HC Deb 24 July 1975 vol 896 cc810-908

5.0 p.m.

Mr. John Pardoe (Cornwall, North)

I beg to move Amendment No. 2, in page 1, line 5, at beginning insert: 'Subject to subsection (2A) below'.

The Chairman

With this we are taking the following amendments:

No. 77, in page 1, line 13, after 'agreement', insert: 'including any agreement to pay annual increments to individuals'.

No. 7, in page 1, line 13, at end insert: (2A) Subsection (1) above shall not apply to—

  1. (a) Wage Council proposals and awards from formal arbitration references made before 11th July 1975;
  2. (b) the implementation not later than 1st September 1975 of annual settlements for groups which, before 11th July 1975, had reached agreement for annual settlement dates, provided that such groups had not received principal increases within the preceding 12 months of such annual settlement date;
  3. (c) remuneration in the nature of contributions paid in respect of a person under a superannuation fund approved by the Board of Inland Revenue;
  4. (d) an increase in the rate of remuneration, due to a major change in the duties or nature of employment or based on increases in age in respect of persons under the age of 18 years;
  5. (e) remuneration for work other than work to be performed wholly or substantially within the United Kingdom or on British ships or aircraft;
  6. (f) remuneration arising from a profit-sharing scheme between an employer and his employees established before 11th July; and
  7. (g) an increase in the rate of remuneration arising out of the requirements of the Equal Pay Act 1970.

No. 9, in page 1, line 14, leave out from beginning to 'the' in line 16.

No. 10, in page 1, line 17, leave out from 'instrument' to 'and' in line 19 and insert 'amend the limits in subsection (1) above'.

No. 11, in page 1, leave out lines 20 and 21.

No. 74, in page 2, line 7, at end insert— '(3A) New or improved benefits under occupational pension or death benefit schemes which are tax approved, or under comparable schemes not requiring tax approval, and any reimbursement of a corresponding increase in employee contributions may, unless subsection (3B) below applies, be given outside the pay limit prescribed under this section. (3B) Where a change in a pension scheme has the effect of increasing the pay, net of any pension contribution of a susbtantial proportion of the group of employees covered by the scheme, that increase counts against the pay limit unless—

  1. (a) a revaluation of the scheme, made in accordance with generally accepted principles for such revaluations, has shown a surplus in respect of those receiving the increase, the value of which equal or exceeds the increase; or
  2. (b) there has been a corresponding reduction in benefits to those receiving the increase: or
  3. (c) the change had been proposed before 1st August 1975.
(3C) New or improved benefits under schemes for payments to workers who leave an employer's service because of redundancy (as defined for the purposes of the Redundancy Payments Act 1965) are outside the pay limit prescribed under this section, as are benefits which become payable after 6 months of incapacity.'.

No. 16, in page 2, line 14, at end, add— '(6) This section shall not have effect on those decisions made by the Industrial Arbitration Board following complaints made under the terms of the Fair Wages Resolution of the House of Commons dated 14th October 1946'.

Mr. Pardoe

I will first set out the general approach to this group of amendments. We believe that it is a bad principle to legislate by passing a law which is unspecific but which refers to another document, in this case the White Paper. The 1966 Act did so, but we believed then that that was a bad precedent.

The hon. Member for Cirencester and Tewkesbury (Mr. Ridley) has later amendments on the Order Paper which seek a way out of this dilemma by attach- ing the White Paper as a schedule to the Bill. There are also some official Opposition amendments which seek to amend that schedule. That is one approach. My right hon. and hon. Friends and I take a rather different one, although we are sympathetic to what the hon. Member for Cirencester and Tewkesbury is trying to do. Our view is that it is better not to have the White Paper as a schedule, certainly not to have it totally separate from the Bill and referred to, but to write it into the Bill, or at least those parts of it that can be made completely specific, so that we down-grade the importance of the White Paper and upgrade the importance of the Bill.

Amendment No. 2 is a drafting amendment which paves the way for Amendment No. 7, which is the guts of the whole group. May I therefore ask, Mr. Thomas, whether you will consider a Division on Amendment No. 7 should we so require rather than on Amendment No. 2. The Bill containing Amendment No. 2 would be ridiculous, but with Amendment No. 7 it would make sense.

The Chairman

I shall consider that matter and let the hon. Gentleman know when he sits down.

Mr. Pardoe

I am most grateful, Mr. Thomas. In Amendment No. 7 we have set out specific exceptions to the £6 limit. Some of the exceptions are mentioned in the White Paper but I concede that some of them are not. The first exception to which the amendment refers are wages council awards. In page 4, paragraph 8 of the White Paper the Government say that they accept: that Wages Council proposals and the awards from formal arbitration references made before this White Paper should he implemented… The matter is extraordinarily vague if it is left at that. It is our view that that provision should he brought straight into the Bill, and that is what the amendment seeks to do. Subsection (a) in Amendment No. 7 reads: Wages Council proposals and awards from formal arbitration references made before 11th July 1975". The date of 11th July is not mentioned in the White Paper. Instead, a rather vaguer phrase is mentioned—namely: made before this White Paper should be implemented". The Secretary of State for Employment, when winding up the debate last night, said: They permit the implementation in full of wages council proposals agreed before 11th July and of arbitration awards where the formal reference was made before 11th July."—[Official Report, 23rd July 1975; Vol. 896, c. 685–6.] The right hon. Gentleman clearly accepts 11th July as we do, and it would be far better if the matter were tied up in the Bill. Paragraph (b) in the amendment seeks to write into the Bill what is already part of the White Paper.

I pass on to the much more important pension point contained in paragraph (c). I hope that in this debate we can get more satisfactory answers from the Secretary of State than those we obtained last night. I shall set out why we believe pension provision is so important and why the Government must accept the arguments of the pension lobby and the arguments that have been put forward from this side of the House, and notably by the hon. Member for Somerset, North (Mr. Dean). We have not yet had any satisfactory answer to those arguments. I am aware that the hon. Member for Somerset, North and his hon. Friends have an amendment on the Order Paper seeking further application and provision. It is not good enough if the Government are to say, as the Secretary of State said last night: As to improvements in occupational pension schemes, these must in general be subject to the £6 limit. That position is pretty clear from a reading of the White Paper, but with the right hon. Gentleman's words now behind it that is clearly the interpretation to be placed upon it by whichever Government Department has to interpret the matter. The right hon. Gentleman went on to say: We certainly hope that the arrangements that I have described will assist the occupational schemes to go ahead…".—[Official Report, 23rd July 1975; vol. 896, c. 688.] How can they go ahead if the Government fail to move from the obstinate position they have taken so far? If the new contributions, either increased contributions to an existing scheme or new contributions to a new scheme, are to count towards the £6 remuneration limit, is it likely that employers will encourage their employees, nay even allow their employees, to use such little money as is available to provide them with better pensions or a pension at all?

There will be almost a complete stop on the development of existing pension schemes and on the implementation of new schemes. For 12 months from the date of the White Paper no employer will embark on introducing new schemes or improving existing schemes. That will be the position as it is stated in the White Paper that the Government's policy will continue for more than a year. We certainly hope that it will last for that sort of period. It will not be of much use if it does not. The delay in the improvement of existing schemes and the implementation of new schemes could well be indefinite.

5.15 p.m.

In all previous prices and incomes policies, pension provision has been specifically exempted. It was exempted under the Labour Government's schemes from 1966 onwards and it was exempted in phases 1, 2 and 3 of the previous Conservative Government's scheme. I ask the Secretary of State to go much further than he did last night in explaining why the policy of exemption, which has been true of all previous policies, has been changed, particularly in view of the need to encourage better pensions and to increase the funds available for pensions.

The Secretary of State must realize that we are not dealing with a wealthy or above-average income section of the community. Pensioners are often among the poorest members of the community. Any action which would raise the living standards of future pensioners should be encouraged rather than prevented. If the Bill goes through unamended we shall be condemning more pensioners of the future to supplementary benefit. In due course that will lead to increased public expenditure on social benefits. I do not think that we should try to restrict improvements to pension schemes by restricting available funds. We should not restrict the funds available for investment at a time when the economy needs them.

The Bill will restrict improvements to pension schemes and will make it impossible for schemes to achieve the standard required for contracting out to the new State scheme. That will at worst frustrate and at best postpone the partnership between State and private pensions which the Government, in their incarnation in the Department of Health and Social Security, wish to achieve. Perhaps it is a pity that we do not have the presence of the Secretary of State for the Department of Health and Social Security or that of her right hon. Friend the Minister of State. Such a partnership is the avowed aim of the right hon. Lady's Department.

Those who are far from retirement can have their pensions improved later when the matters that we are now discussing are dead and buried and when, in the Chancellor's phrase, the North Sea oil is flowing. I rather doubt whether that will be the moment of salvation for the British economy. At some time in the future those who are now far from retirement can have their pensions improved, but for the disabled and for the dependants of those who die in the meantime any relaxation in the future may well be too late.

I put one possible alternative consideration to the Government. I ask the Government to consider permitting new or extra expenditure on pensions when such expenditure can be absorbed by profits or kept within acceptable limits if reflected in price increases. The Government's decision, the surface of which was skated over last night by the Secretary of State, is incomprehensible. It is clear that the Government do not understand the basic and fundamental principle that money paid into pension schemes represents forced savings and is, therefore, anti-inflationary. It is part of the attack on inflation itself. It is at least as good as limiting incomes by statutory means. It ensures that people save their money instead of spending it. Much of the money which would be made available by forced saving could be used for investment. That could only be a good thing. I hope that the Secretary of State will be able to give us some better news than we have had so far.

Paragraph (d) deals with changed duties. The Government have been extraordinarily lax on the question of promotions, tinkering with titles and all the other devices and paraphernalia which have been used in the past to evade the various prices and incomes policies that have been introduced. It is a glaring loophole in the Bill, for clearly people will change their job descriptions. It is very difficult to define, and I am sure that the right hon. Gentleman will say that it has never been possible to define it very clearly in the past, but that does not mean that it should be left wide open as a loophole. We have tried to cover it by paragraph (d) of the amendment, which refers to an increase in the rate of remuneration due to a major change in the duties or nature of employment or based on increases in age in respect of persons under the age of 18 years".

The Government may well be able to produce more suitable words than "major change"—I am not entirely happy with them myself—but I hope that the Secretary of State will come forward at the Report stage with a tighter procedure for dealing with this loophole.

I should like to ask the Secretary of State whether an employer can pay a new employee more than he paid to the employee being replaced. I know that it is very difficult to ensure that an employer shall not do so, but what do the Government propose to do about it? It is perfectly possible to dismiss employees and take on others at the drop of a hat. As the Bill stands, that will be an easy loophole for anybody wishing to evade its purposes.

Mr. Geoffrey Finsberg (Hampstead)

Will the hon. Member also agree that one of the greatest evils of any of these policies arises in relation to the employment of secretaries and shorthand-typists, where one employer is paying the going rate and another employer advertises a vacancy at £6 or £10 a week more? The employer is then left with the problem either of having to pay more, and thereby breaking the law, or of allowing the employee to go and then having to pay £10 more for a replacement.

Mr. Pardoe

I hope that the right hon. Gentleman the Secretary of State has heard those words, and, as I am about to go into the market myself for a new secretary, I hope that hon. Members throughout the House will have noted what was said, because I should not like them to operate against my interests in this matter.

I now move to paragraph (e) of Amendment No. 7, dealing with remuneration for work other than work to be performed in the United Kingdom. I am not quite sure what the Government propose to do about this problem. It seems to me that there is no way in which payment for overseas work can have the £6 limit enforced against it, nor do I think that it should he enforced. If, for instance, a surveyor or engineer goes abroad on a six months' contract, he will almost inevitably, I hope, receive substantially more than he would have received had he stayed at home. That amount will then be added to his other six months' pay when he returns, and it may well be that his aggregate for the year is substantially more than £312 up on the year before, but it will have arisen only because he has been abroad. I hope that the Secretary of State will answer this point.

The next paragraph—paragraph (f) of Amendment No. 7—is concerned with profit sharing. The Secretary of State will know that the Liberal Party is addicted to profit sharing, because it does what he would regard as being totally distasteful—it actually makes profit a desirable thing for the great mass of the people in this country, and therefore supports the free enterprise system. We believe that profit sharing is very important, and we do not wish this Bill to discourage it. But we recognise immediately that there would be a glaring loophole if firms were allowed to introduce new profit sharing schemes after 11th July. Therefore we refer in the amendment particularly to those schemes established before 11th July.

It may well be—the Secretary of State is sure to have spotted this—that it is unlikely that any firms will increase their profits in the next 12 months, but it is possible that some firms, particularly in the export field, with the falling value of the pound, will find their products highly competitive and will make substantial profits. If they have had a profit sharing scheme in force before 11th July, it may well be that the profits they wish to share, together with any other increase in pay they wish to make, will amount to more than £6. As the Bill stands at the moment, the additional profits they would want to share out among their employees would have to be included in the £6 limit. We wish anything arising from already established profit sharing schemes to be exempted from the £6 limit.

Paragraph (g) of Amendment No. 7 deals with a simple point, and I hope that the Secretary of State will accept it. It refers to remuneration arising from the requirements of the Equal Pay Act. It is all in the White Paper, or at least in paragraph 6 of the TUC Annex.

I return to the point that I made in introducing this range of amendments—that we do not like the idea that it should be left to the White Paper to legislate, so to speak, on these matters. We therefore wish is bring it right into the Bill—and that s the purpose of the last paragraph of the amendment.

Sir David Renton (Huntingdonshire)

Assuming that the House, by its vote, brings the White Paper into the Bill as a schedule, does the hon. Gentleman envisage that the House would then be free to amend the White Paper?

Mr. Pardoe

It is not for me to suggest that the White Paper should be amended, because the Chair in its wisdom has already selected amendments tabled by the Conservative Opposition to the amendment which has been tabled by the hon. Member for Cirencester and Tewkesbury (Mr. Ridley). He is seeking to write in the White Paper as a schedule, and the Opposition is seeking to amend the schedule. I believe that the answer to the question posed by the hon. and learned Member for Huntingdonshire (Sir D. Renton) is yes, but the Chair has presumably already accepted that point, and I am not here, with respect, to interpret the views of the Chair.

I turn to Amendments Nos. 9, 10 and 11, which seek to amend subsection (2) of Clause 1. What we are seeking to do here is to leave out of the Bill the power which is given in Clause 1(2) to the Secretary of State to change the whole thing by yet another White Paper. Obviously, since we do not believe that the first White Paper should be referred to in trying to legislate, we do not think that the second should be either. It seems to me that it would be far better if, as suggested in the amendments, the position were stated quite categorically, that the Secretary of State should not be permitted to make an order. If these amendments are carried, subsection (2) would then read: …the Secretary of State may by order made by statutory instrument amend the limits in subsection (1) above, and that subsection shall then have effect accordingly". This seems to me to be a tidier and far better way of legislating on the point, and I hope that the Secretary of State will indicate that he is prepared to accept the idea behind these three amendments, if not the whole of them.

The Chairman

The hon. Gentleman, in the course of his speech, made a request that he should vote not on Amendment No. 2 but on Amendment No. 7. I think that was his request. The position is that, when the moment comes, if he cares to withdraw Amendment No. 2, he may vote on Amendment No. 7, but if Amendment No. 2 is negatived, he will not have the opportunity of voting on Amendment No. 7.

[Mr. A. P. Costain in the Chair]

5.30 p.m.

Mr. Ian Mikardo (Bethnal Green and Bow)

I rise to ask my right hon. Friend to give careful and sympathetic consideration to Amendment No. 7 which seems to me to have great merit, great force and great validity. I hope that we shall not be required to have a Division on it because I look forward to hearing my right hon. Friend indicate his acceptance of it.

I believe that it is a good amendment on two grounds. First, I share the view of the hon. Member for Cornwall, North (Mr. Pardoe) that we get into a mess when we have a Bill with a White Paper as an arrière pensée behind it. If I had not realised that before I did so during that long drawn out Committee on the Industry Bill when, time after time, Front Bench spokesmen said, rather reluctantly, I thought "Where the Bill is in conflict with the White Paper it is the White Paper which will be the operative document." They said it reluctantly because they could not get out of it. The reason why they could not get out of it was that the Prime Minister had said it and by saying it had pre-empted a good deal of what his colleagues were doing in that Committee.

For that reason I do not want to see us going through that same trauma on this Bill. That is why I believe that the hon. Member for Cornwall, North was right. Let us have it clear, so that in the end we have a Bill which stands by itself, rather than our having to keep crossreferencing with another document.

The second reason why I support Amendment No. 7 is that I believe that, in the case of each of the seven exceptions which the amendment proposes to the operation of subsection (1), the hon. Gentleman made a case which is absolutely valid.

Having said that, may I go on to say that there is an eighth one which I think is equally valid? It is the one contained in Amendment No. 16. Since your predecessor in the Chair, Mr. Costain, was good enough to say that if Amendment No. 2 were carried he would permit a vote on Amendment No. 7, I hope that a separate vote will be permitted also on Amendment No. 16.

I shall not go through the justifications which the hon. Member for Cornwall, North gave for each of the seven exceptions, but perhaps I might be allowed to comment on two of them, namely, those in paragraphs (e) and (f) which are both matters of which I have personal experience.

Speaking of work other than work to be performed wholly and substantially within the United Kingdom, the hon. Member for Cornwall, North spoke of the position of surveyors, engineers and technologists of similar kinds who get landed out of the country sometimes for periods of six months or more. All too often they are landed in very difficult climatic conditions and in places with very few amenities. More and more of our export effort is going into the building of complete harbour works, dams, irrigation works, steel mills and large scale chemical or petrochemical plants in all sorts of places in the world. People have to leave their families for six months on the trot and go to live in tropical heat or on east European freezing steppes or in the arid deserts of Arabia. They will not be persuaded to go unless they are properly paid. If they are not persuaded to go British firms doing work of that kind will be hopelessly handicapped in relation to their competitors. Although they will be able equally with their competitors to produce the Stuff, they will not be able to commission it because they will not be able to persuade the commissioning engineers to go.

Mr. Nick Budgen (Wolverhampton, South-West)

Does the hon. Gentleman agree that the same argument will apply to many people who will decide not to go to relatively unpleasant jobs in this country?

Mr. Mikardo

That may be true, but it does not happen to be in the amendment, and I am seeking to avoid your wrath, Mr. Costa in, by sticking close to the terms of the amendment.

I come, then, to paragraph (f). There are all sorts of profit-sharing schemes and other schemes under which a man's remuneration fluctuates according to some factor within or partly within his control. I take the very simplest example, that of the salesman working partially or wholly on commission, perhaps selling in the home market, perhaps selling in the export market.

Let us take the very common case of a man who gets a basic wage and his expenses plus 2 per cent. commission on what he sells or on what he sells above a certain datum figure. If he is not allowed to have more than £6 a week, it does not matter how much he sells above £300 because he will not get any more. If he is a good salesman he will go out on his sales tour on Monday morning and by Tuesday evening he will have sold his £300 worth. He might just as well knock off on Wednesday, Thursday and Friday and take his missus to the pictures, because he will not get any more.

I do not know how companies which operate on the basis of this sort of scheme—I accept that some are not very reputable, but some are perfectly reputable—will ever be able to recruit the right personnel.

Mr. John Biffen (Oswestry)

If this policy is persisted with and this very real problem becomes increasingly evident in industry, industry and commerce will react by devising systems whereby the man to whom the hon. Gentleman refers becomes self-employed—a lump salesman, as it were. That is one of the predictable consequences and, whether it is in the mind of the Secretary of State for Employment, that is what is likely to happen.

Mr. Mikardo

I believe that is possible, but even if that does not happen the unfavourable consequences which I have described are all too likely to occur.

Mr. Budgen

Dealing with the hon. Gentleman's hypothetical salesman who has earned his £6 by Tuesday—

Mr. Arthur Lewis (Newham, North-West)

It is not hypothetical. It is factual.

Mr. Budgen

Surely the hon. Gentleman would argue that, for the remainder of the week, the salesman would work without any increased payment because he believes in social justice and wants to improve the social wage.

Mr. Mikardo

I should greatly approve of it if he did, and it is possible some people might, but I just have a feeling that there might be one or two who would not.

I emphasise again to my right hon. Friend that I hope that he will take more than a cursory look at the amendment and look upon it in the most sympathetic way. It seems to me and to some of my hon. Friends to be worthy of support.

Mr. Biffen

As the Committee addresses itself to the details of this legislation it must feel that the hon. Member for Cornwall, North (Mr. Pardoe) has done it a good service by providing an opportunity for a debate of this character so early in our proceedings. It touches upon two matters of substantial significance. One is the relative weight of the Bill itself compared to the White Paper. The other is an attempt to loosen somewhat the definitions contained in the legislation and in the White Paper to prevent some of the uncertainties already referred to by the hon. Member for Bethnal Green and Bow (Mr. Mikardo).

