DRAUGHTSMEN, GLENROTHES (PAY) (Hansard, 25 March 1968)

§ Mr. William Hamilton (Fife, West)

Beckman Instruments Ltd. is an American firm with a factory in the new two town of Glenrothes in Fife. It has rather less than 600 employees, mostly women. Partly as a consequence of that, trade union organisation is either weak or nonexistent. But one union, the Draughtsmen's and Allied Technicians' Association, has won recognition. On 7th September, it reached agreement with the company, after three tries, on a new wage scale affecting, I think, 15 draughtsmen, agreement on a scale recognising the new D.A.T.A. minimum rates. I am advised by the D.A.T.A. representatives who came to see me that this increase was negotiated after three attempts to secure agreement with the management.

Since the increases were subject to submission to the National Board for Prices and Incomes, the firm quite properly notified the Ministry of Labour on 8th September, the day after the agreement was reached. On 18th September, the Ministry replied stating that the Board's report on the engineering industry was expected in November and asking Beckman's to withhold payment pending publication of that report.

On 4th October Beckman's replied to the Ministry, justifying the increase on grounds of increased productivity, a commendable course of action. The figures which the firm supplied to me in a letter dated 29th February show an increase of 35 per cent. in sales compared with the previous year, with only a 23.8 per cent. increase in engineering expenditure, which included draughtsmen. In a letter which I received from the divisional organiser of D.A.T.A., dated 22nd March it said: The firm agrees that there has been an increase of 18½ per cent. in drawings per man per year, and that the average time per drawing has been reduced from 11 hours to nine hours since July 1967. With those facts in mind the firm had committed itself to implement the negotiated increase on 1st December last year. 1122 It so advised the Minister of Labour in the letter dated 4th October. On 19th October the Minister replied, saying that the Government were unable to reach a decision on the agreement until the Prices and Incomes Board had reported on the engineering industry. That was followed by a further letter from Beckman dated 2nd November, reiterating its intention to pay out on 1st December, as it had promised, unless the Government took legislative steps to protect the company against default. Failing that kind of protection, the firm went ahead and the agreement became effective on 1st December.

Details of the agreement were given to the Ministry of Labour on 8th December and the Prices and Incomes Board's report on engineering was published in mid-December. To recapitulate, two months after the firm had started paying the increases, and six weeks after the report of the Prices and Incomes Board was published, the Ministry of Labour wrote to Beckman telling it that in view of the report it should reconsider and revise the agreement. It was only at that point that reference was made to Part II of the Prices and Incomes Act.

The firm was told that if it did not act voluntarily, then a direction to suspend payment would be issued. Subsequently I understand that there were a lot of comings and goings, telephone calls, letters and visits, back and forth to London. Finally on 20th February, five and a half months after the agreement had been first reported, a direction was imposed by the Minister, suspending payment of increases—not asking for the money already paid to be taken back I understand. I am surprised that the Minister doubted the figure which I gave in my supplementary question to him on 11th March. Such delays as this seem to me to be completely incomprehensible and indefensible. It is simply not good enough to leave a firm in that kind of state of suspended animation waiting for some report at some date which might make recommendations either acceptable or unacceptable to the Government.

What was all the row about? I understand that the total increases to all the men involved amounted to quite a bit less than £20 a week. I understand that two of the men were to get £5 a week 1123 extra. One or two were to get 10s. and some would get nothing.

What kind of men are we talking about? I have been advised that one of them has a Higher National Certificate in chemical engineering. Two have higher national certificates in mechanical engineering. Seven have ordinary national certificates in electrical engineering and one has a City and Guilds certificate in mechanical engineering. We are, therefore, talking about men whom we want to keep and encourage, men with valuable qualifications in the kind of scientific exporting industry which we so desperately need to cherish, and particularly in Scotland.

