§ The Secretary of State for Employment (Mr. Robert Carr)
With permission, Mr. Speaker, I wish to make a statement about the Report of the Court of Inquiry under the Chairmanship of Lord Wilberforce.
The Report of the Court of Inquiry chaired by Lord Wilberforce into the dispute in the electricity supply industry is being published this afternoon. Copies are now available in the Vote Office. It makes three main recommendations.
First, the Court makes recommendations about rates of pay. For all industrial staff other than skilled workers, the Court recommends that the employers' offer of an increase of £2 a week should be accepted as fair and reasonable and should take effect from last September. This recommendation covers around two-thirds of all industrial staff. The Court recommends that this offer should be increased by £35 a year for skilled workers only and that some increase should be made in shift allowances. It also recommends that the employers' offer of one day's additional holiday should be increased to three days. The Court recommends that these improvements over and above the employers' offer should take effect only from 14th December when industrial action ceased.
Secondly, the Court recommends a speeding up in the introduction of the local incentive bonus schemes provided for under existing agreements dating from 1967. It considers these by far the best way of ensuring an efficient and well paid labour force, and believes that the present rate of progress is too slow and causes real dissatisfaction amongst unions and employees. As an incentive to both management and employees to make more rapid progress, the Court recommends a scheme of "lead-in" payments to operate 527 by 1st June for those groups of workers who are not by then covered by bonus schemes.
Such a group would be offered a "lead-in" bonus if a majority of employees in that group formally accepted by majority vote the introduction of a bonus scheme in principle, the carrying out of such work study and work measurement as would first be necessary and the need to run down the number of employees to the point where a bonus scheme could be introduced and bonuses earned. Thereafter each individual worker would be asked to sign a note of acceptance.
The "lead-in" payments so proposed would be 20s. a week increasing to 30s. a week in October, 1971 and to 40s. in January, 1972. They would however stop once a bonus scheme was introduced or such a scheme was rejected. The economies to be achieved are in the Court's view of such a scale that these payments should not add significantly to labour costs.
Thirdly, the Court found that the action of the unions in refusing to let the dispute go to arbitration was a breach of their agreement and the Court deplores this action. The Court also finds that the action taken during the work-to-rule was, in many areas, in breach of agreements, and that it was wrong for the union leaders to put the public at risk by a failure to issue more specific instructions to their members. The Court recommends that obligations and responsibilities should be clarified for the future.
In framing these recommendations, the Court considered in particular the productivity record of the industry, including the contribution the unions and the employees have made, and the bearing on the public and national economic interest. The Court says that it recognises that the country is at present in a dangerous condition of spiralling inflation; and that it should have regard to the dangers of giving this an extra twist. It concludes, however, that set against past and prospective performance in the electricity industry and the special factors relating to this case the settlement it recommends ought not to intensify inflationary pressures.
The employers estimated that their last offer would have increased average earnings by 9.7 per cent. On the same basis 528 the Court's recommendations would represent 10.9 per cent. in the year from September 1970. The total addition to the wage bill should, however, be substantially less than this with the continuing redaction in the labour force which the Court believes should be accelerated with the more rapid extension of bonus schemes. It is in this way that the Court believes that electricity workers can best—and justifiably—benefit from increased efficiency in the industry.
The Court makes it clear that its recommendations are related specifically to the circumstances and special factors in the electricity industry, particularly the contribution that the unions and employees have made and can increasingly make in improving productivity. There is therefore no question of the Court's recommendations being applicable in other industries in different situations. I must reaffirm—as the Court itself accepts—that if inflation is to be brought under control the general level of pay settlements must be reduced as rapidly as possible to a level much closer to the general rise in national productivity.
I have communicated the Report to the employers and unions concerned and I understand they will be discussing it together at an early date. I hope the recommendations in the report will provide an early settlement.
