ROYAL ORDNANCE FACTORIES (WAGES) (Hansard, 21 March 1968)

§ Mr. George H. Perry (Nottingham, South)

I wish to refer to the wage situation in the Royal Ordnance Factories, with special reference to the wage situation in the Nottingham and Chilwell area. It may he the view of hon. Members that it is hardly the time to raise the vexed question of wages and rates of pay, but I am certain that my constituents employed in the Government factories in the Nottingham area will not concur with that view—very much the reverse, in view of the Chancellor's Budget Statement two days ago, which will mean that the purchasing power of the content of the wage packets of the men concerned, which are already well below the national 762 average, will be adversely affected to a considerable degree.

In order to provide proof of this and to substantiate my case I have a bundle of wage packets from the Chilwell workshops which have been in my possession only a few hours. I propose to quote from eight pay packets of skilled craftsmen or engineering inspectors. In the first the take-home pay of a chief engineering inspector is £11 12s. 2d., after stoppages. The second is that of a fitter, £13 17s. 5d, another on 11th March, £13 14s. 9d. A fitter with 29 years service received, last November, £12 17s. 6d. Another fitter in November last year had a take-home pay of £14 13s. 6d, A mechanical examiner took home £14 13s. ld. last July. An electrical examiner took home £14 2s. 11d. this January. Another fitter had a net pay packet of £13 16s. 10d. in March.

My hon. Friends will be aware that there are 13 Ordnance factories, of which only eight are engineering factories. The Nottingham factory is mainly concerned with the production of guns, Leeds with tanks, Enfield with small arms, Blackburn with fuses, Birtley and R ad-way Green with ammunition. Patricroft with shells. Cardiff comes under the Ministry of Technology. The rest are concerned with explosive or fillings.

The industrial strength of the Nottingham R.O.F. consists of 400 skilled crafts- men, 200 semi-skilled and 300 labourers.

Wages at the R.O.F. can be said to compare favourably with the smaller type of engineering factory in the Nottingham district, but are well below the wages of men with similar skills at Raleigh's, Ericssons, Bentleys, Trent Motors, Metal Box and Rolls-Royce, to name but a few of the larger firms in the Nottingham and East Midlands area. One of the main reasons for this anomaly is the wages structure which arises from the Fair Wages Resolution of October, 1946, which was a reaffirmation of another Resolution of 1910. This was further reported in Report No. 18 of the National Board for Prices and Incomes entitled "Pay of Industrial Civil Servants", presented to Parliament in June, 1966, Cmnd. 3034.

The fair wages resolution calls for their pay to be in line with pay for similar industries in the district. The 763 men complain that this wage structure was forced upon them against their will, and that they fought against its acceptance all the way along the line. The main reason for their objection was that the skilled pieceworkers, although on a full rate of £16 10s., did not receive any increase in their pay packets when the new structure was introduced, and that under this system they will never again receive any increase unless the scheme is altered, which means that their wages are completely frozen and outside the concessionary 3½ per cent. which the Government seems prepared to set as a ceiling for wage increases during the coming year, and untouched by the 5 per cent. demanded by the T.U.C.

All of this, added up, places these men in an industrial no-man's land or occupational vacuum so far as wages are concerned. The complaint of the men employed at Chilwell is that, whereas their hourly rate for carrying out complete overhauls to modern tanks is only 8s. 3d., the rate at R.O.F. Leeds is between £25 and £30 a week. Skilled craftsmen employed in the manufacture of these tanks at Alvis Ltd., Coventry, are paid as much as 18s. 6d. per hour, and at Daimlers and Coventry Gears the rate is 14s. 10d. an hour. It is my view that the disparity between these rates and those of the Nottingham men is far too great.

My hon. Friend will no doubt be aware that the 508 skilled men at Chilwell have been in dispute with the management since 6th March this year over the anomalies which exist, and have placed before the management a six-point declaration, or ultimatum, consisting to a great degree of non-co-operation unless proper remuneration is forthcoming in the near future.