I should add another point. I received this morning a letter from the Press and public relations adviser of the Prices and Incomes Board, a Mr. Bernard Ingham. It refers to some comments which I made on the visit to Beckman's of two Board officials on, I think, 29th February. I am not responsible for any gloss which the Press may put on my comments on this or any other matter.

I am not hiding behind anything which has been said or not said, but the opinions which I then stated on the qualifications of the two gentlemen concerned were given to me by the trade union representatives who came to see me. I am repeating what they, the D.A.T.A. representatives, said to me and I apologise to them if I did any of them an injustice. That is a relatively minor point.

I understand that representatives from D.A.T.A. and from Beckman's are to meet the Prices and Incomes Board on 9th April and to that extent, I suppose, the issue is sub judice, but I want to make a final point on the general issue. As my hon. Friend the Joint Parliamentary Secretary probably knows, I am in general agreement with the principle of a productivity, prices and incomes policy. Many hon. Members and people outside this House are inclined to forget the productivity side of it.

Let me, however, add in parenthesis that I was not the slightest bit impressed with the "dog's breakfast" served up as such a policy by the Secretary of State for Economic Affairs last Thursday. It seems to me that if we are to get this kind of policy accepted by trade unions 1124 and by the country, it must be fair, sensible, workable and flexible, and it must provide incentives or rewards to greater efficiency and greater productivity. Because this claim does not do those things, I object very much to the Prices and Incomes Board and the Ministry of Labour interfering with an agreement which has been freely negotiated by the firm and by the trade union concerned.

§ The Joint Parliamentary Secretary to the Ministry of Labour (Mr. Roy Hattersley)

Like my hon. Friend the Member for Fife, West (Mr. William Hamilton), I think it will be necessary for me to go step by step through the details of what is a complicated issue. Before I do that, disagreeing with him on one or two matters of fact, I think it is important that I should put the matter in general perspective.

The general perspective must begin with a statement of what my right hon. Friend the Secretary of State is doing when he asks the Prices and Incomes Board to make a judgment about this and other agreements between D.A.T.A. and specific employers. I should make it clear at the outset that that does not mean that the Government have passed a judgment on the propriety of an agreement—whether or not it is within the terms of the prices and incomes policy. Indeed, the agreements have been referred to the Prices and Incomes Board in order that advice about their propriety can be obtained, and I repeat that nothing I say or that the Government says should be thought to cloud the issue or prejudice the eventual judgment whether what an agreement does or says conforms with the prices and incomes policy. It could well be that this specific agreement or others referred to the Board turns out to be in conformity with the prices and incomes policy; it might be that a part of one of them turns out to be in conformity with the prices and incomes policy. If that is the case the Government are bound by the Prices and Incomes Act immediately to allow the implementation either of all of the agreement or of part of the agreement, depending on whether all or part of it is judged by the Prices and Incomes Board to be acceptable within the terms of the policy laid down by the Government in Cmnd. 3235.

1125 Reference of this agreement, or for that matter any other agreement or claim to the Board, implies one of three things, First, that there is an issue of general principle or general application. Second, the agreement, if implemented, might have repercussions on other claims or agreements. Third, that there is a possible but by no means certain breach of the prices and incomes policy.

I think that if, like my hon. Friend, I go through the stages of this agreement step by step he will agree and the House will agree that by these criteria my right hon. Friend was right to ask the Prices and Incomes Board to look at this agreement.

Of course, my hon. Friend is right in saying that the agreement affected only 15 draughtsmen, but to my mind the numbers involved are irrelevant. If we are, as he agrees, to have a prices and incomes policy it cannot be a policy only for people who choose to co-operate in it and who choose not to oppose it in militant fashion. Equally, it cannot be a policy simply for large firms. It must be fair and must be seen to be fair. The first requirement of fairness is that the policy should be of universal application, irrespective of the sizes of the agreements, irrespective of the number of men who are encompassed by an agreement.