§ Mrs. Castle
Would not the right hon. Gentleman agree that his first consideration should be to try to bring peace to this industry by getting acceptance of this Report? That being so, will he not be more frank with the House and the country and admit, first, that the Court recognised that the workers concerned had a genuine grievance which was not being met by the electricity boards' offer; and, secondly, that the Court has therefore recommended substantial improvements which amount, in terms of an immediately operative improvement, to 12.6 per cent. taking into account shift payments, the additional payment for skilled workers and the additional holidays, and that, further, the lead-in payments which are to come into operation by next June at the latest will add another 2.8 per cent., making an average increase in earnings of 15½ per cent. in all, with further increases due in October and next January? 529 Will the right hon. Gentleman, in order to correct the bowdlerised version of what he says the Court said about inflation, read to the House those passages in the Report pointing out that it is impossible to cure the inflationary problem by trying to lean on individual wage payments without taking into account the need to hold down price increases and stimulate growth?
§ Mr. Carr
I agree, and I should have hoped that the right hon. Lady would also agree, that it is the job of all of us to try to ensure that the Report of the Court of Inquiry leads to a settlement. I certainly agree with that. I do not think that the right hon. Lady's words contributed very much to that cause.
I was completely frank with the House. I underlined certainly once, and I am almost sure more than once—and if any hon. Member reads HANSARD tomorrow he will see it confirmed—that the Court had stressed that the contribution of the unions and their members to productivity had been outstanding and that that was the only reason it was able to make the recommendation it made. That is quite clear.
Secondly, the figures which I quoted were the Court's own figures, and I have the authority of the Court to make that clear. It accepts the figures which I have given, and I do not for one moment accept the figures which the right hon. Lady has given. Her figures are not right. They are a most irresponsible contribution to the major overriding need of this country to bring inflation under better control. How they can be uttered by a right hon. Lady who left her Department with a White Paper saying that price increases should not—[Interruption].—wage increases should not exceed 4½ per cent., and with prices rising faster than they had risen for 20 years, passes all bounds of credibility—even the right hon. Lady's credibility on industrial relations.
§ Mr. Gardner
In view of the careful and balanced recommendations about which we have just heard, would not this be the moment to try again to persuade the Post Office workers, in their own interests and the interests of the nation, to go to arbitration?
§ Mr. Carr
I do not think that it would be wise for me or the House to get involved in another dispute today, but I hope that the House and everyone on both sides of all industries will read and pay great attention to what the Wilberforce Committee said about the failure of the unions in this case to honour their agreement regarding arbitration.
§ Mr. Palmer
The right hon. Gentleman will be aware that there are two other major claims in this industry before the electricity boards, namely, for the technical staff and the clerical staff. Are the Wilberforce Committee's recommendations intended to be a guide in the settlement of those claims?
§ Mr. Carr
I trust that the arguments used in this Report and the analysis on which they are based, which I believe are of a very high order, will be read, marked and taken into account by all other people. The vital thing in the Report is that the Committee underlines the special circumstances of the case into which it was looking and, therefore, the 10.9 per cent., on the same basis that the employers' offer was labelled as a 10 per cent. offer, is not held out by the Committee as, and should not be taken by anybody else to be, a norm of any kind, because it was justified only by the exceptional contribution of productivity in this industry.
§ Sir G. Nabarro
Will my right hon. Friend refer to page 48 of the Report which arrives at the conclusion that the settlement, which he has quantified at 10.9 per cent., would not result in an increase in "inflationary pressures"? Having regard to those words, will my right hon. Friend give the House an assurance that the Government's control over the tariffs of nationalised industries will preclude any possibility of an increase in electricity prices as a result of this award?
§ Mr. Carr
I draw the attention of my hon. Friend, the House and the country to the point made in the Report that if the productivity incentive bonus payments, as the Court prefers to call them, are widely implemented, it will be an example of how individual earnings can be increased without increasing costs. That is the essence of this Report, and 531 if that lesson is learned in every industry, including this industry, I think that my hon. Friend and the country will be highly satisfied about the effect on prices.
