HC Deb 11 May 1972 vol 836 cc1547-9
Q3. Mr. William Hamilton

asked the Prime Minister if he will make a statement on his talks with representatives of the Confederation of British Industry on the question of a period of further price increase restraint.

The Prime Minister

When I met representatives of the CBI on 8th May they indicated a widespread willingness among their members to continue price restraint provided that there was a good prospect of trade union response. I believe that, after carrying through and policing a policy of price restraint for nine months, the CBI is entitled to expect some response from the unions.

Mr. Hamilton

Is the Prime Minister not aware, as he surely must be, that a large number of the members of the CBI are very reluctant to continue the policy initiated by the CBI—[Interruption] It is just that I believe what I see in the Press, but perhaps I am too naive about these things. Is the Prime Minister aware that while private industry is saying this, as recently as Tuesday the Minister for Industry said that the nationalised industries would no longer be allowed to practise commercial pricing? Discrimination between the nationalised sector and the private sector is bound to lead to increasing industrial friction.

The Prime Minister

The nationalised industries are members of the CBI and the chairmen of those industries met and decided to conform with the CBI policy of price restraint. If they had not done so I imagine that the hon. Member and his hon. Friends would have been the first to complain that, whereas others were adhering to the CBI arrangements and they were being policed, the nationalised industries were ignoring them. This was therefore a policy that we believed to be right.

Mr. Redmond

It is obvious that the CBI will want to see the trends of costs before committing itself on prices. In this connection is it not worth noting that the original claim by the railway unions was 16 per cent., the original offer was 9 per cent. and the revised offer was 12½ per cent., which exactly splits the difference?

The Prime Minister

The 12½ per cent. was decided by Mr. Jarratt who sat with the agreement of both sides. He discussed the matter with them and then arbitrated. That was the figure he put forward and the board is adhering to it.

Mr. Bidwell

Is the Prime Minister bearing in mind the continuous effect of rising prices on old-age pensioners? [Interruption] When he saw the TUC representatives recently the Prime Minister no doubt discussed rising prices with them. Did they explain to him that the proposed rise in pensions in October is entirely inadequate? Did they explain what appears in their economic review—that they want a decent pension rise for old-age pensioners and that they want it geared to national average earnings? If they did not explain that to him, will the Prime Minister look at it and not just waffle to the House about what the previous Government might or might not have done?

The Prime Minister

I have constantly emphasised that rising prices and inflation affect the old more than any other section of the community. This is the first Government to institute annual reviews of pensions. To give the old-age pensioners a rise of 32 per cent. in the last two upratings is a very considerable increase by any comparison. But of course the hon. Member is right that if wage claims, which are fought so hard, go far beyond productivity there are bound to be rising prices, and this will damage the position of the old people.

Sir Harmar Nicholls

While it is perfectly clear that the CBI would wish to co-operate in keeping prices at the level my right hon. Friend asks, and while from the nation's point of view it is desirable that it should, does not any impartial view of the situation show that the rising cost of wages with the rising costs of servicing industry will take them to the point where it will be almost impossible for the CBI to carry out what it would wish to do and what the nation desires from it?

The Prime Minister

I would not be quite as dogmatic as my hon. Friend on this matter because unit costs must be taken into account. Industry knows that it is at this moment in a position where the economy is to expand and where greater production may therefore enable it to make certain economies to offset the problems my hon. Friend has mentioned. In addition, at this meeting and at NEDC the CBI representatives welcomed the measures taken in the Budget by my right hon. Friend the Chancellor of the Exchequer, which will also help them. But if wage demands exceed productivity they are bound to endanger the price restraint which I believe the country wants; and the country expects the unions as well as the employers to make their contribution.

Mr. Gregor Mackenzie

As a result of the announcement by the Minister of Posts and Telecommunications yesterday on the effect of VAT on telephone calls, there will be an exceptionally high increase in telephone charges for the old and disabled. This has nothing to do with union claims or with Post Office policy. This is simply a matter of Government policy.

The Prime Minister

The hon. Member is not entitled to take one item of VAT in isolation—[Interruption] He is certainly not. My right hon. Friend the Chancellor of the Exchequer has shown that our rate of 10 per cent. will be the lowest in the Community. As for indirect taxation, this must be looked at as a whole and not with one item taken out of context.

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