I am sure that, in the world of the Daily Express, Mr. Alastair Burnet has found an appropriate situation in which to work and give full vent and display to his abilities. This is a conflict between the moderates and the militants—the mindless militants, no doubt. The awful thing is that, because this debate is taking place on the Floor of the Chamber, we can no longer recognise quite so clearly the mindless militants or the moderates. Everything becomes slightly confused with the real world. Although I often think that the House of Commons may be a shade remote from the real world, we are rather closer to it than some who have thundered in the past few weeks from the security of Fleet Street on these matters.

The first point made by the hon. Member for Cornwall, North was the desirability of having the law clearly established rather than law via the White Paper. It is not even as though the problem ends there. The White Paper is terrifyingly imprecise. I shall try to connect the question of loosening the definition to the whole question of the undesirability of proceeding by the White Paper.

The White Paper has the fascination of containing an annex. I have assumed that the annex to the White Paper—it is the same whiteness and it bears the same imprint Printed in England by Her Majesty's Stationery Office and can be referred to only by reference to Command 6151—is, to all intents and purposes, part of the White Paper. I do not assume that there is, as it were, a mach 1 White Paper and a mach 2 White Paper. It is all one and the same to me. Perhaps I am wrong and the Secretary of State for Employment will rise to say that the annex containing the extract from a TUC document has nothing like the same significance as the first part of the White Paper. That would be a fascinating revelation. I have to take the commonsense assumption that the White Paper is one and the same.

I turn to the question of how to determine remuneration, not merely in terms of cash but also in terms of fringe benefits. This brings me to the other point made by the hon. Member for Cornwall, North. Paragraph 7 of the annex states: Negotiators will be expected to offset any improvement in non-wage benefits against the pay figure. That we understand. It sounds quite simple. Clearly, this would have put a tremendous responsibility on the interpretative capability of the Secretary of State for Employment. Therefore, he has wisely protected himself by Section 7 of the Bill which says: In this Act 'remuneration', in relation to any person, includes any benefit, facility or advantage, whether in money or otherwise, provided by the employer or by some other person under arrangements with the employer, whether for the first-mentioned person or otherwise, by reason of the fact that the employer employs him, and any reference to the payment of remuneration shall be construed accordingly. That is absolutely breathtaking, because with the omniscience that is placed with the Secretary of State, we are immediately brought face to face with reality. I shall not touch upon the problem of pensions because I know that my hon. Friend the Member for Somerset, North (Mr. Dean) and many other hon. Members can speak on this subject with infinitely more authority than I could ever bring to bear.

I take the point raised by the hon. Member for Bethnal Green and Bow. Those who are sent abroad to work will be bound to receive some kind of non-monetary recompense for their travels overseas, whether it be in the form of a clothing allowance or in terms of special arrangements for the education of their children while they are overseas. It is not for me to touch upon the varieties, which must be within the experience of all hon. Members. I only hope that it is within the experience of Mr. Alastair Burnet, who will be the unseen host to our deliberations.

My concern and anxiety is that it is quite impossible for the staff of a company, some of whom work overseas and some of whom work at home, not to know what is going on. They will constantly be confronted with the situation that they will say "But look, we suffer from similar disadvantages and deprivations". My hon. Friend the Member for Wolverhampton, South-West (Mr. Budgen) made a fair point on this. The question will arise whether the replacement company car must be exactly the same type of car as was held hitherto? This is bound to give rise to all sorts of attempts to maintain some kind of relativity between one section of the employed population and another, depending upon whether they work abroad or at home.

5.45 p.m.

Those who work abroad will, of necessity, receive some form of benefits in kind to compensate for their work. Personally, I do not understand how the omniscience of the Secretary of State will be able to catch up with this difficulty. because the companies operating the scheme will know perfectly well that they cannot isolate their employees as though one section of the employees does not know how the others live.

Therefore, constantly the ambitions of this legislation will be brought up against, not the malicious activities of the Trotskyites, but the sheer, hard grind reality of how a business can be run within the rigidities which are aspired to by the provisions of this legislation, particularly this clause.

The hon. Member for Cornwall, North has done the Committee a signal service at this early stage by pointing out some of the difficulties. He has tried to relax the measure by introducing certain wider legislative provisions. The wider one seeks to relax it the more intractable the problem will become and the more evident the absurdities will seem. I congratulate him on the force with which he has set his hand. I wish him well, and I hope that the Secretary of State will try to humour the Committee at this early stage of its proceedings, so that we may proceed happily, with comfort and, therefor, expeditiously, by accepting this amendment.

Mr. Ron Thomas (Bristol, North-West)

I rise to support the amendment moved by the hon. Member for Cornwall, North (Mr. Pardoe). It is already quite clear in terms of his amendment for seven gateways what a jungle of nonsense we become involved in when we embark upon a statutory incomes policy. I am rather surprised at the Liberal Members who have advocated this statutory incomes policy. They have tabled a new clause. They are trying to set this down within rigid limits. They have come forward with this amendment for seven gateways. Certainly I shall support the seven gateways, as I shall the other gateway which will be moved by another hon. Member.

Unlike my hon. Friend the Member for Bethnal Green and Bow (Mr. Mikardo), I should like to refer to paragraph (d) of the proposed amendment. My right hon. Friend the Secretary of State will know that for many years his Department has advocated that firms should get together with the trade unions and rationalise their payment structures, and that they should go in for sophisticated job evaluation schemes, points rating schemes, and so on. In these kinds of schemes it is normally laid down that if there is a change in the job description it should be a right to feed it through the system, and an increase in salary should therefore be awarded.

My right hon. Friend the Secretary of State will probably be able to tell us how many millions of workers in Britain are now covered by such job evaluation schemes, which provide that if there is a change in the job description, as is suggested in paragraph (d), they will have a right to an increase in pay.

We are not concerned merely with situations in which people move from one job to another, but I think that we all know that during the previous freezes and squeezes, and God knows what else, successive Governments, simply by the device of changing a job description, adding a little more responsibility to a job or advertising it under a different title, and so on, allowed firms to recruit or to pay extra if it suited them and if they were short of labour. If it does not suit such firms to do this, they stay rigidly within the law and use the law as an excuse not to pay trade unionists increased awards. Before long many of these firms will be saying how much they would dearly love to give much more than £6 but that the law prevents them from doing that.

I should like to turn to paragraph (f), which interests me. It is a well-known part of Liberal Party policy at elections. This paragraph deals with remuneration arising from profit-sharing schemes, and so on. I assume that in profit-sharing schemes the profits themselves arise out of production. In terms of the clause, I should be interested to hear the Secretary of State's view about any kind of payments which arise out of increased production.

All of us have said in this Chamber, on many occasions, that British industry has been starved of capital investment. We have said that there have been investment strikes. But all of us admit that along with that new capital investment, we want people to work more effectively; not harder, but more effectively. Over a period of years we have had all kinds of productivity and efficiency agreements. Under those agreements, when productivity rises there is supposed to be additional payment. If we are to have this gateway as to profit-sharing schemes, we should equally have a gateway which deals with the production which leads to increased profit. If the workers do not get that profit, we know where it will go or where it will be retained.

Linked to this matter, I ask the Secretary of State to consider those industries which have piece work and bonus schemes. He will know that if there is a change in means, method or material in the engineering industry, there is a mutual agreement. There has to be a new time or a new price fixed by mutual agreement. From reading the White Paper and the Bill, I do not know whether that contractual obligation will now be cast aside. If it is, there will be a hell of a lot of trouble in the engineering industry.

All the time there are changes in means, methods and material, and all the time shop stewards and management get down to sorting out these matters. They fix new times and new prices. It could well be leading to an increase in earnings. That is more than likely. Will that be part of the £6?

In addition to this, I completely support Amendment No. 16 in the name of my hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker), but I do not see much difference between that and the Terms and Conditions of Employment Act 1959. I see my hon. Friend nodding to that. However, I think that the Terms and Conditions of Employment Act is a much more progressive piece of legislation.

The more we look at this matter, the more gateways we shall want to establish and the more we shall be convinced of the absolute nonsense of the whole thing.

Mr. Michael Latham (Melton)

I wish to address my remarks to Amendment No. 7, in particular, and to paragraph (e) which deals with the question of remuneraand was referred to by the hon. Member for Bethnal Green and Bow (Mr. Mikardo) in an extremely convincing intervention.

The Committee will know that I have interests in the building industry. It is an industry which in many ways is particularly concerned with this problem. At present, for example, the allied industry of civil engineering—part of the construction industry—has an extremely poor workload in Britain, because of public expenditure cuts, so it is to overseas that the industry has been looking for the purposes of expansion. In that regard it has been greatly assisted and encouraged by successive Ministers, including the present Minister for Housing and Construction. The present Minister met the officials of the Royal Institute of British Architects only the other day and told them that the Government would be hoping to encourage the industry—and would be making a statement to the House on the matter before the Summer Recess—to do more work overseas and find more commissions overseas.

It must be said that unless the amendment moved by the hon. Member for Cornwall. North (Mr. Pardoe) is accepted by the Government—having heard the debate so far, I fail to see how the Government can resist the amendment—it will be impossible for the construction industry to expand its activities overseas and to get the resources of labour which will be necessary for it to do so.

As you know very well, Mr. Costain, the industry has always had a tradition of substantial site bargaining—of paying the market rate for labour on the site at the time. There is a national negotiating rate which is settled by the Industrial National Joint Council of the employers and the workers, but the reality on the site is wholly different from what is theoretically negotiated. There is substantial arrangement for plus rates, gang bonuses, and so on. That applies all the more so overseas in completely unregulated systems in which the industry must find its resources of labour from the local situation in competition with local contractors who know that situation better than we do.

When the previous Conservative Government introduced stage 3 of the prices and incomes policy they set up a so-called construction panel, which was part of the Pay Board and which attempted to concern itself with the way in which the "lump" was working in the industry by seeking from contractors the returns of their wages for one fortnight. It is a matter of interest that the returns received were so diverse and unhelpful that no use was made of them. Subsequently a report was produced, which said that it was not possible to implement a wages policy in the construction industry because of the diversity of the payments made on site.

If that is so in Britain, where at least the Revenue is able to go around finding out to some extent what is happening on sites—there have been many prosecutions recently for tax evasion, as hon. Members who are interested in the industry will have learned from the newspapers—how much more so will it be impossible to do this overseas?

The Federation of Civil Engineering Contractors wrote to the Chancellor of the Exchequer before the last Budget pointing out to him that under the existing tax provisions it was extremely difficult to get expert men to go overseas and undertake this work. If they are to be restricted to this £6 a week extra it will be absolutely impossible to get the sort of skilled people, be they site managers, operatives or a higher grade of executive, to go overseas and undertake this sort of work in Abu Dhabi, for example, and in climes which are not very pleasant basically for European people. It will be impossible unless they are able to get the market rate.

Therefore, I ask the right hon. Gentleman to consider paragraph (e) of Amendment No. 7 seriously, because its case in the construction industry is unanswerable.

6.0 p.m.

Mr. Eric S. Heffer (Liverpool, Walton)

I should like to make just one comment on the point made by the hon. Member for Melton (Mr. Latham). In general, the construction industry will be badly affected by this wages policy. Every time there is an incomes policy there is greater chaos in the whole system of wage negotiations and agreements in the industry. I think that we shall see the growth of the "lump" system. The trade union movement will again lose membership, and that can be serious for the future of the industry.

There will also be a great difficulty over the productivity agreements. When I was in the industry we started off with the basic rate, but within the terms of the national agreements we had the opportunity of introducing bonus schemes, by classification of a craft or trade or the job as a whole or in some other way. That sort of thing could be badly affected. I hope that my right hon. Friend will say exactly how it will be affected.

I know that what I am saying is not strictly in line with the amendment, but it is an important mater. You are being very indulgent, Mr. Costain.

The Temporary Chairman

I hope that the hon. Gentleman will not try my patience too much.

Mr. Heffer

I thank you for allowing me to make that point, Mr. Costain.

I support the amendment. I do not necessarily say that it is drafted in exactly the way that I would have wished, or that it contains all the exits which should be there and which my hon. Friend the Member for Bristol, North-West (Mr. Thomas) suggested. I should like to see many more exits, but there are a number here which are important and should be supported.

I refer in particular to paragraph (a), dealing with wage council proposals. There is only one danger about this. Wage councils are not renowned for coming up with tremendous wage increases for the people they cover. I have a horrible feeling that those people may be offered less than £6, but as the TUC is insisting that the minimum should be £6, good luck to them. However, I think that they should be exempted, whatever the position is.

I find the whole question of paragraph (e) very interesting. If the people with whom it deals are not exempted, employment may be affected. That may seem a strange thing to say, but I can give concrete examples. Many of my constituents are employed by Plessey, which has a huge factory in Liverpool. From time to time, in order to assist in obtaining an overseas contract which gives my people employment in Merseyside, some of the highly skilled workers are sent to South Africa, Latin America and many other places, to help install telecommunications equipment as a prelude to an order. It is very important that there should be no question of remuneration being held back to £6 for those workers who can, by the very fact of going abroad, help to create employment in areas such as Merseyside.

We must have an assurance from the Government, and the best way in which we can obtain it is to include the amendment. I am a great believer in having things written down. I remember a trade union official in Liverpool once telling me, jokingly "Those verbal agreements that we make are not worth the paper they are written on." He was absolutely right. I love to see agreements written down. I am a great believer in that, particularly in terms of work and conditions of employment. If we are to have this sort of nonsense, at least let us have written in what can happen.

My last point concerns the Equal Pay Act. I understand from what was said in the House when the White Paper was introduced that equal pay will not he affected. Incidentally, that pleased my agent. She is net full-time, but works in industry as well, and for many years she has been demanding equal pay in her employment. She is now about to see the fruition of all the work that has been done. She was very concerned that she might not receive the increase that she had every right to receive under the Act. I was able to tell her that I understood that she would receive it. But it is a good thing to have that written into the Bill, and that is another reason why I support the amendment.

Before we began the debate on the amendments my right hon. Friend the Leader of the House gave the impression that if we went into too much detail and discussed the Bill at great length we should be unpatriotic. I had a feeling that he thought that it would be unpatriotic to discuss these matters. "What we want is the Bill", he said. "Never mind all this discussion and all that rubbish. Get it through." I do not take that point of view.

First, I do not like the whole concept of the wages policy anyway, but if we are to have such a policy hoisted on us, and have this Bill as the first and, I hope, the only Bill on these matters, at least we have the right to examine it in detail and to move or support amendments. I make no criticism of the Chair, but that is particularly so when our own amend ments have not been selected. We have a right to examine those that are selected, particularly if some of them are much in line with ours and have the same objectives.

In examining the amendments in detail, we are not saboteurs. We are not against the national interest. We are not holding up the proceedings of the House. We are not unpatriotic. We are just doing our job as Members of Parliament—the job that we were elected to do.

Mr. Paul Dean (Somerset, North)

I am glad to speak following the hon. Member for Liverpool, Walton (Mr. Heifer), because I wish to refer to pensions, and I know that he is interested in that subject and the effect that the Bill will have on pension rights.

I shall address myself purely to Amendment No. 74—in the names of my hon. Friends and myself—and the consequential Amendment No. 75. I understand that the Chairman of Ways and Means has agreed to a separate Division on Amendment No. 74 if that is desired.

The Temporary Chairman

That is what the Chairman indicated when he left the Chair.

Mr. Dean

I am much obliged, Mr. Costain.

In our debates this week we have heard a great deal about the TUC and CBI and earners. But pensioners have no powerful body to speak for them. The House must be their TUC and CBI. It is important that we examine carefully the effect that the Bill will have on pensions.

I put a simple proposition to the Government: it should be no part of a pay policy to restrict pensions. Pensioners suffer from inflation perhaps more than does any other section of the community, and they should be protected by a pay policy, not caught by it. Amendment No. 74 is in no sense a wrecking amendment. It is in keeping with the Government's counter-inflation policy. Indeed, I believe it will help it. It will relieve pressure, provide flexibility, and prevent hard cases. Nor is it in any sense a party political amendment. It can appeal equally to those who believe in a pay policy and those who do not, to those who approve of the Bill and those who do not.

The aim of the amendment is to try to ensure that we do not cause unnecessary damage to savings through occupational pensions schemes, that we do not inflict unnecessary hardship on individuals retiring owing to age or disability, and do not make life more difficult for those changing jobs or becoming redundant. Against that general background, I want to look at three categories. In doing so, I declare my interest in pension matters. The categories are, first, existing pensioners—that is, those drawing pensions before 1st August 1975—secondly, those retiring or changing jobs or becoming redundant after 1st August 1975 and, thirdly, members of occupational pension schemes remaining in their jobs and building up pension rights with those jobs.

The Chancellor spoke about the first category in the debate on 21st July, when he said: The Government propose that existing pension obligations should be met by public and private enterprises, even where they exceed the £6 limit."—[Official Report, 21st July 1975; Vol. 896, c. 55.] The Secretary of State for Employment, in his speech last night, made much the same point when he said: The arrangements for payments to pensioners under existing schemes may continue unchanged and are not affected by the pay limit."—[Official Report, 23rd July 1975; Vol. 896, c. 688.] Those two statements are reassuring, as far as they go, but they leave a number of questions unanswered. In particular, the main point on which we need to be satisfied is whether pension schemes in all cases may compensate pensioners for increases in the cost of living. It may be difficult for them to do so, particularly with inflation running at 26 per cent. Surely we should ensure that there are no barriers to their doing so.

I have three specific questions for the right hon. Gentleman relating to existing pensioners. The first relates to the Civil Service scheme and similar schemes in which there is an automatic entitlement to increases in some way linked to the cost of living. If I understand the right hon. Gentleman correctly, these arrangements will continue unaltered.

Mr. Arthur Lewis

Of course.

Mr. Dean

I see that the hon. Member for Newham, North-West (Mr. Lewis). showing his usual interest in these mat ters, confirms what I am suggesting. I want to know what will happen with those pension schemes which try to provide some help with the cost of living on an ad hoc basis—schemes that do not have an automatic increase built into their rules, which provide the increase not only out of the pension funds but out of revenue and decide that it is their duty to try to do something to protect older pensioners, in particular, from increases in the cost of living. May we have a clear assurance from the Secretary of State that such arrangements will be as much in order as the automatic arrangements which apply within the Civil Service and other schemes?

6.15 p.m.

My second question relating to existing pensioners is: what is the effect when they work? Many pensioners work part-time, and a very desirable thing that is. How will they be affected? If they have a pay increase, will that count against any pension increase which they may receive? This is an important and clear question, to which pensioners who are working part-time will need an answer. The third question under this head relates to the £8,500 limit. Does this affect pensioners? I assume that it does not. If it does affect them, does the £8,500 limit apply to the pension which the pensioner is receiving or to the salary which he received before retirement, and on which the pension is based?

I turn to my second main category consisting of those retiring or changing their jobs or becoming redundant after 1st August 1975. I fully appreciate that in present economic circumstances the prospect of employers being able to improve the arrangements on offer under their schemes may be fairly remote, but there may be companies that wish to do this. There could be—we hope that there will be if the Government's policy succeeds—future occasions when companies will wish to do that. If this is not to be allowed there will be a series of problems arising unless these people are exempted from the £6 limit.

Let me mention one or two specific instances. I have in mind people retiring in the next 12 months whose pensions will be less than they would otherwise have been, because their pay has been restricted. These are people whose pensions are tied to the level of their last year's pay or the level of their last three years' pay. To some degree their pension will be affected as a result of restraint on their earnings during the year or years on which their pension is based.

It is important that in considering this point the Committee should not forget what we intend to do with our own pensions. There is the somewhat strange recommendation, which I believe has now been adopted, that the pensions of Members should be based on the Boyle recommendation of £8,000—in other words on notional rather than actual pay. This is a pretty questionable principle and I believe that I know the feelings of the Inland Revenue when it heard of this proposal.

However that may be, if special circumstances are to be made by us for ourselves we should at least allow employers, if they can get Inland Revenue approval, to base pension rights on the most advantageous pay. In his speech last night, the Secretary of State endeavoured to be helpful. He said: It will also be open to those concerned to decide if they wish, to continue to calculate pension entitlements on the basis of the rate of pay to which the employer was committed before 11th July, even though that commitment may be limited by the new policy."—[Official Report, 23rd July 1975; Vol. 896, c. 688.]

Against the background of that relatively helpful explanation there are some questions not yet answered and to which we now need answers. I am still speaking about those people retiring after 1st August this year. The first group is made up of the people retiring through age. There will be cases where their pension arrangements are fully funded and one assumes they are within the definition explained by the Secretary of State, but what about the cases where pension rights are not fully funded? An employer may have said when he engaged the employee some time ago that he would provide him with a lump sum on retirement so that he could purchase an annuity. May we have an assurance that these arrangements will be allowable under the Bill?

The second group consists of those retiring early through ill health. If the normal practice is followed, it may be, particularly in insurance schemes, that these people are insured for a pretty low level of benefit, and the employer may wish to augment the pension, not out of the pension fund, or to provide a lump sum. It is very important that we should be clear that this type of arrangement will be allowable under the Bill.

