HC Deb 16 March 1972 vol 833 cc762-4
Q4. Mr. Pardoe

asked the Prime Minister if the public statement on the subject of wages and unemployment made by the Secretary of State for Employment on B.B.C. Television on Monday, 28th February represents Government policy.

The Prime Minister

Yes, Sir. My right hon. Friend referred to the failure of the statutory prices and incomes policy pursued by the previous Administration, and reaffirmed our interest in a voluntary understanding based on the shared objectives of Government, employers and trades unions.

Mr. Pardoe

Is the right hon. Gentleman aware that a certain difference of view arose between the Secretary of State and myself on that occasion? Will he, from his impartial position, adjudicate between us? Is he aware that the Secretary of State said that there was absolutely no connection between a moderate fall in the level of wage increases and 1 million unemployed? Does the Prime Minister now believe, in the light of all the experience of his Government, that a formal prices and incomes policy is the price that we must pay for full employment?

The Prime Minister

I cannot agree with the hon. Gentleman. Experience of the last 10 years shows that a formal incomes policy does not produce the result we want. [Interruption.] Hon. Members are entitled to argue whether there has or has not been a formal incomes policy. I would have said that an incomes policy imposed by statute was about as formal as one could get.

Mr. Atkinson

Would the right hon. Gentleman agree, from the examination that he has obviously carried out into the level of wages in manufacturing and the fact that 7 million workers receive payments by way of the results system, that the higher wages go, so, proportionately, prices come down? That is the experience of those who operate under piece-work conditions.

Will he therefore confirm that he should now be saying not that he is particularly concerned with the level of wages but with the price of the product? In other words, will he resist the temptation to harp on wage levels all the time when he should really be talking about prices?

The Prime Minister

Increased wages are justifiable so long as unit costs can be maintained or, as the hon. Gentleman said, brought down; then they are valuable. But to the extent that wage increases exceed that point, and therefore allow unit costs to rise, even with increased production, they are undesirable; and any study of manufacturing industry will show where that stage is reached.

Mr. Joel Barnett

Is the Prime Minister aware that his right hon. Friend the Secretary of State for Trade and Industry said that no Government can survive without a prices and incomes policy? Will the Prime Minister tell us whether the Government intend to survive or have a prices and incomes policy?

The Prime Minister

We have constantly made it clear that we have a policy for dealing with prices, which has been clearly carried out through the reduction of purchase tax and the other measures that we have taken. As to incomes, the policy is that they should increase. This has been taking place in the past 18 months, in that when we took office they were increasing at a rate of between 13 per cent. and 15 per cent., and they are now down to 8 per cent. to 8½ per cent. in the public sector and 9 per cent. in the private sector. That is an effective prices and incomes policy.