§ Mr. Grimond
Can the right hon. Gentleman tell us what will be the additional cost to the industry of this award before the efficiency agreements come into force? Does he agree that the very fact that Lord Wilberforce and his colleagues have limited their Report to one industry shows that they see it as the Government's duty to establish some principles for regulating wages in the public sector and it cannot be left to a series of ad hoc inquiries into various industries? If the criterion is to be extra productivity, is it to apply to all nationalised and public services and, if so, how are some of them to achieve it because in some of them it is almost impossible to relate work to productivity?
§ Mr. Carr
The right hon. Gentleman has raised some fundamental points, but I would remind him and the House of two things.
I do not believe that that is the central message of the Wilberforce Report, although, quite properly, these matters are discussed in the Report. One of the central messages of the Report is that the Committee accepted the overall spiralling of inflation, which it said was dangerous, and it said that each and every claim and settlement must be judged in that context and that context must, therefore, affect each and every settlement. That is an immensely important thing for the Committee to have said, and it is immensely important for the future.
As to the wider points of the right hon. Gentleman's question, we have to differentiate here sharply between the world of theory and the real world of practice. In theory, when this Government came to power last June it took over an instrument for surveying all these things which, on paper, was a nice tidy-looking incomes policy under which increases should not have been outside the 2½ to 4½ per cent. range. In practice that policy was a "busted flush". It would have been quite pointless to have continued it.
§ Mr. Charles Morris
Has the Secretary of State seen the Press statement this morning attributed to the general secretary 532 of the Union of Post Office Workers indicating that the U.P.W.'s executive council will consider, against the background of the Wilberforce recommendations, whether to prolong the Post Office dispute or seek arbitration? Will the right hon. Gentleman use his good offices and his powers of conciliation to examine the findings of the Wilberforce Committee to find whether this is a basis for leading both sides in the Post Office dispute back to the negotiating table?
§ Mr. Tapsell
If the rate of national production is rising at about 3 per cent. per year, is it not clear that an award of 10.9 per cent. is exceptionally generous? If it is to be regarded as a universal yardstick, would it not be a recipe for national disaster?
§ Mr. Loughlin
Would not the right hon. Gentleman accept that at the moment the primary need is to get both sides of the industry to accept the decision of the Wilberforce Committee? Will he not also accept that any attempt to write down the award is likely to induce the unions not to accept the Committee's Report? Is it not true that the overall affect of the Report is to give to the trade union a 13.4 per cent. increase, and ought he not to emphasise that factor in the hope that we can get the unions to accept the Report so that there is no recurrence of the dispute?
§ Mr. Carr
I have not written down what the Report indicates. I repeat that the figure I gave is the figure which the Court itself had, and I have the Court's authority to say this. I agree with the hon. Gentleman that we ought to try to get this accepted as a basis of settlement. The overall recommendation offers the opportunity to all the workers in that industry substantially to increase their earnings in return for increases in productivity which will not add to the overall 533 costs of the industry. That is the great opportunity this offers, and the whole purpose of the lead-in bonus payments which have been suggested—which are totally different from the old lieu bonuses with which all of us in industry have been familiar for so long—is to give a strong incentive both to management and employeees to move faster in the direction of these incentive bonus systems, which will give the individual and industry much higher earnings without increasing costs for the community.
§ Mrs. Castle
Could the Secretary of State, for the convenience of the House, give the paragraph number of the Report in which the Court gives the percentage figure that he has quoted to us? If it is not in the Report, why was it not in the Report? Why was it suddenly produced like a rabbit out of a hat for the advantage of the right hon. Gentleman's argument? Is it not a fact that if the Court had wished to put a percentage figure in the Report itself it could and would have included one, but has not done so? Although it is true that the Report is merely dealing with a particular wage claim, it has general remarks to make about the way in which it cannot be expected that any group of workers will accept restraint in wage demands as long as there is no attempt to control prices or to hold out any hope of growth.
