HC Deb 11 February 1965 vol 706 cc565-73
The First Secretary of State and Secretary of State for Economic Affairs (Mr. George Brown)

The House will remember that on 16th December the Government joined representatives of trade unions and management in signing a Joint Statement of Intent on Productivity, Prices and Incomes. That Statement recorded agreement on the need to set up machinery, first, to keep under review the general movement of prices and of money incomes of all kinds; and, secondly, to examine particular cases in order to advise whether or not the behaviour of prices or of wages, salaries or other money incomes was in the national interest.

I am glad now to be able to tell the House that after further consultations and after discussion in the National Economic Development Council we have reached agreement with the representatives of trade unions and of management on the machinery and procedures that are needed for these purposes.

The first task which I mentioned—that of keeping under review general movements in prices and incomes of all kinds—profits, wages, salaries, etc.—will be undertaken by the National Economic Development Council. The second task—that of examining particular cases—will be undertaken by a National Board for Prices and Incomes.

The Prime Minister has authorised me to inform the House that Her Majesty the Queen has been pleased to indicate that she would be prepared to approve that a Royal Commission be set up to discharge these duties. The National Incomes Commission will be dissolved at the same time.

The new Board will have a vitally important role to play, as its work develops, in making effective the whole policy for prices and incomes. I am confident not only that its recommendations will be accepted by the parties directly concerned, but that they will have, a growing influence on all who are responsible for settling the levels of prices and incomes.

Fuller particulars of these proposals are set out in a memorandum, prepared in agreement with the Trades Union Congress and with the employers' organisations, which is being published as a White Paper and is now available in the Vote Office. I understand that the Northern Ireland Government agree that the proposals in the White Paper should cover the whole United Kingdom.

The next stage will be, after further consultations and discussions in N.E.D.C., to formulate the norm and criteria which will guide the National Board for Prices and Incomes.

The discussions on these important questions of national policy have, as is right, been held with those organisations which are most generally representative of the interests of employers and of workers. We recognise, of course, that there are groups of workers and employers—many of them in the public sector—who have not been directly represented in those discussions. The responsible Ministers concerned are in touch with the main bodies concerned.

Mr. Heath

I am sure that the right hon. Gentleman will recognise that we would like carefully to study the White Paper which has been published before we give any indication of our views upon it. Meantime, may I ask him three main questions? First, is this machinery to operate voluntarily, as he has constantly emphasised that he would like it to do, or does the fact that the Queen is to set up a Royal Commission mean that there will be powers to summon witnesses and to take evidence on oath against their will if the Commission so decides?

Will he clarify that and tell us whether there will be satisfactory arrangements for safeguarding the security of information supplied to these bodies by trade unions and by employers? Will he confirm that, as this is a voluntary matter, he does not intend to introduce legislation for the control of wages, prices and dividends?

Secondly, will the First Secretary recognise, as I am sure he does, that the most important and most difficult stage is yet to come? In his statement he refers to the settlement of the norm and criteria. Who exactly is to settle them? His statement is rather vague on this. It says "formulate". Who is actually to fix the norm and criteria? Is it to be N.E.D.C., with the triple partnership, or is it to be he himself or the Government? We would like elucidation on this point.

Thirdly, will the First Secretary agree that the establishment of machinery of this kind does not in any way exonerate the Government from following proper economic policies which will lead to the stabilisation of the economy, nor does it in any way exonerate private firms from taking the necessary enterprise and initiative, because machinery of this kind must not be allowed to buttress the inefficient or act as a drag on the enterprising and the efficient?

Mr. Brown

I am sure that the whole House would wish me to thank the right hon. Gentleman for the help and support he is giving us, support which will be noted in quarters outside the House as well as inside it.

As to whether the machinery is to operate voluntarily, the right hon. Gentleman will see in paragraphs 6 and 18 of the statement references to this. I make it absolutely plain that I wish, as does everybody else who has been associated with me—

Mr. Heath

There is no paragraph 18 in the statement.

Mr. Brown

It is at the bottom of page 4 of the White Paper, paragraph 18. I said "the White Paper".

Mr. Heath

No. The right hon. Gentleman said "statement".

