HC Deb 23 March 1967 vol 743 cc1934-49

12.36 p.m.

Mr. Kenneth Lewis (Rutland and Stamford)

The subject of this debate— the difficulties of those on short-time working—does not apply to Members of Parliament. Everybody else's working hours go down, but our working hours go up. I am doing some self-imposed overtime. I am glad to do it and to have the opportunity of debating this subject.

In dealing with this matter, it is important and necessary to put certain figures on the record. There are two obvious indications from the employment figures which concern this subject. First, there has been an obvious reduction in overtime working. In 1964, the percentage of people across manufacturing industry who were working overtime was about 34. I will not go through the figures since that date, but they have come progressively down until in January, 1967, 29.8 per cent. only were working overtime.

The number of those on short-time working in May, 1962, was 118,000. That was the highest figure for many years, and it was the only time that the figure went up to that extent. It has been 45,000 since then, but, on average, since 1962, it was only 25,000, until October, November and December of 1966, when the figure rocketed to 176,000. In January this year the figure was 162,000, which is 2.7 of all operatives on short-time working. There is, therefore, a consistent upward trend.

If one looks at the matter from the point of view of industries, we find that in January, 1967, in the metal manufacturing industry there were 26,000 people on short-time working; in the vehicle industry, 42,000; in textiles, 27,000; and in engineering and electrical industries, 11,000. In addition, there has been a considerable increase in the number of workers temporarily stopped. I will not bore the House with any more figures. They are the basis of my case, and I think that they are pretty crushing. The present figure of people temporarily stopped is 10 times as high as it was in 1964. Average earnings are down by 4s. a week. That is the average, which hides considerable other reductions over a broad field. Average working hours are also down, and they are heavily down over a broad field.

I am concerned about the effect of this. Average male earnings are 110d. per hour; the highest 136d. an hour and the lowest 90d. At the level of average earnings, a man working two hours less will have a loss of about £1 a week. A man on the highest rate of pay per hour will have a loss of about 24s. a week and a man on the lowest rate of pay, who can least afford to lose anything, loses 15s. a week. That is on the assumption that he has a reduction in his normal working week.

If, in addition, a man is dependent on overtime and overtime has been cut out, on an overtime basis of time-and-a-half he can suffer a reduction which is 50 per cent. worse, so that he might be, not £1, but £2 a week down or, on the lowest and middle rates of pay, not 15s., but 30s. or £2 down. Apart from figures, as one goes around the country one sees and hears about the short-time working that exists.

There are three aspects of this matter each of which has a bearing on the economy and arises from Government policy; first, production and productivity; secondly, incomes policy; and thirdly, the social effects on the family First, production and productivity. We will not get increased productivity until we get increased investment, and we cannot get increased investment without confidence.

On Tuesday of this week, the President of the Board of Trade announced a speed-up in distribution of investment grants. This had obviously become necessary because there was a clear lack of confidence in industry, and this must have been obvious to the President of the Board of Trade. Indeed, the Government themselves have predicted that investment will drop this year by something like 10 per cent. According to the Confederation of British Industry, however, the investment drop is more likely to be between 15 and 20 per cent. I am not sure that the Government's predictions are any better than those of Old Moore. I would be inclined to accept the predictions of the C.B.I, as likely to be more correct at the end of the day.

The Government have to recognise that, if production is to be kept up, until we get higher productivity through investment only man-hours can do it. Until the new machinery is installed, only man-hours will give increased output. Short-time working means a lag in production, and if there is a lag in production prices are bound to rise. Whatever the Government may do to hold prices back, they may be effective to a certain extent on the home front but they cannot be effective in keeping down prices for export. Export prices can become higher because, if manufacturers are not allowed to raise their prices in the home market, they must raise them for their overseas products. This can have a considerable worsening effect in our export battle. This is the danger of reduced hours of working.

Yesterday, the Secretary of State for Economic Affairs introduced the new White Paper, "Prices and Incomes Policy After 30th June, 1967", the signposts for the future. I seem to remember something about "Signposts for the Sixties". I do not know what happened to that, but yesterday's White Paper did not seem to be sure which way the signpost would face. It reminds me of when one goes to a road junction and somebody has turned the signpost round the other way: then, one finds oneself on the wrong road. Indeed, the Government have not yet even put up the signpost. They have given us a White Paper but they have left open the options about which way we will turn. We are to hear about this presumably sometime after Easter.