So it is fairly obvious that these men who are employed on armament work are not prepared to accept, in the words of the immortal bard, that they should suffer The slings and arrows of outrageous fortune, but have decided that they should take arms against a sea of troubles, And by opposing end them. 764 At a meeting held 10 days ago at the Chilwell workshops between the management, district union officials and shop stewards, the reference to a productivity agreement was welcomed, but the trade union side expressed their misgivings regarding information they had received from national level to the effect that some considerable time would elapse before such an agreement would affect, conversely, the take-home pay of their members.

Mr. Deputy Speaker, it almost goes without saying that the skilled craftsmen and many others employed at the factories and workshops referred to are up in arms at the fact that their take-home pay can be as low as £13 10s. for a 40-hour week in the face of the present cost of living, which is unlikely to remain stable in the coming 12 months. It is obvious that morale in this section is very low indeed despite the fact that Major-General Shields, Commandant of the Technical Group of the R.E.M.E., told them on 8th February this year that theirs was the finest workshop of its kind in Britain, and second to none in Europe.

Therefore, I implore my hon. Friend to act with the greatest possible speed to ensure that these men enjoy the full fruits of their labours, and do not languish in a mire of industrial discontent, which has been the situation in the Nottingham factories for far too long.

§ The Under-Secretary of State for Defence for the Army (Mr. James Boyden)

I am grateful to my hon. Friend the Member for Nottingham, South (Mr. George H. Perry) for raising the question of the wages position in the Royal Ordnance Factories and R.E.M.E. Workshops because it gives me an opportunity to say something about the new pay structure which has recently been introduced not only in the Army Department but throughout the Industrial Civil Service. It is no exaggeration to describe the recent changes as a new departure in the field of pay, and for this reason I welcome this chance to discuss them.

I have visited Chilwell, the Royal Ordnance Factory, Nottingham, and the Royal Ordnance Factory, Leeds, and I should like to take this opportunity to say how impressed I was with the intelligent and enthusiastic management of all 765 three establishments and with the loyalty and industry of the workers. I met the trade union representatives at each place, and I discussed with them fully the matters that they raised with me. Their attitude was a highly responsible one, and their relations with the managements of the establishments seemed to me to be very good.

We do all that we can to foster good relations between the managements and the workers throughout the Army Department. There are well established arrangements in the Royal Ordnance Factories and in our other establishments where the official and trade union sides can get together for consultation and negotiation. In the Royal Ordnance Factories this is done at factory level through joint factory committees and joint production committees on which local workers and managements meet regularly. In other Army Department establishments consultation takes place in industrial Whitley committees. At national level the Department regularly meets the headquarters representatives of the trade unions at the Engineering Trades Joint Council and at the Army Department Industrial Council, which I chair. I can say from my own experience that these arrangements have worked extremely well over the years, and I have no doubt that they will continue to provide management and workers with the right kind of forum for discussing points of mutual concern.

As my hon. Friend said, in October, 1965, the Government asked the National Board for Prices and Incomes to look into the system of determining rates of wages in the Industrial Civil Service in order to establish whether the existing arrangements could be regarded as being in line with the White Paper on Prices and Incomes of April, 1965, and to report accordingly. As the Board pointed out when it eventually issued its Report No. 18 in June, 1966, this was the first occasion on which the Industrial Civil Service had been examined in this way by an independent body.

Its Report contained some fairly far reaching proposals, and I think that it would be helpful if I outlined briefly its three main recommendations and conclusions as they affected pay. First, it concluded that the Government service is not one homogeneous industry but a 766 number of different and often diverse industries and that, therefore, the old arrangement of a unified pay system with common rates of pay for each grade, irrespective of the establishments in which they were employed, should be replaced by separate pay structures for each group of establishments in the same "industry". Second, it recommended that the traditional six-monthly pay reviews should be discontinued, and that future pay negotiations should take place not more frequently than annually. Finally, the Board proposed that the Government should consider the desirability of allowing local management, within the limits of the financial budget, local discretion to decide numbers and grades, and that any gains arising from the better use of labour should be appropriately shared between workers and the Government as the employers.

