen to the Pay Board apparatus and the whole system of the statutory control of incomes. It was not an easy question at all to settle, particularly because we were in the middle of a pay round, and we certainly did not want to add to the inflationary pressures in the situation.

I perfectly agree with the right hon. Gentleman about the gravity of the inflationary situation. I understand from what I have been told—I do not understand all these matters yet—that the prospective figures that people in Government Departments calculate about what is to be the inflation in the months ahead are not published exactly, but I could if I were pressed, eventually—not today but at a later stage—tell people what was the danger of inflation when we took over, before there was any miners' settlement. That is another question; that too could be stated.

But, of course, it was a difficult choice to make. Of course we did not want all the settlements which had been made to be reopened. Of course we did not want the whole of the chain to be altered. On the other hand, we were committed, and are committed, to the abolition of the Pay Board. We are opposed—I am bitterly opposed—to the system of the statutory control of incomes. As I said before, I have a great deal to learn, but one of the things that I have been learning, very fast I hope, in the time that I have been in this position is how difficult are the obstacles placed in the way of extra production—which is the best way of solving the inflationary situation—by the statutory apparatus, the obstacles in the way of achieving what we have to achieve in this respect, and, moreover, how difficult it makes the carrying through of what I hope we shall be able to carry through—the general perspective, for example, that is set out in the Economic Review of the Trades Union Congress published on Sunday.

The TUC set out there the way in which it thinks the country should try to deal with some of our economic problems. When I sat where my hon. Friends the Members for Salford, East (Mr. Allaun), Feltham and Heston (Mr. Kerr) and Bolsover (Mr. Skinner) are sitting, I often used to quote against a previous Government, which shall be nameless, the arguments which were in the Economic Review of the TUC. My view about the wisdom of its report has certainly not altered because I have the position that I hold today.

I think that the TUC's report is extremely valuable, and I am sure that the present Government think so, too. But the more than one looks at it the more one sees that there are obstacles to carrying through the kind of expansionist policy which the TUC outlines—and some of those obstacles derive from the statutory control of incomes.

Moreover—here I respond directly to what the right hon. Gentleman said about the scrutiny of Parliament; I certainly do not propose to abandon my views about the scrutiny of Parliament—I propose, as part of the operation, and I hope that I will have the support of the Liberal Party, but I do not know how that will turn out—[Interruption.] I am promised in advance that I shall not have that support—to restore to Parliament some of the rights which were taken away from it.

So these are some of the considerations which were in the Government's mind and in my mind in the very first week in which we were considering these matters. We came, I think, to a fairly speedy conclusion, although, there again, we said that we must wait until the House of Commons met before we divulged those conclusions. Again, I know that this may be very disappointing. I should, of course, like to do my best to help the Opposition out if I could. If only I could tell them that the Government had come to these conclusions only because of their pressure, it would be of great assistance, and I should be eager to do it, except that it would not be the truth and I could not start off on that basis.

But the position is this, governing the interim period. The Government intend shortly to introduce legislation to give them power to abolish the Pay Board and the associated statutory pay controls. It will be the Government's intention to exercise this power with Parliament's approval, after discussions with the TUC, the CBI and others concerned about methods to secure, as announced in the Queen's Speech, the orderly growth of incomes on a voluntary basis. Let me insist again that a primary purpose that I have in mind is to restore to Parliament some of the powers which were originally removed from it by the Counter-Inflation Act.

I have discussed the position—this deals directly with another of the questions put by the right hon. Gentleman about my relations with the Pay Board and its Chairman—with the Chairman of the Pay Board, and he has confirmed the willingness of the members of the board to continue in operation for a transitional period. It must be understood that until we can repeal the legislation the Pay Board will have a continuing statutory duty to enforce the pay code.

I have asked the Pay Board to notify me of any cases of special difficulty that may arise, and I would be ready, where there are exceptional circumstances, to temper the rigidities of the statutory control through the use of my power to consent to settlements which are not strictly in line with the Pay Code. I think that that disposes of another of the questions that the right hon. Gentleman put to me.

However, it must be recognised that under the terms of the existing legislation I have no power to issue consents save where the circumstances are truly exceptional, as they certainly were in the miners' case. So those who have already made agreements on the basis of the current arrangements will be expected to stick to them; and those making settlements in the transitional period will similarly have to keep in line with the rules of the Pay Code. I think also it may be—[Interruption.]—all this, I may say to the disappointment, apparently, of hon. Members opposite, was explained not only to the trade unions but to the CBI before the Opposition had ever tabled their amendment.

I have also asked the Pay Board to continue with the existing advisory references. The board expects to report on Government scientists in the next two or three weeks, but it is just not possible for it to report on London weighting until the middle of the year, although we have urged the board to speed it up as much as possible and arrangements will be made for its completion. The problems of London weighting manifestly require independent examination, and I would urge all those concerned to await its outcome.

The inflexibilities of statutory control always lead to anomalies, grievances and inefficiencies, which people naturally want to remedy immediately statutory controls are removed. But we certainly want a smooth transition to voluntary methods which takes account of the need to contain inflation and to secure the orderly growth of incomes. Without this, excessive pay increases could shatter all our other policies on rents, food subsidies, pensions and the rest. It therefore follows that pay settlements in the rest of this pay round should be at a level which does not go beyond the many settlements already made, though the earlier we can discard the in-built rigidities of statutory control the better.