The third group consists of those who will be changing or losing their jobs and, with the bleak reality facing us today, there will be all too many of these after the pay policy starts. I hope that those who lose jobs will get redundancy pay under the normal arrangements, but what if the employer, out of his generosity and limited resources, decides that he wishes to do more for them? Will he be entitled to do so under this Bill? I believe he must be entitled to do so if justice is to be done.

Another relevant point is that until the full preservation provisions come into force, those who change or lose their jobs are entitled to a full refund of their contributions. Will they still be able to get that refund when this Bill becomes law? These are all questions of direct relevance to people who are going to retire and may have had an increase of up to £6 under the arrangements in the Bill. I hope that we shall have clear answers from the Government on these points.

The main object of Amendment No. 74 relates to the position of new and improved benefits under occupational pension schemes, death benefit schemes, redundancy schemes, or incapacity. The Secretary of State said, last night: As to improvements in occupational pension schemes, these must in general be subject to the £6 limit"—[0fficial Report, 23rd July 1975; Vol. 896, c. 688.] He made one or two additional qualifications, but that was the general intention. In other words, the Government intend to impose what is, in effect, a freeze on the development of existing occupational schemes or the formation of new schemes. I agree entirely with what the hon. Member for Cornwall, North (Mr. Pardoe) said about this. It is unsatisfactory and unacceptable, and is an unnecessary part of a pay policy.

An improvement of these schemes is counter-inflationary. It is real saving, the seed corn for future investment. I know that my right hon. Friend the Member for Knutsford (Mr. Davies) wishes to say more about this, so I will not develop the point further.

If the Equal Pay Act is to be effective, it means equal pensions too. The increase in earnings which women will achieve under the Act will, in many cases, be reflected in increased contributions to pensions schemes by women and their employers. Is this to be allowed? As I read the Bill, it will not be allowed, but Amendment No. 74 would permit it.

The Social Security Pensions Bill is still before Parliament and a number of hon. Members have spent many hours discussing it recently. The Opposition have been facilitating its passage and doing our utmost to improve it. The whole of this Bill depends on the improvement of occupational pension schemes so that they can be maintained and can qualify under conditions the Government is laying down in that Bill. Unless we pass this amendment, there will be a clear conflict between the Bill we are now discussing and the improvements we wish to see under the Social Security Pensions Bill. The Government should pay serious attention to this point, otherwise they will be in the ridiculous position of saying one thing in one piece of legislation and something completely different in another—with both pieces of legislation being before Parliament at the same time. Unless the Government accept the amendment, they are going to get into the most hopeless tangle.

For instance, what should the £6 limit relate to in the Bill as it stands? Should it relate to the amount of prospective benefit an individual will get, perhaps in 30 years' time, or should it relate to the contributions of the employer and employee to provide that benefit in 30 years' time? It will need all the actuaries in the land to work out whether this is within or outside the £6 limit. I beg the Government not to get themselves into this sort of hopeless position.

Another topical example is mergers Companies are merging all the time, and there is often a resulting merger of pension schemes. Frequently some companies have contributory pension schemes while others have non-contributory schemes. If a non-contributory scheme becomes the group scheme, those who have been paying contributions will be better off. This will, in effect, be a pay rise for them. How will this be calculated under the £6 pay arrangements? Here again, there will be the most hopeless tangle.

The Government may say that my arguments are powerful and valid, but that they cannot accept Amendment No. 74 because it would lead to loopholes and abuses. I suggest that this would not be the case. The amendment has been drawn very carefully to restrict improvements to occupational schemes which are tax approved or have an equivalent approval. Equally, the provisions with regard to redundancy are tied very carefully to the definitions in redundancy payments legislation. I do not think the amendment provides the opportunity for abuse. This approach to occupational pensions arrangements has already been tested in practice and found to be satisfactory. The wording of the amendment is precisely the way in which the previous Conservative administration dealt with pension arrangements under the Counter-Inflation Act.

I therefore hope that the Secretary of State will answer the substantial queries and anxieties which exist among pensioners as to how they will be affected. I hope that he will answer in detail the points I have put concerning those who will retire after 1st August, be it through ill health or age, or those who simply change their jobs.

All these people will be affected and will want to know what the Government intend to do. I hope that, on reflection, the Government will feel able to accept Amendment No. 74.

6.30 p.m.

Mr. Richard Wainwright (Colne Valley)

I wish to address myself to Amendment No. 7. The purpose of it and the other, related amendments tabled by my right hon. and hon. Friends is not to vary the nature and substance of the White Paper and its annex from the TUC, but simply to translate them, as far as possible, into proper legislative terms.

The Secretary of State has eloquently reminded the House that he is promoting a voluntary agreement with a certain amount of legislative under-pinning, and he and the Government are entitled to be proud of the document from the TUC which my hon. Friends and I have unreservedly welcomed as a great achievement. Surely, however, the Secretary of State accepts that the TUC document is written in the language of the negotiating chamber. That is the language one would expect the TUC to use, and in that context it is quite clear, but in order that a statute of this kind can be effectively applied it must be translated into the language of the wages office. The language of the negotiating room is not appropriate for wages super-intendants, and clerks as legislative instructions.

Our amendments attempt to translate the White Paper and the annex into legislative terms. In this connection I draw attention to paragraph (d) in Amendment No. 7, one of the gateways for exceptions to the £6 rule. Paragraph (d) takes account of the fact of life that in the course of 12 months some employees will have major changes in their duties without being necessarily formally regraded under the terms of a trade union agreement. They may be working in an establishment where there is no formal trade union agreement. For someone in his 20s or early 30s a year in his working life is a very long time. To suggest that such people should take on major duties, perhaps in order to help the company over a very difficult period, without that major change in duties being recognised appropriately in pay is a dreadful prospect and one which would bring the legislation into disrepute. It therefore seems to me essential in any prices and incomes legislation that there should be provision for people who face a radical change in their duties to have that fact reflected in their pay.

That is an example of one of the ordinary circumstances of life the amendment seeks to provide for. In no sense does it offend the tone and intentions of the TUC document, and I hope that the right hon. Gentleman will accept that the amendment is not put forward with the intention of sabotaging the agreement which the Government have reached with the TUC, but of translating it into language which can be applied and understood in the ordinary daily conduct of factory life.

I cannot believe that the TUC's approach to this whole question, which has been so helpful, would be in any way undermined by the mere act of translating into normal legislative terms an agreement reached with the Government. If the TUC's agreement is conditional upon its document being incorporated in the law and if it is not prepared to allow the normal process of translation into legislation to proceed, the Secretary of State has the duty to tell us so. However, I should be astonished if that were a condition of the agreement. It therefore seems only common sense and not in any sense a party matter to accept the amendment, and in trying to apply the agreement we should do so as nearly as possible in normal legislative terms.

Mr. J. W. Rooker (Birmingham, Perry Barr)

I wish to speak to Amendment No. 16. It concerns a matter which, I believe, is not a party matter but is one on which there should be agreement on both sides of the Committee. The point at issue is what is to happen to the operation of the "fair wages" resolution passed by the House in 1946.

The arrangements made in the past under former incomes policies have always excluded the provisions of that resolution. The resolution has no statutory force and in that respect I think I am on to a winner. Since it simply expresses the will of Parliament it is the very essence of a voluntary policy. The resolution, therefore, falls into line with everything that my right hon. Friend has been saying from the Dispatch Box over the last two days. The resolution was the third in a series which went back as far as 1891. It was accepted at the time without a Division, although there was some bitter debate among the Conservatives about the closed shop. Since there was no Division I believe that the resolution can be regarded as the will of both sides of the House.

Basically, it provides that Government contractors, whether they are contracted for 1 per cent. or 50 per cent. of their output, mut pay a fair rate to their employees since it is reasonable to assume that the contractor is getting a fair rate from the Government. There is a mechanism by which employees who feel aggrieved can complain if they do not think that they are getting a fair rate for the job. The system that has operated has been that disputes have gone through what was the Ministry of Labour and what is now the Department of Employment; and if agreement could not be reached the matter was referred to what used to be the Industrial Court and what, since 1971, has been the Industrial Arbitration Board, which has acted in a private capacity by way of arbitration.

Even after that procedure the awards are not binding. In one of the standard textbooks on grievance procedures by Wedderburn and Davies the point is made that the operation of the arbitration board, without making decisions on the resolution, is essentially voluntary, in acting strictly as a private tribunal doing a job of arbitration.

The record is not all that good. The hon. Member for Colne Valley (Mr. Wainwright) has referred to this as a gateway, but I do not think it is. If one looks at the figures of the number of disputes during the years 1946 to 1972, a 26-year period, one finds there were 32 complaints to the Industrial Arbitration Board under the wages part of the resolution and only 11 were upheld. I will admit that over the last two years or so—and I would not wish to mislead the Committee on this—in 1973 and until this month, there were 13 complaints, of which seven were upheld, but we are still only talking about 45 complaints in a period of 30 years. So this is not a gateway through which one is going to drive a coach and four.

No Government since the war, in bringing in a statutory policy, ever sought to stop the operation of this resolution provision. My hon. Friend has mentioned Section 8 of the Terms and Conditions of Employment Act 1959. In the past, Government reports on statutory policy have rather let that go. I do not want to go that far. Here we are talking of the statute book and not a system, and within a week we shall have a chance to put that right. Today, I am sticking to the resolution of the House. If we do not make an order setting aside the operation of the 1946 fair wages resolution—and I understand that it has to be done by both Houses—and we do not pass this amendment, then if anyone wishes to make a complaint under the fair wages resolution and the matter reaches the point where my right hon. Friend's Department refuses to send it to the Industrial Arbitration Board, there could be an argument that there could be contempt of the House, though my right hon. Friend is the last person with whom I would wish to raise such a point.

It was laid down that Government contractors must pay a fair rate, and I cannot conceive of any argument under any statutory policy whereby firms getting either a large or small percentage of their output through the Government, through the public purse, can be taken out of the area where they are required to pay their employees a fair rate for the job. I implore my right hon. Friend to accept this amendment. Before leaving the Chair the Chairman of Ways and Means indicated that if the amendment were not accepted he would allow me to call for a Division. I hope that we shall not go that far in discussing a resolution laid down by the House 30 years ago, and, therefore, I ask my right hon. Friend to accept the amendment.

Mr. John Davies (Knutsford)

I would like to speak in support of Amendment 74 and very much hope the right hon. Gentleman will see his way to accepting it, for the very good reasons so excellently illustrated by my hon. Friend the Member for Somerset, North (Mr. Dean).

It will be in the recollection of many hon. Members, that a former General Secretary of the TUC used to say that the operation of any incomes policy is nothing but a series of shabby, shoddy compromises, and he was right. I always felt that Mr. Woodcock was correct in making that statement, because, as I understand it, his intention was to illustrate that the operation of an incomes policy is just an assembly of rough justice, and that is inevitable.

6.45 p.m.

I accept the principle that there is a great need for rough justice in the operation of an incomes policy, and, inevitably, many will suffer and a few will spuriously gain, but at the same time it seems to me there is one class of people who must not be made to suffer in such a rough justice operation. Those are the pensioners and those who expect to be pensioned. They constitute a class of a quite separate kind, and it is right that, in any specific provision to govern the handling of this extraordinarily awkward phase in our lives, they should be protected, and for one particular reason amongst many others, that to a large degree, if they are not so protected, inevitably many of them, and particularly those who fall into retirement during the course of the most arduous stage of the incomes policy, may be called upon to suffer the consequences of it, not for a period of perhaps 12 months or somewhat longer, but for the remainder of their lives.

This is really the different and quite characteristic segregation which justifies one's calling for a special amendment in relation to the whole issue surrounding pensioners. Therefore, it is wise to make provision, as this amendment seeks to do, to ensure that penalties of this kind, falling, as they do, always within the broad ambit of the restriction placed by the Inland Revenue on the constitution of pension arrangements, should not be allowed to constitute a permanent and rather unjust burden on pensioners throughout their lives.

I call very strongly on the Government to accept this amendment. They really should do so, and I will bring to bear two further arguments, both of which seem to me to have their force. I declare the interest of being concerned with a company which both advises upon and administers and manages pension funds.

I believe this particular activity within our economic life over the course of the last years has been subject to a degree of uncertainty which has very greatly damaged the occupational pension fund system in Britain. To add now a further element of uncertainty and vulnerability to the pension system in this country is to do something which is critically unwise. Many may think, and I am among them, that, in some ways, we administer our fiscal arrangements as they affect individuals in a very unwise way; but, on the contrary, it always seems to me that our concept of the administration of pensions has been imaginative and has been supported by every Government, not only in terms of the statutory provision made by Governments themselves but in their concern with adequate. sensible, ongoing systems of occupational pension schemes.

At the present time, if one looks at the broad development of the pension schemes of the industrial and commercial world, one finds that they are of a character which reach downstream into the whole of the work force. There was a tendency in years gone by to create pension arrange ments which picked off the top elements of the employees of a concern, but this is not now the case. The development that is taking place now in so many schemes is to reach down with the selfsame principles and formulae to the shop floor and to every single employee, with the minimum of requirements, in terms of service and the like, to justify membership. To penalise such schemes at this stage would affect not the top hat elements but those right down to the shop floor. This is where it will hurt and pinch, as we know.

A third point—and here I join with the hon. Member for Cornwall, North (Mr. Pardoe)—is that the whole purpose, in economic terms, of an incomes policy, with all the elements of rough justice to which I have referred, is to procure a shift of resources out of the consumption of the country and into investment in the country; and a large part of the purpose and provision of pensions schemes does precisely that. It actually calls out of the current consumption of the country and puts into an area where the creation of investment is most effective.

I cannot believe, therefore, that the concession of such an amendment could do otherwise than reinforce the effectiveness of the incomes policy which the Government contemplate, far from endangering or undermining it. Therefore, I sincerely ask the right hon. Gentleman, when he turns to this matter, to give satisfaction to those who have suggested this amendment believing, as they do, that they are doing something totally in the interests of the economic policy which the Government and the country need to pursue.

Mr. Arthur Lewis

I support the impassioned appeal of the right hon. Member for Knutsford (Mr. Davies) and particularly the speech of the hon. Member for Somerset, North (Mr. Dean), who has an excellent record, within Government and outside, in pension matters. When he was at the Department one could always count on his going out of his way, fighting his civil servants if necessary, to right an injustice. I was right in what I said when I intervened in his speech. Top civil servants always look after themselves just before any wages freeze, whether compulsory-voluntary or voluntary-compulsory. The wages freeze which my right hon. Friend the Secretary of State then opposed as much as I did was initiated by Sir William Armstrong. A couple of months before, he upped his salary and those of the other top civil servants. Now they have done it again. They have looked after their increments, pension rights and salaries. I do not blame them for that but I do blame my right hon. Friend, who now appears to look after the well-to-do but cannot do anything for ordinary people.

Amendment No. 16 will allow me to deal with a problem that I foresee. I warn the Secretary of State that he could be landing this country in one hell of a mess. Does he remember the pile-up of refuse during the dustmen's strike? He is now about to start the same process. The civil servants, knowing what was on the cards, have already started negotiating an increase in London weighting. I believe they have applied for 21 per cent. and a little dickey bird tells me that they hope to have it settled before 1st August. This will all be manoeuvred, and no doubt they will be happy.

The problem to which I wish to refer is raised in a letter delivered by hand today, and relates to the worries of the chief executive, mayor and council of my local authority. The local government officers also have their dickey birds and they want to know whether their London weighting will be raised in line with that of the civil servants, on the lines of pension rights and other things, and they are worried because time is running out. The local authority will be in a quandary either way. If it does not pay and its officers go on strike, it will not be Ministers living in Hampstead who suffer but the workers of Newham, where all these Left-wingers live, according to the news at the moment. Perhaps this is being done on purpose, on grounds of political bias.

There will be a strike unless the council pays an increased London weighting. If the Minister does not stop it, he will at least refuse to increase the rate support grant and the cost will have to be raised from the rates, in addition to swingeing increases already planned. My area has lost much rate income through war damage, and so on, and it will mean another 1 p in the pound on the rates.

Otherwise, the council will have to say, "If we cannot afford to pay, we shall have to cut services".

The Secretary of State for Employment (Mr. Michael Foot)

indicated assent.

Mr. Lewis

My right hon. Friend nods. But cutting services means cutting employment. I thought I heard my right hon. Friend boasting earlier—no, "boasting" is not the word; reluctantly announcing—the wonderful achievement of his Department in reaching a total of 1 million unemployed. Is he happy with that? I hope not, and I do not believe so, since he said that he regretted it, but his policy will increase that figure. Does he want to do that? I do not think so, but he cannot say that he is against increased unemployment and then introduce policies which will increase it. He cannot have it both ways. Like me, he has spent a lifetime here fighting for decent hours, wages and working conditions—

Mr. Deputy Speaker

Order. I hope that the hon. Member will relate what he is saying to the amendment. This is getting near to a Second Reading speech.

Mr. Lewis

I am referring to Amendment No. 16, which will allow me to invoke the fair wages resolution. Without the amendment, there could be problems such as I have described. What does my right hon. Friend intend to do about that? I do not want my local government workers out on strike. I do not want to see rubbish piling up because of a strike of refuse collectors. It is only four weeks since we cleared up the accumulation of work caused by the last industrial dispute. I am sure that my right hon. Friend does not want to create unemployment, but this is one of my fears about his present approach.

I also support Amendment No. 74. If civil servants are to get this treatment, it should be extended to people in other schemes as well. My right hon. Friend has always been a fair man. I do not object to civil servants getting increased salaries and pensions or getting their increments, but I do object to their trying to stop others. My right hon. Friend evidently wants to stop others as well. I support the amendments, which will help to deal with anomalies which, as it stands, the Bill could cause.

[Sir MYER GALPERN in the Chair.]

7.0 p.m.

Mr. Kenneth Clarke (Rushcliffe)

I wish to take part in the pensions debate which is one part of the broad discussion on these amendments, and to support Amendment No. 74, to which my hon. Friend the Member for Somerset, North (Mr. Dean) spoke so forcefully. As the pensioneers in this debate are taking part in a debate heavily interspersed with contributions from the Tribune Group and even by some of my hon. Friends who are hostile to incomes policy, one should begin by stressing the constructive purpose of Amendment No. 74.

I trust that I shall win some sympathy from the Government Front Bench when I say that I welcome the underlying principle behind the Bill and their conversion to statutory pay policy which clearly lies behind it.

My enthusiasm for phase 4 of an incomes policy which should have been introduced 12 months ago is considerably damaged by the crudities, imperfections and details of the Bill. The major crudity, imperfection and indeed inexcusable error is that the Bill does not follow precedents by exempting pension improvements from the application of the pay limit chosen.

Given that there is this particular point on pensions, I regret that throughout the debate no Minister from the Department of Health and Social Security has made any appearance on the Government Front Bench. I do not say that simply to make a debating point. Obviously Ministers have engagements elsewhere.

However, two points worry me. First, I do not know which Minister from the Department of Employment will answer the debate, but I should be amazed if any Minister from that Department were adequately briefed to reply to the extremely detailed and important points raised by my hon. Friend the Member for Somerset, North. There should have been an intervention by a Minister from the Department of Health and Social Security who is able to draw on the continuing expertise of that Department concerning pensions. I have no doubt that the reply will be entertaining, but I look forward to discovering whether it deals with the very important points raised by my hon. Friend.

The other reason I comment on the absence of a Minister from the Depart ment of Health and Social Security is that it confirms my suspicion that the Department of Health and Social Security has not been involved in the production of the Bill to any adequate extent. That can be the only explanation for the Bill as it now stands, because it is utterly and completely inconsistent with everything that that Department has been doing for the past six months and, indeed, is still continuing to do in legislation which is at present going through another place, but will return to this House in about a week's time.

Why does one feel so strongly about the exemption of pensions from the operation of an incomes policy if one is fairly sympathetic to that incomes policy in the first place and wants, on the whole, to see it succeed? Pensions improvements have always been exempted in the past from all prices and incomes legislation. The major reason in the past, which I shall not go into because my right hon. Friend the Member for Knutsford (Mr. Davies) dealt with it more than adequately, has been that funded pensions have an anti-inflationary consequence on the economy. The more one encourages improvements in funded pensions during a period of incomes restraint, the more one is turning resources from consumption into investment which is entirely beneficial and in the interests of the whole country. Indeed, that is what the Government are supposedly trying to achieve.

I shall not go over the past. At present there is a new and special reason for the exemption of pension improvements because of the Social Security Pensions Bill which will receive its Third Reading in the other place tomorrow and then return here in a week's time. I have spent hours, indeed weeks, during the past few months working on the Social Security Pensions Bill. I assure the Secretary of State for Employment that there was a good understanding between both sides of the House about the Bill and in the end we produced a fairly agreed measure. What is contained in this Bill, as it stands, runs the risk of almost entirely negating the work we have been trying to do on the Social Security Pensions Bill and it will do considerable damage to the continuing partnership between occupational pension funds and the State. That partnership is what the Minister's right hon. and hon. Friends have been trying to achieve in the other legislation.