In the White Paper, the Government have taken tentative steps towards recognition of the value, and, indeed, the need, for productivity bargaining. This is acceptable to us but it is rather belated. The Government have had to accept this all along to a certain extent with piecework rates, because increases have arisen from piecework rates despite the incomes policy. The Government's mistake has been that they did not announce a long time ago that they were prepared to encourage productivity agreements. One of the great economic debates during the next few months and years will be whether we need an incomes policy. Incomes are not only a matter of base rates, but a matter of earnings. This is why short-time working affects any incomes policy.

In so far as the Government are trying to get away from complete monolithic bargaining on base rates, I agree with them. We must have base-rate agreements, but they should not be the only content in wages. In so far as the Government are trying to shift some of the negotiation on to the plant level, I support them. If they really believe in this, however, they should have been encouraging productivity agreements at least a year ago.

The present position is that earnings are down over a very wide front. Over part of this front the trend is still down and over part of the front it is static. This is the result of deflationary measures assisted by the stop. But the stop would not have worked without the deflationary measures. Even if the Government had realised that Part IV of the Prices and Incomes Act could work only for a limited period, they should also have realised at the same time that if they had got the economic situation under control earlier, they would not have required Part IV of the Prices and Incomes Act. Short-time working as a result of Government policy—and it is a result of Government policy—is a direct encouragement to base rate upward demand. In so far as it cuts back production, it is also a disadvantage to the economic health of the nation.

What will happen when we get out of the present depressed state, when industry starts moving again, as we hope it will? What part will a prices and incomes policy play then? The Government want a prices and incomes policy as a long stop. We do not know at what position the stop will be held, whether it will be for four months, six months, nine months or a year. The Government say that the T.U.C. voluntary method should be tried, but they have not very much hope that it will work. I must confess to the Joint Parliamentary Secretary to the Ministry of Labour that I have not very much hope that it will work either.

Suppose, however, that we give it a chance and that in the long term everybody in the House would want to give it a chance. If it works, that will be fine and the Prices and Incomes Board will presumably be out of a job. If, however, as is more likely, the voluntary effort works only partially—I am being an optimist in supposing that it might work partially; it might not work at all —what then will be the rôle of the Prices and Incomes Board?

I have said that the Government want the Board as a long stop and the Board itself wants to be a long stop. As I see it, however, it ought to be, to continue with cricketing terms, more a slip activity, or a means of hold-up rather than stop. A Prices and Incomes Board as a hold-up procedure on wage claims could be useful—for two reasons, in my opinion. First, because while it is holding up the claim, public opinion can be brought to bear by the investigations of the Board and by the comments made by the Board. Secondly, when the hold-up is taking place on any wage claim employers would be strengthened, again by the comments of the Board, to hold out against any unreasonable demands.

If the economy of the country is right, this is the only function which is required of a Prices and Incomes Board. But first of all we have got to get the economy right. Short-time working as it is at present in the country indicates that the economy clearly is not right.

The White Paper which was produced yesterday asks for redeployment, what it terms "redistribution of manpower". Redeployment is the answer to short-time working and to cuts in hours. But then, what are the Government doing to provide redeployment or redistribution of manpower? We are not getting it. We are not getting it for two reasons, first of all, because retraining opportunities have been too slow to develop, and I think the Government are accepting this slow development instead of giving the push which is required. Secondly, there is a complete lack of incentive given to our best industries. There is a lack of confidence, there is a lack of incentive over a broad field, whether one looks at investment or whether one looks at taxation.

The present situation of short-time working and under-employment is not only bad for the nation from the production point of view but, of course, it is particularly bad socially. Low-paid workers are the worst hit. Low-paid workers more than any other depend on working full hours. Many of them, indeed, depend on overtime. Cuts in hours among them mean that their wages are so low that they can hardly manage. In addition, they may be hit by the wage stop. A 15s. a week cut to a man earning £9 or £10 a week is the difference between his normal rate with which he pan hardly, but just, cope and the reduced rate which means complete and absolute disaster. A cut of £1 or even slightly more to a man earning £24 a week means he has to make certain economies; but he can manage. So hours of work matter very much to the lower-paid and middle-paid bands of workers.