Certainly, the size of the agreement, and the number of men involved, should in no way suggest that this agreement would not have repercussions in other drawing offices throughout Scotland. To my mind, there is no doubt that if this agreement had gone forward, it if had been allowed by the Government, if it had automatically been approved by my right hon. Friend, hundreds more—and I use the word "hundreds" after some consideration—hundreds more specific agreements might have been made involving increases of similar or comparable size. I say again that this one agreement, or hundreds more which might have resulted from it, may well be in conformity with the prices and incomes policy. If this is not the case, and if that is the judgment of the Prices and Incomes Board, then we were right to stop this one, and stop others which might have flown as a consequence of it.

1126 I turn to the sequence of events which, as my hon. Friend says, began effectively on 8th September, 1967, when the Ministry of Labour was notified of pay increases agreed between the firm and D.A.T.A. which would have had the operative date of 1st December, 1967, and offered a new pay scale of £20 a week for a man of 21, rising to £24 10s. at 30.

It amounted to increases of between £3 and £5 for young men at the bottom of the scale. It amounted on one scale to increases of £2 10s. for men of 30 and more and, since the firm operated three scales according to proficiency, a man on the highest scale who would not have benefited by the proposed maximum of £24 10s. negotiated individual and personal increases. According to my information, because of this individual increase the award would have resulted in increases for everyone of the 15 men. Implementation would have resulted in an average increase of about 8.4 per cent. throughout the firm.

These increases must be set against the background of two facts which were very much in my right hon. Friend's mind when he was considering the specific agreement. The first was that on 16th May, 1967, he made a reference to the National Board for Prices and Incomes of the pay and conditions of non-manual workers in engineering, and he was therefore anticipating some general guidance as to how such men should be paid. The second fact against which this must be set was the July, 1967, offer of the Engineering Employers' Federation to draughtsmen under its National Agreement. That offered increases of 30s. at 21, tapering to £1 at 23 and above. That offer was rejected by D.A.T.A., but was reported subsequently by the Ministry of Labour and the Secretary of State for Economic Affairs.

On 18th September, 1967, the Minister of Labour wrote to the company asking that at that time any increase to its draughtsmen should not exceed the offer made to them by the Engineering Employers' Federation. He also asked that its pay policy should be guided by the conclusions of the Report of the National Board for Prices and Incomes which we awaited. We told the company that we 1127 anticipated that the report would be ready on 1st December last year. In fact, it was not ready until 13th December, but we hoped that, whenever it was ready, the company would be guided by it in deciding its pay criteria and pay levels.

On 19th October last year, that advice was repeated, and in the Minister of Labour's letter to the firm it was referred to two sets of criteria. The first was those laid down in Cmnd. 3235 outlining the objectives of the Government's prices and incomes policy. The second specifically referred the firm to Report No. 36 on Productivity.

The firm replied to that letter, and its reply was in direct contradiction of some of the facts outlined to the House by my hon. Friend. The letter said that the firm had "examined the criteria". It went on to say that it had no measurement of efficiency prior to the scheme. It concluded that it was therefore unable to state a measured increase in productivity flowing from this pay increase. By any standards that was a virtual agreement that the criteria of increased productivity did not apply.

Having had that admission and that bald statement, according to the productivity criteria, there could be no justification for the pay increases proceeding. My right hon. Friend awaited the outcome of the firm's deliberations. The firm reported that, if the report of the National Board for Prices and Incomes was not ready by 1st December and if legislation was not invoked to compel the firm to withhold the wage increases, it would pay them on 1st December, 1967.

On 8th December, the firm wrote again saying that the agreement had been implemented, and on 13th December the Board's report was published. It was unequivocal about pay to draughtsmen. It said: No general increase can be justified above the offer which has been made and approved implicitly by the Ministry of Labour. The offer was made with the Engineering Employers' Federation's agreement and the implicit approval had been given by the Minister of Labour in his letter to Beckman Instruments and other companies. in that he said that he hoped 1128 interim awards before publication of the Report would be limited to that level.

