§ 1.15 p.m.
§ Mr. Arthur Davidson (Accrington)
I wish to draw attention to certain anomalies under the Pay Code, anomalies which, I submit, border on the absurd for the adverse way they affect a group of my constituents, namely, the foremen working at Platt International, the largest works in my constituency.
My hon. Friend the Member for Oldham, East (Mr. Lamond) has been faced with the same problem in his constituency, affecting foremen in the same firm. My hon. Friend, who unfortunately is unable to be present to- 668 day, wishes to be associated with the remarks that I shall make.
The Pay Code and the rigid legalistic interpretation placed upon it by the Pay Board have resulted in a serious injustice to hundreds of people in my constituency. If the situation were not so serious for my constituents it could be described as farcical. Foremen are now receiving, and ever since the Pay Code came into operation have been receiving, less than the men whom they supervise. It is a Catch 22 situation, because the catch is the anomaly clause in the counter-inflation policy. Paragraph 178 of the Counter-Inflation (Price and Pay Code) (No. 2) Order 1973 is supposed to enable a payment to be made outside the Pay Code to a group of people if it can be established that their salaries are linked to the salaries of others, working in the same establishment.
The foremen in my constituency are the victims of the rigid technicalities and the legalistic verbiage of the Pay Code, a code which has become, and indeed was from the outset, totally irrelevant to wage bargaining. It is an irritant. If any case were needed to prove that, this case does so. I know my hon. Friend the Minister of State's view of the statutory incomes policy and of the Pay Code.
For many years the salary of the foremen at Platt International—this is not unusual—was adjusted at the beginning of each year to restore the differential between the foremen and those they supervised. Within a few weeks or months that differential was lost because of the rise in piece work earnings of, the men. But for almost two years the employers of Platts International, the foremen and the union, ASTMS, had been negotiating to try to resolve the problem by the introduction of a salary structure which was linked with the skilled piece work earners. The negotiations, as is frequently the case, went on for several months, and when a solution was finally reached the Pay Code stopped its introduction. That was the first catch.
However, they were caught not only by the standstill but by phase 2 and by phase 3. Whatever wage increase was given under those various phases, it still fell considerably behind the wages 669 of the very men whom they were supervising. So we have the typical Catch 22 situation. One can have an advancement of the position of the foremen, who perform a very responsible job—and employers want to encourage responsible people for promotion—but the catch is that such a person must take a drop in his wages if he wants to supervise. Alternatively, one can have the reverse Catch 22 situation. One can have a substantial wage increase but one must cease to be a foreman and go back to the shop floor from which one was promoted. It is an absurd situation.
To do the Pay Board justice, after I had written bringing its attention to the anomaly, I received a reply on 4th September from Mr. Johnson, the deputy chairman, who said:This is a particularly unfortunate case but I regret that the Pay Board is unable to vary the terms of the decision …".He admits that it is an unfortunate case. The foremen certainly think it is unfortunate. The employers at Platt International are willing, anxious and eager to pay the new salary structure but the anonymous men on the Pay Board—I am not blaming them personally because they only interpret the rigid rules which this House has laid down and was wrong to lay down—can do nothing to come to the aid of men whom they consider have been treated in an unfortunate manner.
The Counter-Inflation (Price and Pay Code) (No. 2) Order 1973 has a paragraph, paragraph 178, to which I referred earlier and which ASTMS certainly felt covered the case of the foremen. It is the anomaly clause. It is meant to enable increases to be given outside the pay limit in order to correct certain anomalies. Paragraph 178 says:In order to qualify as an anomaly on the basis of a link—and do not forget that the wage structure of the foremen has been based, certainly unofficially, on the wage structure of the shop floor workers—the link must have been broken by the standstill.The link was certainly broken by the standstill, but the catch is that the Pay Board is not satisfied that there has been a link. The workers think there has been a link. The employers think there has been a link. It has always been under- 670 stood that there has been a link but the interpretation of the anonymous men of the Pay Board is that there has not been a link.