The underlying principle of the Social Security Pensions Bill is to provoke and accelerate improvements in private occupational schemes and to bring as many as possible, in the shortest time, up to the necessary standard to contract out of a second State pension scheme which that Bill embodies. It is hoped that 8 million people in all—4 million in the State sector and 4 million in the private sector—by 1977 or 1978 will be in private occupational pensions of an adequate and improved standard to contract out under the provisions of that Bill.

Those who have been involved in this Bill must realise just how delicately poised at present is the decision that will be made by many private occupational schemes as to whether they will bother to try to make the improvements to contract out and whether the employers in those schemes can take on the financial risks which may be implicit in doing so.

Every effort has been made in the past few months to encourage private employers and their pension advisers to decide that they will make the necessary improvements in pension provisions to get them up to the contracting out level. Given that one is trying to override every other problem, if an added obstacle is now put in the way of those improvements; if for 12 months at least—given that this is likely to be a continuing pay policy unless we have some further U-turns from the Government—we have a pay policy which continues to override pension policies and to interfere with the ability to improve pension schemes, it could well be the last straw for many employers who are worried about whether they will try to contract out now. Even if it produces only delays, it could be disastrous.

One of the features of the new pension scheme is that it is the wish of both sides of the House to get it into operation, if possible, by 1977, but that prospect looks doubtful now and probably 1978 is the more likely date. Given the shortage of time, all possible work should be done quickly in preparation for a contracting out for pensions scheme.

If this Bill and the policy delays work for 12 months, some employers may feel that they may as well postpone the decision indefinitely. That could damage the whole underlying timetable and principle of the Social Security Pensions Bill.

It may appeal to Labour Members to contemplate that, given that they are trying to run a policy which they say is by consent, they have an opportunity to win added support from the trade union movement, which wishes to help in the contracting out of pension schemes. I believe that they will find enthusiasm within the trade union movement if they allow the new improved pension scheme and the second pension proposal from their Government to be exempt from the £6 limit in the pay policy.

As Jack Jones of the Transport and General Workers' Union has paid such a key rôle in drawing up the White Paper and the Bill which is before us today, I trust that at some stage some discussions will be had with Mr. Harry Lucas, head of the Pensions and Social Services Department of his union. I applaud the General and Municipal Workers' Union, because it is almost leading the way at present in making trade unionists more pension-minded and in getting the whole idea of pensions into collective bargaining. I trust that the Secretary of State has seen Mr. Lucas' letter in The Times of 15th July, emphasising the importance of pensions as part of the continuing trade union function. He emphasises how people should be allowed to stay in funded occupational schemes contracted out of the State provisions. If they respond, they will contribute to the success of the policy.

One of the many snags of a statutory pay policy is that if one is not careful one leaves nothing to negotiate about. At present the £6 limit is being interpreted as £6 full stop. As we experienced with the miners' dispute not so long ago, if negotiators go to the limit of the pay policy straight away there is nothing left to talk about and thus there are considerable difficulties. If we exempt pensions we leave an extremely important part of the bargaining process which can continue. If it is successful and leads to improvements in pensions policies, it is in the national interest as well as in the interests of those workers in the industry where the bargaining is taking place. To leave scope to negotiate in this area may well contribute to the strength of the policy and allow it to last longer and make a small contribution to easing the pressure that all statutory policies are bound to come under. On that basis, I hope that the Secretary of State, if he has been adequately briefed on this subject, will find the case for Amendment No. 74 unanswerable.

Mr. Kenneth Baker (St. Marylebone)

I cannot help observing, listening to the debate today, that my memory of the debates in 1972, 1973 and 1974 has been refreshed. When embarking on an incomes policy, whether specific, as the Conservative Government's was, or vague as this Government's is, questions regarding special cases and exemptions inevitably arise from the outset. The Government have recognised that fact by attempting to lay down only the vaguest and broadest guidelines for their incomes policy.

I commend Amendment No. 7 to the Committee. Its purpose is to define more precisely and specifically the policy regarding certain special cases. The Secretary of State hopes to get through the first year of this incomes policy by its very vagueness, but that will not do the trick in many cases. I am sure that horses are already being put into the shafts of coaches to go through many aspects of this vagueness.

My hon. Friend the Member for Somerset, North (Mr. Dean) has drawn attention to pensions. I hope that the Secretary of State will be clear and specific in trying to answer some of the questions put to him by my hon. Friend.

Does the limit of £8,500 apply to the pension or to the salary on which that pension is to be based? For example, a Permanent Secretary or a senior civil servant gets a pension of about £8,500. If in December this year, when there is the annual uprating of public sector pensions, the actuarial calculation comes out at 10 per cent., which would give him an increase of £850 a year, will he be held back to the general standard of £312? That is the first question on pensions.

Secondly, what will happen about someone who retires during the next 12 months whose pension is based on his salary during his last year of work? His salary, by the nature of this policy, will be restricted to an extra £312. That problem came up during the period of the Conservative Government's incomes policy. It is a problem which comes up in respect of any incomes policy. Will the Secretary of State avoid the permanent disadvantage which such a person will carry through the rest of his days by deeming his salary to have gone up to what it would have been if the incomes policy had not been in force? That seems to be the policy which we are about to adopt for our own salaries. I have profound misgivings about it. However, if that is to be the Government's policy, is it to be the general policy?

The rules of the Inland Revenue, as the Secretary of State will know or as any Treasury Minister would advise him, have been against such a system, because one of the major loopholes for "perks" has been to deem that somebody gets a salary of, say, £20,000 for pension purposes, but receives only £7,000 or £8,000. There is an enormous coach and horses there if that is to be the general rule.

Mr. Arthur Lewis

I know that the hon. Gentleman was a Civil Service Minister in the past. Is he aware that that has been happening for a long time with the chairmen of nationalised boards and certain top-paid civil servants who have had to wait for their increases, but are getting the notional pension allocation?

Mr. Baker

The Revenue rule is that the general public are not allowed to have those advantages. From my own knowledge, senior civil servants certainly are not. I do not know about the chairmen of nationalised boards. Perhaps the Secretary of State will clarify that point as well.

7.15 p.m.

I suggest that, as the policy progresses in the next 12 months, these kinds of points will come up not once a month but every week and every day. That is why, with an incomes policy, we must be more definite and clear about its boundaries and limitations. I appreciate that the Secretary of State, knowing the difficulties into which we got in 1973–74 by being too precise, will try to get through the next 12 months by being imprecise, but that will not save him from having to answer questions of this kind. Under another provision the Secretary of State will have the power to interpret the rules, but I suggest that he will need at least 10 junior Ministers to deal with the numbers of cases which are likely to come his way. Of course, we know how interested he is in dealing with detailed cases himself.

The third point on which I should like clarification relates to Amendment No. 77 about increments. This is a confused situation. I have read carefully what the Chancellor of the Exchequer, the Secretary of State and the Prime Minister have said in the last few days, but I am still not one jot clearer on how increments are to be treated under this policy. I understand that the Secretary of State and the Chancellor have gone out of their way not to commit themselves to a limit of £6 per head to allow some flexibility in dealing with the problem of increments. I understand that they intend to deal with increments, which involve 2 million workers in the public sector and 2½ million in the private sector, by taking the global amount available for those groups of workers and juggling with it. Therefore, some might get more and others less than £6, but the general global amount will be taken. I assure the Secretary of State that he will not be able to use that degree of flexibility by set- ting a limit of £6. Indeed, £6 is not only the limit, but the norm of the policy. That was reinforced by Mr. Len Murray yesterday when he said that if free collective bargaining is to continue under this policy the unions will free collective bargain up to £6, and, if it means having to take industrial action to get £6, they will take industrial action to get it. Therefore, £6 is not only the limit, but the norm. It is the standard.

The Conservative Government had a norm of £1 plus 4 per cent. If we are to have norms and limits I commend a set figure plus a percentage, because that will give flexibility. We had a similar problem with increments. By having a figure of £1 plus 4 per cent., or whatever it was, we were able to deal with increments under our incomes policy. With a set limit of £6, I suggest that the Secretary of State will be unable to deal with that problem.

Finally, as public sector employees, particularly civil servants, have been mentioned several times, I should like the Secretary of State to make clear the position on pay research. The White Paper states that pay research will be suspended for the period of the policy. If the policy lasts for 12 months, pay research will then start again, but the whole principle of pay research is that it catches up with the historic past. It catches up not just the last 12 months but previous time as well. I suggest that when the calculations are carried out that will allow the Civil Service a considerable retrospective catch up unless the Secretary of State is prepared to say "We are thinking of suspending the whole principle of pay research for longer than the period of the policy."

I hope that the Secretary of State will clarify these points. I make them, as my hon. Friend the Member for Rushcliffe (Mr. Clarke) said, in a spirit of constructive comment on the policy. I am not inimical to a Government having to intervene in the determination of wages when inflation is so high, but, if it is to be done, it must be done sensibly and fairly.

I also ask the Secretary of State to let us know what system he will employ for answering questions of this kind in future. How will he give guidance when the various groups of wage bargainers come to him with problems of this kind? Will he make statements to the House or issue administrative fiats on how these problems are to be dealt with? How does he envisage that he will administer this policy?

Mr Emlyn boson (Montgomery)

I should like to bring the Committee back to the discussion of Amendments Nos. 2 and 7, and the associated amendments, as they go to the nub of the matter and the principle of the Bill.

Previous speakers have indulged in special pleading, and rightly so, on behalf of Amendments Nos. 16 and 74. They made out a good case for the amendments. Nevertheless, the point at issue in Amendment No. 7 is the way in which legislation is brought before the House.

The right hon. Member for Knutsford (Mr. Davies) referred to the elements of rough justice in an incomes policy. To a degree, that is inevitable. It is even more inevitable when the legislation is rushed, as in this case. Nevertheless, even in these circumstances the vehicle for an incomes policy need not be quite as rough as this instrument.

There is the highly objectionable principle within the Bill of legislation by reference to a White Paper. There are precedents for that in the Prices and Incomes Act 1966. References to the then Mr. George Brown's White Paper were incorporated in the Act. Thereafter, there were references ad nauseam to the guidelines laid down in the White Paper.

What effect does a White Paper have on legislation? Is it right that important legislation of this kind should be brought before the House and that the Minister who must determine these matters, and who has had much power vested in him, should make a determination by reference to the imprecise language of a White Paper? That is highly objectionable in principle.

My hon. Friend the Member for Cornwall, North (Mr. Pardoe) tried, by means of Amendment No. 7 and the associated amendments, to put some of the provisions of the White Paper into more precise language. He tried to enlarge them in some respects, to establish more precise limits, and to avoid references to the White Paper.

Clause 1 refers to the White Paper and to a future White Paper. Clause 1(2) says: If Her Majesty at any time causes a document to be laid before Parliament". That presumably envisages yet another White Paper.

The White Paper is referred to in Clause 1(1). Let us see how it can be interpreted. Reference was made to the status of the annex to the White Paper. The annex does not have the same status as the White Paper. However, the language of the White Paper, makes the annex of supreme importance.

Clause 7 of the White Paper says: Annexed to this White Paper is an extract from the TUC statement 'The Development of the Social Contract' which was adopted by the TUC General Council on 9 July. This extract sets out the requirements which should be observed by those determining pay over the whole period from the date of this White Paper until 1 August 1976. The Government recommend only one modification of this guidance. The Government consider that the upper limit for the £6 increase should be £8,500 a year rather than £7,000. In the White Paper the Government are elevating the annex to the status of a document to which employers and unions must look for their guidance. The words used are: the requirements which should be used by those determining pay. The annex is imprecise. The most obvious example of imprecision is contained in paragraph 6, which reads: However, final steps towards the attainment of equal pay for women by the end of 1975, in line with the equal pay legislation and TUC policy objectives, will be in addition to the £6 figure. How on earth can final steps be additional to the final figure?

Mr. Nicholas Ridley (Cirencester and Tewkesbury)

Is the hon. and learned Gentleman aware that the general council has not only taken over the job of drafting the statute but has also taken over the job of Parliament? Paragraph 4 of the annex says: The General Council would, if it is considered necessary, agree to legislation to relieve employers of contractual obligations. Is not that awfully nice of it?

Mr. Hooson

The hon. Gentleman has made his point. I shall not follow it.

I wish to bring the Secretary of State's mind back to the consequences of legislating in this way. In the White Paper the Government refers to £6 per week. Paragraph 6 reads: The £6 is however a maximum within which negotiations will take place some employers may not be able to pay it. However, the Government say that the requirements for those determining the policy are to be found in the annex. Paragraph 1 gives a different wording. It reads: The General Council therefore conclude that there should be a universal application of the figure of £6 per week. The TUC will oppose any settlement in excess of this figure. Mr. Len Murray has gone on record as saying that on his interpretation of paragraph 1 of the annex, every employee in the country should have a £6 per week rise across the board, apart from those above the cut-off point. He is right. The words of the annex seem to be unequivocal. Mr. Len Murray's interpretation is right. The Government's statement is wrong. If so, does the Secretary of State interpret paragraph 6 of the White Paper as the authority? It reads: The £6 is however a maximum within which negotiations will take place some employers may not be able to pay it Alternatively, does the Secretary of State interpret the matter in accordance with the language of Clause 1?

This seems to me an illustration of the great dangers of legislating by reference to a White Paper. I remember the eloquent way in which the right hon. Member for Ebbw Vale (Mr. Foot), when he sat below the Gangway, attacked this method of legislation contained in the Prices and Incomes Act 1966. I cannot hope to rival the eloquence and erudition of the right hon. Gentleman. Nevertheless, the principles which he then enunciated are still correct. Surely, he should reconsider the drafting of this legislation. It is not too late for him to incorporate in the legislation the basic requirements of the White Paper and to set them out in precise language so that we may all know, as far as language can convey, the effect of this legislation. Otherwise, those who oppose or support an incomes policy—the Liberal Party is in favour of it—will not know, as far as words are able to convey precision in this sphere, exactly what the Government have in mind.

Reference was made to the difficulty of legislation based on imprecise language. A great sense of grievance will arise as a result of the different interpretations which can be put on the White Paper. That problem can be solved only by spelling out the legislation in more precise terms. That is the purpose of the amendment proposed by my hon. Friend the Member for Cornwall, North, and I hope that the Minister will seriously consider it.

Mr. Douglas Hurd (Mid-Oxon)

I listened with interest to the constitutional points which were raised by the hon. and learned Member for Montgomery (Mr. Hooson), my hon. Friend the Member for St. Marylebone (Mr. Baker) and my hon. Friend the Member for Oswestry (Mr. Biffen). This afternoon we are at a watershed in considering these matters. Up to now we have dealt with general principles. It is striking that the tone from the Government Front Bench was loud and indeed almost triumphant in dealing with these principles.

The Chancellor of the Exchequer referred to the tidal wave of opinion behind the new policy. I understand that, as I was present at No. 10 Downing Street, in an insignificant capacity, when the last such policy got under way. So long as we are dealing with general principles there is a feeling of euphoria. We appear to be cutting away the imperfections and compromises of the past and starting out on a new tack. At that stage of general principle public opinion is firmly behind us.

7.30 p.m.

The watershed and the change come when we turn to points of detail, as we have begun to do for the first time in this debate on the Liberal amendment. Then, the euphoria quickly disappears. That occurs not because great forces outside are ranged against the policy, but because we are emerging from the smoke-filled rooms into the world of reality and dealing with actual people, actual firms, actual pensions. We are drawn into greater and greater regulation of detail. That is an inevitable process once we have taken the basic decision.

We have to decide how we are to cope with the regulation of detail and answering all the queries that arise in letters, telephone calls, speeches and representations from every conceivable interest. Here, there is a choice of great constitutional importance, as I am sure the Secretary of State will recognise.

The bad way out is the way which he began to take in his speech last night. The hon. and learned Member for Montgomery (Mr. Hooson) spoke of Government by White Paper, but something worse has begun to happen, and that is Government by rather haphazard readings into Hansard of departmental briefs on particular points which happen to have been raised in a certain debate. We had a bad and unhappy example of that in the Secretary of State's speech last night, when in replying to specific queries raised in the debate, he put down his head and read a series of observations couched in a remarkably imperative mood: The first category … will have to comply.… The only exception will be. … Of course, no payments can be made. … This is on the condition that".—[Official Report, 23rd July 1975; Vol. 896, c. 686.] All those observations are in the imperative mood. When my right hon. and learned Friend the Member for Surrey, East (Sir G. Howe) asked about the basis tor all these "musts", "on conditions" and "cans", there was no reply. Presumably it was because the Secretary of State was saying "it must", "it could not", and so on.

That is the bad way to proceed. It is impractical because it requires employers to spend time rifling through Hansard to try to collect from a random answer, a random intervention or from various Ministers' speeches on different days in different debates, a coherent account of what employers are supposed to do. Apart from being impractical, it is wrong that a major turn in economic policy should be launched and run in this way.

The alternative approach is the one set out by the hon. Member for Cornwall, North (Mr. Pardoe) and embodied in the Liberal amendments and others. That is, to set out as a matter of rough justice to debate openly in the Committee, and to incorporate in decisions of the House in the best way we can, the practical points of detail, of exemption in the first instance and regulation as we go on.

Of course, that is difficult and it raises many problems, but those problems are inherent in the original decision of principle. I hope that the Secretary of State, if he resists this or subsequent amendments, will not take the line that it is unnecessary to go into such detail or that a certain matter can be dealt with by reference to this or that speech. That is the wrong approach. It is impossible for the Bill, which is being rushed through the House, to cover all the points which will flood in to the Secretary of State and to us as representatives of our constituents on matters of detail.

Apart from the question of secret powers, if the Government persist in their course there will have to be a major new Bill in the next Session to succeed this Bill and to cover not just powers but the whole question of the boundaries and limits of this policy. That is the right way. The wrong way is the way in which, unfortunately, the Secretary of State, the Prime Minister and the Chancellor of the Exchequer have started to do it—by a sequence of ministerial speeches, publications and Press conferences. I hope that the Secretary of State will not carry on with this policy in a non-constitutional way, which in an earlier, perhaps happier, day he would have been the first to condemn with the utmost ferocity and conviction.

Mr. Robert Boscawen (Wells)

We are getting into the quagmire of reality in the area covered by Amendment No. 74 tabled by my hon. Friend the Member for Somerset, North (Mr. Dean), which I hope the right hon. Gentleman will he able to accept.

Both State and occupational pension schemes are going through an extremely delicate and complicated phase. It is essential that we have a thriving occupational pensions system. Without that the whole State edifice of earnings-related pensions will crumble because of its vast cost. Over the next 20 years, earnings-related pensions will take a greater and growing share of the gross national product. Unless a substantial share is borne in the private sector the State sector will not be able to provide more favourable pensions. Many anomolies and problems will be created by the Bill. Hon. Members who have sat in Committee on the Social Security Pensions Bill over the past few months could all write out dozens of anomalies and problems which will result from this policy.

Last night the Secretary of State said that occupational schemes must in general be subject to the £6 limit. Dozens of problems will arise from that. I hope that the Department of Health and Social Security will issue a clear statement on exactly what is intended and on all the problems that will arise.

Problems will arise when an employee transfers from one firm to another, when firms are taken over and when pension schemes run into trouble, have to be bailed out by the parent firm or someone else and large sums of money—which can affect prices—have to be put in to top up the schemes because of the negative return they are able to get on investments.

I hope that the amendment will be accepted but it would be even better if occupational pension schemes and State pensions were taken out of the Bill. We have not heard what will happen to schemes which are due to come into effect later this year or next year. Last night the Secretary of State talked about existing pension schemes but he did not mention schemes not yet on the statute book.

What about the mobility allowance for the disabled? The allowance is to be £7 a week. Is it to be reduced by £1? What about the increase in the earnings rule? From next April an individual will be abe to earn up to £35 a week when retired without having anything deducted from the retirement pension. Is that to be reduced to £6? Let us have some of these anomalies explained. We must turn to the nitty-gritty of the pension jungle. It is an extremely complicated area and the pension industry is in a delicate situation. We need to tread very carefully. I hope that the right hon. Gentleman will be more forthcoming than he was last night.

Mr. Foot

First, in answer to the hon. Member for Mid-Oxon (Mr. Hurd), who commented upon the nature of this debate and on some of the remarks that I made last night, I am the very last person to object to scrutiny of legislation in the House of Commons. I believe that it is right that we should give the most detailed investigation to what Governments propose. My views on that subject have not altered one scrap because I have moved from one side of the House to the other or from the back benches temporarily to the Government Front Bench. I can assure the Committee that my views on this matter are exactly the same as they always were.

One of the most valuable functions of the House of Commons is provided by its Committee stages. Perhaps they are of most value when they are conducted on the Floor of the House. The procedures of the House of Commons are often foolishly derided by people who talk about us, but sometimes the only way in which these matters can be properly dealt with is by sitting late at night.

I make it clear to my hon. Friend the Member for Liverpool, Walton (Mr. Heifer), who suggested that the Government think that discussion on the Bill is unpatriotic, that I do not hold any such view. Indeed, I think that it is the patriotic duty of all hon. Members to conduct investigation into Bills of this nature.

