Water Industry (Pay)

– in the House of Commons at 12:00 am on 6th February 1979.

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Photo of Mr Peter Shore Mr Peter Shore , Tower Hamlets Stepney and Poplar 12:00 am, 6th February 1979

I wish to make a statement about pay negotiations for manual workers in the water industry. The House may recall that on 19 January the water industry employers made a revised offer for manual workers, representing an increase in earnings of 13·9 per cent., of which a substantial element —6·9 per cent.—related to a new productivity agreement. After lengthy negotiation, the trade union side of the National Joint Industrial Council agreed to recommend acceptance to its relevant decision-making bodies. That offer was not, in the event, accepted by union members and negotiations resumed on 2 February.

In the early hours of this morning, I learned that after long discussions the National Joint Industrial Council had not found it possible to reach a pay settlement for the manual workers. The offer —representing an increase in earnings of 15·88 per cent.—made by the employers was not acceptable to the union negotiators as a basis for a pay agreement. This offer is worth an increase in average weekly earnings of £9·81 a week immediately rising to £12·70 from 1 April 1979. This is a major setback and disappointment with potentially very serious implications for industrial relations and for the British economy. I have, therefore, thought it right to request those concerned to reflect further, and to consider whether in the national interest negotiations should be resumed. The House will understand that I can say little further at this stage.

Photo of Mr Michael Heseltine Mr Michael Heseltine Shadow Secretary of State, Shadow Secretary of State for Environment

The House will not understand why the Secretary of State does not say a considerable number of other things at this stage.

First, the House wants to know what arrangements the Secretary of State has made to ensure that the water and sewerage facilities of this country are kept running. The right hon. Gentleman should also explain how on 19 January the unions were able to recommend an average settlement of 13·9 per cent., whereas a fortnight later they were unable to express any opinion upon a settlement of 15·88 per cent.

Photo of Mr Michael Heseltine Mr Michael Heseltine Shadow Secretary of State, Shadow Secretary of State for Environment

Is a possible explanation for the unwillingness to recommend the higher settlement the Prime Minister's speech at the weekend in which, by design or carelessness, he added a licence of 2 per cent. on all negotiations in the public sector? Does the right hon. Gentleman understand that any settlement that is agreed in this industry, with the unions involved, will have clear implications for all other union negotiators who are now negotiating in the public sector?

Photo of Mr Peter Shore Mr Peter Shore , Tower Hamlets Stepney and Poplar

I do not think that the hon. Gentleman was particularly helpful in putting his questions, but I shall attempt to answer them.

Of course, we must accept the responsibility of making all possible arrangements to keep vital community services running. Those arrangements have long been in our consideration and are in hand. The hon. Gentleman asks how it is that the union side first recommended the offer which was subsequently rejected by its members. As my hon. Friend the Member for Hemel Hempstead (Mr. Corbett) said succinctly, the unions have democratic procedures. They put their recommendations to their members, but from time to time those recommendations are not accepted. That is what happened in this case.

With regard to the Prime Minister's speech, that has been nothing but helpful in the general context of negotiations. But, of course, we have it in mind that settlements in one part of the public sector have implications for settlements elsewhere. That is a serious matter which we have constantly borne in mind.

Photo of Cyril Smith Cyril Smith , Rochdale

Will the Secretary of State give some indication about the arrangements to which he has just referred? For example, will he assure us that there will not be the flapping about that occurred a fortnight ago when my local authority experienced this problem? What arrangements have the Government made to deal with the emergency? All that has been said so far is that arrangements are in hand. What are they?

Secondly, can the right hon. Gentleman give any indication what a declined offer of 15·9 per cent. will mean to the water rates of this country? What proportion of average water rates are attributed to labour costs? Therefore, if a 15·9 per cent. offer has already been declined, what will that mean in relation to increased water charges over the next 12 months?

Finally, if 15·9 per cent. is not acceptable in the water industry, what chance is there of local authority workers accepting 8·9 per cent.?

Photo of Mr Peter Shore Mr Peter Shore , Tower Hamlets Stepney and Poplar

The hon. Gentleman's last question is relevant. The water industry, like certain other of our publicly owned industries as distinct from services, has opportunities for productivity arrangements that are greater than in local government and central Government services. As I explained to the House, a substantial component of that figure is attributed to a productivity deal.

I understand the hon. Gentleman's first concern. He has been in an area in the North-West where there was unofficial action that rumbled on and to some extent still does. As he well knows, various ad hoc arrangements were made, including standpipes, switching of water supplies and management personnel and others undertaking work normally done by the men on strike. But we were dealing mainly with unmended bursts. Quite frankly, we had to judge the scale of those before deciding whether further action was needed. We decided that it was not.

On the labour content of the total cost, water is a capital intensive industry. I would need notice of that question before I could give the precise additional cost that would be attributed to increases in pay claims.

Photo of Mr Eric Heffer Mr Eric Heffer , Liverpool, Walton

Does my right hon. Friend agree that it is never a straightforward 15 per cent. increase? The matter is much more complicated. What is being paid now is not new money but the consolidation of money that is already available. Should it not be explained to the country that the workers are asking for the consolidation to become available from two months past and not from 1 April? We must understand the problem and explain it instead of talking nonsense about 15 per cent.

Photo of Mr Peter Shore Mr Peter Shore , Tower Hamlets Stepney and Poplar

My hon. Friend has considerable understanding of trade union negotiations. In judging any settlement, it is right to look carefully at its components. They are often not as simple as many people may believe. Nevertheless, at the end of the day one must aggregate the total increase that arises from whatever changes and arrangements are made. We must therefore look at the total figure.