Paragraph 178(ii) states:but for the standstill, the link must have determined the pay of the group concerned.According to the employers and the men, the link did determine the pay of the group concerned, but the catch is that the Pay Board think that the link, if they admit that there has been a link, did not determine the pay of the group concerned because,In order to satisfy this condition there must be evidence of that link and clear identification of the pay group being followed; and the effect of the link on the pay of the group must have been known (even if not formally agreed) before 6 November 1972 or have been predictable within a narrow range.The workers say that the best evidence of the link is the fact that their wages have always gone up at some stage to keep abreast of the wages of the shop floor workers. That is common sense, but unfortunately common sense apparently does not enter into the regulations of the Pay Code. Nor apparently does natural justice enter into it. It would be common sense to everybody, if common sense principles were applied rather than complicated irrelevant regulations, that foremen who have a responsible job of supervising must be expected to get a higher salary than the salary of the men who they are supervising.
May I draw attention to the current position. There are four grades of foremen at Platt International, as follows: Grade D £2,125 amounting to £40.75 a week ; Grade C £2,205, £42.40 a week ; Grade B £2,260, £43.34 a week ; and Grade A £2,315, £44.40 a week.
The shop floor workers get the following salary structure: a toolroom charge-hand gets £47.03 a week; a toolroom worker £46.53 a week; a chargehand £43.50 ; maintenance men £42.50; skilled inspectors £43.50 to £45 a week. Clearly this is a ridiculous situation. The foremen have not criticised and I do not criticise the earnings of the shop floor workers; they would be happy to see those wages go up. They merely point to the anomalies of the absurd situation which is created, for them as a result of the statutory incomes policy and the Pay Board's interpretation of the Pay 671 Code. At present the foremen are working, according to the local Press, without enthusiasm. They are not on strike. They are not indulging in any industrial practice in support of their claim, but if they are working without enthusiasm, one can hardly blame them for that.
I understood, when I raised this matter at Question Time about a fortnight ago, that my right hon. Friend has no power to intervene in a case of this sort. It seems absurd that he should not have a right to intervene because it seems to me that industrial relations are eminently a matter for a Government Minister and should never be left to a board of men, however honourable and sympathetic those men may be personally, to decide these matters. There is no right of appeal from their decision.
I had the doubtful pleasure of appearing at the Pay Board with the foremen, when various arguments were advanced for not granting this very worthy claim. "We agree with you", said the members of the Pay Board, "You have been very badly treated. You are the victims of various phases of Government policy, but unfortunately we cannot help you." I am delighted that the Government intend to abolish the Pay Board at the earliest opportunity. It has no place at all in industrial relations and I want to see it swept away as soon as possible. I am quite sure that my hon. Friend the Minister of State does, too.
I have done my best to show my hon. Friend that this is a very special case. If he has any powers whatever to help, this is, surely, an anomaly which ought to be rectified. If he comes to the aid of these men, he will not open the flood gates. The case would not, as it were, let in a whole variety of other similar claims, since it is a very special case, though I do not doubt that there are many thousands of workers who have been affected in a similar absurd and anomalous way as a result of the application of various phases of the statutory incomes policy.
As the last resort, therefore, I ask my hon. Friend to intervene if he possibly can to grant these men what can only be regarded as their justifiable pay increase. It is an increase within the salary structure which the firm itself wishes to pay. 672 When I went to the Pay Board, representatives of the firm went too, and the personnel manager argued the case most skilfully on behalf of the men.
The firm itself is extremely concerned. It wishes to encourage responsibility on the shop floor. It wishes to encourage promotion. But, in present circumstances, it faces the risk of people actually turning down the chance of promotion or of even leaving the firm altogether. As a matter of fact, some of these foremen are considering leaving the firm. There is the further absurdity that, when the shop-floor workers gain as a result of increased production, as they rightly should, the foremen who have contributed to that increased production gain not a penny. This cannot be right. There is a great injustice here, and I ask my hon. Friend to remedy it if he possibly can.
§ 1.32 p.m.
