HC Deb 09 August 1966 vol 733 cc1415-45

If in compliance with the request by the Government that employers should for the period from 20th July 1966 to 31st December 1966 disregard pay increases in existing contracts any employer does so disregard them for that period and complies with the conditions set out in subsection 2 of section 30, then such an employer shall not be liable in respect of a breach of a contract to which this section applies for failure to pay remuneration at the rate provided by the contract.—[Sir T. Brinton.]

Brought up, and read the First time.

Sir Tatton Brinton (Kidderminster)

I beg to move, That the Clause be read a Second time.

Amendment No. 43 appears, on the face of it, to fly directly against the new Clause. It would be our preference that Clause 30 should be omitted altogether, in accordance with Amendment No. 43, because it is highly distasteful to any employer to find himself in the position of having to denounce or abrogate a freely arrived at agreement that he already has with his employees concerning an increase in remuneration during the period of standstill, namely, from the month of July until the end of December.

That is distasteful enough, and that would be our first preference. But since the Government have already shown a ruthless determination to have their Bill in the form in which it now stands, and have shown that determination by a considerable disregard for the normal niceties of Parliamentary procedure, we must budget for the situation which will arise if Clause 30 is included in the Bill. If it is included we come up against a very important anomaly, which the Bill creates in any case.

Throughout the White Paper and all through the discussion in Committee, it has been made clear that the Government are asking for the sweeping powers conferred by Part IV in the hope that the possibility of their being invoked will be sufficient to ensure voluntary co-operation which will carry out the terms of the whole Bill, especially Part IV, without the necessity of actually using the powers conferred. Clause 25 indicates that Part IV will not come into operation unless Her Majesty should so direct by Order in Council. Therefore, until that is done Part IV in effect does not exist.

One of the voluntary actions which employers are asked to undertake under Clause 30 is to refuse to pay any increased remuneration during the standstill period, even though it is already agreed and confirmed between the employer and employee by an agreement arrived at before 20th July. The Clause contains protection for an employer against the reasonable consequences of breaking his agreement, namely, possible legal action.

I am not clear whether all industrial agreements are legally enforceable. I think not, but at least all those which are incorporated in contracts of employment must be legally enforceable, as well as any that are the subject of a proper legal contract. This should, therefore, include nearly all industrial agreements today, if employers are carrying out the provisions of the Contracts of Employment Act. There is a legal remedy against a breach of an agreement, but the protection envisaged by Clause 30 will not exist unless Part IV is in force, and it can be brought into force only by introducing at the same time all the compulsory apparatus which the Government are seeking, and they have said that they do not wish to do this unless they are absolutely forced to do so.

This point was brought up in Committee and it was not very satisfactorily answered. The Solicitor-General confirmed that there was no legal protection for an employer who broke his agreement voluntarily, unless Part IV was brought into operation. Pressed on this point, the First Secretary said that the employer must go to his employees, the relevant trade union or the relevant employee—it might be a single person—and negotiate, presumably appealing to the worker to forgo his rights and thereby settle the matter.

This is not a matter which is truly negotiable. To my mind, a negotiation starts with two people somewhat apart, and eventually, if a negotiation is to be effective, they probably meet somewhere in the middle. This is what usually happens in industry, but here is a situation of a straight "Yes" or "No". Does one break one's agreement as an employer or defy the Government? If one goes to one's employees or their trade unions and they say, "No, we have our rights and we stand by them "—I have every sympathy with them if they do—one is in a cleft stick.

Do we refuse to pay what we should pay or do we drive a coach and horses through the Bill, which, the Government say, we must carry out, however distasteful we may think it? Most employers would say, whatever the Government, that the Bill puts a duty on employers, and that they should attempt to make it work even if they disagree with it, as I do. That is the anomaly. What shall we do to solve the problem? I suggest that there are only three choices. One can accept substantial breaches of the voluntary system that the Government have asked for; one can bring in Part IV; or one can accept the Clause which we put forward.

Mr. George Brown indicated dissent.

Sir T. Brinton

I see that the right hon. Gentleman is already shaking his head. He may have a fourth choice. The best of all would be to throw out Clause 30, which we suggest in Amendment No. 43. Perhaps that is the fourth and best choice, but I assume that the First Secretary will not accept it.

If he is willing to accept the Clause, which would give purely temporary protection during the six months' standstill, and which would require compliance with Clause 30(2), whereby proper notice must be given, and so on, he will solve the very substantial difficulty in which employers will be placed.

That is all we ask, but we suggest that if he accepts it it must go into Part I, because that is the part which will in any case be operative. The object of moving the Clause is to give this protection and enable it to be placed in a part that the Government will introduce and bring into force in any case. They would then not have to bring any other part into force, unless they saw fit, merely to provide this protection.

Mr. Norman St. John-Stevas (Chelmsford)

I support the very weighty argument put forward by my hon. Friend the Member for Kidderminster (Sir T. Brinton). First, I support Amendment No. 43, to delete Clause 30, which is quite contrary to the basic principles of our law. I am glad that the Attorney-General is here today. The Clause is an attack on the freedom of contract and on the good faith of those entering into contracts, because it is a basic foundation of our law that agreements freely entered into shall be kept. By Clause 30 the Government are holding out to those who have entered into contracts an inducement to break them.

The Government, having already undermined the prestige of Parliament by their procedure on the Bill, are now attacking the law itself. I hope that we shall hear something from the Attorney-General on this point. The only justification for the Clause brought forward in Committee was an argument by the Solicitor-General on the grounds of expediency, that it was necessary for the Government's policy. That is an argument for changing the policy; it is not an argument for supporting the Clause.

The second point one must consider in relation to the Clause—and I hope that we shall hear the views of the right hon. Member for Nuneaton (Mr. Cousins) on this—is the effect on industrial bargaining. Industrial bargaining and agreements depend on good faith, which is built up over a long period, and the Clause would wantonly set those agreements aside. This must constitute a blow to confidence which will persist long after this freeze is only a bad memory.

I also agree with my hon. Friend that if we are to have this bad Clause, and the bad Measures which have given rise to it, it should be applied equitably. That is the purpose of the Clause which he so ably moved. What will be the position of those who are observing a voluntary freeze during the period before Part IV of the Bill comes into operation?