In the industries most affected at the moment, textiles, boots and shoes, furniture, general engineering, short-time working is causing difficulties which to many people mean they would be hardly much worse off if they were actually unemployed. In vehicles and the auxiliary industries this is probably temporary, but I am not sure that it is temporary in these other fields, and I should like to know from the Minister what he proposes to do to encourage an increase in activity in these other industries where the signs are that stagnation is setting in.

The answer to this problem is very clear, I think. First of all, instead of punitive and selective taxation across the board in industry the Government have got to reduce taxation in order to provide incentives. We want words and not deeds from the Chancellor on 11th April. Instead of discouragement we want encouragement from the Government for industry. Britannia's fork is a very uncomfortable weapon if one is made to sit on it. If it is used for production it can be a means by which everyone gains, from the top right down to the bottom. It is no good pretending that a man at the bottom of the wage scale or salary scale will gain if the man at the top is unduly squeezed.

Easter will soon be upon us, and we look in vain to the Government for Easter eggs. I hope that when we come back after the Easter Recess the Treasury Ministers and the Secretary of State for Economic Affairs and all those Ministers who are concerned with this problem will realise that something must be done about short-time working in industry. There is a clear indication that industry is running below the productive level which the country requires to give us growth. At the moment growth is static, and only out of growth can the country secure its future prosperity.

12.56 p.m.

Mr. Robert Carr (Milcham)

I am sure that we should be grateful to my hon. Friend the Member for Rutland and Stamford (Mr. Kenneth Lewis) for raising this matter as one of the subjects for debate today. I should like just to make a very few points, and to do so briefly, in support of what he has said.

I am sure, first of all, that we would all agree that what the figures which my hon. Friend has been bringing before us show is that the most serious effect is the human effect, the effect on the lives of many thousands of people of the loss of overtime to which they have previously been accustomed; and added to that is the loss for some of their ordinary basic wage, through short-time working and hence the loss of a very substantial part of the earnings to which they have become accustomed and on which they have based the pattern of their lives.

Coupled with that is the fact that we have had the wage freeze. The Government's policy must be making life very hard for many people, and, unfortunately, as my hon. Friend said, those whom it is affecting hardest are those workers who were in the first place very often among the lowest-paid section of our community.

Also coupled with that is the Government's apparent inability, shown again only yesterday, to define in any way what constitutes "the lowest-paid workers" and therefore to provide any criteria on which to justify wage increases to help them in their difficulties. This is a matter on which I think we should press the Government very hard to do better than they have hitherto done.

All these figures reflect the inefficiency of the Government's economic policy. When the Prime Minister came to the House on 20th July one of the great claims which he made, and which he has made on other occasions, was that one of the great objects of the policy was to shake workers out of the less essential industries in order to get them moving into those industries which were more important in the national need.

We on this side of the House are sceptical about the gentlemen in Whitehall always knowing best which are the most important industries and which are not, but that is another issue. What is clear from the figures is that this idea of redeployment has been nothing but a myth. Had we in fact got a large movement of people from the so-called less essential industries into the big exporting industries something would have been achieved.

But nothing is achieved by putting people on short time, just as nothing is achieved by putting people out of employment. Short time is only one stage less had than unemployment, and the evidence of the figures to which my hon. Friend has drawn attention is that, far from a rapid movement of people from less essential to more essential industries, we have seen short-time working rising to unprecedented levels. That is not only hard on the lives of the people concerned, but bad in the national economic interest.

The figures to which my hon. Friend has drawn attention are an indication of the whole negation of growth in our economy from which we are suffering at the moment. They are the epitome of stagnation. We were invited as a country to "go with Labour". We were told that we must get rid of the old Tory stop-go. At least, in those bad Tory days we had a number of periods of "go", and very fast "go". Never did we have two and a half years of complete stop, as we have had under the present Government.