§ Mr. Norman Atkinson (Tottenham)
My hon. Friend the Member for Accrington (Mr. Davidson) has put clearly to the House the circumstances of an anomaly about which he knows—an anomaly that has arisen because of the existence of a statutory incomes policy. There are dozens upon dozens of examples to be found all over the country—they have been happening over quite a long time—of anomalies which either Ministers or employers' organisations have said they are powerless to remedy.
My union, the AUEW, has contested many of these anomalies and tired to correct them. It has made many suggestions showing how employers can solve the problems which a statutory policy has created. If there were any will on the part of this employer, Platt International, it could remedy the difficulties which it has experienced in its establishments, and do it without reference to the Minister or anyone connected with a Government Department. It may be argued that to put them right would be immoral, that it would be wrong to do so, but many employers have found ways to make a decent arrangement and so honour their moral obligation to their workers, and to supervisory staff in particular.
I shall not now give a list of ways in which this employer, given the will, could honour his agreement or obligation towards the people it employs. I 673 am sure that my hon. Friend the Member for Accrington, an eminent lawyer with knowledge of these matters, could show the ways by which money could be paid. Although it might be called immoral to do so, it would not be illegal. I say, therefore, that the matter could be put right if the employer wanted to put it right.
This debate and the whole context within which it arises demonstrate the need to dismantle the statutory policy, the Pay Board, the Pay Code and all the other trappings which have led to a whole series of situations of this kind, which are ridiculous, contradictory, and unhelpful in every possible way towards the betterment of industrial relations.
How soon can we get rid of the Pay Board and all that goes with it? That is the question. Hon. Members opposite are no doubt exercising their minds on how to preserve the Pay Board and the Pay Code. I put this matter very seriously to my hon. Friend the Minister because I accuse the Government and those representing them of deliberate deviousness in not wanting to get rid of the Pay Board or to dismantle the statutory system. Whether they have personal misgivings about it, I do not know, but I believe that they have accepted the present policy of the Treasury—that is, to keep a statutory wage policy in being—and are attempting to justify it by saying that the whole apparatus of wage control cannot be dismantled quickly without the creation of a series of difficulties in other areas of industrial relations.
I do not accept that view. If I were a Minister wanting to keep the Pay Board and to keep wage restraint in the present orthodox statutory form, I should take the course of introducing another Bill and inserting therein a clause dealing with the Pay Board, so that that Bill could probably be accepted while the clause dealing with the abolition of the Pay Board could be defeated in Committee. If I were devious, that would be the way I should go about it.
There have been discussions in the House about the way in which that is to be done. I have heard hon. Members opposite discuss ways by which they will preserve the Pay Board by defeating Clause 5 of the Prices Bill. Thus, a way has now been found of making known 674 publicly, or of demonstrating, that there is some desire to abolish the Pay Board, while leaving it pretty certain that the clause which is the instrument to abolish the Pay Board and dismantle the statutory policy will be defeated during the Committee stage of the Prices Bill.
Many of us believe that the Prices Bill will not get through the House in this Parliament anyway. There are indications that it will not. Certainly, if my idea and those of a majority of my hon. Friends are right—namely, that we shall have a General Election in June—there will be no time to pass the Prices Bill, and the Pay Board, therefore, will remain intact. Even if the Bill does get through this House—I am assured that there is no chance of its getting through Committee in this Parliament—the House of Lords has already indicated that it will not let it go through.
Thus, we face the continuation of anomalies such as that which my hon. Friend has raised, the guaranteed continuation of the statutory policy of wage restraint in all its forms as we know it, and the continuation of the Pay Board throughout the life of this Parliament.
There were alternatives open to the Government. They could have proceeded in a simple, straightforward way, by a surgical operation, so to speak, cutting the thing away completely. They could have got rid of the statutory policy, the Pay Board and the rest overnight if the had wished. If they had chosen that method, they would not have created the problems which they claim would have been created. I regard it as totally wrong to say that they are doing the best they can to get rid of the Pay Board and dismantle the statutory incomes policy by tucking an insignificant provision into Clause 5 of a Bill dealing with prices—a Bill, incidentally, which does not set out to control or regulate prices, which would be an alternative to a statutory incomes policy. It does not pretend to do that job. It merely gives certain powers to the Minister in respect of various matters specified and scheduled in the Bill in the way we have heard about already.
