Orders of the Day — Pay and Prices Policy

Part of the debate – in the House of Commons at 12:00 am on 7th July 1976.

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Photo of Mr Tom Litterick Mr Tom Litterick , Birmingham, Selly Oak 12:00 am, 7th July 1976

Indeed. I hope that my hon. Friend the Member for Motherwell (Dr. Bray) will recognise that there is a difference—I do not mean to make a party point—when I say that the Prime Minister of the Conservative Administration was severely damaged after making the assumption that in some sense national secretaries of trade unions can deliver the goods. Apart from the implicit cynicism in that assumption, a profound judgment is being made about the nature of trade union democracy.

One of the essential elements of British trade unionism is that it is composed of a series of democratic institutions. In practice they might be far from perfect but, unlike their European and American counterparts, they are institutions that have been developed from the ground upwards rather than imposed by a political party on the working class. If we are not careful, we are in danger of doing some violence to major institutions in our society.

It was understandable that the Chancellor should refer to what he described as the remarkable achievements of the past 12 months. I happen to believe that there has been a remarkable achievement during that period, but I do not think that it features in the achievements that my right hon. Friend was trying to put before the House yesterday. He spoke, understandably, about reducing the rate at which the domestic price level is rising. He also referred to the narrowing of the trade gap. Those are commendable objectives, but my right hon. Friend chose to place remarkably little emphasis on the level of unemployment, which since last July has risen by more than one-third.

No Government will claim such an increase in unemployment as an achievement, but it must be recognised as a component in the Government's action during the past 12 months and perhaps to some extent a result of some of the Government's actions during that period. To put the best face on it, it would seem to be reasonable for my constituents to be a bit sceptical about my right hon. Friend's claim of remarkable achievements, bearing in mind that rather more of them are out of work now than 12 months ago. Birmingham has more than 50,000 unemployed workers. The figure is almost 40 per cent. up on 12 months ago. That could hardly be described as an achievement.

There is another danger present in what the Government have been doing with the trade union movement and the wages system. One long term damaging conse- quence might be the suppression of the process of collective bargaining. We are now in the second year of wages restraint. Institutions are viable only as long as they are used. It has long since been noticed by the House that the most vital element within the British trade union movement was within the factories and centred around the activities of the shop steward who had to work with his constituents. That is no longer so.

Throughout industry employers were telling their workers that they could have the £6, and not a penny more, with no questions asked and no bargaining. Negotiation does not arise. Now they will be telling their workers that they can have the 4½ per cent. and no bargaining. Employers are falling over themselves to do this, and that is a clear manifestation of the fact that employers see wage restraint as being in their interests.

As the wage restraint policy will reduce the real value of family incomes, it is clearly on in the interests of the British worker, unless someone can spell out, as the Chancellor attempted to do yesterday, a long-term benefit. That is where the Government are getting into trouble. It is difficult to convince the British people that their sacrifice will result in a material long-term benefit. I assure the Chancellor that the British worker is a firm materialist when considering his own interests as expressed in the wage packet and what it can buy.

The Chancellor is trying to persuade the working class that there will be an advantage in the long term. The day after tomorrow there will be pie in the sky. His most remarkable achievement is to persuade the leadership of the trade union movement to accept this policy. I do not want to create the wrong impression. I do not approve of the policy. I think that the leaders of the trade union movement are profoundly wrong and mistaken. Perhaps they have been pressured into accepting the deal by people who are better at putting on the pressure than they are—which is saying something. They have been subjected to pressures which they find difficult to resist. The argument with which they have been presented is that there is but one possible set of policies to get us out of this hole, and the alternative is total disaster for them. That is never true either in politics or in economics.

The evidence of the conferences suggests that that is how the policy has been presented. One after another the general secretaries of the trade unions—sometimes men who have hitherto been regarded as holding radical opinions—have mediated that message from the Government to their members and terrified them into acceptance. I do not apologise for using the word "terrified" because there is a sort of terrorism involved in what the Government have done to the trade union movement. That is a political ploy for which, however skilful, they will in the long term have to pay dearly.

The Government are saying that restraint on working-class families' wages will contain domestic demand and keep down British industry's manufacturing costs. They are suggesting by implication that if they can suppress domestic demand, some other part of the economic balloon will expand. That is simply a declaration of faith, or even hope, that it might happen, that exports might grow disproportionately and make up for what the British people will not be allowed to consume. In economics things rarely work in that simple way. There is no reason why the Japanese should suddenly buy vast quantities of British goods, or why the Americans should suddenly become more liberal in their attitude to British exports or the Germans easier in their attitude to us. As they have come through similar experiences, there is every reason to think that they will get tougher.

As for improving the competitiveness of British industry, it is extremely unlikely that British manufacturing costs will he reduced because British wages are restrained. British wages are amongst the lowest in Europe. If we exclude Greece, Spain and Portugal, the British worker is already the cheapest worker in Western Europe. The British worker might well ask "How cheap do we have to be before the British economy becomes viable in the eyes of the people whose confidence is being sought?".

Here we get to the heart of the matter. The Government are seeking to inspire confidence in people who do not live here, let alone pay taxes here. They seek to inspire confidence in people abroad who speculate in sterling, who may or may not invest in this country and who do not like what the British Government are doing.