The moral to be drawn from the figures seems to be that we shall never get a satisfactory incomes policy, never get a permanently satisfactory balance of payments and never get over the problems of many kinds which worry us until we get our overall economic policy right. That involves a whole package of measures, and the great mistake which the Government have been making is to try to depend far too much on one measure, namely, their prices and incomes policy.

An overall economic policy involves a constraint on Government expenditure, and we are getting the reverse. It involves a reform of taxation to give more incentive to individuals and to companies, and we have had a change in the reverse direction. It involves a return to proper investment allowances, because good modernisation of the plant in our factories is one of the keys to higher productivity and lower cost production; yet we have been saddled with a system of investment incentives under this Government which are much less in total and less effective in kind than when the Conservative Government were in office. It involves the reform of trade union law. It involves the use of tariff policies and a tightening of our attack on restrictive practices, whether by management or labour. All these things must be pursued consistently and simultaneously.

If we were to have from the Government an overall policy which was encouraging growth, competitiveness and modernisation, we should not have the short-time working about which my hon. Friend has spoken. We should not have this abortive and unfair incomes policy about which we heard so much yesterday. The country would be making progress towards a growing richness of life and a growing material richness for our people as a whole.

1.15 p.m.

The Joint Parliamentary Secretary to the Ministry of Labour (Mr. Roy Hat-tersley)

I want to deal, first, with the points raised by the right hon. Member for Mitcham (Mr. R. Carr) and the hon. Member for Rutland and Stamford (Mr. Kenneth Lewis), which, while not directly related to the problem of short-time working, are obliquely related to it in so much as they refer to labour utilisation and the proper uses of resources.

However, before doing that, may I clear away some of the clouded air which has been caused by the over-use of cricket metaphors, such as the distinction between long stops and slips. The hon. Member for Rutland and Stamford talked as if the Prices and Incomes Board was seen by the Government as a long stop. When references to long stops are made from this Dispatch Box—certainly by Yorkshiremen, who are the people most qualified to use cricket metaphors—they relate to those parts of the prices and incomes policy referred to in paragraphs 36 to 38 of yesterday's White Paper. They are the reserve powers, or the potential reserve powers.

The hon. Gentleman referred to the Prices and Incomes Board as being, in his view, more properly a slip. As I understand the rôle of slips, they are to catch people out, and that is not the rôle of the Prices and Incomes Board. The Government see the Board as having a much more positive and creative role, and many of the reorganisational proposals for industry which the hon. Gentleman has suggested this morning might be initiated by the deliberations of the Prices and Incomes Board.

I urge the hon. Gentleman to read its Report on productivity agreements. It has nothing to do with deterring a wage claim, and nothing to do directly with holding a prices and incomes policy, but everything to do with a cool, long look at the nature of British industry. As the years go by, that must be increasingly the job of the Prices and Incomes Board.

Secondly, may I refer the hon. Gentleman to Government policy on productivity agreements? He has discovered a reference to productivity agreements in yesterday's White Paper "Prices and Incomes Policy After 30th June, 1967." When the debate is concluded, I hope that he will read the White Papers published in June of last year, in November of last year and even before the statement of 20th July, which have referred constantly to the necessity for promoting productivity agreements, and have enabled those companies and unions which have organised acceptable agreements to make and receive additional payments notwithstanding the requirements of the freeze.

If the hon. Gentleman spent all his late Wednesday nights listening to the recurring debates in the House about the prices and incomes policy and Orders relating thereto, he will understand that from time to time there are complaints that the Government have been over-willing to allow increases on the basis of productivity agreements.

Before I turn to the direct subject of short-time working, may I say a word about its reference to and its application to the lowest-paid workers? We are told constantly that the Government have no conception of what a lowest-paid worker is and that the Government's economic policy has no understanding of and makes no allowance for the needs and problems of the lowest-paid workers. I ask him to understand that it would be arbitrary, impossible and a totally abortive exercise to expect the Government or the Prices and Incomes Board to make a precise, general, absolute and all-embracing definition of what is a lowest-paid worker.