Those are my misgivings. I do not believe that the Prices Bill and the dismantling of the Pay Board will go through in this Parliament. I believe 675 that a devious way has been taken to keep it in existence. I am assured that the Opposition will defeat the relevant clause, and, certainly, if there be a chance of its reaching the House of Lords, that it will not survive there.
The situation is clearly understood throughout the trade union movement. The Government must recognise that. The Pay Board will continue, and along with it the life of a statutory incomes policy in the United Kingdom will continue.
§ 1.40 p.m.
§ The Minister of State, Department of Employment (Mr. Albert Booth)
I thank my hon. Friend the Member for Accrington (Mr. Davidson) for the way in which he raised the subject and for the steps he took before raising the matter to try to deal with a particular anomaly in the operation of the Pay Code as it affected his constituents. The action which he and other hon. Members took in seeking to resolve these problems underlines the need, if it needed any underlining, for a rapid termination of the operation of the Pay Board and the Pay Code.
The Government are fully aware of the many anomalies of the kind mentioned in the debate and which we believe are bound to continue to arise when collective bargaining is forced into the strait-jacket of statutory control. This inflexibility has been felt particularly where wage structures have become outmoded or where differentials have needed adjusting through the passage of time or for other good reasons.
The situation at Platt International, where the earnings of supervisors have fallen below the earnings of those they supervise, is absurd and harmful. That can only create feelings of unfairness and impair the efficiency of the company. The company has made several approaches to the Pay Board and has asked for its case to be treated as an anomaly under the appropriate provisions of stage 3. But the Pay Board, which is in one sense as much hemmed in by its statutory responsibilities as we are hemmed in by the legislation, has concluded that there is no way in which the problem can be resolved under the code.
676 Unfortunately, this case is by no means unique. If it were I should be delighted and life would be much simpler in my Department. There are many cases where differentials have remained unadjusted because of the operation of the code. Not only have matters not been put right; the situation has grown worse. Differentials have been squeezed, anomalies have grown more bizarre and relativities have become more and more unfair. That has been the case particularly in firms like Platt International, where the companies realised that something needed to be done and were negotiating new wage arrangements when the freeze intervened. This inflexibility of the Pay Board has hit hard where piecework is prevalent. It has also created problems in relation to day wage arrangements. Piecework earnings have been increased in recent years, even under the pay code. In contrast, in the absence of an arrangement linking their pay directly with that of the workers they control, the wages of supervisers have been left behind
I understand, from having worked in the engineering industry, the point of my hon. Friend's argument. He and I and many others would contend that there must be a link, but it is the view of the Pay Board—and the statutory responsibility for interpretation rests with it—that in this case there is not a link for the purposes of the operation of phase 3. One of the major reasons for abolishing the Pay Board is precisely because the operation of the code, with all its inevitable inflexibilities and rigidities, has created problems of this kind. However, a decision about the Pay Board must rest with the House because the original decision was made in legislation. We are therefore seeking powers in the Prices Bill, which was given a Second Reading on Tuesday, to abolish the Pay Board and all the associated controls over pay.
My hon. Friend the Member for Tottenham (Mr. Atkinson) said that the provision in the Bill was a devious way of trying to get rid of the Pay Board. We are making no bones about the fact that Clause 5 is designed to create the situation in which the House can take a clear-cut decision about the sole issue of the Pay Board. The clause provides for an order to be laid before the House under the affirmative resolution procedure providing for the abolition, and I am confident that 677 when that order is brought there will be no doubt what the House is debating and voting upon. There will be nothing devious about it. The situation will be perfectly clear and I am certain that every hon. Member will understand what we are seeking to do.
The best way to resolve the problem raised by my hon. Friend the Member for Accrington, and all similar problems, is to sweep away altogether statutory controls over pay. But until we have the statutory authority to abolish the board there is no alternative but to accept the existing controls. So long as the board remains it has a statutory duty to enforce the code.