As my hon. Friend knows, the Government accepted the Board's Report and are now in the process of implementing it. In particular, we entered into negotiations with the trade unions concerned on the proposals for a new group pay structure. I am glad to say that we were able to reach agreement with them, and the new structure was introduced throughout the Government service in July, 1967. Let me say at once that from the point of view of the Industrial Civil Service as a whole this was a good pay agreement and meant that most people got a bigger pay packet. For the Industrial Civil Service as a whole it cost the Government £11 million.

Now I want to go into a little detail on the structure of the new pay system, for this is fundamental to the situation which my hon. Friend has been describing. The new structure consists of ten different pay groups covering both craftsmen and non-craftsmen. For craftsmen there is a two-tier structure comprising Craftsmen Grade I and Craftsmen Grade II, and both grades are paid at flat rates. For non-craft grades there is a pay banding system with up to 20 five-shilling bands in each pay group.

The effect of these new arrangements is that both craft and non-craft grades in each group or, as it were, industry receive rates of pay related to those found in the corresponding commercial undertakings outside the Government service. 767 For example Group "A" is the Engineering Production, Repair and Maintenance group, and this covers Engineering and Filling Royal Ordnance Factories and the larger R.E.M.E. workshops. An industrial civil servant employed at one of these establishments receives the rate of pay for the group. His colleague who works in Group "H", which is the Store Holding Group and covers most of the industrial employees in our storage establishments like the Central Ordnance Depot at Chilwell for example, will get a different rate of pay. Equally the man, whether he is skilled or unskilled, working in Group "E", which is the Research and Development Group, will get a different rate of pay again.

I can best illustrate the new structure by quoting some actual examples of time-work rates of pay for certain grades for a 40-hour week. A Craftsman Grade I, for example, gets £18 14s. a week in Group "A". In Group "H" he gets £18 8s. a week and in Group "E" he gets £19 19s. The rate for a craftsman Grade II in Group "A" is £16 10s. a week, in Group "H" £16 8s. a week and in Group "E" £17 8s. An unskilled labourer in Band 0 of the 20 five-shilling bands for non-craftsmen gets £12 a week in both Groups "A" and "H". In Group "E" he gets £12 7s.

I have quoted these examples in some detail because they illustrate very clearly that the new pay structure recognises not only that individual workers achieve differing levels of skill and performance of their work but that in the commercial world different industries have different wage structures. This, then, is the general picture of the industrial pay situation in the Army Department and in the Civil Service as a whole.

I now turn specifically to the R.E.M.E. workshop at Chilwell and the Royal Ordnance Factory at Nottingham. Both establishments are in Group "A"—the Engineering Production, Repair and Maintenance Group—and for this reason timeworkers on comparable work all receive the same rate of pay. But the calculation of this rate was based on the average of the rates payable in a wide range of engineering production undertakings up and down the country. It took into account as well the differing con 768 ditions of service like annual leave, sick leave and pension arrangements. I am sure my hon. Friend will see that in the light of this broadly-based method of calculating rates of pay for Group "A" there is little to be gained by making local comparisons with particular firms or, indeed, with average rates of pay in a particular region. This is true even where the outside concerns are doing work which is more or less similar to what is being done in the local Army Department Establishments. Before my hon. Friend tells me that equal work should receive equal pay, let me remind him that our new rates of pay were introduced only after detailed negotiations and agreement with the trade unions concerned.

However, I accept—and I am sure the unions would agree—that the conversion from the old arrangements to the new pay structure has given rise to anomalies and some of these have still to be resolved in consultation with the unions. But I think it is unlikely they would have any fault to find in the rates themselves since they and we negotiated them so recently.