What we have done, with the assistance of the Prices and Incomes Board, is to recognise many groups of people as falling within that category. I refer the hon. Gentleman to the Agricultural Wages Review and the decision by the Government and the Board that people covered by that review were genuine lowest-paid workers. I refer him to considerations about the engineering agreement and the decision that some people covered by that agreement were lowest-paid workers. There are substantial studies from time to time which recognise and diagnose lowest-paid workers when they are seen. There is little more that any Government can do. The question of having an all-embracing definition is impossible.

In the part of his speech which referred directly to the Motion on the Order Paper, the hon. Gentleman drew our attention to two sorts of difficulties caused by short-time working: the difficulties of a personal sort and the difficulties of an economic sort. First of all, there are the difficulties of the man who is no longer working a full week and who is required to live on reduced earnings. He undergoes those difficulties both in terms of uncertainty and of loss of morale and because of a reduction in his standard of living.

The Government in no way minimise the personal problems which have always been associated with short-time working and always will be. The problems are analogous to those of full unemployment, and on some occasions can be felt more severely than those of full unemployment itself. These hardships are a salutary lesson to those people on both sides of the House and outside who continue to advocate a prolonged period of deflation as an alternative to an incomes policy.

One of the objects of the policy is to make sure that, when this present period of unemployment and underemployment has passed, we do not return to that altogether undesirable and unsatisfactory state of affairs, because the Government do not pretend that it is anything other than that—

Mr. R. Carr

During the last two and a half years, have we not had a prolonged period of deflation?

Mr. Hattersley

Of course not. We have had a period of severe deflation since 20th July. If the right hon. Gentleman looks at the figures up to 20th July, he will see how quickly wage rates were increasing. During the March election, his right hon. Friend went about the country quoting the figures 9:5:1, which was intended to demonstrate that wages had gone up by 9 per cent. during that period. We have certainly had a period of deflation since 20th July, and part of our policy is to make sure that, when we get the economy right this time, it does not have to happen again. 20th July was not simply an exercise in increasing deflation. It was not simply an exercise in solving our economic problems in the way the problems were almost solved in 1961. Whilst one of the objectives of the 20th July measures was a reduction in consumer demand, another essential objective was the redeployment of labour.

I want to make it absolutely clear that, in the Government's view, redeployment of the sort we then advocated, and of the sort we have since encouraged, cannot be achieved, in its fullest sense, if too many employers and unions choose short-time working rather than movement from job to job.

In some industries occasional periodic temporary short-term working may be economically acceptable, but where the Government are promoting or causing a structural change, short-time working is not the answer. My right hon. Friend made this exact point after his meeting with the motor manufacturers and trade unions on 28th September when, after discussing with them the redundancies in the industry, he said that when a firm was reducing its labour force to a more permanent and economic level, redeployment was the answer, but that there were certain circumstances in which short-time working could be desirable in the short term.

He went on to make it quite clear that the ideal solution for which the Government were striving was movement from one firm and one industry to another.

Mr. Kenneth Lewis

Surely it is a question whether employers choose short-time working? If the Government had jobs available for the workers, they would not want short-time working, but would want to move to those new jobs in those industries.

Mr. Hattersley

Time does not allow me to allocate blame. The Government do not seek to allocate blame, but we are trying to encourage men to accept new jobs rather than short-time work. The Government have brought in redundancy payment benefits which encourage men to change jobs without worrying about losing seniority, about the temporary frictions which are bound to be caused when moving from one job to another, and about many of the other problems associated with a change of job. The Government has also brought into operation short-term unemployment benefits, all of which are geared to encourage a man to change his job rather than to stay on working on a short-time basis.

The Government have done more than that. They have made a series of proposals, all of which are now in operation, positively to encourage the retraining which is an essential feature of re-employment. The hon. Member for Rutland and Stamford said that the Government were not doing enough. He said that the programme which the Government had outlined was not being completed, that progress was not being made at the right speed. At some time a learned society will write a thesis on the force of the unsubstantiated assertion in politics, and I am sure the hon. Gentleman's contention this morning may well appear high on its list of reference. It is impossible for the hon. Gentleman to say quite blandly that the Government are not doing enough about retraining and encouraging mobility, and leave it at that. I will remind him of some of the things that the Government are doing.