According to the First Secretary's argument, there seemed very small likelihood of Part IV coming into operation early. He has gone out of his way on numerous occasions to say that it will be brought into operation only as a last resort. If the Government are to adopt this approach, some defence should be given to those employers who attempt to co-operate with the Government during this period.

I therefore hope that the Government will withdraw their opposition to the deletion of Clause 30, which would be the best course. But if they are not prepared to do that, I hope that they will at least acknowledge the equity of the arguments that have been put forward and accept the Clause.

4.30 p.m.

Mr. Raymond Gower (Barry)

There can be no answer to our case on this new Clause. If the Government reject it, they will, virtually, be telling an employer, "You must obey our request, but if you do so you will do it at your own legal risk and, ultimately, at your own financial risk". If the Government ask employers to break existing contracts, it is only reasonable for them to allow some exoneration or reprieve from the natural consequences of breach of such contracts.

Mr. George Brown

One of the interesting facets of experience in going through a Standing Committee, which I have not done for nearly 20 years, is the closeness one gets to folk and the degree of understanding one develops of people who, in the House, are figures shadowy and away. During the Committee stage of the Bill, I came to have quite a regard for the hon. Member for Kidderminster (Sir T. Brinton) and an understanding of him which, I suppose, I would never otherwise have gained. I know why he has moved this new Clause. I know exactly what inspires him, and I know the patriotism which led him to do what he did as a carpet manufacturer going in to defend a Government policy with which he did not altogether agree. So I start here, I believe, really understanding the motive behind this proposal.

I must say again to the hon. Gentleman and to his right hon. and hon. Friends—my right hon. and hon. Friends know it, so I address myself to the Opposition—that we want this policy to operate by agreement. We want it to be a voluntary acceptance of something which the force of events makes inescapable. We can argue about whether one has read events aright, about whether our policies were responsible for leading up to those events, about what other policies might have produced—that is another matter which can occupy us for a long time—but, having got to that point, however we did, we recognise the need for a breathing space, the need for a pause. I think that this is accepted in pretty well all quarters of the country.

Having got over that, having swallowed that much, the next question is: do we do it by compulsion because we do not believe that it can be done in any other way, or do we do it up to the very last minute of the eleventh hour by persuading folk to do it for themselves? I choose the latter course. If I choose the latter course—this is the answer I gave the hon. Gentleman in Committee and the answer I must give again now—then there really must be no compulsion until the very last minute of the eleventh hour. No compulsion means not even nice-looking compulsion, and what the hon. Gentleman has proposed would, of course, look nice to an employer but would be horribly nasty compulsion to an employee.

Seeing as I do the motives behind the hon. Gentleman's proposal, I still have to resist it, on his own argument given again and again in that marathon Standing Committee, that we do not activate Part IV until it has been shown beyond a peradventure that it cannot work by persuasion or the voluntary method. The hon. Gentleman knows exactly what I should be doing if I were to accede to his proposal. I should be compelling the employee under the guise of being kind to the employer, because by the mere act of giving the employer this degree of protection I should be authorising him, covering him, giving him my authority, for compelling the employee to give in. If I were to do that, beguiling as the hon. Gentleman's arguments are, I should be saying right from the beginning that it will not work by agreement.

At this stage, we are genuinely trying to pursue this policy by agreement. There is a lot of evidence that folk want to do it by agreement. I accept that there is some evidence that some folk do not want to do it at all, but there is a lot of evidence that a lot want to do it by agreement. The C.B.I. has leaned over backwards to show that it wants to do that, and the T.U.C. has done the same. Some quite remarkable and very impressive groups of trade unionists have shown that they want to do it. In this situation, it would be a mistake to make any move that looked as though we doubted this.

This is why I say that I cannot call this provision into operation unless I call the whole of Part IV into operation. If I call the whole of Part IV into operation, I can use it for any particular purpose. I could use it for this purpose alone, I could use it for price operations alone, I could use it for wage or salary operations alone, or for any of these in combination. But I ask the House to accept that it would be wise not to call it into operation at all, and certainly not to try to bespeak it for any one of these combinations.

If I were to give in to the hon. Gentleman on this point, I would then be asked to call in some other part without actually activating Part IV. Before we knew where we were, by the end of this Report stage the whole protection which we have written into Part IV for the voluntary system would have gone because we would be bringing in bits of it out of context. I want the House to realise that it would be a great mistake on everyone's part—at least, on the part of all those who want the policy to work on the voluntary principle—to push me into pulling in in compulsory fashion any one piece which is part of the whole system.

Sir T. Brinton

I put three points to the right hon. Gentleman. First, according to the newspapers—I have not the means to check it—the representatives of about 3 million workers have already declared themselves against the policy and will, therefore, presumably, resist the standstill on increases of the kind we are now discussing. Second, under Part IV not the entire onus, but the main onus, of refusing these increases is put upon employers, with the penalty of heavy fines in the background. It is provided also that no one must press employers to break the standstill, and a trade union can be in trouble too, but the main onus is upon the employer. Third, there are far fewer employers than employees.

Therefore, it is easier to work this scheme through a small number of people than through a large number, and it is precisely this small number of rather key people, who might—I think in the main they would—help the right hon. Gentleman, who will in many cases be put in an impossible position.

Mr. Brown

On the last point, I think that the hon. Gentleman has not really taken my argument, and I shall try to put it again. On the question of what the newspapers say, I think that I must be regarded now as a not unbiased observer. From my experience, whether in the ordinary hours of the day or even late at night, I do not find them the best of guides as to what is going on. If I were the hon. Gentleman, I would not accept the simple statement by newspapers that 3 million workers are against it and will, therefore, resist it. I would not take it at its face value.

Sir T. Brinton

I said "the representatives of about 3 million workers".

Mr. Brown

That is a better way of putting it, although that does not mean that 3 million workers will resist. Some of us will face the representatives, be it of 1 million or 3 million workers. We will do our utmost to persuade people that, perhaps, their representatives are not all that right. We must stand for the merits of the policy.