Mr. Brown

That is not a tremendously important point. I meant the White Paper. We are dealing with a much bigger issue than the right hon. Gentleman seems to understand.

The right hon. Gentleman will see when he reads the White Paper that this is referred to specifically in paragraphs 6 and 18. I am making it plain that my desire, and that of everybody who has been associated with us in this exercise, and of all those who want it to succeed, is that it should operate on a voluntary basis and that all parties on both sides of industry as well as in the Government shall be willing and ready to participate fully and make themselves available and accept the decisions which are made. That is our wish. That is our intention.

The right hon. Gentleman will see that in both those paragraphs we have to say that, should it ever be proved, much to our regret, that the voluntary system would not work, the Government would have the duty, on behalf of the nation, of reconsidering the situation.

On the question of the privacy of information and of meetings, we make it absolutely plain that the divisions of the Board will decide for themselves whether they meet in public or in private. In any case where the disclosure of information would be against the commercial interests of those concerned, the information will be taken in private and will not be disclosed. This has been made clear to both sides of industry, and both sides of industry are happy with the assurances given.

The third question, as I took it, related to what the right hon. Gentleman called the next and most difficult stage. I remind the right hon. Gentleman that some of his right hon. and hon. Friends thought that the first stage was the most difficult. Most of them then thought that the stage I have now succeeded at arriving at would be the next most difficult stage. Each one is difficult, but the next stage of fixing the norm and criteria will be dealt with, as I made quite clear in my statement today, by discussions in the National Economic Development Council. That does not mean that other discussions will not go on.

When the right hon. Gentleman asks who fixes the norm and criteria, he asks a question which is not really the relevant one. As the original White Paper in December made clear—perhaps the right hon. Gentleman would like to go back and have a look at it—the statement of the national interest, which will be the background against which the Board will do its work, will be given to the Board by the Government. But that statement will be arrived at by the Government after discussions with all the interests concerned and after the fullest debate and discussions in the National Economic Development Council. The Government cannot at any stage in this duck their own responsibility, but at every stage, the next stage like the last two, I have every intention myself, and every hope, that we will conduct it by way of agreement and arrive at general views.

The right hon. Gentleman then asked me whether I appreciated that this did not exonerate the Government from following proper economic policies, to which the answer is that we have been able to get this particular agreement, which our predecessors were unable to get, precisely because we are doing just that. There must be some good reason to explain why we have got this agreement, but the Tories did not.

Then the right hon. Gentleman asked me whether I accepted that this did not exonerate private industry from behaving responsibly, too. The answer is, "Of course".

Mr. Grimond

I have not had the advantage of reading the White Paper yet. The First Secretary refers in his statement to a Royal Commission. Although I fully appreciate that he wants to get voluntary agreement, may we take it that, since a Royal Commission has, by its very nature, certain powers, these powers will be available to the new Board?

Secondly, no body in this country will be more grateful for anything that the First Secretary can do to stop a rise in prices than will the consumers. It appears that, so far, most of the conversations have taken place with the employers and the unions. Can the right hon. Gentleman assure us that the interests of consumers have been represented? Will he tell us how they will continue to be represented on these new bodies which are being set up?

Lastly, when the criteria are under discussion, surely one of the most important criteria should be productivity. Quite large increases in wages, salaries or profits may be justifiable if, at the same time, efficiency and productivity are increased.

Mr. Brown

I am much obliged to the right hon. Gentleman. I can only repeat that we are using the Royal Commission machinery because I think that that is the right way to do it, and, particularly, it is the right level at which to try to do it. But this is an area where, quite frankly, it is far better to proceed by agreement and consent, even if it does not work quite as firmly as otherwise one would like it to do, rather than try to force people. It is certainly my intention—and everyone knows this—to proceed in that way.

In the discussions which have got us this far, inevitably, for the most part, we have had to proceed on the basis of the Government acting as the consumer's representative, which, after all, is their ultimate duty. The agreements could only be negotiated with the special interests concerned, but on the National Economic Development Council there are independent members who also fulfil that function. On the Commission, when we get round to announcing the names, as I hope to do soon to the House, the right hon. Gentleman will see that I shall provide for people who are not representatives of special interests there, but who will be able to have the consumer's view in mind.