It was at this point that the negotiations to which my hon. Friend takes exception began between the company and my right hon. Friend. If there is to be a voluntary incomes policy, a voluntary incomes policy perhaps backed by statutory provision but very largely relying on the cooperation and good will of the parties involved, it is absolutely essential that, before a reference is made to the N.B.P.I., and before a direction is made preventing a wage increase until the National Board has reported, every step should be taken to encourage the firms involved voluntarily to limit their wage increases and to encourage the trade unions taking part to accept a voluntary postponement of the improvement until the National Board has reported. This is the sort of procedure which continued from 1st February onwards.

The significant dates which follow that initial discussion are 14th and 15th February. On the 15th officers of my Ministry had a meeting with the firm. It was then that we first heard of measures to improve efficiency which have or have not been costed—I think that is still a matter of dispute—but there is certainly no assurance that these measures to improve efficiency are directly linked to the pay increases which the House is considering this evening.

On 14th February D.A.T.A. wrote to the Ministry of Labour a letter which we received on the day on which we were meeting the firm. The Association's contention was certainly not that this was a productivity agreement. The Association said at the time that a survey of the work being performed was being carried on. No doubt the Association meant to imply that, when the survey was completed, it would be in a better position to judge whether there was a productivity element. The main argument the Association advanced was that the firm's range of salaries did not pay sufficient regard to skill and was certainly out of line with the salaries paid in neighbouring companies.

As a result of this, on 24th February the reference was made. It was made after the usual consultations, which in themselves take time. It was made after the T.U.C., the C.B.I., the E.E.F., the 1129 appropriate trade union, and the firm had been notified and consulted. But it was made after those processes in the knowledge that, though there was delay, it was very much better that the firm should be taken into the Ministry's confidence and should discuss it informally before the die was cast and the report was requested.

I should make clear to the House, and perhaps through the House to people in the locality, the nature of the investigations that are going on. I know that my hon. Friend was given information about the sort of people who were carrying on this investigation for the Board, information that led him to believe, perhaps reasonably, that they were in no way equipped to carry out this task. The first gentleman involved was described, rather offensively, I think—not by my hon. Friend but by people who spoke to him—simply as an ex-colonial civil servant. I think that the person concerned held that position in the past. But now he is a full-time officer of the Board who had worked on the general engineering investigation and the general engineering report and who naturally was sent to do the follow-up investigations into the specific claims, reports on which flowed naturally from the original general report.

The second man involved in the investigations was described in a local newspaper as a university student and therefore was regarded as ipso facto inappropriate for such an investigation. He was in fact a lecturer at the City University who was a special industrial adviser to the Board, who had for five of his working years been an adviser on industrial and economic matters to the National Union of Mine Workers, and who was, in my view and in that of the Board, particularly well qualified to give expert and direct advice about this particular matter.

As to the advice which these two gentlemen give, I repeat that I make no judgment. What is happening in this case is that the Board, after consideration, will make a recommendation to my right hon. Friend on whether or not these increases—on average 8 per cent.—can be justified within the terms of incomes policy.

I say again that if the Board decides that the agreement, in whole or in part, conforms with the incomes policy, my 1130 right hon. Friend is required to allow the increase to be implemented at once. If it does not, the matter is quite different. If it does not, a very serious situation will have been prevented from coming about. The repercussions which would have been certain will have been prevented. The feeling that it is possible to escape the rigours of the incomes policy will have been defeated. The line will be held on incomes policy, and other individuals, other groups, other unions, and other companies which have made voluntary agreements to limit their wage increases will feel that it is not possible to escape through some loophole either because of the militancy of the demand, or because of the number of men involved. I therefore have no doubt that my right hon. Friend was right to make this Order.

I hope my hon. Friend agrees that the case is slightly stronger than it has been made out to him by some people on the spot, and I hope that when the people in the area understand the obligations which were placed on my right hon. Friend they, too, will feel that he took the right decision in operating in the way that he did.