HC Deb 29 July 1975 vol 896 cc1692-729

1.0 a.m.

Mr. Ridley

I beg to move Amendment No. 25, in page 1, line 6, after person', insert: 'currently in receipt of more than£3,000 per annum'. I do so in order to give the House the opportunity to consider whether it wants the policy to apply to the less well paid. I think that£3,000 a year is about the average income at present, and the amendment seeks to exclude for the policy those earning below that average national income.

That would have two advantages. First, it would greatly restrict the number of people to whom the policy would apply and thereby reduce the mischief which the policy will cause to the smooth and effective running of the economy. Secondly, it is a gesture towards the less well paid. Labour Members who have expressed their keen concern that the lower-paid should increase their remunerations will now have the opportunity to support the amendment if they so wish.

I warn them that I suspect that the effect of the amendment being accepted and, as a result, the policy not applying to people earning less than£3,000 a year. would be that they would get less than if the policy applied to them. I suspect that there are many people on low incomes who will receive£6 a week as a result of the policy. That figure will be taken to be the norm rather than the maximum, and it will always be argued that people should get the£6 and no less. If no policy applied I suspect that, bearing in mind the current state of the economy and the labour market, the pressure of demand for labour being slightly reduced, there would be many cases where people earning£3,000 would not get as much as a£6 a week increase.

I have mixed feelings about this proposal. I am not sure that the amendment would be of very great assistance to the lower paid. The Socialist regimentation of incomes, which is so dear to the heart of the Secretary of State, would perhaps result in the£6 increase being paid across the board, whereas the amendment would leave it to collective bargaining which might not be so fruitful for them.

As one who believes fervently in leaving these matters to collective bargaining, I feel that it would be an improvement to the Bill if half the population were able to avoid its provisions. As a follow-up I should be glad to move a second subsequent amendment which would let out the other half as well.

I must warn Labour Members that if accepted the amendment might not lead, in current economic conditions in which there is a slackening of demand, to those earning less than£3,000 a year racing ahead in the level of pay claims that are accepted.

Mr. Lawson

Surely my hon. Friend is being over-modest. Is there not the risk, in the present economic climate, that£6 flat would cause considerable unemployment among the lower-paid? Would the amendment not free the lower-paid from the£6 limit and would this not lead to a reduction of unemployment among them?

Mr. Ridley

I have the greatest respect for people who fully understand the consequences of the claims which are put in on their behalf, whether they are the higher-paid, the average-paid or the lower-paid. There has been an almost unanimous support of high wage claims recently, because people have believed that in the current economic conditions they can get the higher wages without damage. They are not getting higher wages—often they are doing no more than keeping their current real wage through getting a high money increase.

If at any stage the trade unions, the Government, through this sort of legislation, or the Secretary of State, through his determination from on high of what wages should be, were to ask for claims to be met which were higher than the economic situation could accommodate, my hon. Friend the Member for Blaby (Mr. Lawson) would be right and the consequences would be unemployment. However, the ordinary working people are far too clever to be taken in by this.

One can envisage a situation in a highly deflated economy in which they would repudiate claims put in on their behalf and ask not to have them paid if this were a way of preserving their jobs. This has already happened in Leicester in the textile industry and it reinforces my belief that the market is the best determinant of wages and that workers understand the true pressures of the market very much better than the right hon. Gentleman the Secretary of State.

Mr. Foot

rose—

Mr. Ridley

Does the right hon. Gentleman wish to interrupt me? That is all I wish to say.

Mr. Foot

I was not interrupting the hon. Gentleman, I trust. I just had the hope of bringing the debate to a close. The hon. Gentleman was good enough to say at the beginning that this was, at least, a semi-wrecking amendment, and that if he had the chance he would like to introduce the other half as well. I should have thought that on those grounds it would have been possible for us to discuss this amendment briefly.

He said that, first of all, he was possibly introducing it in order to assist the low-paid. We were a bit suspicious when he introduced it on that account, but he withdrew the proposition later because he said that he did not believe the policy would assist the lower-paid. One of the purposes of the Bill is to assist the lower-paid, but we are unlikely to convince each other on that point at this stage, I am sure.