It is true that there are fewer employers than employees. I understand that only too well. It is also true that if one wanted to operate this compulsorily one could operate it by giving protection to the few and thereby compel it on the many. That is really what the hon. Member for Kidderminster is proposing. It is what I do not want to do and do not propose to do. Indeed, I do not think that it is what the House would wish me to do. I want to give the whole policy a genuinely fair run on a voluntary basis. It would be very wrong of me to try to compel the many by covering the few for that reason. It would not be genuinely giving the policy a fair run as a voluntary business.

It is far better that all of us, on whichever side of the House we sit and whether we wholly agree with this policy or only partially agree with it, to say that the Government should go out and face everybody with the situation, persuade them or fail to persuade them, before we come round to deciding whether we want to operate this compulsorily, And if we do operate it compulsorily at any stage, the right thing to do would be to call in the whole of Part IV and not merely try to compel the many under the guise of giving cover to the few.

I know how deeply the hon. Member for Kidderminster feels on this subject and I respect the action he took. However, it would be wrong of us to do what he asks. I am sure that what we have suggested represents the right advice to give to employers. During this period we will try to genuinely operate this policy as a voluntary business. We must say, "You, the employers, you, the trade unions, and we, the Government, must sit down and see whether we can work this out". If that fails, then a new situation will be created and I will then take the action that I should take.

Sir Spencer Summers (Aylesbury)

Having been closely following the right hon. Gentleman's reasoning for suggesting that the new Clause should be rejected, would he say whether he would regard in the same light as the remarks he has just made the power in Part IV, when called in, to protect employers who might have been subjected to legal action as a result of following the policy which he himself would wish them to follow? This is not exactly the same point as would be covered by the proposed Clause, but it does have a bearing on it.

Mr. Brown

During the voluntary period we must run it voluntarily. I therefore do not expect any employer to hit his employees, his trade union chaps, over the head. During the voluntary period we will genuinely work it voluntarily, which will mean that the hon. Gentleman or his friends who run his family firm will meet with people and get agreement, or they will not get agreement. If they get agreement there is no problem. If they do not get agreement—and if this happens in a sufficient number of cases—then the case, to my regret, will have been made out for calling into operation the whole of Part IV.

That is a much more satisfactory way of going about this and I am certain that the hon. Gentleman would not wish me, with some of his hon. and right hon. Friends listening, to say that I would then give restrospective cover for actions that were not legal at the time.

4.45 p.m.

Mr. Mark Carlisle (Runcorn)

I was not a member of the Committee upstairs and the First Secretary will, therefore, appreciate that my knowledge and reading of the Bill may not be as detailed as it should be. Having listened to him explain why the new Clause should be rejected, I have a number of points to put to him since it appears that some of his remarks were wholly illogical.

The right hon. Gentleman said that if one turns to Clause 30 one finds that a defence is given for a breach of contract by an employer who refuses to pay an increased rate of pay to an employee after the coming into force of the effective Part IV of the Measure. However, if one looks at Clause 28 one sees that that specifically states that on the coming into force of Part IV it shall be an offence for an employer to pay … remuneration … at a rate which exceeds the rate of remuneration paid by him for the same kind of work before the date of the coming into force of … Part IV.

I am sure that the Attorney-General would agree that that Clause in itself gives a defence to any claim against an employer after the coming into force of Part IV, and that, therefore, the vast majority of cases with which Clause 30 is designed to deal would already be covered by Clause 28 because from the date of the coming into force of Part IV there would be a compulsory prevention of paying an increase, which would mean that any contract to pay an increase would be frustrated and could not be enforced in the courts.

An important point to consider is the position before Part IV comes into force and where there is no statutory preventive measure to prevent an employer from paying more and, therefore, no possible defence, against any action brought by anyone who sued him for failing to carry out the terms of the contract. I appreciate the First Secretary's point—which he made in a way that, as a layman, I was able to understand—about the purpose of desiring to have a voluntary basis on both sides. However, it is wrong to suggest that the Clause has anything to do with compelling an employer to do anything.

It may be right that, from the First Secretary's point of view, he would like the employer and employee to agree between themselves not to press for an increase, but to freeze it for a period of a certain number of months. But if the employee says "No, I want the increase" and the employer replies "I am sorry. I must stand by my duty to the Government and I cannot let you have it," then there is no possible legal defence to an action that may be bought.

What would be the First Secretary's answer to this example? The right hon. Member for Nuneaton (Mr. Cousins) would probably agree on this point. Say a union has negotiated, on behalf of a number of people, a pay increase which is based on a contract to come into force during this period. Say the employer then goes to his employees and says, "In view of the Government's policy and in the light of my desire to help in that policy, I feel that I should not pay you the additional sum this month, but that it should wait for a period of six month".

Suppose that then the union, on behalf of its members, says, "We agree. We will co-operate." And suppose that one member of that union working for that employer says, "I do not agree." That is an example of a voluntary means of negotiating. One has the sort of voluntary co-operation which the First Secretary wishes to see being given the opportunity to flower between the union and employer, yet one member of the union who works for that employer says, "No", and refuses to wait, and it would appear to mean that the employer could be sued unless the protection of the new Clause is given to him.

Let us consider another example. Suppose that four people who are on a similar contract of employment with a firm expect pay rises at particular times. Suppose that three of them agree, while the fourth does not agree. What should the employer do? If he does not pay then, according to the First Secretary, he has done his best to provide the voluntary co-operation about which the right hon. Gentleman spoke. But, unfortunately, in such a case one out of the four employees does not agree and in such circumstances the employer may lay himself open to being sued by the one or, alternatively, having to say, "One of the four will not agree, so I must pay because of possible actions in the courts", and, therefore, the whole policy collapses. I suggest, therefore, that it is before the coming into force of Part IV, far more than afterwards, that the proposed Clause is necessary.

Mr. Frank Cousins (Nuneaton)

As my right hon. Friend the First Secretary said, in some long and protracted discussions in Committee we came to understand each other's points of view and the different standpoints from which we should examine the principle of the new Clause. We are also unable, in many instances, to get the answers we sought. Answers were given, but not the ones we wanted. In our debate today, I am sure that we shall have a good deal more talk about this kind of Clause and will get to know each other even better—sometimes for the worse.