§ Mr. Carr
As for the percentage figure, it is correct that it is not in the Report. [HON. MEMBERS: "0h."] It is entirely up to the Committee to decide what it does or does not put into its Report. [Interruption]. I never said it was in the Report. The Committee believes that its argumentation stands on its own feet without the mention of percentages, and in the Committee's view percentages would be misleading. As a general method of calculation, it is difficult to decide how best to present the effect of any settlement in any industry. Anybody who likes to present the figure as a higher percentage cannot then claim that the employers' offer was 9.7 per cent.
What is incontrovertible and absolutely accepted by the Court, which is the figure it had before it—[HON. MEMBERS: "Which paragraph?"] I did not write the Committee's Report for it. [HON. MEMBERS: "0h."] I can only report 534 what is true, which is that 10.9 per cent. was the figure which the Committee had before it before signing the Report and which it accepted as being the effect of its recommendations. I have the Committee's authority to say this to the House. [Interruption.]
Since this is evidently regarded by the House as an important matter, perhaps I should indicate the basis of the calculation. The employers' offer was calculated to add £15.091 million to the annual wage bill as it stood at last September. The annual wage bill of the industry as at last September was £155.9 million. On that basis that offer represented an increase of 9.68 per cent., or 9.7 per cent. as I said to the House. The Committee's additional recommendations add £1.905 million to the employers' offer, making a total of £16.996 million, which is 10.9 per cent. of the last September wage bill of £155.9 million. This is the basis of calculation of the employers' offer and the comparable offer put forward by the Court and is therefore—[Interruption.] The two things are strictly comparable, but if the House wishes to judge what the Court has proposed by the same yardstick as it judged the employers' offer, the correct comparison is as between 10.9 per cent. and 9.7 per cent.
§ Mr. Harold Wilson
Whilst congratulating the right hon. Gentleman on the use of cosmetics in presenting the Report this afternoon, may I ask whether he agrees, on the figures which he has just read out to the House, that the calculated figure which he gave earlier was based on an annual rate from September, 1970, the date which he quoted, and that, since a number of the Court's recommendations—only a small proportion of them—go back to September, 1970, but some take effect in December and some during this summer, the annual rate from now on, from the date of publication of the Report, is as was stated by my right hon. Friend earlier? If the right hon. Gentleman is not satisfied with that calculation, may I ask him to present the figures to the House in a White Paper, or in some other way, so that we can do our own calculations without the benefit of cosmetics?
Secondly, since the right hon. Gentleman made this very moving plea, which really impressed some of us—[Interruption]. certainly—when he was arguing 535 that it was very misleading to use percentages in these cases, will he say why three of his right hon. Friends, at a most difficult point in the electricity dispute, laid down a figure, expressed in a percentage, which should not be exceeded? Will the right hon. Gentleman take this up with his right hon. Friends and draw to their attention the benefit of using words such as those he has used this afternoon?
§ Mr. Carr
I think that before the right hon. Gentleman criticises the use of percentages, he must accept—[Interruption.]—two things. First, from his own and his right hon. Friend's experience, the right hon. Gentleman must know that it is very difficult to know what is the best and most accurate way of putting these matters forward. Secondly, the right hon. Gentleman must know that, despite these difficulties, the Labour Government consistently used percentages as the basis of their criteria, that their criteria for 1970 was between 2½ and 4½ per cent., and that we are here dealing with something of the order of 10 per cent., which is a long way above that.
§ Mr. Carr
On the specific question which the right hon. Gentleman raised, I said in my statement that this represented a 10.9 per cent. addition in the year from September. The wage year in this industry runs from September to September. Therefore, this is a perfectly fair and normal thing to do. If the right hon. Gentleman and the House want to know what the annual rate is, I shall certainly tell them. It is not what the right hon. Lady said. It is 11.3 per cent.—[HON. Members: "Oh."]
§ Several Hon. Members rose—