I shall seek to do my best to answer the questions which have been put according to the procedures of the Committee. Perhaps I might also say at this stage that I am extremely glad that arrangements have been made whereby we shall deal with Report at a later stage. To have proceeded with Report immediately after our proceedings in Committee would have been extremely awkward for the Opposition and extremely awkward for my right hon. and hon. Friends and myself. Therefore, I am gratified that a different arrangement has been made. I think that it is for the good order of the House of Commons that we should proceed in the way that has now been adopted.

Mr. Ridley

Is the Secretary of State aware that on the Counter-Inflation Bill 1973 our discussions amounted to 1,128 columns of Hansard in Committee? Has the right hon. Gentleman worked out that we shall have to sit in Committee until some time next Wednesday evening if we are to take the same time on this Bill?

Mr. Foot

I dare say that the hon. Gentleman's arithmetic is correct, however forbidding it may be, but I hope that some of my remarks may relieve both the hon. Gentleman and the rest of the Committee so that they will not find it necessary to stay here until next Wednesday to discuss the Bill in Committee.

7.45 p.m.

This is a much more modest Bill than the Counter-Inflation Bill 1973. It is trying to deal with these matters in a different way altogether, as I hope to try to underline to the Committee. The Bill has a different approach to that which was adopted in the Prices and Incomes Act 1966, a measure which was quoted by the hon. and learned Member for Montgomery (Mr. Hooson). It is not a good precedent for the hon. and learned Gentleman or myself to quote the 1966 Act or the 1973 Act. That is not the best way of proceeding when dealing with these matters. That is why we are seeking to proceed in another way, and that is why I believe that some of my hon. Friends have a misunderstanding of what we are seeking to do. I believe that they have a misunderstanding of the nature of the Bill. That is what I shall try to reveal in answering some of the speeches that have been made. I hope that as I do so some of the opposition to some of the clauses will fade away.

I appreciate that the opposition of the Liberal Party may not fade away. At any rate, if any fading takes place we know who will be the last on the scene on the Liberal Bench. I say to the Liberal Party that I am not surprised by its list of amendments. I appreciate that the Liberal Party has always been the advocate of the most elaborate statutory policy. The Liberal amendments are in conformity with that approach, but that is not the position of many of my hon. Friends or of some members of the Conservative Party.

There seems to be a general assumption that the White Paper is to have universal legal force. That is quite wrong. We expect and hope that 99 per cent. of the people will comply voluntarily with what is proposed. The provisions in Clauses 1 and 3 relating to the interpretation of the White Paper will have effect only in a few cases where existing commitments exceed the policy. It is on that basis that we are proceeding.

I hope that as I relate the principle to the individual cases it will be seen that we are proposing to deal with the problem in a sensible manner. That is one of the answers to the hon. Member for Colne Valley (Mr. Wainwright). The hon. Gentleman said, "Surely the TUC would not object if all the provisions in the White Paper were translated into the most detailed legislative form". I certainly think that it would object, and rightly so.

I believe that if we try to translate an incomes policy, or whatever one likes to call it, into detailed complicated and elaborate legal form, we shall become ensnared in one difficulty after another. We have sought to avoid such difficulty by the way in which we have proceeded. On grounds of practicality as well as principle I oppose the general idea behind the Liberal amendments.

Mr. Hooson

The right hon. Gentleman has said that the White Paper is not fully incorporated in the Bill, but the limits of remuneration contained in Clause 1(1) are referable only to the White Paper. How are they to be interpreted other than by reference to the White Paper? That is the right hon. Gentleman's problem.

Mr. Foot

There are references in the White Paper and there are references in the annex. The hon. and learned Gentle man referred to the difference in emphasis between the application of the £6 as an entitlement or as an upper limit as it appears in the annex and in the White Paper. I do not dispute that. However, let me emphasise that in these arrangements we are proceeding in the hope that all settlements will be made on a voluntary basis by employers and trade unions. That is why we are so concerned with the number of tree unions which are prepared to accept the general proposals which have been put forward by the Government. We hope that settlements and agreements that are made under them will be arrived at voluntarily by accepting bargaining arrangements. I think that will be overwhelmingly the way in which it is done, and it is much better than trying to lay down everything by detailed statutory arrangements, because the more we do that the more we become ensnared in one difficulty after another.

I will illustrate this by referring to what was said by my hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker). I fully sympathise with the case he has made. Indeed, I do not think he need have any anxiety whatever about interference with the fair wages resolution. I do not believe there will be any difficulties on that score at all. That is certainly the intention of the Government. The Government have no intention of disturbing the arrangements under which the fair wages resolution operates, and any such increases may therefore be made in addition to the limits imposed by the policy. It is the Government's intention that this exemption should also apply to increases to meet the purposes of Section 8 of the Terms and Conditions of Employment Act 1959, the Road Haulage Wages Act 1959, and similar legislation.

The reason that we do not wish to see the principle which my hon. Friend proposes incorporated in the legislation illustrates what I was saying before about the strong preference I have for dealing with these matters by voluntary methods rather than by specific legislation. The hon. Gentleman's amendment, in my judgment, is too restrictive, in that it refers only to increases under the fair wages resolution and limits such increases to those arising from decisions made by the Industrial Arbitration Board. In fact, questions arising under the fair wages resolution are frequently settled without recourse to the Industrial Arbitration Board, and it is intended that any such increases should also be exempted.

Mr. Rooker

Now that my right hon. Friend has given me a foot may I try for the yard? Will he comment on Schedule D of the Employment Protection Bill, which will take over Section 8 of the Terms and Conditions of Employment Act 1959? I did not dare raise that because I thought that would be too much, but the one supersedes the other later this year.

Mr. Foot

My hon. Friend is commenting upon the operation of the part of the Employment Protection Bill which will be discussed in the House next week. He has, along with other hon. Members, played a notable part in pushing it to the statute book. He is referring to one of the clauses to which we attach the greatest significance. The exact form in which it will apply under this legislation will be discussed on Report. My hon. Friend said earlier that he was on a winner. He is on a winner, and I accept what he says about the fair wages resolution, although I would expect it to be carried more widely in the sense that I have described. But if it were to be set down in legislative form, the difficulties I have described would arise, and that, in my opinion, is a perfect illustration of how I would much prefer and the Government would much prefer to deal with these questions by voluntary means and by voluntary settlements, rather than by setting down specific clauses in the Bill saying that these loopholes are to be permitted and everything else is not to be permitted, and that that is the form of procedure under which the Act is to operate.

I am extremely grateful to my hon. Friend not only for drawing attention to this important fact but also for illustrating the whole case that I am seeking to make to my hon. Friends and to the Committee.

Mr. J. Enoch Powell (Down, South) rose

Mr. Hurd rose

Mr. Powell

Will the right hon. Gentleman explain, what is the difference between the cases with which he has just been dealing and the Equal Pay Act, which is specifically made a stated exception in the document?

Mr. Foot

I fully appreciate that point. I am not suggesting that I should have been wiser to give way to the hon. Member for Mid-Oxon (Mr. Hurd). I fully appreciate what the right hon. Gentleman has said, and it is perfectly true that in the annex to the White Paper the specific exception that is made is equal pay. I know that the Liberal Party wishes to put it in legislative form, and I shall come to that in a moment, but it is already covered.

The right hon. Member for Down, South (Mr. Powell) asked me why we have not covered this in a specific statement as well, and I perfectly understand the point. We considered whether we should have the legislative provision in the Act which would release the fair wages resolution from the difficulties described. The reason we rejected that proposition—although it has some logic in it. as I perfectly understand—is that we thought that if we once start on that course we shall finish un with the full statutory policy desired by the Liberal Party. Certainly that is not our intention, and I hope that no Members of this House who are opposed to a statutory policy, as I am, will pursue the course which the Liberals advise, because they would mislead us in that sense.

Mr. Hurd

The right hon. Gentleman has used this particular point to illustrate his general thesis. Does it not illustrate the opposite? He has asked the House to reject the amendment moved by his hon. Friend. He has not put forward an amendment of his own or said that he will table one on Report. He has again read the bit of his brief about what he, the Secretary of State, hopes will happen in this field. This leaves us with a thoroughly unsatisfactory situation, in which those concerned with these arrangements are expected to read, and presumably comply with, not a piece of legislation passed by this House but a statement made by the Secretary of State. Is not this a clear illustration of the difficulty into which we are getting?

Mr. Foot

I do not think so, and I am sorry if I appear to repeat myself in any sense. I do not think it leads to those difficulties unless the proposition is that the only way in which we can have a policy that tries to deal with the dangers of inflation, or such dangers of inflation that arise through wage settlements, is by full statutory means. I understand that once the term "incomes policy" is mentioned, people reach for their statutory guns, and say that here we must have statutory guns in order to make it work. My whole belief is that we should not seek to do it by those means at all, but that we should seek to do it by voluntary means. But it may be that in order to make the voluntary policy work—I know that many Members of the House do not accept this but I say that it is the case —we have to have what is in this clause in order to liberate employers from the difficulty that they would face if they had made other contracts to pay above the limit that had been agreed.

Mr. Heffer

I am desperately trying to be helpful in relation to my right hon. Friend but I do not understand the position. The White Paper clearly lays it down that the maximum is £6 and the one exception is on the question of equal pay. It is being suggested that there should be a number of other clear exceptions. If it is not written into the Bill, how are we ever to know, except merely on the statement of the Secretary of State, that they will be agreed? The right hon. Gentleman knows as well as I do that a statement made by a Minister in this House is not what counts in these matters. I learned this when I was in the Ministry, and every other ex-Minister knows this to be so. The legal people tell one all the time, "It does not matter what you say in the House of Commons. It is what is in the Act that counts." If it is not in the Act, how do we know that there is to be an exception? That is the point.

Mr. Foot

I fully understand what my hon. Friend is saying and of course it is the case that the fact that I say something from the Dispatch Box does not make it the law of the land. I understand that perfectly well. It might be an improvement if it were, but it so happens that it is not the case and I am as well aware of that as is my hon. Friend. What we are seeking to do is to run a voluntary policy. This means that the Government state their views on these matters, and the TUC, in the annex, which the Government have generally accepted, states its views in the White Paper. We are seeking to run this policy on a genuinely voluntary basis.

But it my hon. Friends support the Liberal amendment—I trust that they have no such intention—and say that they want to write into the legislation the elaborate procedure whereby every exception must be written into the legislation, they will establish a full-scale statutory policy. The only people who would be gratified by that process are right hon. and hon. Members on the Liberal Bench.

8.0 p.m.

Mr. Mikardo

May I put two matters to my right hon. Friend? I am sorry to interrupt him again, but this is of major importance and we are all trying to be helpful.

First, I cannot accept his last thesis, which is that if we have a statutory policy that is all right and it is not a statutory policy, but that, if we exempt certain things from the statute, that becomes a statutory policy. I find that a little difficult to follow.

Secondly, my right hon. Friend said that Amendment No. 16 was an exact illustration of the difficulty of trying to write things into the law instead of dealing with them flexibly. Within this Chamber, that meets the demand 101 per cent. That is fair enough. But, as my right hon. Friend will know, the fair wanes clause operates in such a way that a contractor must pay the wages and apply the conditions operating in the trade in his area. If a contractor finds that his wages are below those of the customers of the trade in his area and that in order to get them up he has to put them up by £7 a week, his workers will say to him that he has to pay them £7 under the fair wages clause. In such a case, he will not quote what my right hon. Friend has said. He will say, "I am forbidden by the statute to give you more than £6."

Mr. Foot

I do not think that he will be forbidden by the statute to pay more than the £6. The statute does not forbid him in that sense. We are not laying down a policy under which it is a statutory offence. If we had a full statutory policy—the 1966 Act arrangements or the 1973 Act arrangements—that would apply. But it does not apply when we seek to deal with these matters on a voluntary basis.

If my hon. Friend voted for the Liberal amendment and it were carried, he would be creating a very wide loophole. Some of these items are covered in the White Paper or in the annex and are superfluous. I have in mind that relating to equal pay and that relating to the fair wages clause. But some of the other items, especially that about profit-sharing schemes, could create very wide loopholes and would make a very big hole in the idea of trying to operate the scheme.

I repeat that in my opinion and in the way in which we have sought to devise this policy we are seeking to conduct it on the basis of voluntary agreements. We have made an agreement with the TUC. It has set out its view about how it thinks we can tackle this problem in the coming year. It has said that it would favour dealing with it by this method, and it considered all these questions carefully.

Mr. Mikardo

The TUC would not object to this.

Mr. Foot

My belief is that the TUC would object to having this kind of approach. Once we start on the process of writing into the law all these arrangements, we are heading for the kind of policy that the Liberal Party wishes to see.

Mr. Biffen

I am a little worried. The Secretary of State is all too easily sliding into the theology of incomes policy, whereas the purpose of many of these amendments is to establish practical situations. In a situation specifically and dramatically outlined by the hon. Member for Bethnal Green and Bow (Mr. Mikardo), would an employer in those circumstances be allowed to pay £7 a week?

Mr. Foot

If it were in accordance with the fair wages resolution, he could. But the question is this, and this was fully in the minds of the TUC in all our conversations—[An HON. MEMBER: "What has the TUC got to do with it?"] The TUC has something to do with it because we are seeking to establish, by methods we think likely to be a great improvement on anything attempted in previous arrangements, how to do it by voluntary means.

If we were to take the method proposed by the Liberal Party of specifying in detail each loophole which was to be provided, including the additional loopholes proposed by the Liberal Party, not only would we open a large number of further loopholes for payments over the £6 but we would make the situation so specific under the law that people would say that every arrangement had to be governed by the whole legal apparatus. We are seeking to avoid that.

Mr. Jeremy Thorpe (Devon, North)

Is not the Secretary of State very sensitive about what is a statutory policy and what is not? As I understand it, he is saying that this Bill is not a statutory policy but that, if it is amended, it may become one. He is in favour of a voluntary policy, and he makes it clear that reserve powers will have to be introduced if it is breached. If that is the position, is it not helpful to trade unions and employers alike to make sure that it is clear what are the exceptions to which they are entitled and which would not be a breach?

Mr. Foot

The right hon. Gentleman raises a different aspect of the matter. Amendment No. 7 attempts to do two things at the same time. It seeks to increase the number of loopholes which might be available. It also seeks to specify more precisely some of the exceptions already acknowledged, such as that on equal pay. There will be no doubt about the equal pay exception, partly because it is already the law of the land. But if we proceed along that course, we shall land up with a much more complete statutory system than we think is the right course to deal with the present situation.

If right hon. and hon. Members think that the TUC would like us to proceed in this fashion, they are making a very grave error. We should then have embarked on the full statutory course which the TUC wishes to avoid.

Mr. Mikardo

The opposite is in fact the case.

Mr. Foot

If we were to specify all these things in the law, we should have a much more elaborate law for dealing with the situation. In this clause, we seek only to remove the difficulties in carrying through the voluntary exceptions to the £6 limit across the board. We are seeking to remove the difficulty which otherwise would create such a blockage that the policy would not operate at all. The block would be imposed because of contracts which would still remain in existence and would prevent the carrying out of the £6 across-the-board agreement.

Mr. Ridley

Surely the right hon. Gentleman is wrong. This clause deals with the limitation of liability in the case of a breach of contract. Whether a contract has been breached will have to be interpreted by the courts. Let us suppose that an action is brought against an employer for breach of contract. It will have to be known whether the contract was breached, and all these exceptions that the right lion. Gentleman is producing to the general run of the White Paper's scope will greatly widen the scope for claiming that the contract has not been breached. Therefore, as this is not a matter of incomes policy but one of law —whether a contract exists or not and can or cannot be breached—surely it has to be made explicit in this instance.

Mr. Foot

It is made explicit in the White Paper and in the annex. In this debate and in previous debates I have tried to elaborate on that in order to make clear what those provisions mean. I shall come in a moment to the further provisions about pensions. We have sought and are seeking—we do it because we wish to avoid the perils of precise legal arrangements for governing all these matters—to ensure that the voluntary arrangements shall prevail over the whole area as far as possible. There may be some exceptions which have to be guarded against.

One difficulty against which we have to guard is that of contractual obligations which would prevent the voluntary arrangements from going forward.

Mr. Ron Thomas

Will my right hon. Friend be good enough to deal with two points that I raised? The first is in connection with job evaluation agreements where there is regrading, new job descriptions, productivity and efficiency agreements and, secondly and more importantly, the question of piece-work and payments-by-results systems. In the engineering industry it is laid down that if there is a change in means, methods or material, a new price or time is negotiated by mutual agreement. I should have thought that that is a contractual agreement or arrangement. Will negotiations under such arrangements for claims in excess of £6 continue or must that whole area be limited to £6?

Mr. Foot

What applies in those cases —and it is governed by the TUC's statement on the subject—is that existing productivity agreements go forward and they do not count against the £6. However, new productivity agreements would count against the £6. If we did not do that— and this was also the view of the TUC—

Mr. Heffer

The TUC is up the wall then.

Mr. Foot

If it were agreed that productivity agreements should escape from the £6 limit, there would be so many exceptions that that limit would not work effectively. It is for that reason that we reached this agreement. It was a perfectly sensible arrangement to conclude.

Throughout the discussions one of the reasons that the TUC took this view and why we concurred in its view was that if we started to make exceptions to the £6 limit in productivity and new arrangements, there would be so many loopholes that it would be impossible to apply the £6 arrangement across the board, and in that case the whole of the policy would fall apart and it would not be possible to apply it. I know that some of my hon. Friends and some hon. Members would say that they would not mind if that were to happen. If that were to be the case, the whole plan for combating inflation as proposed under this scheme would fall to pieces.

8.15 p.m.

It has been stated by others and by myself that it is a rough and ready way of doing it. The £6 limit is itself a rough and ready way of doing it. However, at the end of the discussions which we had with the TUC and which the General Council had amongst itself—it was originally a proposal put forward by Mr. Jack Jones but it was accepted by other members of the General Council prior to the proposals of the Government about the 10 per cent. limit and the £6 across-the-board limit—the council accepted as a general principle, that if it were to make such a proposal, it would be better to do it on the flat-rate principle despite all the anomalies and difficulties outlined rather than by percentage or some other means which would give rise to anomalies.

Mr. Heffer

As regards productivity agreements, a practical question arises in industry. As an example I shall take the construction industry. In the national agreement there is the opportunity on all sites for introducing a productivity agreement. It can be done for the whole site, on a gang basis or on a trade basis, whichever way is agreed with the employer on the site. If the basic rate increased only by £4 and a productivity agreement which would give another £2 extra to the workers on that site was the only agreement that could be negotiated, we would never get any productivity from those men. The measure is not practical or realistic. I do not care how many trade unions agree to it. I tell my right hon. Friend that when it is put to the rank and file, particularly to those who are used to negotiating productivity agreements, it will be thrown right out the door.

Mr. Foot

If it were also put to them that they could have a scheme such as this and the flat rate, across-the-board figure—assuming it was wanted—and if it were said, "We shall add to it any productivity agreements anyone wants to make", everyone knows that there would be many productivity agreements of various kinds or another which would upset the £6 limit. Many of the friends of my hon. Friends would understand it too.

All those problems were well understood by those who discussed this matter. We understand the difficulties that arise. The members of the General Council of the TUC, with whom we were talking understood the difficulties which would arise. However, their conclusion and our conclusion was that if we were to try to get this policy through at all, it was better to do it on the simple across-the-board principle, which would also give rise to anomalies and difficulies, rather than by the elaborate statutory methods we have experienced.

Mr. Hal Miller (Bromsgrove and Red-ditch)

Will the Secretary of State explain how we are to combat inflation if all this policy is doing is just adding £6 on the wage bill for every worker for no improvement in output? That will just raise costs and prices throughout industry. Can the right hon. Gentleman explain how that will help reduce the rate of inflation?

Mr. Foot

Many productivity agreements already exist in industry. It was the proposition of those with whom we discussed the matter that if we said that new productivity agreements should not count against the £6, we should open up such a wide loophole that the £6 would be utterly discredited, that some people would be getting away with it by those means and that, therefore, the plan for doing it by this method would fall apart and could not be applied. That, I believe, is the sensible, commonsense conclusion about the matter.

Mr. Dennis Skinner (Bolsover)

I want to try to be helpful to my right hon. Friend. He has been beset by a number of hypothetical queries about possible productivity arrangements which could be made in all kinds of industries. As he and I together, or apart, are trying to mould opinion on this matter, inside Parliament as well as outside it, perhaps he could give me the answer not to a hypothetical question but to a question that is real, live and matters very much. That is whether the newly arranged productivity scheme within the mining industry, which is only about six months old and by which many people set great store—not people like myself, but some do—will become part of the £6. The miners taking part in the ballot in the course of the next few weeks ought fully to understand what it is about.

Mr. Foot

I am very grateful to my hon. Friend. Perhaps he was more helpful than he intended, because I can say to him that the productivity arrangement that is already included in the whole of the mining industry, the arrangement made last year, will stand. As I have said previously, the increases and benefits for the miners under that productivity scheme do not count against the £6. They are already there. That is part of the scheme that is already in existence.

Mr. Skinner

What about the additional payment?

Mr. Foot

The additional payment under that existing productivity scheme will stand. That is the situation.