Photo of Mr Charles Fletcher-Cooke Mr Charles Fletcher-Cooke , Darwen

The Secretary of State has said that the present unofficial dispute in the North-West is still rumbling on. Can he say what divisions of the North-West water board are at present having trouble, and what parts of those divisions? Can he also say whether the dispute has been merged in the general dispute, or does it still have a life of its own?

Photo of Mr Peter Shore Mr Peter Shore , Tower Hamlets Stepney and Poplar

As the House will recall, the area most affected in the North-West was the Pennine division. I am glad to say that that unofficial dispute has been settled. The backlog of work, which at its peak resulted in over 1,000 homes being deprived of piped water, has been cleared. I hope that the right hon. Gentleman will forgive me if I do not catalogue all the subdivisions within the North-West region, but the southern and central divisions—the Ribble—have been affected. It is a changing situation and some improvement has been reported over the past week.

Photo of Dennis Skinner Dennis Skinner , Bolsover

Will my right hon. Friend accept that when the hon. Member for Henley (Mr. Haseltine) attacks what is to him a large settlement it shows the hollowness of the Tories' claim to support free collective bargaining on behalf of all working people? Immediately there is an increase of this kind ready to be paid, the Tories turn their attention to who will pay the rates and what a burden it will be. Does it therefore not help my right hon. Friend to understand that, as the battle continues and the problems are solved, the Governmbent can emerge as victors only by being consistent with those of us on the Labour Benches who at all times represent the people who put us in Parliament? They should take little or no notice of that gang of hypocrites opposite.

Photo of Mr Peter Shore Mr Peter Shore , Tower Hamlets Stepney and Poplar

My hon. Friend is right about the Conservatives' attitude to free collective bargaining. It is deeply contradictory. I hope that my position on it has been consistent. I believe that there is a common will in the country to defeat in- flation. If unrestricted collective bargaining stokes inflation, we have a problem. We must adjust and arrange matters within the trade union movement and the policies of the Government to prevent inflation from getting out of hand.

Several Hon. Members:

rose

Photo of Mr George Thomas Mr George Thomas , Cardiff West

I remind the House that this is a truncated Supply day. I am prepared to call more hon. Members, but there is a Ten-Minute Bill before we get to the main business.

Photo of Mr William Molloy Mr William Molloy , Ealing North

I put it to my right hon. Friend that these statements on the difficulties in any form of public employment are meaningless. How can we accept the theory of the Conservative Party that people in public employment should have an increase in their wages and salaries but that it should not come out of rates and there should be no Government subsidy? Will he ask them what the hell they mean by that sort of ridiculous attitude?

Photo of Mr George Thomas Mr George Thomas , Cardiff West

Order. We must not let the standard of our language fall below parliamentary level.

Photo of Mr William Molloy Mr William Molloy , Ealing North

I wish to apologise to the House for that lapsus linguae and, if I may, withdraw it.

Photo of Mr George Thomas Mr George Thomas , Cardiff West

The hon. Member, despite his name, is Welsh, and I understand why he slipped.

Photo of Mr Norman Tebbit Mr Norman Tebbit , Waltham Forest Chingford

Will the Secretary of State confirm that the offer of 15·9 per cent. was inside the Government's 5 per cent. pay limit? Can he say whether it is possible to increase that 15·9 per cent. and still remain within the Government's 5 per cent. pay limit?

Photo of Mr Peter Shore Mr Peter Shore , Tower Hamlets Stepney and Poplar

The hon. Gentleman obviously was not listening with his customary attention. I said that the productivity element within the scheme is 6·9 per cent. He is as able as I to subtract, and that means that the residual figure is within single figures.

Photo of Mr Jonathan Aitken Mr Jonathan Aitken , Thanet East

As the Secretary of State appeared to be praising the democratic processes of this group of workers, will he take his approval one stage further and assure the House that, before this vital industry goes on strike, he will use his influence to make sure that its workers have a proper ballot?

Photo of Mr Peter Shore Mr Peter Shore , Tower Hamlets Stepney and Poplar

At least one of the unions, and possibly two, as a matter of practice has a ballot. But the way in which unions consult their members is a matter for them.

Photo of Mr Michael Latham Mr Michael Latham , Melton

Is it not extraordinary that the Secretary of State could not answer the question of the hon. Member for Rochdale (Mr. Smith) about the effect on the rates? Is it not his clear duty to confront the negotiators with the effect on both the rates and the level of capital investment?

Photo of Mr Peter Shore Mr Peter Shore , Tower Hamlets Stepney and Poplar

Clearly it is a matter which everyone should have in mind. It is an important factor. However, I pointed out to the hon. Member for Rochdale (Mr. Smith) that in this industry the effects, although of some importance, must be measured against the fact that it is a very heavily capital intensive industry.

Photo of Mr Michael Heseltine Mr Michael Heseltine Shadow Secretary of State, Shadow Secretary of State for Environment

Is it not apparent that the Secretary of State did not have it in mind at all, because he patently did not know what element of the cost labour represents in the water industry? If it helps him, may I say that it is 20 per cent.

Photo of Mr Peter Shore Mr Peter Shore , Tower Hamlets Stepney and Poplar

I thank the hon. Member, but presumably he is giving a national figure. The figures vary from region to region.

Later

Photo of Mrs Elaine Kellett Mrs Elaine Kellett , Lancaster

On a point of order, Mr. Speaker. Is it in order for the Secretary of State for the Environment to make a prepared statement to the House in which he displays a lamentable lack of knowledge of the seriousness of the water supply situation in Lancashire? [Interruption.] A call to the Warrington office at 2.15 p.m. could have given him the exact facts.

Photo of Mr George Thomas Mr George Thomas , Cardiff West

Order. I very much deplore the repeated occasions on which, when the hon. Member for Lancaster (Mrs. Kellett-Bowman) speaks, there are people who make offensive noises. Those people would not like it for members of their own family.