I am sure that the adjectives "voluntary" and "compulsory" will be thrown across the Chamber, as they were in Committee. It will be said that this can be done on a voluntary basis, provided that one does everything which is said in the White Paper. I may be wrong, but I feel that if I told members of my organisation who have come, by discussion and negotiation, to an agreement with an employer for an adjustment in their rates of pay to take place either before 20th July or since, but not yet applied in either case, "We now have a voluntary understanding that that agreement should not be applied", they will think that I have gone crazy, and I will think the same.

There are not, as my right hon. Friend said, 3 million trade unionists who have yet gone on record saying that they will not accept the Bill when it comes into being, but if we say that it is only their representatives who take this attitude it is equally true to say that it is only the representatives of those who agree with the Bill who take their attitude. It is interesting that substantial numbers of members of organisations who are on record as approving of this principle have written to me saying how much they agree with the stand which we are taking on their behalf.

Something needs to be clearly understood. A member of a union is entitled to demand that the law should protect him if an employer is in breach of contract with him. The employer is not protected by the declaration of a Prime Minister, to whichever party he belongs. One cannot say that contracts for selling a man's services, which have become accepted as law, can be breached because someone so wishes. Nor can one accept that an offence is committed if an employer says that he will honour the contract even though someone at top level in the Government would prefer him not to do so. The new Clause could not possibly be supported, because it asks that the House should agree that an offence is committed if someone observes a contract. It says, "Will the law guarantee protection if I observe the law?" This is crazy.

A substantial number of people, during this period of argument and debate from 20th July to the end of the year, will honour obligations which they have under contract with their employees, some of them by agreement with the unions, some simply because it is the only way in which they can retain their personnel. They will not be committing offences. Therefore, the Clause is not required and should be withdrawn.

Mr. Charles Fletcher-Cooke (Darwen)

The First Secretary is putting employers in an impossible position. He made a most moving plea for the trial of a voluntary system, but compulsion already exists, and this is a flaw in his analysis. Those employers who have entered into legally binding contracts to pay certain sums are already under compulsion. No attempt by the First Secretary, even in his most persuasive manner, to pretend that we are still in the voluntary era and have not yet moved into the compulsory can escape that fact. That entirely destroys his case. They are compelled by law to pay these sums.

That being so, they have no negotiating power and such power of persuasion as they have is likely to be extremely limited, particularly in view of the frank speech of the right hon. Member for Nuneaton (Mr. Cousins). What is the employer to do? He will be faced with a conflict of duties, which is grossly unfair. I therefore appeal to the First Secretary to disabuse his mind of the impression that this is moving into the compulsory zone of Part IV if he merely removes a compulsion which already exists. This is what a legal obligation to pay under a firm and concluded contract amounts to.

Mr. R. T. Paget (Northampton)

The hon. Member for Chelmsford (Mr. St. John-Stevas) said that the new Clause is a novel proposition. He is quite wrong. There is almost a precisely similar clause in the Statute of Labourers, which was passed at the end of the 100 Years' War. Indeed, that clause was one of the principal causes of Jack Cade's rebellion. One cannot introduce a licence allowing one side to a contract to default on that contract without getting resistance from the other side. We do not want another rebellion, and this is just the kind of Clause which would get us one.

Mr. Angus Maude (Straford-upon-Avon)

Although the right hon. Member for Nuneaton (Mr. Cousins) and the First Secretary both opposed the new Clause, their speeches, taken together, brought out the inherent conflict and the difficulty behind the policy of which Part IV is the culmination. I listened carefully to the First Secretary—I accepted much of the logic of what he said and certainly the sincere and disarming way in which he expressed it—but I am not clear whether he has appreciated the enormous psychological and industrial harm which will be done between employers and employees and between employers and employers while the voluntary system is being tried.

Although that means that the least patriotic employees in the categories which the First Secretary mentioned will make the initial gains and, for a certain period, will have an advantage over their more patriotic mates, it follows that it will be the less patriotic and more unscrupulous employers who will take advantage of every loophole. I ask the First Secretary to consider what happens when an employer seeks to default on an agreement with his employees into which he entered voluntarily.

The employees would say, "We know that we can sue you. You say that the Government do not want to keep your word, but you know that you do not have to take any notice of the Government." Which is the good employer—the man who says, "I will keep the word I have given", or the man who says, "I will do what the Government want, because the Government say, and maybe I believe, that it is in the interests of the country."? Which of those two is the good employer?

5.0 p.m.

This may seem like hair splitting and logic chopping, but it is at the bottom of the whole argument. It makes absolute nonsense of the policy, because some people whom the First Secretary might regard as bad employers will say that it is perfectly right that the Government cannot compel them to do what the Government ask and that they will not risk being sued for failing to carry out their undertaking and will therefore implement the agreement. Certainly, some employers will take the easy way and they will pay.

Then the first Secretary has to decide—and this, again, is one of the crucial questions to which he has not addressed himself—how much inroad he can allow into the voluntary policy before deciding to activate Part IV. He may find that a whole industry has gone. He may find that a part of 20 industries has gone. It may be that we shall have half the country saying that those who have given way are bad employers and the other half saying that they are good employers. But inside the firms and inside the industries, in addition to this, the damage which will have been done, as between employer and employee, to industrial relations and trust and faith will be incalculable.

That is what the trouble is about and the First Secretary has not answered that at all.

Sir Gerald Nabarro (Worcestershire, South)

This is the first time that I have had occasion in this Parliament to refer to a speech made by my hon. Friend the Member for Kidderminster (Sir T. Brinton). As I sat in his seat for nearly 15 years, I have some knowledge of the conditions in the industry which he himself now largely represents here and the magnificent record of peaceful negotiations and the absence of stoppages and strikes in the carpet industry. I therefore want to support what he said in Committee upstairs and here about the extremely delicate position in which many employers will now find themselves as a result of the arbitrary provisions of the Bill.

My purpose in intervening is in parallel with that of my hon. Friend the Member for Kidderminster and to draw attention for the first time, at least on Report, although it may have been alluded to in Committee—I did not have the privilege of being a member of that Committee; I wish that I had been—to the position of wages councils, which dominate and control the wages of millions of employees.

Mr. George Brown

Not in order.

Sir G. Nabarro

This is perfectly in order, in my judgment. To recall the statutory position, wages councils make recommendations to the Minister of Labour. The Minister of Labour may accept a recommendation of a wages council or reject it, but he may not amend it.

Mr. Cousins indicated assent.