Mr. Nigel Lawson (Blaby)

Will the right hon. Gentleman say where in the White Paper, and particularly in the TUC's annex, it is stated that increases under existing productivity schemes will be over and above the £6 limit? I can find no such thing stated anywhere.

Mr. Foot

I think that the hon. Gentleman will find it easily enough. [HON. MEMBERS: "Oh."] In the general statement that we have agreed with the TUC there has been an understanding that one could accept it under the productivity agreement. [Interruption.] I shall come back to the hon. Gentleman after finding the exact place shortly.

Mr. Graham Page (Crosby)

if the right hon. Gentleman looks at column 687 of Hansard for yesterday, he will see that he himself explained the position as regards productivity agreements. He has evidently forgotten.

Mr. Foot

I had not forgotten it at all. I have explained it about four times, in almost the same words that I used yesterday. However, the hon. Member for Blaby (Mr. Lawson) asked me a different question. He asked where it appeared in the annex.

However, it is our understanding with the TUC that this is the way in which the productivity agreements should be covered.

Mr. Heffer

I am sorry to interrupt my right hon. Friend, but I must get this matter clarified because it is of great importance. My right hon. Friend says that the miners' productivity agreement will continue. I understand that that is an accumulative agreement, and that could smash the thing right open—but that is a matter for the miners and my right hon. Friend. In the construction industry we have a national agreement by which one can have, if one desires, a productivity agreement on a particular site. Let us suppose that there is no site but just a green field, and that workers go on to that site and there is no agreement. Let us suppose that they accept the basic national rate and the national agreement. Part of that agreement, however, is that they can, if they wish, create a productivity agreement on that site.

If it is good for the miners to continue with the productivity agreement that is already in existence, I want the right for construction workers. The fact that they happen to move from one job to another because they work in that industry is not their fault. I want them to have the right to a productivity agreement on the same lines as the miners. If construction workers cannot have it, that is totally unfair to them.

Mr. Foot

I have already explained this matter. If it is an existing agreement they can continue with it, as in the case of the miners, but if it is a new productivity agreement it has to count against the £6, because if that were not so it would create such a loophole that the principle of the £6 across-the-board, payment would be destroyed.

Let me come to what is said by those hon. Members who have spoken about the pensions agreement and the statement about pensions which I made in the Chamber yesterday, and to the various questions they have put to me on this subject. I shall return to the general principle that my hon. Friends have been raising, but I should like first to refer to the pensions situation. I do not have a great deal to add to what I said yesterday on the subject. The hon. Member for Somerset, North (Mr. Dean) asked about arrangements that already exist for pensions for people earning more than £8,500 a year. They are covered by the answer I gave yesterday. The arrangements of the pensions schemes established before 11th July will continue unaffected by the pay limit. It is only new or improved schemes that are affected by the pay limit, subject to what I said yesterday. New schemes will be affected, but existing schemes will be protected.

We have also said that we wish to do our best to protect the arrangements under occupational pensions schemes, including new schemes as they come forward. We have had discussions with the Department of Health and Social Security on these matters, and the proposals have its approval. We worked them out with the Department. If there is any threat to occupational schemes, we are prepared to examine it and see whether further protection is required. When negotiations have been started in the three-month period before 1st July, we believe that the proposals should be accepted. We believe that our proposals here will generally protect the situation.

But I repeat that if we were to go further, and abandon the proposition that improvements in non-wage benefits should be counted against the £6, we would destroy the credibility of the £6 limit. However, if it is found that any injury is done to occupational schemes, in the way that the hon. Gentleman described, we shall be prepared to consider the situation. As I said yesterday, our intention is to provide reasonable protection, and I think that we have done so with what we have proposed.

Mr. Kenneth Clarke

Will the right hon. Gentleman address himself to the fact that the object underlying the Social Security Pensions Bill is to set off a whole wave of improvements to be carried out over the next 12 months or so in private occupational schemes, to enable them to contract out? Does he accept that he must consider that matter now, because this entire Bill makes that impossible? I trust that the right hon. Gentleman is not suggesting that every manager of a pensions scheme, or adviser, will have to refer to his Department, as well as the Occupational Pensions Board, to see whether the special arrangements made for his scheme are acceptable and enable him to carry on contracting out. Assuredly, managers and advisers will not take on that added burden in the next 12 months.

Mr. Foot

I shall consider what the hon. Gentleman has said. If there are difficulties of that kind we shall consider the matter.

I do not think that a general, blanket acceptance of the proposal made by the hon. Member for Somerset, North is possible, but I shall reconsider the matter, and we can discuss it afresh on Report on Tuesday. I am not saying that I can give any undertaking to accept the hon. Gentleman's Amendment No. 74, because I believe that in the main we have covered the matter, and that most of the questions he put to me concern matters arising from the existing arrangements, which therefore are not injured or affected in any way.

Mr. Mikardo

My right hon. Friend has generously said that he is willing to look at Amendment No. 74, which none of his hon. Friends has supported, and see what he thinks about it. Is the fact that his hon. Friends have supported Amendment No. 7 the reason why he is being much more implacable on it? He says that the TUC General Council might not like it. I think that he is wrong about that. If only my right hon. Friend would say "Let me talk to the TUC General Council and see its reaction, and then I shall come back", if only he said half as much as he has said to Opposition Members, there would be a very different atmosphere in this debate, and perhaps a different result.

[Mr. W. T. WILLIAMS in the Chair.]

8.30 p.m.

Mr. Foot

What I said to the hon. Gentleman was said because I wished to make sure that the statements I made yesterday were fully understood. That was perfectly proper. I do not see why my hon. Friend should have any quarrel with that. I have not made any commitment to accept Amendment No. 74.

Mr. Lawson

The right hon. Gentleman promised that he would tell me where in the TUC annex to the White Paper or in the White Paper there is any warrant for his statement that increases in existing productivity agreements will be allowed over and above the £6 limit. I bet the right hon. Gentleman £6 that he will not find any such reference.

Mr. Foot

We shall see whether the hon. Gentleman is right. There is no doubt about the situation as I have stated it. That is our understanding about productivity agreements and it would be most unwise to think that we could proceed on any different basis. If we do so we would open up such a wide loophole that the £6 limit proposition could not be applied. I come to what was said—

Mr. Dean

I appreciate the right hon. Gentleman's difficulty in trying to be expert on a whole range of subjects, including pensions. I am grateful for what he has said about looking at Amendment No. 74 but I am bound to say that it is totally unsatisfactory to 10 million people who are in pension schemes and their families, that he cannot give any indication whatever to the Committee that he has given any serious consideration as to the effect of the Bill on the future of their pensions. Will he at least assure us that between now and Report he will consult the Secretary of State for Social Services and consider what has been said in this debate with a view to returning on Report, if he is convinced by our arguments, and accepting Amendment No. 74? Does he realise that there have been at least eight precise questions addressed to him affecting pensioners and their prospects? So far he has answered only one of them. It is totally unsatisfactory when we are considering the detail of a Bill in Committee that we should allow these things to go by and ignore these questions.

Mr. Foot

It is not a question of their being ignored. I have answered the hon. Gentleman, as I did yesterday. The hon. Gentleman's first remarks on these matters were published in his local newspaper, to which I referred yesterday. He suggested that existing schemes would he affected. I have made it clear that that is not the case. I came to the House yesterday and told him what we thought was the best way of dealing with the position for future pension schemes so that we would not injure them.

I believe that we made a reasonable proposal. We made that after discussions with the CBI and the TUC. They had different views on this. In some cases we were asked to be much more severe, in others to be much more relaxed. We have chosen what I suggested yesterday was a reasonable compromise. I make no commitment to accept Amendment No. 74 but I will look at the matter to see whether the reasonable compromise we proposed should be altered in some way. I will look at it in that sense and in the light of the questions the hon. Gentleman has put to me. If there are improved proposals which we can put forward, I will introduce them on Report. That is not a commitment to accept Amendment No. 74. If we did that we would open up another big loophole which could mean that increases way above the £6 limit could be paid in certain circumstances, and that could inflict injury on the whole scheme.

Mr. Boscawen

Can the Secretary of State just answer this one question on the Government's own schemes? If there is a new scheme, not yet enacted, to pay a benefit more than £6 per week, will that be paid?

Mr. Foot

I have already dealt with this question in the replies I gave yesterday.

I fully understand and appreciate that my hon. Friend the Member for Bethnal Green and Bow does not approve of the proposal for a £6 across-the-board method of dealing with the problem. I understand his opposition to that proposition. I also understand that in the application of any policy on incomes, whether voluntary, as I believe this still to be, or statutory, the number of anomalies and difficulties that can arise is enormous and they have been illustrated very clearly by my hon. Friends in the debate and in the questions they have put to me.

It is partly for this reason that my hon. Friend for Bethnal Green and Bow and I have been so strongly opposed to statutory incomes policies for many years. We have always agreed that if we sought to set down in black and white how every wage negotiation should be carried out, what should be its outcome, whether any exceptions should be permitted and whether there should be any sanctions, we would get into enormous complications and difficulties. That has been the result when such policies have been applied.

However, we were confronted with a national situation where the Government, the majority of the TUC General Council and the great mass of the people of this country believed that something drastic, dramatic and immediate had to be done to deal with the current rate of inflation. If we had not taken such action, this Government, this country and all our economic policies would have been in peril. Our conclusion was that if we did not take action on this matter, the country would be put in the gravest difficulties and the whole inflation problem could not be dealt with. This is the method by which we elected to try to deal with it.

I acknowledge, as do all those from the TUC General Council, who have agreed the policy, that this is a rough and ready way of doing it. I understand that it creates anomalies and difficulties. I understand that some people could say that if they wanted to create loopholes and exceptions, they could make the policy unworkable. If everyone up and down the country said they were going to reject the idea of trying to make the £6 across-the-board limit work, I have no doubt that they could succeed. I am sure that many of the anomalies pointed out by my hon. Friends, whether in productivity agreements or other matters, could ensure that the policy was destroyed.

My hon. Friend the Member for Bethnal Green and Bow is entitled to exercise his judgment, but my judgment is that if we see the collapse of this policy of trying to deal with the matter by voluntary agreement and by people accepting it despite all the anomalies and difficulties, it will have a very grave effect on this country and on our chances of overcoming our economic problems. It will greatly reduce the likelihood of the Government's survival.

I am not pressing that as the only consideration, but the chances of defeating inflation will be enormously reduced if the simple formula of £6 across the board is eroded, destroyed or undermined. That is not only my belief; it is also the belief of the majority of the TUC General Council. That is the belief of the majority of trade unionists, too. In making that policy work and in ensuring that we take dramatic action to deal with inflation we can also go forward to carry out all the other policies for which my hon. Friend the Member for Bethnal Green and Bow and I have fought over so many years.

I therefore ask my hon Friends, in spite of their doubts, anxieties, fears and criticisms—which I am sure they will continue to make—to assist us in carrying this measure through. I ask them to assist us in seeing whether we can make this policy work, because in doing so they will be doing a great service to the Labour movement. They may continue their criticisms of the Government in general and of me in particular, but if they respond as I hope they will, they will be answering a much deeper call from the Labour movement and they will be making a great contribution to enabling the country to overcome its very serious economic difficulties.

I am asking my hon. Friends not to withdraw their criticisms, but, having made their criticisms, to help us to get this Bill through, to enable us to try to make it succeed and to keep it on as voluntary a basis as possible. If they do that, they will be assisting us to discharge our obligations to the principles on which we were elected and our obligations to the country that we were sent here to serve.

Mr. Arthur Lewis

On a point of order. My right hon. Friend has, it seems, wound up the debate. He has not attempted to deal with the actual case which I put before him. Will he reply to my questions?

The Temporary Chairman

As the hon. Member knows, that is not a matter for the Chair.

Mr. John Nott (St. Ives)

I shall turn briefly to a few details of the Bill, and since I sense that the Committee wishes to come to an early decision on these amendments I shall leave the Secretary of State to consider the point raised by the hon. Member for Newham, North-West (Mr. Lewis) on another occasion.

The right hon. Gentleman began his remarks by commenting on the great value of a Committee stage and he has spoken for about an hour. I think I can say with certainty that my hon. and right hon. Friends have become, as that hour has proceeded, more and more confused. The Secretary of State described the Bill as modest and as different from the sort of Bills we had before. But it is the very modesty of the Bill which leads to so much confusion.

My hon. Friend the Member for Mid-Oxon (Mr. Hurd) said that in this first debate in Committee we had seen a watershed because at last we had got away from general principles, and that now we were emerging into a world of real people and actual situations; we were now asking precisely the questions that every employee and every employer would be asking from now on.

My hon. Friend the Member for Somerset, North (Mr. Dean) made an admirable speech. I wrote down the eight specific questions that he posed about pension schemes. These questions involve the affairs of 10 million people. We are talking of matters of very great concern to every one of them, and to my knowledge the Secretary of State has answered only one of those eight questions. I read with great care what he said last night and his general remarks on what he described as the three months' rule, but he did not really answer any of the points very reasonably and sensibly asked by my hon. Friend the Member for Somerset, North.

8.45 p.m.

We really have to get the question of pension arrangements sorted out before the end of the Report stage on Tuesday night. Much as I would like to go over these points, it would be inappropriate for me to do so at the present time. The vital importance of our hammering out a policy for incomes which is not only fair but workable has surely been demonstrated throughout the course of this debate. Throughout the country there are employers and employees who simply must know the answers to these questions. The Secretary of State said—I wrote down his remarks—that this is a voluntary policy. He really pushed aside the White Paper and the annex as much as to say they were not relevant to our debate—but the White Paper is fundamental to our debate because it forms the whole basis of the Bill which is now before the Committee.

Industry and the trade unions must know the answers to these problems. The Secretary of State kept failing back on the statement, "We have made an agreement with the TUC." We are not complaining about his agreement with the TUC, but there are millions of ordinary working men and women throughout the country who have no affiliation at all with the TUC, and those people really must know the answers to these questions. I know that the Committee wishes to come to a decision. I conclude by saying that our initial feeling was that we would not support the Liberal Party in its amendment simply because we had said we wanted this Bill withdrawn and a new measure brought forward which the whole of the country and the House of Commons could understand, but in view of the comments of the right hon. Gentleman we have to say of the Liberal amendment that at least it takes us down some of the path towards explaining to the country and to every hon. Gentleman in this Committee exactly what it is that the Government mean.

I am sorry that I have not been able to say more about the Liberal amendment or the debate. We feel that Amendment No. 7 at least goes some of the way to answering the points that have been made by hon. Gentlemen on the Government side—some are answered in that amendment, though a great mass are not—and it is because it answers some of these points and specifically deals in general terms with pension schemes that we feel disposed to support Liberal Members if they seek to force a Division on Amendment No. 7.

I want to say one last thing to the Secretary of State. I refer to it only because it is referred to in Amendment No. 77, to which the Secretary of State did not make a single reference. I must remind the Committee that that amendment refers to the 4½ million people on incremental scales. The confusion about those scales is now extremely great.

Mr. Foot

I apologise to the hon. Gentleman, and the hon. Gentleman—I believe the hon. Member for St. Marylebone (Mr. Baker)—who raised it, for not referring to it, but I really have nothing to add to what I said yesterday about this. Of course, we understand that the question of incremental scales gives rise to difficulties. It was one of the most difficult problems that we had to try to meet. We did not believe that we could exclude them altogether, although that was the recommendation of some. In fact, we have made a compromise on the matter which we hope and believe will work so long as people try to operate it in good faith. Under the previous arrangements of the Conservative Party, increments were also counted, so it does not lie in their mouths to criticise us. We admit that there are blurs in the scheme, but that is bound to be the case. We think that this is the most practical way of dealing with the problem.

Mr. Nott

I am not seeking to criticise the right hon. Gentleman. This is the Committee stage and we are trying to get some answers. The Industrial Correspondent of the Financial Times this morning deals with some comments by Mr. Campbell Adamson, who made a sensible, not a critical, point that With 2.5 million in the public sector and 2 million from the private sector already involved in incremental schemes and with millions more with grading arrangements who would seemingly escape the £6 limit 'you are finally talking about a policy which would affect only the "blue collar" workers and the few earning above £8,500 a year', he said. We have been given one night to deal with these problems. I must ask my right hon. and hon. Friends to support the Liberal Party not only in Amendment No. 7 but in Amendment No. 2. This has been an interesting but very confusing debate. We are now greatly concerned about the success of this policy if the Secretary of State cannot give us some more precise answers.

Mr. Pardoe

The amendment has been supported and closely argued from both sides. The Secretary of State has failed to meet the principle that, in the words of the hon. Member for Liverpool, Walton (Mr. Heller), we should "get it

in writing", in the legislation rather than in the White Paper.

I should like to clear up a point about the vote. Your predecessor in the Chair, Mr. Williams, said that if we withdrew Amendment No. 2, we could vote on Amendment No. 7, but it is clear—the two are closely linked and No. 2 is a paving amendment for No. 7—that we should have the vote on the latter a long time hence, after the next two debates. It therefore seems sensible not to seek to withdraw Amendment No. 2.

Question put, That the amendment be made:

The Committee divided: Ayes 256, Noes 257.