On 30th November my right hon. Friend announced the largest plans for the increase of industrial training that have ever been announced in the House. He announced plans which were basically to do with training within Government establishments. He outlined the plan for increasing the number of places at Government training centres. I assure the hon. Gentleman and the House that those plans which were then outlined are going ahead on schedule. The targets were very precisely estimated and promises firmly given. Those targets will be reached and those promises kept. The increase in Government training centres and places is going ahead and will be accomplished.

This is an enormous incentive to a man to choose not to work three days a week at his old trade, but to go on very favourable terms, to a Government training centre, and learn a new job which will enable him to work five days a week at a new one.

In addition, there is a vast programme of internal industrial training organised by the training boards which give to specific industries the opportunity to provide for their working people increased basic training. It is bound to make the individual working man more mobile. It is bound to make him more willing and able to accept new techniques in a new firm and apply himself and adapt himself to a new job, rather than stay working for two days, or three days, or three and a half days in his old one.

Having said that, I would not like the House to believe that all these programmes for promoting redevelopment, as an alternative to short-time working, substantiates the theory that short-time working remains serious a problem, as the hon. Gentleman made out. Let me give him some figures.

Mr. R. Carr

The hon. Gentleman mentioned the Government's retraining centre expansion. Is it possible to give any figures as to how much these places are being taken up and whether he is satisfied that the help and incentive given to people to go for retraining are adequate?

Mr. Hattersley

I can give an absolute assurance on that. The first point is that places are being provided. The second is that the demand for them is there. Waiting lists still remain and the demand for people trained is there. There is no question of training people for jobs which are not available afterwards. I visit a Government training centre somewhere every week. I have asked men whether they find the levels of financial help adequate, or if their inadequacy is a deterrent, and on no occasion have I been told that the financial provision prevents or might have prevented them from taking up training places.

Let me turn now to the figures of short-term working. At the time the July measures were announced, short-time working was running at about 0.5 per cent. By November, it had increased to 3.1 per cent. By December, it had decreased to 3 per cent. In January, there was a further reduction, and short-time working is now hardly greater than it was in the early months of 1966. Of course, that is a general figure. There are industries where there are exceptions.

Let us examine those industries and see what is the position. In the motor industry where short-time working invariably receives the most prominence and most publicity, short-time working rose to almost 30 per cent. in October last year. That is a very large figure, and it is in no small part due to the special industrial and economic circumstances that surround that industry. In December, the figure fell to less than 19 per cent. In January, it was a little more than 11 per cent.

The House knows that motor manufacture is traditionally volatile. There were many months over the last three years when short-time working was at or about 10 per cent. Therefore, not only as a Minister, but as a Midlands Member, it gives me great pleasure to remind the House that at this moment short-time working in the motor industry, although we deplore it, is no greater than it has been for many years or many months of our recent economic history.

One of the ways in which we hope to judge the success of the Government's policy is our ability to protect from some of its more severe, though necessary, provisions those parts of the country and those sections of industry which are traditionally prone to unemployment and which traditionally suffer more than some of their industrial competitors. I would mention, as an example, the shipbuilding industry, which, paradoxically, is always beset by short-time working and unemployment, but which, at the same time, should, could and must make a very large contribution towards the economic prosperity and success of this nation.

In the shipbuilding industry short-time working this month is less than it was in July and less than it was a year ago. It is an example of the Government's decision and determination to cushion that sort of industry and that sort of sector against those measures which we thought necessary on 20th July.

I do not run away from the word "deflation". The measures of 20th July were in no small degree deflationary.

They were intended to hold back consumer demand. They were the bitter medicine which the Prime Minister and the Government felt the economy needed.

The sort of figures which I have given the House, and the proposals for retraining and redeployment which I have been able to outline, signify that it was more than simply an exercise in cutting back demand. It was an exercise in cooling down the demand in some industries, but it was also an exercise in making sure that the resources that were thus made available went into export-earning, growth industries, on which the future prosperity of this country depends. It was an exercise which all the economic indicators published over the last month prove to have been a great success.