Sir G. Nabarro

I am glad to have the agreement of the right hon. Member for Nuneaton (Mr. Cousins). The First Secretary will recall that 10 or 12 years ago, when the late Lord Monckton of Brenchley was Minister of Labour, he had occasion to reject a recommendation of a wages council. There was a great row in the House from the then Opposition.

Mr. George Brown

Nothing to do with the new Clause.

Sir G. Nabarro

This is the effect of the Clause.

Mr. Deputy Speaker (Sir Eric Fletcher)

There is an Amendment which deals with wages councils and anything which the hon. Member for Worcestershire, South (Sir G. Nabarro) has to say about that subject would be better deferred until then.

Sir G. Nabarro

I will rest my argument on a very narrow issue in advance of that Amendment, if that is your wish, Mr. Deputy Speaker.

I am told that there are several wages council decisions affecting many employees in industry and taking effect after 20th July. What, then, is to be the position of the employer? Is he to obey the Statute, because it is a statutory order that he should obey? Is he to obey the instructions of the Minister of Labour to pay the increase, or is he to abide by the Prime Minister's statement of 20th July that there is a complete wage freeze?

Mr. George Brown

On a point of order. We shall get ourselves into terrible trouble if we go from here to there. My submission is not intended to hamper the hon. Member for Worcestershire, South (Sir G. Nabarro). This very issue arises on a later Amendment, when we shall be willing to defend and explain our position. The new Clause deals only with private employers. By definition, it cannot deal with wages councils and with what the Minister of Labour should or should not do. May I ask you to rule, Mr. Deputy Speaker, that we should now deal with private employers and deal with wages councils and the Minister of Labour when we get to Amendment No. 31?

Mr. Deputy Speaker

Discussion of wages councils must be deferred until we get to Amendment No. 31.

Sir G. Nabarro

The First Secretary has just said that the Clause applies to private employers. Wages councils also apply to private employers who employ millions of employees.

Mr. George Brown

By statutory order.

Sir G. Nabarro

Exactly, but such an employer may find himself in the same invidious position as the result of a wages council decision and the order put upon him by the Ministry of Labour as the position related by my hon. Friend the Member for Kidderminster.

Mr. Deputy Speaker

I have ruled that any discussion of wages councils should be deferred until we get to Amendment No. 31.

Sir G. Nabarro

I have made my point and I accept your Ruling with the greatest reluctance, Mr. Deputy Speaker, because the First Secretary in disarming fashion, to use the words of my hon. Friend the Member for Stratford-on-Avon (Mr. Maude), has misled you.

Mr. Geoffrey Wilson (Truro)

I was not a member of Standing Committee B, so I have been listening to this debate with interest. I want to raise merely one quite short and simple issue, speaking as a member of the junior arm of the legal profession, as a solicitor. What is the position if there arises a situation in which an employer comes to an agreement with the representatives of the trade union representing his employers that an agreed contract of increased wages shall not be paid, but, nevertheless, one individual then proceeds to sue?

What does the First Secretary say? Is he saying that because one person has taken legal proceedings, the right hon. Gentleman will take the necessary action to bring in Part IV, or is he saying that the employer should just stew in his own juice and pay up? It seems an enormous nutcracker to crack a nut and to implement Part IV in order to deal with one legal action which may be quite small, but, on the other hand, it will be very difficult for the employer if he just has to pay.

Mr. Carlisle

Would not the right hon. Gentleman be too late if he implemented Part IV, which relates only to increases taking effect after he has implemented it, so that he would be implementing it after that particular increase had been paid?

Mr. Wilson

I should like to know about that, too, because the First Secretary has referred to acting retrospectively. Is he saying that he could retrospectively protect the employer in those circumstances?

Sir S. Summers

I do not want to prolong the discussion very much, but I am bound to say, having started quite strongly biased in favour of the new Clause, that the more I have heard in this debate the less I have liked it. I am not at all sure that I could now support my hon. Friends. With the very best of reasons, they are trying to find a way of escape for an employer who is put into an impossible position by the Government. They are seeking to protect him from the consequences of a breach of contract.

It would be a dangerous precedent to pass legislation providing protection from the consequences of a breach of contract purely because the Government of the day suggested that a certain course was in the national interest and too proposed to steamroller it through, with the necessary number of hon. Members in the Lobby.

This could be called in aid on any future occasions to relieve contracts of the consequences of their breach in circumstances far more disagreeable and potentially dangerous than is the case here. But we are undoubtedly creating a precedent if we go ahead with the proposition that contracts can be set aside by the dictate of Government by means of a Bill, and those who consider that their rights have been removed in the process will have nothing to say because of the steps that have been taken.

Nothing I say does other than leave the employer in an utterly untenable position. If he has to choose between supporting the Government by breaking his contract, or maintaining his contract and, perhaps, bringing nearer the day when compulsory powers are substituted for voluntary ones, it seems to me that his course is clear. He should try to get set aside the contract that he entered into, but if he is not successful in getting it set aside he must honour the contract regardless of the effect on the Government of the day. It would be very much sounder in the long run to leave the matter in that way, and I hope that I have said enough to justify my point of view.

Sir K. Joseph

First, Mr. Deputy Speaker, I should like to ask your guidance about a power of the House to vote on Amendment No. 43. There are those of us, and I think that I speak for all my hon. Friends, who abominate Clause 30, which would be removed by the acceptance of Amendment No. 43, which we are taking with this Clause. There are those of us who very much wish to put new Clause 1 on the Statute Book, but our decision whether or not to vote against the Government on new Clause 1 will be affected by whether we have the right to divide on Amendment No. 43.

Mr. Deputy Speaker

The position is that Mr. Speaker has selected new Clause 1 for debate, and that can be divided on. He has indicated that Amendment No. 43 can be discussed with it. Amendment No. 43 has not been selected for a Division. Amendment No. 43 does not arise for some time. If the Opposition prefer not to divide on new Clause 1, they can reserve their rights to ask Mr. Speaker if he will allow a Division on Amendment No. 43, when we come to it. But I cannot give any assurance one way or the other.