Division No. 298.] AYES [8.54 p.m.
Adley, Robert Drayson, Burnaby Kurd, Douglas
Aitken, Jonathan Dunlop, John Hutchison, Michael Clark
Alison, Michael Durant, Tony Irvine, Bryant Godman (Rye)
Amery, Bt Hon Julian Dykes, Hugh Irving, Charles (Cheltenham)
Arnold, Tom Eden, Rt Hon Sir John James, David
Atkins, Rt Hon H. (Spelthorne) Edwards, Nicholas (Pembroke) Jenkin, Rt Hon P. (Wanst'd&W'df'd)
Awdry, Daniel Elliott, Sir William Jessel, Toby
Bain, Mrs Margaret Emery, Peter Johnson Smith, G. (E Grinstead)
Baker, Kenneth Eyre, Reginald Johnston, Russell (Inverness)
Banks, Robert Fairbairn, Nicholas Jones, Arthur (Daventry)
Beith, A. J. Farr, John Jopling, Michael
Bell, Ronald Fell, Anthony Joseph, Rt Hon Sir Keith
Bennelt, Sir Frederic (Torbay) Finsberg, Geoffrey Kaberry, Sir Donald
Bennett, Dr Reginald (Fareham) Fisher, Sir Nigel Kellett-Bowman, Mrs Elaine
Benyon, W. Fletcher Alex (Edinburgh N) Kershaw, Anthony
Bitten, John Fookes, Miss Janet Kimball, Marcus
Biggs-Davison, John Fowler, Norman (Sutton C'f'd) King, Evelyn (South Dorset)
Blaker, Peter Fox, Marcus King, Tom (Bridgwater)
Boscawen, Hon Robert Fraser, Rt Hon H. (Stafford & SI) Kirk, Peter
Bottomley, Peter Freud, Clement Knight, Mrs Jill
Bowden, A. (Brighton, Kemptown) Fry, Peter Knox, David
Boyson, Dr Rhodes (Brent) Galbraith, Hon T. G. D. Lamont, Norman
Bradford, Rev Robert Gardiner, George (Reigate) Lane, David
Brains, Sir Bernard Gardner, Edward (S Fylde) Langford-Holt, Sir John
Brittan, Leon Gilmour, Rt Hon Ian (Chesham) Latham, Michael (Melton)
Brotherton, Michael Gllmour, Sir John (East Fife) Lawrence, Ivan
Brown, Sir Edward (Bath) Glyn, Dr Alan Lawson, Nigel
Bryan, Sir Paul Goodhew, Victor Le Marchant, Spencer
Buchanan-Smith, Alick Goodlad, Alastair Lester, Jim (Beeston)
Buck, Antony Gorst, John Lewis, Kenneth (Rutland)
Budgen, Nick Gow, Ian (Eastbourne) Lloyd, Ian
Bulmer, Esmond Gower, Sir Raymond (Barry) Luce, Richard
Burden, F. A. Grant, Anthony (Harrow C) McAdden, Sir Stephen
Butler, Adam (Bosworth) Grieve, Percy MacCormick, lain
Carlisle, Mark Griffiths, Eldon McCrindle, Robert
Carr, Rt Hon Robert Grimond, Rt Hon J. McCusker, H.
Carson, John Grist, Ian Macfarlane, Neil
Chalker, Mrs Lynda Hall-Davis, A. G. F. MacGregor, John
Channon, Paul Hamilton, Michael (Salisbury) Macmillan, Rt Hon M. (Farnham)
Churchill, W. S. Hampson, Dr Keith McNair-Wilson, M. (Newbury)
Clark, Alan (Plymouth, Sutton) Harrison, Col Sir Harwood (Eye) McNair-Wilson, P. (New Forest)
Clarke, Kenneth (Rushcliffe) Harvie Anderson, Rt Hon Miss Madel, David
Clegg, Walter Havers, Sir Michael Marten, Neil
Cockcroft, John Hawkins, Paul Mates, Michael
Cope,John Hayhoe, Barney Mather, Carol
Cormack, Patrick Henderson, Douglas Maude, Angus
Corrie, John Hicks, Robert Mawby, Ray
Critchley, Julian Holland, Philip Maxwell-Hyslop, Robin
Crouch, David Hordern, Peter Mayhew, Patrick
Crowder, F. P. Howe, Rt Hon Sir Geoffrey Meyer, Sir Anthony
Davies, Rt Hon J. (Knutsford) Howell, David (Guildford) Miller, Hal (Bromsgrove)
Dean, Paul (N Somerset) Howell, Ralph (North Norfolk) Mills, Peter
Douglas-Hamilton, Lord James Hunt, John Miscampbell, Norman
Mitchell, David (Basingstoke) Reid, George Stewart, Ian (Hitchin)
Moate, Roger Ronton, Rt Hon Sir D. (Hunts) Stokes, John
Molyneaux, James Renton, Tim (Mid-Sussex) Stradling Thomas, J.
Monro, Hector Rhys Williams, Sir Brandon Tapsell, Peter
Montgomery, Fergus Ridley, Hon Nicholas Taylor, R. (Croydon NW)
Moore, John (Croydon C) Ridsdale, Julian Taylor, Teddy (Cathcart)
More, Jasper (Ludlow) Rifkind, Malcolm Tebbit, Norman
Morgan, Geraint Roberts, Michael (Cardiff NW) Temple-Morris, Peter
Morgan-Giles, Rear-Admiral Roberts, Wyn (Conway) Thatcher, Rt Hon Margaret
Morris, Michael (Northampton S) Rodgers, Sir John (Sevenoaks) Thomas, Rt Hon P. (Hendon S)
Neave, Airey Ross, Stephen (Isle of Wight) Thompson, George
Nelson, Anthony Ross, William (Londonderry) Thorpe, Rt Hon Jeremy (N Devon)
Neubert, Michael Rossi, Hugh (Hornsey) Townsend, Cyril D.
Newton, Tony Rost, Peter (SE Derbyshire) Trotter, Neville
Normanton, Tom Sainsbury, Tim Tugendhat, Christopher
Nott, John St. John-Stevas, Norman Vaughan, Dr Gerard
Oppenheim, Mrs Sally Shaw, Giles (Pudsey) Viggers, Peter
Osborn, John Shaw, Michael (Scarborough) Wainwright, Richard (Colne V)
Page, John (Harrow West) Shelton, William (Streatham) Wakeham, John
Page, Rt Hon R. Graham (Crosby) Shepherd, Colin Walker-Smith, Rt Hon Sir Derek
Pardoe, John Shersby, Michael Wall, Patrick
Parkinson, Cecil Sims, Roger Walters, Dennis
Penhaligon, David Sinclair, Sir George Watt, Hamish
Percival, Ian Skeet, T. H. H. Weatherill, Bernard
Peyton, Rt Hon John Smith, Dudley (Warwick) Wells, John
Pink, R. Bonner Speed, Keith Wilson, Gordon (Dundee E)
Powell, Rt Hon J. Enoch Spicer, Jim (W Dorset) Winterton, Nicholas
Price, David (Eastleigh) Spicer, Michael (S Worcester) Young, Sir G. (Ealing, Acton)
Prior, Rt Hon James Sproat, lain Younger, Hon George
Pym, Rt Hon Francis Stanbrook, Ivor
Raison, Timothy Stanley, John TELLERS FOR THE AYES:
Rathbone, Tim Steel, David (Roxburgh) Mr. Cyril Smith and
Rees, Peter (Dover & Deal) Steen, Anthony (Wavertree) Mr. Emlvn Hooson
Rees-Davies, W. R. Stewart, Donald (Western Isles)
Abse, Leo Crosland, Rt Hon Anthony George, Bruce
Anderson, Donald Cryer, Bob Gilbert, Dr John
Archer, Peter Cunningham, G. (Islington S) Ginsburg, David
Armstrong, Ernest Cunningham, Dr J. (Whiteh) Golding, John
Ashley, Jack Dalyell, Tam Gould, Bryan
Ashton, Joe Davidson, Arthur Gourlay, Harry
Atkins, Ronald (Preston N) Davies, Bryan (Enfield N) Graham, Ted
Bagier, Gordon A. T. Davies, Denzil (Llanelli) Grant, George (Morpeth)
Barnett, Guy (Greenwich) Davies, Ifor (Gower) Grant, John (Islington C)
Barnett, Rt Hon Joel (Heywood) Davis, Clinton (Hackney C) Grocott, Bruce
Bates, Alt Deakins, Eric Hamilton, James (Bothwell)
Bean, R. E. Dean, Joseph (Leeds West) Hamilton, W. W. (Central Fife)
Benn, Rt Hon Anthony Wedgwood de Freitas, Rt Hon Sir Geoffrey Hardy, Peter
Bennett, Andrew (Stockport N) Delargy, Hugh Harper, Joseph
Bishop, E. S. Dell, Rt Hon Edmund Harrison, Walter (Wakefield)
Blenkinsop, Arthur Dempsey, James Hart, Rt Hon Judith
Boardman, H. Doig, Peter Hatton, Frank
Booth, Albert Dormand, J. D. Hayman, Mrs Helene
Boothroyd, Miss Betty Douglas-Mann, Bruce Healey, Rt Hon Denis
Bottomley, Rt Hon Arthur Duffy, A. E. P. Hooley, Frank
Boyden, James (Bish Auck) Dunn, James A. Horam, John
Bradley, Tom Dunnett, Jack Howell, Denis (B'ham Sm H)
Bray, Dr Jeremy Dunwoody, Mrs Gwyneth Huckfield, Les
Brown, Hugh D. (Provan) Eadie, Alex Hughes, Rt Hon C. (Anglesey)
Brown, Robert C. (Newcastle W) Edelman, Maurice Hughes, Robert (Aberdeen N)
Buchan, Norman Edwards, Robert (Wolv SE) Hunter, Adam
Buchanan, Richard Ellis, John (Brigg & Scun) Irvine, Rt Hon Sir A. (Edge Hill)
Butler, Mrs Joyce (Wood Green) Ellis, Tom (Wrexham) Irving, Rt Hon S. (Dartford)
Callaghan, Jim (Middleton & P) English, Michael Jackson, Colin(Brighouse)
Campbell, Ian Ennals, David Jackson, Miss Margaret (Lincoln)
Cant, R. B. Evans, loan (Aberdare) Janner, Greville
Carmichael, Neil Evans, John (Newton) Jay, Rt Hon Douglas
Carter, Ray Ewing, Harry (Stirling) Jenkins, Hugh (Putney)
Carter-Jones, Lewis Faulds, Andrew Jenkins, Rt Hon Roy (Stechford)
Cartwright, John Fernyhough, Rt Hon E. John, Brynmor
Castle, Rt Hon Barbara Fitch, Alan (Wigan) Johnson, James (Hull West)
Clemitson, Ivor Fitt, Gerard (Belfast W) Johnson, Walter (Derby S)
Cocks, Michael (Bristol S) Fletcher Raymond (Ilkeston) Jones, Alec (Rhondda)
Cohen, Stanley Fletcher, Ted (Darlington) Jones, Barry (East Flint)
Concannon, J. D. Foot, Rt Hon Michael Judd, Frank
Conlan, Bernard Ford, Ben Kaufman, Gerald
Cook, Robin F. (Edin C) Forrester, John Kelley, Richard
Corbett, Robin Fowler, Gerald (The Wrekin) Kilroy-Silk, Robert
Cox, Thomas (Tooting) Fraser, John (Lambeth, N'w'd) Kinnock, Neil
Craigen, J. M. (Maryhill) Freeson, Reginald Lamborn, Harry
Crawshaw, Richard Garrett, John (Norwich S) Lamond, James
Cronin, John Garrett, W. E. (Wallsend) Leadbitter, Ted
Lestor, Miss Joan (Eton & Slough) Owen, Dr David Strang, Gavin
Lewis, Ron (Carlisle) Padley, Walter Strauss, Rt Hon G. R.
Luard, Evan Palmer, Arthur Summerskill, Hon Dr Shirley
Lyons, Edward (Bradford W) Park, George Swain, Thomas
McCartney, Hugh Parker, John Taylor, Mrs Ann (Bolton W)
McElhone, Frank Parry, Robert Thomas, Jeffrey (Abertillery)
MacFarquhar, Roderick Peart, Rt Hon Fred Thomas, Mike (Newcastle E)
McGuire, Michael (Ince) Pendry, Tom Tierney, Sydney
Mackenzie, Gregor Perry, Ernest Tinn, James
Maclennan, Robert Phipps, Dr Colin Tomlinson, John
McMillan, Tom (Glasgow C) Prescott, John Tomney, Frank
McNamara, Kevin Price, C. (Lewisham W) Torney, Tom
Magee, Bryan Price, William (Rugby) Tuck, Raphael
Mahon, Simon Radice, Giles Varley, Rt Hon Eric G.
Mallalieu, J. P. W. Rees, Rt Hon Merlyn (Leeds S) Wainwright, Edwin (Dearne V)
Marks, Kenneth Roberts, Albert (Normanton) Walden, Brian (B'ham, L'dyw'd)
Marquand, David Roberts, Gwilym (Cannock) Walker, Harold (Doncaster)
Marshall, Dr Edmund (Goole) Robertson, John (Paisley) Walker, Terry (Kingswood)
Marshall, Jim (Leicester S) Roderick, Caerwyn Ward, Michael
Mason, Rt Hon Roy Rodgers, William (Stockton) Watkins, David
Meacher, Michael Rooker, J. W. Watkinson, John
Mellish, Rt Hon Robert Rose, Paul B. Weetch, Ken
Mendelson, John Ross, Rt Hon W. (Kilmarnock) Weitzman, David
Millan, Bruce Rowlands, Ted Wellbeloved, James
Miller, Dr M. S. (E Kilbride) Sandelson, Neville White, Frank R. (Bury)
Miller, Mrs Millie (Illord N) Shaw, Arnold (Ilford South) White, James (Pollok)
Molloy, William Sheldon, Robert (Ashton-u-Lyne) Whitehead, Phillip
Morris, Alfred (Wythenshawe) Shore, Rt Hon Peter Whitlock, William
Morris, Charles R. (Openshaw) Short, Rt Hon E. (Newcastle C) Willey, Rt Hon Frederick
Morris, Rt Hon J. (Aberavon) Silkin, Rt Hon John (Deptford) Williams, Alan (Swansea W)
Mulley, Rt Hon Frederick Sillars, James Williams, Alan Lee (Hornch'ch)
Murray, Rt Hon Ronald King Silverman, Julius Wilson, Alexander (Hamilton)
Noble, Mike Small, William Wilson, William (Coventry SE)
Oakes, Gordon Smith, John (N Lanarkshire) Woodall, Alec
Ogden, Eric Snape, Peter Woof, Robert
O'Halloran, Michael Spearing, Nigel Young, David (Bolton E)
O'Malley, Rt Hon Brian Spriggs, Leslie
Orbach, Maurice Stallard, A. W. TELLERS FOR THE NOES:
Orme, Rt Hon Stanley Stewart, Rt Hon M. (Fulham) Mr Laurie Pavitt and
Ovenden, John Stott, Roger Mr. David Stoddart

Question accordingly negatived.

Sir Geoffrey Howe (Surrey, East)

I beg to move Amendment No. 5, in page 1, line 8, leave out from 'limits' to 'he' in line 10 and insert 'set out in the Schedule (The Attack on Inflation) to this Act'.

The Temporary Chairman

With this we are to take the following amendments:

No. 104, in page 1, line 8, leave out from 'by' to 'he' in line 10, and insert 'the terms and provisions of the Schedule (The Attack on Inflation) to this Act'.

No. 6, in page 1, line 9, leave out from 'the' to 'he' in line 10 and insert 'Schedule (The Attack on Inflation) to this Act'.

No. 80, in page 1, line 10, after '6151)', insert 'and as contained in Schedule (The Attack on Inflation) to this Act'.

No. 8, in page 1, line 14, leave out subsections (2) and (3).

No. 101, in page 1, line 14, leave out subsection (2).

No. 82, in page 1, line 16, leave out from 'State' to end of line 19 and insert 'shall lay before both Houses of Parliament a new Schedule in the form of a draft incorporating the new limits proposed in the document. (2A) If the draft Schedule laid under the preceding subsection is approved by the resolution of each House of Parliament the Secretary of State may by order made by statutory instrument substitute the draft Schedule for the Schedule to this Act, and that Schedule'.

No. 110, in page 1, line 71, leave out from 'instrument' to 'shall' in line 19 and insert 'add the said limits or any of them to or substitute the said limits or any of them for the limits set out in the Schedule (The Attack on Inflation) to this Act and the said Schedule'.

No. 59—new Schedule—"The Attack on Inflation".

We shall also take the following amendments to the proposed new Schedule:

Amendment (a), in page 4, after paragraph (6), insert— The annual limit to which pay settlements must conform will in general be related to the group covered by the settlement not to the individual. The total cost on the annual pay bill of all pay increases affecting any of the group during a 12-month period must not exceed the equivalent per head of £6 a week within this total figure there will be scope for negotiations, for example, on the extent to which the increase is to be weighted in favour of the lower paid. Negotiations will also be free to decide the extent to which the increase takes the form of improvements in other terms and conditions of employment, as an alternative to a straight increase in pay.".

Amendment (b), in page 5, after paragraph 11, insert—

"Other terms and conditions

12. The cost of improvements in other terms and conditions of employment must be included in the total cost of settlements. Improvements in pensions and redundancy payments schemes may, however, be negotiated outside the pay limit, as may reductions in standard working hours down to a net 40 hours per week and improvements in annual holidays up to three weeks.".

Amendment (c), in page 5, after paragraph 11, insert—

"National local and plant negotiations

12. Where settlements for a particular negotiating group are concluded at more than one level, e.g., a settlement at national level is supplemented by settlements at local or plant level, the total resulting increase must be within the pay figure.".

Amendment (d), in page 5, after paragraph 11, insert—

"12. Personal increments

Personal increments of any kind may be paid so long as any additional cost on the annual pay bill of the group concerned is counted against the pay limit. Where, however, existing pay is expressed in a predetermined range or scale and the increments are regular and of specified amounts, any cost of movements within the range or scale on the annual pay bill of the group concerned will not count against the pay limit. The cost of any improvements in existing ranges or scales must be contained within the pay limit.".

Sir G. Howe

The Government succeeded in defeating the first amendment by one vote. That indicates how serious are their difficulties.

I wish to make clear the position of the Opposition on this matter. We do not seek to obstruct the Government's handling of this business. We are grateful to them for having agreed to make a further half day, or day if necessary, available on Tuesday. However, we are anxious that if the Bill, which was given its Second Reading last night, is to find its place on the statute book, it should be a measure with which our working people and managers should be able to live. It should be intelligible and clear.

The debate so far has demonstrated clearly the miasmic confusion in which the Secretary of State finds himself in trying to secure the enactment of a measure necessary to the working of a voluntary policy and a statutory policy which is not clear in many important respects.

Even if we accept this approach—

Sir Derek Walker-Smith (Hertfordshire, East)

There is too much noise. We cannot hear.

Sir G. Howe

My right hon. and learned Friend suggests that there is too much discussion. Although I understand the anxieties of Government supporters sitting below the Gangway, they should listen to my point.

I warn the Secretary of State that a policy which is voluntary, yet statutory —voluntary, yet dependent upon ill-defined, incoherent, statutory provisions —will crumble with far more certainty than a statutory policy which is clearly defined.

If we analyse these matters further we shall realise the difficulties of the Secretary of State. The right hon. Gentleman should know better than almost anyone else that there is no point in presenting a policy which depends upon quasi-statutory interpretations uttered by him or other Ministers. In the previous debate, perhaps inadvertently, he said that it would be much better if it were possible to go that way.

Mr. Foot


Sir G. Howe

He said that it would be nice if his utterances had the force of law.

Mr. Foot

I was trying feebly to make a joke. I should not attempt that in the right hon. and learned Gentleman's presence.

Sir G. Howe

I am as ready as anyone to join the right hon. Gentleman in his humour, but he does not seem to realise the seriousness of the problems.

Amendments Nos. 5, 104, 6 and 80 all seek to schedule the White Paper to the Bill so that the provisions by which people are to be bound are clearly set out, as they were in the 1966 Act, and so that we may have the opportunity of amending those provisions to deal with the loopholes, as the Secretary of State described them, which are or may be apparent.

Amendments Nos. 8 and 101 seek to remove subsections (2) and (3). Amendment No. 82, which is a more important one, seeks to require the Government, if they wish to amend the schedule by laying the draft of another document, to give the House a chance of discussing that draft before it is embodied in a statutory instrument.

Amendment No. 59 is the new schedule which we wish to add. We are also discussing Amendments (a) to (d), which raise some of the matters which have already been discussed. Amendment (a) raises the question—which has not been answered to our satisfaction in any of the previous debates—how far the pay limit is to be calculated either by reference to individual work people or, as an alternative, by reference to the pay bill of a total group of employees. It reproduces the concept that it should be calculated by reference to the group. The purpose of putting that concept forward as an alternative is that it gives greater flexibility in bargaining arrangements, it enables some rôle to be preserved for trade unions and it enables some flexibility to be maintained in the agreements that are arrived at. We prefer that to the straight flat-rate £6 limit per head.

The important purpose of raising this matter is to allow the Secretary of State to make clear which way the policy is intended to work. As I mentioned briefly yesterday, certain parts of the White Paper make plain that the limit is to be on a flat-rate basis of £6 per head—that is particularly clear in the annex—whereas in other parts it is suggested that settlements become out of order only if the aggregate addition to the pay bill which is reflected in the application for higher prices involves an average of more than £6 a head. The Secretary of State's intention must be one or the other, and it is not clear which. That is one reason why we prefer to have the schedule open for debate.

Amendment (b) sets out more clearly than does the White Paper the extent to which changes in other terms and conditions may or may not take place within the scope of the policy relating both to pensions and to redundancy payments.

On Amendment (c), we do not know which way the Secretary of State wishes the matter to move, but the amendment makes clear the extent to which the consequences of local and plant negotiations alongside national agreements are to be taken together.

Amendment (d) comes back to the question of incremental scales. The drafting description of incremental scales in paragraph 4 of the annex falls a long way short of clarity, and the policy which is to be applied cannot be made any clearer for the purposes of law by the Secretary of State's utterances yesterday. The amendment is taken from one of the provisions of the previous Pay Code, which is at least carefully composed and likely to be capable of having some meaning. The underlying dilemma—and this is why all these debates are so important—is that the Government are bringing before the House a statute to give effective force to a so-called voluntary policy, but the limits of that voluntary policy, the limits of the extent to which existing contractual arrangements or new contracts can be set aside by the voluntary arrangements, depend inescapably upon the terms of the document we are now writing into the law.

The Bill prescribes those limits by reference to the policy set out in the White Paper, but when the Secretary of State deals with questions arising under subsection (5) he will be allowed to do so only by reference to the policy set out in the White Paper. He may say that that which is in the White Paper is defective, but that which is not in the White Paper will be of no effect. He may say as often as he likes that one kind of productivity agreement is right and that another kind is wrong, but when the time comes for him to answer questions referred to him in a real case he will not be able to rely on productivity agreement rulings which do not appear in the White Paper.

That is why the White Paper has either to be drawn up in a workmanlike fashion and comprehensively and effectively debated on a consultative basis by the House, or taken away and redrafted and then approved by the House, as was done with the previous Conservative Government's counter-inflation policy. Alternatively, it can be scheduled to the Bill and discussed in detail in that way.

The Secretary of State says that the voluntary policy needs the support of Clause 1, but what does Clause 1 say? It provides that the normal existing pro- ductivity agreements, whatever they may be, may be modified so far as the policy extends, but whatever the right hon. Gentleman may say in his private broodings, such agreements cannot be modified any further than that permitted by the clause. They cannot be modified any further than the White Paper, embodied by the clause, sets out. They cannot be modified any further even by the Secretary of State. If the right hon. Gentleman is confronted with a real case and it looks to him, in accordance with what he thought was the spirit of his agreement with the TUC, that a decision should be taken in one way rather than another, and he gives a ruling to that effect when there is nothing in the White Paper to support it, his decision and his ruling will be beyond his authority and wilt be ultra vires.

Let me take the Secretary of State through the lessons that he will painfully be learning, given the law that he will henceforth have to apply and interpret. Let me put to him another Latin proposition that may well be at the heart of what is put forward by Labour Members below the Gangway, namely expressio unius est exclusio alterius. It is said in the White Paper that equal pay is good and that an exception can be made for it, but if it is not set out in the White Paper that productivity deals are good whether before or after the three months, if it is not said that pension payments are good, and if it is not said that compliance with the fair wages resolution is good, the Secretary of State may huff and puff as much as he likes at the Dispatch Box but he will not be able so to interpret the voluntary policy with which he is seeking to override existing legal arrangements. That is at the heart of his difficulties.

An example has been given of an employer being sued for non-compliance with the fair wages resolution. The Secretary of State has said that he would be able to say that that does not matter, as it is in accordance with the policy. That is not so. The right hon. Gentleman will be able to modify existing contractual arrangements only if that power is set out in the White Paper scheduled to the measure.