As to the criteria and productivity, yes. When one talks about establishing the norm and the criteria, one first discovers how to do it, and there will be some discussion about that. But one means very much that, unless all our incomes—I do not just mean wages—and prices stay within the total rise of our gross national product, the end, of course, is inflation, which is bad not only for consumers but for wage and salary earners as well. Obviously, therefore, this will be one of the principles by which we shall arrive at the definition of what are the norm and criteria to be observed.

Mr. Palmer

What will be the likely effect of this Royal Commission on the impartial and objective working of the arbitration and industrial conciliation machinery of the country?

Mr. Brown

It is not our intention to by-pass or interfere with them at all, but there must be somewhere, we think, where particular cases can be examined and where a general policy can be established. If we get this done, the work of these other bodies will thereby be advantaged.

Mr. Biffen

Will the right hon. Gentleman be under no doubt, first, that very many people regard the quest for an incomes policy as illusory and, indeed, undesirable? Secondly, what statistical machinery will the right hon. Gentleman use to determine whether or not his incomes policy is succeeding?

Mr. Brown

The hon. Gentleman is responsible for his own views. I think that the country will be very glad to hear that he and the right hon. Member for Wolverhampton, South-West (Mr. Powell) have the courage to say openly what many of their right hon. and hon. Friends try to indicate but try to avoid actually saying. If this is the view of the party opposite, very well; let it be known.

Mr. Biffen

Will the right hon. Gentleman answer my question?

Mr. Popplewell

Will my right hon. Friend take it that we on this side congratulate him on the way he has got this done in such a short time? We all appreciate that he has had great difficulty in building up the machinery and getting confidence on both sides of industry. He has now succeeded. This is the first step towards a realistic approach to meeting the needs of the nation's economy. There will be many difficulties, as he knows full well, before this co-operation can percolate down to the shop floor, but does my right hon. Friend realise that the nation is sure that he will carry forward the skill, energy and patience which he has shown so far? We are extremely grateful to him for what he has done.

Mr. Brown

I am much obliged to my hon. Friend. There will be many difficulties between here and the end. It took the Swedes, for example, who are much lauded in these matters, more than 20 years to bring their policy to fruition. We shall beat that. But what puzzles me is that, whereas outside the House it is a matter of all-party concern that we should succeed, only inside the House does it become a matter of party division.

Mr. Heath

When will the right hon. Gentleman learn that, if he has a genuine concern for the national interest and wants to secure agreement upon it, he does not help the process by insulting his opponents? When three serious questions are put to him about the contents of a statement, he might at least answer them soberly, not in the way he has done so far. If he can change his attitude, he will get a better result, because there is not party opposition on this but a desire to secure a sound incomes policy.

When the right hon. Gentleman talks about the real explanation of what happened in the past, does not he realise that he has reached exactly the position we were in a year ago, in January, 1964, when the National Incomes Commission had been established? The employers had made their offer of price machinery, the Chancellor had given his categorical undertaking in the White Paper to deal with profits through fiscal measures, but both the other items were turned down by the trade unions? That is the real explanation. The right hon. Gentleman has now secured agreement about it, and he at least might answer serious questions put to him without imputing dis-honourable motives to his opponents.

Mr. Brown

I am sure that I am. I am open to be taught how to behave, but I am equally sure that the right hon. Gentleman is not in a position to do it.

The right hon. Gentleman is absolutely wrong in what he says about the National Incomes Commission. If he will go back and read the first White Paper—perhaps he might try to do his homework, too—he will see that there is a world of difference. The National Incomes Commission was given the job of trying to state what the national interest was and, in fact, was given the job of looking only at incomes, which meant only wage settlements. There is the world of difference between that and the policy followed this time, the machinery achieved this time and the purposes given to it.

The reason why we are succeeding this time, the right hon. Gentleman should remind himself, is simply that the policy is wholly different, the machinery is different, and the purposes are different. This is why both sides of industry were willing to accept it this time, but were not last time.

Several Hon. Members


Mr. Speaker

We shall find time to debate this when there is a Question before the House, but we cannot do so without one.