Sir K. Joseph

I am grateful to you, Mr. Deputy Speaker——

Sir G. Nabarro

Further to that point of order, I am not grateful to you, Mr. Deputy Speaker, at all. If we are denied the right of a decision at this minute, how are we to decide how to treat new Clause 1? We are an Opposition. Surely, we should receive some guidance from the Chair, and I am asking for that guidance, Mr. Deputy Speaker.

Mr. Deputy Speaker

The position is clear. When the debate on new Clause 1 is concluded, I will put the Question. Those who wish to vote for it can vote for it, and there will be a Division if any one wishes to divide on it. When we come, subsequently, to Amendment No. 43, hon. Members will be able to ask Mr. Speaker if he will allow a Division on that Amendment.

Sir G. Nabarro

Further to that point of order, Mr. Deputy Speaker. That statement does not meet my case at all. As my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph) will spend a few minutes winding up the debate—and you have already called him—would it not be possible for you, with great expedition, to dispatch a messenger to Mr. Speaker and ask him whether he proposes to call the Amendment later? There is plenty of time to go the 50 yards to the Speaker's House and get an answer, so that I know what to do on new Clause 1. Otherwise, Mr. Deputy Speaker, you are putting me in an impossible position—[HON. MEMBERS: "And a good job!"] It is not a good job—this is a valid point. I must, therefore, ask you, Mr. Deputy Speaker, to send a messenger to Mr. Speaker to rule on Amendment No. 43.

Mr. Deputy Speaker

It is quite irregular. New Clause 1 has been selected for debate and a Division, and there may be a Division if any hon. Member so desires. Amendment No. 43 has not been selected for a Division, and it will not be reached for some time. When we come to Amendment No. 43, it will be open to any hon. Member to ask Mr. Speaker if it may be divided on, but the present Ruling is that Amendment No. 43 has not been selected for a Division.

5.15 p.m.

Sir K. Joseph

We on this side, Mr. Deputy Speaker, strongly urge Mr. Speaker, through you, to give us the opportunity to divide on Amendment No. 43, and I hope that you will be good enough to convey that view to Mr. Speaker.

Before coming to the main subject of our debate, I would remind the First Secretary that we are also discussing Amendment No. 43, which seeks to omit Clause 30, and I should like to take him up on his promise to give us his further views on the recoverability of money forgone by voluntary or compulsory standstill under the Bill and the Government's policy. The right hon. Gentleman will remember that in Committee we discussed to what extent men deprived under Clause 30 of an increase would have the right to recover the money forgone, if at all, after the freeze was over.

The hon. and learned Gentleman the Solicitor-General, replying in the Committee used words suggesting that the increase forgone would not … be recoverable, at any rate during the standstill period."—[OFFICIAL REPORT, Standing Committee B, 4th August, 1966; c. 730.] My hon. Friends and I pressed him to elucidate what that remark meant, because we took from the hon. and learned Gentleman's words straight contradiction of the First Secretary's interpretation of the Government's policy, namely, that any increase forgone would be an increase lost for ever. In Committee, the First Secretary undertook to tell us who was right—the Solicitor-General, who implied that an increase might be recoverable after the standstill was over, or the Government, through the First Secretary, who said previously that it would never be recoverable. I ask the First Secretary to honour his undertaking when he replies to this debate.

I come now to the subject of the debate, and I should like to say, with all respect, what an extraordinarily high-quality, though brief, debate it has been. The First Secretary was at his most charming, and I particularly welcomed his tribute to my hon. Friend the Member for Kidderminster (Sir T. Brinton).

The fact remains that the Government are putting employers in an almost impossible predicament. Employers and their employees have to bear in mind three considerations. First, there is the question of contract. Some employers are bound by contract to increase pay during the standstill period. They are at the very heart of the controversy of whether the Government should or should not, during the compulsory or during the voluntary phase, protect employers who abrogate their contracts.

The Government have already put in the Bill, and my hon. Friend the Member for Aylesbury (Sir S. Summers) will have noticed it, protection for employers who abrogate their contract when Part IV is activated. What we are discussing now is whether employers who break a contract at the Government's request, though not under legal compulsion—and Clause 30 is the Clause concerned—shall get legal protection.

In addition to contract, employers will want to take account of their moral obligation, and I know that the First Secretary would take this as seriously as anyone in the House. The moral obligation is as important as is the employer's contractual obligation when it comes to his relationships with the staff.

Thirdly, and I mention this only as a passing reference, there is the economic context, because if the Government have succeeded in increasing unemployment during the coming months the economic strength of the employees in holding the employer to what may not be a contractual but only a moral obligation—I wish to withdraw the word "only"—to a moral obligation, will be slightly different from their economic strength if there is no increase in unemployment. There are those three different aspects of the employer's obligation and overriding all those there is the question whether the Government are operating a voluntary or a compulsory legal wage and price freeze.

As between the Committee stage and today, the First Secretary has made a big change in his argument, and we welcome it. Today, he has said that he clearly understands that an employer could not go ahead with abrogating a pay increase during the voluntary phase if that employer's employees do not agree. That is a very different attitude from what the Government were maintaining in Committee. It is a tribute to my hon. Friend's approach to this new Clause and we welcome the realism which the right hon. Gentleman has shown.

Of course, it follows from the First Secretary's attitude now that to a limited extent—I certainly do not want to make his job more difficult—the voluntary phase may be slightly less effective, but we would only ask him not at a later stage to blame employers if under the combined effect of contractual and moral obligations and of the Government's recognition that they should not abrogate contracts even when the Government ask them to do so unless their employees agree. The Government and the First Secretary should not blame employers in those cases where they do not break contracts.

We are getting only too used to employers getting the blame for taking one or other horn of the dilemma on which the Government place them. My view is that if we have the chance to vote against Clause 30 as a whole we should, in the light of the Government's recognition that employers should not abrogate contracts or moral agreements unless all the employees—not simply trade union representatives because that would leave individual employees free to bring an action against an employer—in the light of the Government's realistic recognition that no employer can be asked in that situation to abrogate a moral or legal contract unless his employees agreed that he should do so, my impression is that my hon. Friends will be glad to vote against that Clause rather than on new Clause 1.

We would, naturally, want to hear the First Secretary comment on the debate before making a final decision. I hope that he will take the opportunity to clear up the doubt about recoverability of any forgone increase and clear up whether he or the Solicitor-General, who used the … at any rate during the standstill period", words, stated Government policy.