So far I have been talking about the time workers at the Royal Ordnance Factory at Nottingham and the R.E.M.E. workshops at Chilwell. It is, however, the Army Department's policy to introduce in the Engineering and Filling Royal Ordnance Factories payment by results schemes wherever practicable. This is, of course, subject to certain conditions. For example, output must be capable of being increased by additional effort, and the effort must, in turn, be capable of being measured in terms of output. Again, for piecework there must be sufficient repetitive work to provide the data for establishing piecework rates. These conditions are reasonable and sensible and do not inhibit the widespread use of payment by results schemes. In the nine Royal Ordnance Factories in Group "A" the proportion of our industrial staff employed on one form or another of payment by results is as high as 70 per cent. At Nottingham the proportion is even higher: there it is 75 per cent. At the Royal Ordnance factory at Leeds, another engineering factory, it is 68 per cent.

These payment by results schemes, which are, of course, agreed with the unions, produce good rates of weekly 769 earnings and are popular with our employees. The average weekly earnings of a skilled pieceworker at the Royal Ordnance Factory, Nottingham, for example, are £22 12s. a week, and at Leeds they are as high as £26 8s. We have no difficulty in recruiting people at these two factories.

The position at the R.E.M.E. workshops at Chilwell is, however, rather different, and I think this is the nub of my hon. Friend's difficulty. The work done there is not straightforward production work which can easily be measured, as it can at Nottingham, and this has meant that we have not been able to devise a suitable payment by results scheme. As a result, workers at Chilwell, apart from earning overtime, have not been able to supplement their basic timework earnings; and since there is no need for a great deal of overtime at the moment, average earnings at the workshops are not much higher than the flat rates for craftsmen and non-craftsmen in Group A establishments. However, we have recently made a special study to see whether we might not be able to improve the output of the workshops by means of a productivity agreement which would conform to the criteria and conditions laid down by the Prices and Incomes Board in its Report No. 36.

This study is now complete and we are examining the working party's report. We expect to be able to start discussions between the management and the unions very soon. We have been fairly smart with this. I have been reminded that a similar scheme introduced at Fawley took two and a half years to arrive at fruition, so we have not done badly. It is, however, important to bear in mind that we are breaking new ground and have no previous experience of productivity agreements in the Service Departments. Much will depend on the good will of the management, trades unions and the workers themselves during the next few months of negotiations if we are to get the scheme off the ground as soon as possible and achieve its main objective of improving productivity. I hope that my hon. Friend will assist us in trying to do this. It will be for the benefit of the workpeople and the Government and, I hope, for the benefit of my hon. Friend.

770 The financial benefits of the productivity agreement will, of course, be shared between the management and the workers, and I am sure that everybody will join me in hoping that the agreement will not only increase earnings at the workshops but go a long way towards maintaining good industrial relations there. I shall be watching with particular interest how the discussions between the management and the unions progress, because their success or failure will not only affect Chilwell but could have wider significance for the introduction of productivity agreements elsewhere in the Department.

I come now to the question of differentials. Differentials between skilled and non-skilled grades in the Government service have, as a whole, widened under the new arrangements and not narrowed. For example, before July, 1967, a craftsman Grade II in Group "A" on basic rates of pay—that is, without any supplements—got 34s. a week more than a driver in band 4, and 52s. more than an unskilled labourer. Since last July these differentials have increased to 61s. and 90s. Other groups would provide similar evidence of widening differentials.

It is, however, true that within the craft field differentials have narrowed following the introduction of the two flat rates of pay to replace the old craft supplement scheme with its complicated system of rewards. But insistence on two flat rates for craftsmen was one of the main conditions of the trade unions' acceptance of the new structure.

The pay arrangements for the Industrial Civil Service are fairly complex, but I have done my best to set them out as clearly as possible. I believe that the new structure is a great improvement on the old arrangements and offers considerable benefits to management and employees alike. We are now in the process of taking the opportunities presented by this new departure in the pay field to further the interests of all who are involved in establishments like the Royal Ordnance factory at Nottingham and the R.E.M.E. workshops at Chilwell; and, given the continuation of the good relations which now exist between the management and the workers and their representatives, I believe we shall succeed in making the most of these opportunities.

771 I hope that tonight's brief debate has given the opportunity of clearing the air with regard to Chilwell in particular, and that we shall be able to look forward fairly shortly to good negotiations with 772 the trade unions and satisfactory arrangements for the workers.