The Secretary of State said—this is an illustration of his dilemma—" Once you start trying to define these matters you are on the way to legal complexity." But he still does not appear to realise that that is what he has started. He is on the way to having drafted a pay code. It is a very badly drafted code, hut it is that document and only that document that can vary existing contractual arrangements.

I think that we have discovered that there is a hole in the code, in that it appears not to deal with pension arrangements. That may be because it has not been the subject of consultation with the Secretary of State for Social Services. It has not been thought necessary to consider the impact of this legislative act— this pay code—upon pre-existing legislative activities of another Department.

I think we are entitled to ask how far this bizarre piece of quasi-legal fantasy has been the subject of consultation with any of the Law Officers. It seems inconceivable that any Government properly advised by the Attorney-General or Solicitor-General could dare to bring before the House an astonishing proposition of this kind. I can understand that the Law Officers may be heavily preoccupied elsewhere in seeking to enjoin certain parties not to publish certain documents, but those activities are taking place in another place. In a matter of this kind the Committee is entitled to call for the attendance of the Law Officers during this debate to tell us exactly how they construe these astonishing propositions.

The right hon. Gentleman has said that equal pay is an exception. Why is it to be an exception? Why are existing contractual arrangements entitled to be overridden in favour of equal pay? Of course, equal pay is part of the statutory policy and is set out in black and white in the annex to the White Paper.

The Secretary of State said that if we go on like this we shall end up with a much more complete incomes policy. He said that the Government do not want to embark on that, but the embarkation has taken place. The Secretary of State is on this great ship labelled "Incomes Policy". He is captain of the ship.

He says that the Government want voluntary arrangements to prevail, and that the only obstacles are existing contracts; therefore he says that it is necessary for those existing contracts to be overridden and rewritten in favour of voluntary arrangements of the kind that the Government intend should prevail.

The question is: which voluntary arrangements? He cannot invent them as he goes along. People will be going to the courts and saying, "I have a contract and I am entitled to enforce these rights arrived at by collective bargaining", under a new or an old productivity agreement. The courts will say, "Certainly you are entitled to do so." Someone will say, "We must ask the Secretary of State whether it is right or not", and the Secretary of State will be asked to say whether this, that, or the other existing legal right is or is not overridden by his so-called voluntary arrangements. If he seeks to uphold the right that he wants to uphold, or to override a right that he wants to override, it will be his whimsy for the most part. If he does that, and cannot find a prop for his decision in the White Paper—the pay code which is being given statutory powers by this statute—his decision will be of no avail.

The Secretary of State, with every phrase that he utters, reveals the increasing morass into which he is getting. He said that the Government cannot make concessions to the point made by the hon. Member for Liverpool, Walton (Mr. Heffer) in favour of productivity agreements, because that would be creating a loophole. He does not sound like a Minister in favour of a voluntary policy but like a Treasury Minister bringing a taxing code before the House. A loophole in what? A loophole in a taxing statute, which is what this is. To call that a voluntary policy is absurd, and one comes to the particular example of the productivity agreement referred to by the hon. Member for Bolsover (Mr. Skinner) in the coal industry. We have looked in the White Paper and cannot find there any reference to productivity agreements, so that anything the Secretary of State says about the impact of this policy on productivity agreements, whether bargained before or after 1st July—three months before or afterwards, or six months before or afterwards—is in vain and without point.

The right hon. Gentleman will recollect the case instituted some years ago, I think, in the Mansfield County Court, in which his then right hon. and learned Friend, now Lord Gardiner, was instructed to appear for the National Association of Colliery Overmen, Deputies and Shotfirers in arguing the scope and scale of their contractual rights against the National Coal Board. Suppose that kind of case were to be initiated in just such circumstances in two, or three, or five, or six months' time, and the people concerned said, "This is our right under the productivity agreement". having bargained for it earlier in the year. There would be nothing in the White Paper, and therefore nothing in the statute or in the power of the Secretary of State, to enable him to overrrule the result of those contractual proceedings.

Mr. Daniel Awdry (Chippenham)

The right hon. Gentleman says that if the Secretary of State makes a decision which is clearly ultra vires he can be overruled. Will he explain to the Committee in what way he would be overruled? On the face of it, the Secretary of State has the final decision.

Sir G. Howe

I am grateful to my hon. Friend for his intervention. The Secretary of State will be overruled. He may think, without the advice of the Law Officers, that he may do so, but he is under a delusion. The Secretary of State does not escape from the surveillance of the courts. Clause 1(5) provides that Any question arising under this section… shall be referred to and determined by the Secretary of State. In this country there is virtually no such thing as a judge-proof statute. The Secretary of State may remember, with a sense of irony, the provisions in the Industrial Relations Act, which said that if it appeared to the Secretary of State for Employment that there was doubt as to the support of members of a union for strike action, he could order a ballot, and so on. That might have looked like a judge-proof decision, but it was not. It was tested closely and thoroughly up to the Court of Appeal. In the same way, any decision which the Secretary of State or his—currently—100 extra staff but—shortly—1,000 or 2,000 may care to make under that provision will be challenged in the courts. The courts will say "What is this policy? What are the limits set out?" They will be driven to look in the White Paper, and they will say, "We see here a reference to equal pay, but we see no reference to the right of people to make pension payments and no reference to the right of productivity agreements to survive. The Secretary of State has wholly misconceived his powers and misunderstood his position. He does not appear to appreciate that he is operating a statutory policy. If that is the position, he must operate it within the provisions set out in the statute."

That is the way that this parliamentary government, which is or used to be so much cherished by the Secretary of State, works. What he says makes no difference to the framework of the law. That is why his answer to my hon. Friend the Member for Somerset, North (Mr. Dean) about the scone of new or improved pension schemes took the matter no further. The Secretary of State says, "We wish to do our best for new schemes. If what we said yesterday evening was not good enough, we shall look to see whether further protection is required." But what protection? There is no protection given by the right hon. Gentleman's utterances yesterday. Until something is written into the provisions of the White Paper, there is no protection for the advancement of the policy adopted by the Secretary of State for Social Services.

This is the central argument underlying our debates so far, and it remains completely unanswered. This is a profoundly disreputable way for this or any other Government to proceed.

Yesterday evening, the Opposition did not stand in the way of the Second Reading of this Bill. The Government having willed their way towards this kind of statutory policy, we are not at this point challenging it in principle. But we say that this is abhorrent nonsense. This will not work. It is not in accordance with our constitution. It will not secure the position of the Secretary of State. It cannot be described as a framework for a voluntary policy. It can be made more credible and subject to sensible discussion if this amendment is accepted, if the White Paper is scheduled to the Bill, and if we are then able, as we were in 1966, to discuss that schedule. Without that, the Secretary of State is presenting a policy based on fraud. I do not mean that in any criminal sense. But it is misconceived in that it will not stand up. It will not survive.

It is for that reason that the right hon. Gentleman should by now be inviting the Law Officers to come before the Committee to say exactly what their view of this matter is. We are entitled to call for the advice of the Law Officers on matters of this kind. We want to know their view of the extent to which this is or is not a statutory policy and the extent to which the Secretary of State is or is not right in claiming the powers which he is arrogating to himself. Indeed, we would like to know whether the Law Officers were consulted about this astonishing document.

9.30 p.m.

Mr. Mikardo

I want to address myself for a short time to Amendment No. 101, the effect of which is to delete subsection (2) of Clause 1. That subsection interests me a great deal.

When we were discussing the previous group of amendments, my right hon. Friend the Secretary of State told us what he thought the attitude of the General Council of the TUC would be to that group of amendments, and particularly to Amendment No. 7. His estimate was that that council would not have approved it. Has Clause 1(2) been discussed with the General Council? If so, what does it think about it?

If ever a blank cheque were given to a Secretary of State, this is it. On Monday, when we were talking about the White Paper, several hon. Members spoke about the second unpublished Bill as being a blank cheque. However, subsection (2) is even blanker a blank cheque, if a blank cheque can be blanker than blank.

I invite the Committee to look at what it says. We have had great arguments about the contents of Command Paper 6151, the £6 limit a week and all that. The right hon. and learned Member for Surrey, East (Sir G. Howe) has just been addressing us on the question whether "all that" should be written into the statute. Unless I have misread subsection (2)—and I hope that my right hon. Friend will correct me if I have—it says that the Secretary of State, after going through the comedy or prologue of pretending that the initiative has been taken not by him but by Her Majesty, at any time can change that £6 a week. He can substitute another limit for that limit. He can add to the limit.

I do not know what is meant by limits in addition to or in substitution for those so imposed". I can understand what "in substitution for" means. It means that we delete £6 and insert £4, £7 or whatever the amount may be. That is the substitution. However, what is meant by "limits in addition to"? Does it mean that we keep the £6 but that it goes only to certain classes of workers and not to other classes of workers? If it does not mean that, what does it mean other than what is meant by the words "or in substitution"?

I shall deliberately take an extreme case which no one expects to happen in order to illustrate my point, because often points can be illustrated by taking them in extremis. Let us suppose that Her Majesty gives her assent to this measure just before we rise on 8th August, and then, on 10th August, along comes the Secretary of State with a document from Her Majesty and makes a statutory instrument reducing the £6 a week to £2 a week. He will tell us—and it is true —that he cannot get away with that unless Parliament approves it within 28 sitting days. However, the twenty-eighth sitting day after 10th August is 10th November—three months later.

Let us also suppose that after the week commencing 1st August a group of workers puts forward a claim in good faith to its employer for an increase of £6 a week and the employer says "I think £5 is better", and they then have a little haggle over whether it should be £5, £6 or something in between. On 10th August along comes the Secretary of State and under his powers under subsection (2), alters the £6 a week to £2 a week. The employer would then have to say to these chaps, "Sorry. I was prepared to give you £5, although you wanted £6, and we might have settled for £5.50 but now I cannot do anything about it. I am restricted to £2".

I repeat that this is deliberately chosen as an exaggerated example, but even if one takes away the exaggeration the situation still exists that a group of workers, in good faith, can be negotiating for an increase amounting to a figure not exceeding £6 a week, and in the middle of that negotiation along can come the Secretary figure. I wonder whether the General of State and reduce it to some other Council of the TUC was seized of that point. If my right hon. Friend tells me that its members were and that they were enthusiastically in support of the idea, of course I shall believe what he says, but I shall be just a shade surprised.

Mr. Budgen

I wonder whether the hon. Gentleman would care to comment on one other point. I assume that the Government hope that this piece of legislation will stay on the statute book for a long time. It might then be used in the future by a Tory administration. I wonder how the hon. Gentleman would feel if in the future a Tory administration, instead of having discussions with the TUC, had discussions with only the CBI and, in the way he suggests, reduced the limit to no increase at all. How would the hon. Gentleman and his hon. Friends feel then?

Mr. Mikardo

When the hon. Gentleman reaches my advanced age he will stop thinking about the possibility of Armageddon, and for that reason I do not propose to cloud my thinking by taking into account the possibility of a return of a Tory Government. The subsection is bad enough without that. Let us deal with the subsection as it is at present. It is possible, however, that my right hon. Friend may not be in his present office all the time. He may become Lord Chancellor and someone else may be the Secretary of State. That Secretary of State may, as the hon. Gentleman says, vary the £6 to nil pounds or 50p, or may limit any addition—not in substitution, which would be a change, as I have said—to only X, Y or Z groups of workers, or something like that.

I repeat that if my right hon. Friend says that his colleagues on the General Council of the TUC are seized of this point and were delighted with it, I shall believe it but I shall be just a shade surprised. I also wonder whether they have all gone out and told the members of their unions that they have agreed to buy this pig in a poke.

The plain fact is that as long as subsection (2) is there, this is not a Bill limiting wage increases to £6, irrespective of what the White Paper says. This is a Bill limiting wage increases to whatever figure the Secretary of State chooses at any given moment, not exceeding £6 a week.

The only description of subsection (2) is that it is a formula for "Think of a number; you can halve it after that if you like." It is much too arbitrary and much too blank. The poke in which the pig is wrapped is too deep and too impenetrable. On those counts I find it difficult to see—

Mr. Walter Clegg (North Fylde)

Does the hon. Gentleman think that his right hon. Friend the Secretary of State has told the TUC General Council that Parliament cannot amend any measure brought in under subsection (2)?

Mr. Mikardo

I dare say that my right hon. Friend will deal with that point. He can obviously deal with it much more authoritatively than I can.

If the Bill means what I think it means, it seems to me so outrageous that I cannot believe that the Government have introduced it. Therefore, I look forward to my right hon. Friend telling me that I have got it all wrong, that I am up the wall, and that it means something entirely different. Believe it or not, I shall welcome his doing so.

The Temporary Chairman

Mr. Page.

Mr. John Page (Harrow, West)


Mr. Graham Page

On a point of order, Mr. Williams. My hon. Friend the Member for Harrow, West (Mr. Page) raised a similar point of order last night when the name "Page" was called: I take it that you meant Mr. John Page.

The Temporary Chairman

Yes. I did not even see the right hon. Gentleman rise. I am sorry.

Mr. John Page

It is admirable how much attention the Pages pay to this Committee and the Bill. They are fresh and clean, and ready to have well-informed information written on them, something that we have not so far received from the Secretary of State.

Will the right hon. Gentleman tell me first whether, if the Bill went through unamended, there would be anything to stop any employer from paying any employee any sum that he wished? The only sanction available to the Government immediately is that which is already threatened, that if the employer happen to be the head of a nationalised industry he gets the sack. But legislation is not needed for that.

Therefore, we turn to the document which we propose in the amendments should be annexed to the Bill. Does the annex to the White Paper have the same standing as the rest of the White Paper? It says that it is an extract from the TUC document "The Development of the Social Contract", but it says at the top that it is an annex. Will the words and the sentiments of the annex have the same force in the minds of the Secretary of State and anybody else as the rest of the White Paper?

It occurs to me that the White Paper is the annex to the extract from the TUC document, rather than the TUC document being annexed to the White Paper. I have always thought that the Cabinet were marionettes.

If the White Paper and the annex are of exactly the same repute, with the exception of the brave dash for freedom when the Government increased the top incomes limit from £7,000 to £8,500, it still leaves a large number of inconsistencies, some of which were pointed out by my right hon. and learned Friend the Member for Surrey, East (Sir G. Howe) in his opening speech.

[Mr. OSCAR MURTON in the Chair]

9.45 p.m.

As an ordinary, simple business man I went through the White Paper this morning with members of my company. They could not understand where various agreements and methods of payment in our company are applied or not applied for the purposes of the White Paper. It seems —this was brought out during our previous debate—that the Secretary of State has no knowledge—and it is not in the Bill or the White Paper—of productivity agreements, commissions to salesmen and that kind of thing.

We have, therefore, to ask the right hon. Gentleman to be much clearer and to accept many of our amendments so that the White Paper is made more explicit. Unless it is, it will be quite useless to those who try in good faith to interpret it. I thought that Clause 1(5) gave the Secretary of State the privilege of making any interpretation he wished on any matter to do with remuneration. My right hon. and learned Friend the Member for Surrey, East says that this is not the case. I would like the right hon. Gentleman to say exactly what he feels his powers are in subsection (5).

Mr. Powell

There is a certain pall of sadness which seems to hang over the series of debates which has now started on the Committee stage of this Bill. It is the sadness of regret, the sense of a loss irreparable and immense. That loss is the loss of what would have been said in this Chamber incomparably to the destruction of this Bill if only the right hon. Member for Ebbw Vale (Mr. Foot) had been sitting two or three yards further south.

One can hardly bear the agony of imagining what has been torn from the annals of the House of Commons and Parliament, and indeed the history of liberty in this country, by the fact that we shall never, at any rate not at this crucial stage of events, hear what the right hon. Gentleman would have said about Clause 1. Tragic indeed it is that the cause for which Hampden died in the field and Russell on the scaffold, and which the right hon. Gentleman has so often illustraded and expounded, is to lack that magical touch being brought to bear upon what the Committee is expected to accept in Clause 1.

We see now what a great mistake the Prime Minister made in the formation of his Cabinet. Some of us were inclined to think that it was a master stroke of a master conjurer that the right hon. Member for Ebbw Vale of all people should have been placed in that office. We now realise that of all right hon. and hon. Gentlemen, he is the one worst equipped to succeed in piloting this Bill through the House and Committee. The right hon. Gentleman knows this. It was evident in every repetitious sentence of his in the previous debate. He knows perfectly well the outrage he is committing in this Bill upon the principles of parliamentary democracy and upon the protection of the subject from the arbitrary powers of the executive.

What is needed in order to give this Bill its best chance is a combination of the Minister of Agriculture, Fisheries and Food and the Lord President of the Council. There, indeed, is a team—resistant not merely to argument, but to comprehension. As it is, those of us who lack the superb talents of the Secretary of State for Employment will have to do our best to place on record and bring to the attention of the parliamentary conscience what it is that we are doing.

The business of Clause 1 is for Parliament to legalise the breaking of contracts. That is the delicate and fearsome operation to which Clause 1 is directed. It would be elementary that, in so intervening to break contracts freely entered into between private citizens, this House should be specially jealous to define with the utmost clarity and limitation the conditions in which it believes that is unhappily necessary and to set down in the statute and in terms familiar to the process of interpretation the exact circumstances in which, temporarily, that departure from the sanctity and validity of contracts is to be authorised.

Instead, there has been a cobbling together of clauses of the Bill by—I was going to say emptying into it, but not even that has happened—making reference in it to what is not even exactly a document, for I believe that the right hon. and learned Member for Surrey, East (Sir G. Howe) actually credited this clause with a greater precision than it possesses.

The words of subsection (1) are: the limitation is no greater than necessary —there is already some act of judgment involved in that— to keep the remuneration within the limits". It does not go on to say these are the limits prescribed or set down in the Command Paper or anywhere else. It says, "imposed by the policy". We have discussed in the House this policy for wages and prices and alternative policies. It is only the limits imposed by the policy set out in the White Paper which are to determine—according to this drafting —the circumstances in which contracts can be broken with impunity. There is a yet further stage of uncertainty interposed between the Bill itself and the document which the citizen must be careful to acquire, as well as the eventual Act of Parliament if, unfortunately, it is passed, before he can ascertain in what circumstances he or his employer can void, break or fail to comply with an existing contract.

It is an outrageous piece of drafting in any circumstances, let alone when we are doing this sort of business, that a mere reference to what is necessary to keep within the limits imposed by policy set out in a White Paper should replace what ought to be precise statutory specification.

Of course, the Secretary of State for Employment is not so foolish or self-deluding as to suppose that by producing a bad statute he is succeeding in operating a non-statutory policy. This of course is a statutory policy, but it is bad statutory policy which has to be implemented in terms of a statute outrageously and un-constitutionally drawn.

But our difficulties increase when we summon up courage to make the reference which we are invited to make by the clause. If we turn to the section headed in heavy type "THE LIMIT ON INCOMES" we find the requirements which should be observed by those determining pay. We are told that they are in the annex, the TUC document, but we would be greatly mistaken if we thought that we would there ascertain the limits imposed by the Command Paper, let alone the limits imposed by the policy set out in the Command Paper. Paragraph 8 says The Government recommend only one modification of this guidance. They recommend that the upper limit should be £8,500 rather than £7,000. But who are they recommending to, and is the recommendation the limit imposed by the policy set out in the Command Paper? These are the questions which arise in the interpretation of words imported under the cover of a statute. We are presented with a proposition which speaks first of requirements which should be observed and then goes on to say that the Government recommended a modification. We are not told whether whoever they recommended it to has accepted the recommendation.

But in paragraph 8 they accept certain propositions. I think that the Secretary of State was looking for some of them earlier, but in the wrong place. They are in paragraph 8. The Government accept certain points which are not set out in the annex to the White Paper. The difficulties are even greater therefore than those which the right hon. and learned Member for Surrey, East so impressively outlined. He concerned himself almost exclusively with the terms and silences of the annex, but of course the reference in the clause is more comprehensive than that.

It would surely therefore be the object of any hon. Member going about his legislative duty to attempt to substitute for what is in subsection (1) words which at any rate shall form part of a statute, which are therefore capable of being considered in Committee like any other part of a statute, are capable of being amended in Committee or on Report, and are such as would be put into a statute by a parliamentary draftsman as being capable of normal interpretation by legal advisers and by the courts. But the alacrity with which we set to work on that task—and the hon. Member for Cirencester and Tewkesbury (Mr. Ridley) bent his energies to that—is very much blunted when we read further on in the clause. Subsection (5) says Any question … whether any remuneration exceeds the limits mentioned therein shall be referred to and determined by the Secretary of State. I note in passing that the limits mentioned therein are not the limits mentioned in the annex. They are the limits mentioned in subsection (1), namely the limits imposed by the policy set out in the Command Paper. Therefore, in proceeding to obtain whatever writ it may be for which those dissatisfied with the determination of the Secretary of State will appeal to the courts, there are several more hurdles to be surmounted before—I do not say before one can be sure of anything—

It being Ten o'clock, The CHAIRMAN left the Chair to report Progress and ask leave to sit again.

Committee report Progress.

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