§ Mr. Ronald Brown (Hackney, South and Shoreditch)
Surely the Minister realises that many of the cases that have been pursued by my hon. Friend and myself—I have been pursuing a different argument from his—concern people who are already three years behind. One example is the London teachers. Assuming that the Minister gets to his millenium and the Pay Board is abolished, those people will still be three years plus six months behind. The stupid situation will exist in which everyone will want to go ahead, yet these workers who have been waiting patiently will be unable to move any faster than anyone else and must remain in their present position.
§ Mr. Booth
If we waited until we had abolished the Pay Board and expected everybody to proceed from there, as if there never had been counter-inflation legislation, there would be even greater anomalies than there are already, and greater than there were a year ago under the Counter-Inflation Act. But that is not what we suggest should happen, and it will not be any part of my argument that the abolition of the Pay Board is the millenium and that all anomalies will automatically end. When it goes there will be a great many anomalies, and we therefore require some measure of agreement on policies which will operate there after. That means not only policies on pay hut policies about all the things which determine the work which is done in this country and the remuneration for it in relation to broader economic and social policies. We do not see the abolition of the Pay Board as the answer to all our problems—as the magic key to the box.
678 As my right hon. Friend the Secretary of State has told the House, the rigidity of the code can be tempered by the power to consent to increases outside the limits set down. He has already exercised that power in the instance of the miners' settlement, and I hope that no hon. Member will now contend that that settlement was not a case of exceptional circumstances. I believe that it will be accepted that never again should we have a situation in which a large number of people have to work a three-day week because of a refusal to recognise what are now generally agreed to have been exceptional circumstances.
The wording of Schedule 2 of the Act does not allow the Secretary of State to exercise his power in any general or indiscriminate fashion. In this instance, there is no unique feature that would justify our saying that this was a case of exceptional circumstances. If we said that this case was exceptional, we should be defining circumstances that were applicable to many others. It might he said that that would be just and that if there are many other cases like this, they should be similarly treated but that would be giving one group of cases priority over many other groups, many of which are in as bad and some of which are in worse difficulties.
Moreover, we have to have regard to the need to move from a situation such as we now have with statutory pay control into the voluntary situation that is expected to succeed it We are trying to move into that situation in a way that will redress the serious anomalies that have arisen out of the statutory period. I hope that we shall do that with a clear and broad understanding with the Trades Union Congress, the CBI and others who are properly involved in securing an alteration not only in the relative position of incomes but in the relationship of incomes and the country's economic development.
When he spoke on 18th March, my right hon. Friend the Secretary of State emphasised that the transition needed to take account of our policy on inflation and on the future growth of incomes. He said that it was essential that pay settlements in the rest of this pay round should be at a level that did not go beyond the many settlements already reached. It is conceivable that we could have a 679 sudden upsurge in the level of pay settlements in the middle of this pay round as a consequence of ending statutory pay control in the present circumstances without regard to the serious anomalies that that control has itself created. If we are to end statutory pay control in a situation in which it is conceded that pay control itself has created anomalies, it is sensible to have a proper agreement with the trade union movement to enable us to hold out a reasonable prospect that what happens following the abolition of statutory pay control will resolve many of the anomalies.
The discussions that the Secretary of State has already begun with the TUC and the CBI cover a wide range of issues. The first meeting, at the beginning of this month, was concerned primarily with the urgency of repealing the Industrial Relations Act, and that will be understood by my fellow trade unionists in the House. But further talks have covered the establishment of an independent conciliation and arbitration service, and ways of meeting genuine grievances and difficulties of the kind that my hon. Friend the Member for Accrington has described. We have made it clear that we do not think that a relativities procedure of the kind recommended by the Pay Board is the right answer.
If we deal with the problem solely as a matter of relativities, we shall leave at the bottom of the pay structure those who were at the bottom of the pay structure three years ago, many of them, in my opinion, deserving much better pay in a proper wages policy. The problem cannot be dealt with merely as a matter of relativities. Such an approach would not work, and to attempt it would be a mistake. We are seeking voluntary cooperation by the trade unions and their members, and I believe that we shall receive it.
