HC Deb 01 July 1975 vol 894 cc1176-7
13. Mr. MacGregor

asked the Secretary of State for Employment what is the latest annual percentage increase in average earnings.

The Minister of State, Department of Employment (Mr. Albert Booth)

The April index shows an overall increase in average earnings on a year earlier of 30.5 per cent. for the industries covered.

Mr. MacGregor

Is the Minister aware that it is figures like this that are causing concern among informed observers abroad, who can see clearly that they are way out of line with productivity at home and with international increases in pay levels, and that it is this most of all that is causing the extremely disturbing lack of confidence in sterling at the present time? Will he therefore state clearly what level of wage increase is compatible with the Government's target—modest enough—of getting inflation down to 10 per cent. by 1976?

Mr. Booth

The social contract guidelines for wages were based upon an economic judgment made at that time. It has proved in practice that the movement towards obtaining the low paid target, equal pay, meeting obligations under threshold agreements and dealing with a number of very serious problems that arose as a result of the statutory pay policy which preceded it are measures which have led to an increase above what was judged necessary at that time.

I think it would be better if, instead of my attempting to predict a figure which is appropriate to the judgment of the present economic circumstances, I said that whatever guidelines are agreed for the second round need to be much more closely adhered to in the circumstances that exist now than was possible in those which existed when we came out of statutory wage control.

Mr. William Hamilton

Will my right hon. Friend give an assurance that, whatever else might happen, there will be no retardation of the progress made towards equal pay between now and the end of the year?

Mr. Booth

I think I can say, on behalf of all Ministers in my Department, that we have persistently taken the view that, whatever policies are followed, equal pay must have the utmost priority.

Mr. Hayhoe

But how long must it be before the Government realise that it is the social contract and its so-called guidelines which have led us into our present disastrous situation? Is not it a fact that the wage settlements to which the Secretary of State referred, when he said that other people were calling them excessive, are the very ones the Secretary of State has described as being within the social contract?

Mr. Booth

The factors which have put the social contract guidelines to the test were created by the policy that preceded it. It cannot be deduced from these circumstances that the guidelines created the problem.