TUC AND CBI (TALKS) (Hansard, 11 July 1974)

§ Q4. Mr. Skinner
asked the Prime Minister what recent talks he has had with the Trades Union Congress and the 1546 Confederation of British Industry; and if he will make a statement.

§ Q6. Mr. Atkinson
asked the Prime Minister what recent discussions he has had with the TUC and CBI; and if he will make a statement.

§ The Prime Minister
I am regularly in touch with representatives of the TUC and CBI through NEDC meetings. The meeting which I chaired on 3rd July was one of the most thoughtful and constructive I have attended and is a hopeful sign of the co-operation that is developing between the Government and both sides of industry.

§ Mr. Skinner
When he next meets the representatives of the buyers and sellers of labour, will my right hon Friend tell them that he has been listening closely to the majority moderate opinion within our country against the extremists? Will he tell them that the stifled cries he hears most loudly are those asking him to get out of the revolting Common Market into which the extremist leaders of the Tory and Liberal Parties dragged us, in which task the trade unions—the moderate trade unions—are assisting the British people in helping to get us cut?

§ The Prime Minister
Without following all the points made by my hon. Friend, I was struck by his reference to moderation in relation to the meeting I have described. Contrary to a great deal of panic statements and comments, and the stirring-up of divisions within the country, it was significant that, although great anxieties were expressed by the CBI and also by the TUC on certain aspects which have been raised this afternoon, a clear desire to work together for the good of the country was expressed at that meeting. Indeed, it began by the President of the CBI voluntarily congratulating the TUC on the social contract. That was a very important thing for him to have said on his own initiative. In this respect some Conservatives seem to be totally out of touch with industrial thinking.

§ Mr. Atkinson
Will my right hon Friend also confirm that the trade unions on 3rd July recognised the extremely serious situation in which our economy is now placed? Will he also confirm that the economic advice given 1547 to him prior to that meeting was that threshold agreements between now and November could result in 10 per cent. wage increases and that in total over the phase 3 period this would represent a price index increase of 17 per cent.? Is it not a fact that the increase in take-home pay over the same period is likely to be 13 per cent.? Therefore, since the trade unions recognise that this year under phase 3 they are likely to take a 4 per cent reduction in their living standards, it would probably help the country if in view of these facts the Conservative Party stopped attacking the trade unions on their attitude.

§ The Prime Minister
Much of what my hon. Friend said reflects the discussions on both sides of the meeting to which I referred. Threshold agreements have not worked out exactly in accordance with the expectations either of the Conservative Party or of myself, because I pressed threshold agreements on the then Conservative Prime Minister. As to the advice which my hon. Friend said was given to me at the meeting about thresholds, exactly the same advice was given to the Conservative Government.
With regard to what has happened since on thresholds, a great deal of anxiety has been stirred up as a result of panic Press comment, statements in the City and all the rest of it. However, the situation was known before polling day to all who studied these matters with the advantage of inside information. The same is true of most of the other factors.
While the situation faced by the country is extremely serious, for all the reasons we have stated, nothing that has happened since 4th March is new. All of it was forecast. It is wrong for Conservatives to talk of "price increases", because price increases had been forecast by them. While world prices, and therefore wholesale prices, are falling, it must be remembered that it takes seven to eight months for those to pass into the consumer sector. Therefore, the Conservative Government knew what the price situation would be today.

§ Mr. Tom Boardman
In the light of the discussions and advice he received, will the Prime Minister say what maximum average increase in wages and salaries he considers acceptable without 1548 adding further to the inflationary pressures?

§ The Prime Minister
I would refer the hon. Gentleman to a speech I made on this question to leaders and Prime Ministers from other parts of the world, on which there are Questions on the Order Paper. As we move from rigid wage controls, which broke down and which are still responsible for many of our problems today—literally today—my right hon. Friend the Secretary of State for Employment is in touch with the unions and, of course, with the CBI on the situation which is to follow the ending of the Pay Board. It would be easier to answer that question, I think, when these discussions have gone a little further.

§ Mr. Cant
Has the CBI, which is due to meet the Chancellor of the Exchequer, yet made up its mind whether it wants a reflationary Budget or a neutral mini-Budget?

§ The Prime Minister
I cannot answer that question, but the CBI at that meeting and in direct meetings with the Government has expressed anxiety about a number of issues of a continuing character affecting investment, cash flow and other matters. It was invited by my right hon. Friend to supplement what it said at that joint meeting by a separate meeting with him which is taking place, I think, later today.

§ Mr. Lawrence
Did the CBI also congratulate the Government on their plans for the nationalisation of British industry? Did the Prime Minister tell the gathering that he was considering a referendum on the issue? If not, why not?

§ The Prime Minister
The hon. Member, like so many of his party, has become obsessive on this question. Here again, judging from that three-hour meeting, I think that Conservative Members are very much out of touch with industry on the questions of the abolition of the Pay Board and the social contract. In the three hours of the meeting—it was an open meeting at which any subject could be raised—the matter to which the hon. Gentleman refers was not mentioned for more than one minute.

§ Mr. Heath
The Prime Minister has said that he cannot tell us what would 1549 be the proper level of wage increases in the present situation. Therefore, when the President of the CBI congratulated the TUC and NEDC on the social contract did the right hon. Gentleman express agreement with him that the present level of wage increases of between 22 and 27 per cent. was fully justified in the present situation?

§ The Prime Minister
The right hon. Gentleman will be aware that wages over the past year have not kept pace with prices, despite threshold agreements. I am sorry that the right hon. Gentleman is so churlish about the comment the CBI made. He should try to approach the spirit of the nation in the same way as the CBI does, if nothing else. The right hon. Gentleman knows that he tried to negotiate a voluntary agreement with the TUC and he did not at that time say what the level of wage increases should be. He carried on the negotiations about a voluntary agreement. He entirely failed because he refused to sacrifice any of the divisive policies of his Government.
We are now negotiating with the TUC on these matters. We shall be ready to give answers to this question at the right time, but it is important at this stage that we should continue these discussions and try, hard though it may be, to get out of the continuing difficulties arising from bureaucratic reports by the Pay Board which the right hon. Gentleman set up.

§ Mr. Heath
If the right hon. Gentleman thinks back, he will recognise that he is mistaken in this matter. In the Chequers and No. 10 talks, specific figures were mentioned and debated among the TUC, the employers and ourselves on the basis of the gross national product in the forthcoming year. Therefore, this was a specific matter. The settlements which are being made now are to come into effect after the Government end stage 3, in addition to stage 3 rises negotiated this year and in addition to threshold payments. The settlements are at the moment between 22 and 27 per cent. Does the Prime Minister agree that these are justifiable or not?

§ The Prime Minister
If the right hon. Gentleman is referring to the two cases which I think he has in mind. I would say that both of them related to large and substantial firms, both of which were 1550 characterised by capital-intensive rather than labour-intensive industry. With the right hon. Gentleman's support of big business and the great fight he is putting up against any accountability of these firms to the nation, he should use his influence with these firms—[HON. MEMBERS: "Answer."] I have answered. I said that I shared the right hon. Gentleman's concern when I saw the extent of those increases. But the right hon. Gentleman should use his influence with his friends in dealing with these matters.