We do not hear Opposition Members complaining about those aliens, who frequently profoundly damage the British economy. The Opposition spend more time and energy in talking about a different sort of enemy because they think that that will get them a few votes. That is the truly threatening alien influence that concerns British people. The people who control capital in New York, Paris, Hamburg, and Yokohama can and do attack Britain and damage the interests of my constituents as and when they please. The sadness of the Government's strategy is that they propose no means by which they can prevent a repetition of that attack.

To that we must add the irresponsible behaviour of our home-grown patriotic capitalists who take their money out of the country as and when it suits them, with no consideration of the consequences for Britain. If they are ever involved in making self-validating pronouncements about the future of the British economy they say that it is all gloom, and will get worse, and those pronouncements promptly bring about those events. I understand that that is called an attack on the pound.

The British worker does not do that. He travels to work on a Monday morning—assuming that he has not been math redundant. According to the Government, he does not have a crisis of confidence. His confidence is not being sought, and that is the essential weakness and failure of the Government's approach.

What will improve Britain's industrial competitiveness is an improvement in managerial efficiency. Hon. Members have spoken at length about the supply of capital to industry, but we in the West Midlands well know that managers are not particularly good at using their resources. The report referred to yesterday by the Chancellor produced by Professor Dudley's Committee for the West Midlands Regional Economic Planning Board, and the earlier report made by Professor Turner, are both concerned with interruptions to production and both have come up with the same conclusions.

The reports noticed that machines were being woefully under-used. The Dudley Committee noticed that in some cases machine tools were operating at about 30 per cent. capacity. That was in the first half of 1974 before we had reached the depths of the slump. The Turner Report noticed that the vast majority of interruptions to production were caused by internal managerial factors such as a falloff in scheduling, failure to provide plant maintenance, and so on. Only a relatively small proportion of the total number of interruptions and the total number of days lost in production was caused by industrial disputes or could be attributed to the British worker, British trade unions, or the mechanisms of collective bargaining and conciliation.

That is fairly convincing evidence that as yet we are unable to use the tools we have, for reasons which seem to be endemic to British management and the structure of industry. The Chancellor said that cuts are being made in public expenditure because resources had to be made available. Professor Dudley's committee made it clear that we do not suffer from a shortage of resources. About 200,000 building workers are unemployed and that is a resource. There is no shortage of bricks. Brick works are operating at half capacity and we have been stockpiling bricks for a year.

Birmingham has a shortfall of more than 20,000 houses, despite there being no such shortages. What kind of logic is the Chancellor of the Exchequer applying to that? The same situation exists in virtually every city in the country. A major industry is being paralysed because the Government are presenting a policy that makes it impossible for that industry to operate. There is no shortage of resources at all.

As and when it comes, the upturn will be characterised by those managements which can use the capacity that they have, thereby slowly taking up the slack with little effect on the level of employment. If investment ever gets going in the private sector it is certain that it will take place in the capital intensive areas. The result on employment will be far less during the recovery period than it was after previous slumps. While that slack is being taken up, unit costs of production will inevitably fall.

Listening to the hon. Member for Gloucester (Mrs. Oppenheim) today, one might have been forgiven for thinking that the opposite was true. If an organisation is operating at 50 per cent. capa- city or less and it starts to increase productivity, it is inevitable that its unit costs will fall, and yet the Government are helping prices to be pushed up and are making concessions to encourage companies to put up prices. The fall in costs which is inevitable with an increase in activity will widen profit margins. Companies do not need another concession either in terms of a relaxation of the Price Code or a relaxation in tax allowances for depreciation to create the necessary surplus that they say that they should have.

There has been no instance of a fall in the retail price index in the United Kingdom in any time in the trade cycle since 1934. The last great depression was the last time that the general level of prices fell. From the Second World War we entered an age in which we had to accept inflation as normal if we were to remain committed to full employment.

The Chancellor of the Exchequer has assured us more than once that he expects the level of unemployment to fall to 700,000 by 1979. That is a retreat from full employment and a retreat from the idea of maintaining full employment. Unless there is a serious attempt to change everyone's attitude towards work—to change society's attitude towards work—that 700,000 unemployed, which the Chancellor of the Exchequer regards as a desirable target, will be seen as evidence of intellectual failure by the Government.

We should remember that the favourite bloodsport of the Opposition is hunting social security claimants. Examples of the victims of their sport will be excoriated in page after page of daily newspapers because members of that party will gladly find examples of unemployed men and women who are getting too much and of whom they can say "Is not that a scandal?".

Generally, we still regard working as evidence that a person possesses social virtues. It is time that we questioned that view. It is time that we accepted that adults should be able to opt out of work frequently, to do something else which is not generally regarded as work. Adults should, for instance, be able to take up full-time education. That should be a large component of our social and economic policy.

People should be allowed sabbaticals from the horrible places in which they are obliged to work. Very few hon. Members would like to work at Long-bridge assembling motor cars but, unfortunately, it is people like us who get sabbatical years—or sometimes sabbatical four years. I come from a profession that treats its members in that way, and that is right. But the kind of stresses to which I was subjected are not the same as the stresses experienced by build, ing, car, or foundry workers.

We find it difficult to look at that seriously because we are stuck with the ancient belief that if a man is not having a horrible time at work, he is not working. It is time that view was changed. Middle-class people unconsciously take the view that it should be unpleasant for working-class people to work but that it should be enjoyable for them.