Mr. John Rankin (Glasgow, Govan)

Before my right hon. and learned Friend the Attorney-General replies, may I put one very short point to him? I have listened to all the discussion that has taken place on this Clause and, as a result, I find myself in rather a puzzled position. That sort of situation is not unusual in this House.

On 20th May this year the Prime Minister in this House solemnly guaranteed to general practitioners and other medical men a certain increase in their salaries. So far as I understand, the Government are really the employers of the men to whom they promised in honour that increase in their salaries. That promise, in my view, was shabbily broken. Now the Government, as the employers of this section of the community, are asking the House to give the Government protection against the Government themselves. I ask my right hon. and learned Friend when he replies if possible to solve the conundrum which this new Clause has presented to the House.

The Attorney-General (Sir Elwyn Jones)

This debate, at the very beginning of this Report stage, raises important matters of principle which it is right that the House should consider. As I see it, two main issues have emerged from the debate. The first is: do we want the voluntary system in respect of the policy of prices and incomes to work? If so, are we prepared to give it an opportunity to work? It is because the answers that the Government give to those questions are in the affirmative that we reject the new Clause.

This is a challenging period and a challenging phase for the people of our country. We are appealing frankly, as a Government, to their patriotism and public spirit. I hope that in making that appeal the Government have the support of the whole House. It is an essential element of this appeal that our people, employers and employees, should have an opportunity voluntarily and by agreement to operate what we regard as a vital experiment, a vital phase, for the country to emerge out of recurring difficulties which Government after Government have tried to face and have tried in vain to resolve.

We are convinced that it is essential that we should first try the voluntary approach to this policy. It is for that reason that we think that to introduce this new Clause, which would give the employer a statutory power of compulsion—at least, it would give him statutory indemnification in breaking his contracts—would introduce into this voluntary phase of the standstill an element of statutory compulsion which would be foreign to the voluntary principle which we think is the right principle to approach.

It is only if events show that the voluntary principle cannot work that the admittedly drastic powers under Clause 30 of the Bill will be brought into operation. Let me remind the House and the wider public outside that those drastic powers will be introduced only after both Houses of Parliament have had the opportunity of considering whether the gravity of the situation is such as to justify giving to the Government these drastic powers. There will then be an opportunity for an inquest by this House into the circumstances which have arisen and for a no doubt agonising appraisal of the situation in which we then find ouselves.

5.30 p.m.

Therefore, there will be abundant opportunity for the voluntary system to be put to the test. It will be ended, and the compulsory powers will be introduced, only if there is evidence that certain elements in the community have fallen short of their public duty and have chosen, by an attitude of recalcitrance, to challenge the policy which the Government feel is in the best interests of the nation at this time.

It is also right that the House should appreciate, not only that these drastic powers are of temporary duration, but also that the Bill signs their death warrant, because after the termination of one year Part IV lapses. The warning is clear. The conditions are very restricted.

I have described the powers themselves as drastic and admittedly unattractive. They are especially unattractive to a lawyer. Any interference with a contract which parties have voluntarily arrived at is a most serious matter which the legislator should ponder about long and carefully before doing. I would indeed be a very remarkable bird as an Attorney-General if I did not accept that. Nevertheless, there are precedents by which the legislature, in the public interest, in pursuance of public policy, has most flagrantly interfered with privity of contract.

Sir G. Nabarro

All bad ones.

The Attorney-General

Exchange control is an example. Import controls are an example. I do not know whether the hon. Member for Worcestershire, South (Sir G. Nabarro) will regard them as good examples. They are certainly examples of controls that many previous Governments—indeed, most Governments since the war—have at one stage or another thought it proper to introduce. Therefore, while we speak of the sanctity of contract, it has not apparently been regarded as blasphemy by previous Administrations to interfere with contract in the interests of the community.

Mr. A. P. Costain (Folkestone and Hythe)

Does the Attorney-General agree that in the examples he gave there was no question of the Government's saying that either party should negotiate? The First Secretary said today that the two parties should negotiate. How does the right hon. and learned Gentleman think that they can?

The Attorney-General

My right hon. Friend has rightly said—I agree wholeheartedly with his speech—that in the voluntary phase what is expected—what is certainly hoped for—is that there will be voluntary negotiations between employers and employees and that in this critical six-month period, when the nation's economy will be at challenge, there will be a willing forgoing, a voluntary coming together of the parties, which will achieve the desired result without the necessity of the Government undertaking the statutory powers it seeks under the Bill.

Sir Hugh Lucas-Tooth (Hendon, South)

If there is neither agreement nor disagreement but a number of employees take less wages than is due to them under protest, surely this will leave a legal claim which will be valid for a number of years and which will put the undertaking concerned in a completely hopeless position?

The Attorney-General

We will have to see how these things work out in practice. It is true that during the voluntary phase there will be no power of compulsion. There will be no enforceability in the agreement; it will be a matter of agreement between the parties. It has been rightly said that rights that exist in that phase will not by statute be interfered with. We are saying to employers and employees in this phase, "Please, in this period of trial and testing of the public-spiritedness of the people "—[Interruption.]—I am sorry to repeat it. I am surprised that this should be sneered at by any right hon. or hon. Member opposite, especially by the right hon. and learned Member for St. Marylebone (Mr. Hogg), who so often appears to appeal to the best instincts of the nation.

Mr. Quintin Hogg (St. Marylebone)

I did not sneer. I said only that it was not only so much trial and testing as trial and error.

The Attorney-General

I do not know whether that was intended to be a clarion call for co-operation by the nation. However, that is the call that the Government make in all sincerity.

I have been asked certain questions about the contractual results which will flow in this voluntary period. No power of retrospective protection is given to the employer for anything he does during this voluntary period. He will, in the event of non-co-operation by his employees, undoubtedly be in a position of difficulty. We insist that this voluntary phase must be given an opportunity to work.

As I understand the reaction from certain quarters on the other side of the House at the moment, they seem to be against giving the opportunity for the voluntary phase to work. Is that their point of view?

Sir G. Nabarro rose——

Mr. Gower

No. Will the right hon. and learned Gentleman give way?