Therefore, I hope that my hon. Friend the Member for Tottenham will not take it amiss when I say that I reject his suggestion that the Government wish to continue a statutory policy. If he cares to come to the Department and meet my fellow Ministers he will find that if there is one thing that is exercising our minds and on which we are all working more than any other it is how to get rid of the statutory pay policy.
680 Hon. Members may have read in this morning's newspapers reports indicating that the TUC and its members are reviewing the subject of pay negotiations. In part, the reports confirm that many existing settlements would continue for some time beyond the ending of the statutory pay policy. The TUC has shown that it is clear that any consents given under the Counter-Inflation Act could operate only in exceptional circumstances. I have said that I do not believe that the Pay Board is the sole source of all the anomalies and inefficiencies in the pay situation, important though it is and with all the priority that I give to terminating its life and persuading hon. Members that to do so is the correct course.
§ Mr. Atkinson
I am certain that the planning in my hon. Friend's Department depends upon a time scale, which he must clearly envisage, for bringing the Pay Board to an end. A great deal depends on that, as he appreciates. How does he foresee that time scale? When does he expect the Bill to have passed through the House of Lords, so that we may start on the work of repairing—reclamation, to put it that way—and the other jobs that have to be done following the passing of the Bill?
§ Mr. Booth
I agree that the time scale is extremely important. I believe that we must move as rapidly as we can to the termination of the statutory life of the Pay Board. As soon as the Prices Bill has completed its Committee stage we must move towards the issuing of the order.
I make it clear, because there may be some misunderstanding, that we do not regard a continuation of the statutory policy as any sort of bargaining factor in bringing about the policy that is to succeed it. To put it crudely, we do not regard the statutory pay policy as a blunderbuss to be held at the head of the General Secretary of the TUC as a means of getting him to commit the trade union movement to the policy that is to follow. We foresee the very reverse as the case—namely, that any continuation of the statutory policy would militate against the sort of voluntary policy that we hope will succeed it.
In my view, the Pay Board is not the only source of all the anomalies, inefficiencies and injustices in the current 681 pay situation, and when it is swept away, as I hope it will be, many problems will remain—problems concerning the way in which those who man the country's services are remunerated compared with those who man manufacturing industry.
§ Rear-Admiral Morgan-Giles (Winchester)
The Minister mentioned services. In his global look at this question does he mean the Armed Services—because it is a most outstanding paradox that the Armed Forces should be paid very much below the industrial average? I am sure that the Government will take this into consideration, although I know that this subject is not his departmental responsibility.
§ Mr. Booth
I did not have the Armed Services in mind when I made that statement; I was thinking of those who work in services, be they public or private, as compared with those who work in manufacturing industry, nationalised or private. As the hon. and gallant Member says, the pay of the Services is not my direct responsibility, but we do have to consider the total claim of the Services in just the same way as we consider the claims of other sectors. It is quite proper to raise the matter in that context.
We have also to examine relativities and have some idea about what will happen. I believe that it is not just a matter of relativities. We need to have a view on the extent to which price control has a bearing on wages. If we have a statutory prices policy that works, that will circumscribe the wages which can be earned by those in manufacturing.
We must also consider the extent to which new, highly capital-intensive methods of production alter the relationship between workers and the total output of the establishment in which they work. We must consider conciliation and arbitration, and the new, wider rôle they can play when the statutory pay policy goes. Above all, we are a party committed to the basic ideal of the redistribution of wealth. This must play some part in our policy. Our discussions with the TUC and the CBI must be seen as a continuous process. Those who are looking for the drama which so often attended discussions under the last administration, will I fear, be disappointed.
682 We have seen how futile it is to seek agreement on voluntary arrangements against a background of divisive policies. It is our belief that as it is seen that the Government are ready to act on pensions, food subsidies and other social measures, so we shall be able to take concrete steps towards carrying out a redistribution of wealth, if trade unions and their members will voluntarily co-operate to make the whole policy successful. This, in the end, is the only way it can be done.