The Attorney-General

Just a second. I repeat that right hon. and hon. Members opposite sneer at the matter, because undoubtedly unavoidable difficulties will arise and no skill in the world will eliminate them all. In this phase the Government and, I should have thought, most right hon. and hon. Members, want the voluntary phase to be given the chance to work, difficult though it may be. Now I give way.

Sir G. Nabarro

I am grateful to the Attorney-General. It is all so imprecise. A few minutes ago the right hon. and learned Gentleman said, "in the interests of the community".

The Attorney-General


Sir G. Nabarro

The Attorney-General agrees. Does not "in the interests of the community" mean exactly the same as "in the public interest"? When it is all put together, do not these two terms mean "what the Government want" and nothing else?

The Attorney-General

I hope that they do mean the same thing. I hope that what the Government want is in the public interest.

Sir G. Nabarro

No, it is not. That is the point. It is not in the public interest.

The Attorney-General

My right hon. and hon. Friends are pressing these policies for that reason, and that reason alone. Accordingly, we say that this voluntary phase must be given the chance to operate.

I was asked by the right hon. and learned Member for Leeds, North-West (Sir K. Joseph) a question in regard to the operation of Clause 30, which was much discussed in Committee. My hon. and learned Friend the Solicitor-General made it quite clear at column 731 of the OFFICIAL REPORT that increments which would have accrued during the period of the statutory standstill will not be recoverable.

Mr. Carlisle

Surely the reason for that, as I said earlier, is that under Clause 28 it would be an offence to pay the extra once Part IV comes into force.

If, during the voluntary period, the additional sum is not paid, then has an employer any defence whatsoever if five years, eleven months later he is sued?

The Attorney-General

I have explained the position that the contractual liability of the employer remains during the voluntary period and there is no getting away from that fact. I make the following point in reference to what was said by the hon. Member for Runcorn (Mr. Carlisle). Even after Part IV comes into force, Clause 30 will be needed only in relation to contracts broken voluntarily by employers. As the hon. Gentleman pointed out, special provision for indemnification will be unnecessary in cases which are subject to a statutory standstill under Clauses 28 and 29.

Sir K. Joseph

How does the right hon. and learned Gentleman explain the phrase … should not be recoverable, at any rate during the standstill period …".—[OFFICIAL REPORT, Standing Committee B, 4th August, 1966; c. 730.] If he thinks that is wrong and he adheres to what was said in column 731, we expect a withdrawal of the comments of the learned Solicitor-General.

The Attorney-General

My hon. and learned Friend the Solicitor-General said that at 6 o'clock in the morning and corrected himself immediately. I should have thought the right hon. Member for Leeds, North-East (Sir K. Joseph) would display the generosity which I hope is reflected in all our deliberations, because my hon. and learned Friend put the position accurately and beyond peradventure within a second or two of making the error. Accordingly, I invite the House to reject the new Clause and give the voluntary system a fair wind and a chance to operate.

Mr. Harold Gurden (Birmingham, Selly Oak)

I want to put a short question to the right hon. and learned Gentleman. The legal arguments are fascinating, particularly as he puts them. But now I want to deal with the employer himself and I will try and put myself in the position of an employer in order to put a direct question to the Attorney-General. Supposing I am faced, as an employer, by an employee who says, "I must have my contract honoured"? Do the Government say to me that I should pay or that I should not pay? That is the question of the man in the street. It is as this situation appears to the mass of employers and employees beyond the legal arguments.

The Attorney-General

I have said more than once in my speech that contract remains valid, the liabilities under contract remain. There is no more to be said during the voluntary phase but I come back to the question that I put to the Opposition. Do they want to say that there shall be no voluntary phase and that we should immediately go to compulsion? That is the issue in this Amendment.

Mr. Gurden

The right hon. and learned Gentleman has given the legal answer, but I put another question. I asked what the Government's advice is to the employer.

The Attorney-General

I repeat that the advice the Government give to the parties is, "Please, in this phase, come to terms remembering the public interest."

Sir K. Joseph

The answers given by the Attorney-General have given us even more misgiving on this side than before.

Mr. George Brown

On a point of order, Mr. Deputy Speaker. I should like to know the rules of order so that we can all observe them. Are we in Committee or on Report?

Mr. Deputy Speaker

I was about to say that the right hon. Gentleman the Member for Leeds, North-East (Sir K. Joseph) can speak again only by leave of the House.

Sir K. Joseph

I beg your pardon, Mr. Deputy Speaker. Perhaps I may have leave of the House to make a final and very short intervention before my hon. Friend the Member for Kidderminster (Sir T. Brinton) seeks leave to speak again.

We shall reserve our rights strongly to vote on Clause 30 which—and I hope that the House will take seriously what it does—should be entitled, "A Clause to authorise employers to steal some of their employees' money and to keep it." [Interruption.] If we were in Government, that is what hon. Members opposite would be saying.

The right hon. and learned Gentleman has said that it is the public duty of both sides in employment to renegotiate contracts and to the extent that it is a public duty on both sides it was better as originally presented by the First Secretary of State—simply as an appeal to the employers. We shall reserve our rights under Clause 30. What my hon. Friend the Member for Kidderminster wishes to do about new Clause 1 is a matter for him.

Sir T. Brinton

The further we have gone into this—may I have leave of the House to reply?

Mr. Deputy Speaker

The mover of a new Clause or Amendment does not require leave to speak again.

Sir T. Brinton

I am sorry, Mr. Deputy Speaker. From the glower that I got from the benches opposite I thought I did. Perhaps the First Secretary of State paid me some charming compliment.

The further we go into this the greater the difficulty there seems to be. We have learnt that the voluntary observance of restriction of wage increases will depend entirely on the unanimous good will of all the employees. We have at least elicited that and so long as it is understood by the country new Clause No. 1 has served its purpose.

It would not be my desire nor, I am sure, that of my hon. Friends, to be in the position of moving a Clause enabling employers to break their contracts. Our idea was merely to cover a point which was already in Part IV. I therefore beg to ask leave to withdraw the Motion, provided that we shall be able to vote on Amendment No. 43.

Mr. Deputy Speaker

I think the House may assume that if new Clause 1 is, by leave, withdrawn, or no Division takes place on it, Mr. Speaker will allow a Division on Amendment No. 43.

Motion and Clause, by leave, withdrawn.