Therefore, I hope very much that after this discussion, in which we have exhausted this aspect of the matter, we can move on to some other questions. I am not being disrespectful to the hon. Gentleman. I always listen carefully to everything he says. However, I do not believe that we can carry the debate much further on this item. Therefore, I hope that we can move on to some other amendment.

On those grounds, but in particular because the hon. Gentleman says that it is a semi-wrecking amendment, I hope that the House will reject it.

Mr. Ridley

With the leave of the House, Mr. Deputy Speaker, I shall reply to the right hon. Gentleman. The fact that it may be a semi-wrecking amendment should, indeed, commend itself to many hon. Gentlemen. Many hon. Members in this Chamber would like to see the Bill wrecked, and for that I make no apology. I should have thought that the right hon. Gentleman was probably one of those who would like to see the Bill wrecked, which may account for the extraordinary cursory and almost too scanty reply which he gave to the points that I made. He claimed that the Bill was to help the lower-paid. I do not think that many of his hon. Friends agree with that, and I am certain that the lower-paid do not agree with it. Perhaps it is better to put the matter to the test and to allow this amendment to go through so that, whether it is in their interests or not, can be determined by what happens in the market.

I am sorry that the right hon. Gentleman seems to be tiring. I know that he has had a tiring time and wants to hustle on from this point. He has had a few days to recover from the last Session and I pay tribute to his diligence in listening to our debates. However, I hope that he will not feel that the way to make progress is not to answer the debates at any length. Although I shall seek to terminate this debate, I assure him that it will not be because of the eloquence and persuasiveness of his reply but out of consideration for his health, which I hold dear.

Amendment negatived.

Sir David Renton (Huntingdonshire)

I beg to move Amendment No. 45, in page 1, line 8, at end insert "paragraphs 5, 6, 7, 8, 14, 18, 19 and 24 of".

This is certainly not in any sense a wrecking amendment. Indeed, it has the constructive purpose of attempting to save the Government from some embarrassment. The embarrassment which many hon. Members on both sides of the House feel is suffered by the Government is that they have invoked in Clause 1(1) the whole of their White Paper, all 48 paragraphs plus an annex of 10 paragraphs, when only eight paragraphs are relevant to the power which the Secretary of State will have to exercise in determining what limits are imposed by his pay policy. That is the power which he will exercise under Clause 1. The para- graphs concerned are paragraphs 5 to 8 inclusive and 14, 18, 19 and 24—as set out in the amendment.

I assure the House that in naming those eight paragraphs as being the relevant paragraphs, I have erred if anything on the side of generosity towards the right hon. Gentleman. The effect of those paragraphs happens to be set out in Amendment No. 47, which has not been selected for debate. All that I ask, however, is that hon. Members glance at it, merely for information, in order to see what the effect of those paragraphs would have been had they been set out in the best attempt I could make at statutory form. I refer to that amendment partly in the hope of keeping my speech short. I do not propose to say more about those paragraphs than that.

The paragraphs set out in the amendment are the only paragraphs to which the Secretary of State would have or might have to turn in making the determinations which he alone in the first instance would have to make under Clause 1. But what about the rest of the White Paper which the right hon. Gentleman has invoked. It cannot possibly be relevant, because it consists either of very general statements about the economy, which we find in paragraphs 1 to 4, for example, and I think in paragraphs 47 to 48, or a mass of information which has nothing to do with pay limits—information, for example, about the Price Code, which we find in paragraphs 29 to 37, about reserve powers, in paragraphs 25 and 26, and about employment in paragraphs 38 to 42. This is something quite distinct from the pay limits.

However, the most extraordinary thing of all is this: the right hon. Gentleman surely must realise that he has already brought into statutory form some parts of his White Paper. For example, paragraph 15, which deals with the power to reduce certain rate support grants to local authorities and other paragraphs that go with it have been written into Clause 4. Therefore, there is in effect repetition between the White Paper and the terms of the Bill concerning that matter.

Yet the White Paper is invoked only in relation to Clause 1. This is a most extraordinary situation. It is a piece of drafting whch is most unusual. We have challenged the right hon. Gentleman about it from the drafting point of view, and we should be able to take some pride in the method of law-making in which we indulge, quite apart from the purposes of the law-making.

1.15 a.m.

If the amendment, which I put forward in a constructive spirit, is accepted, the Government will be spared acute embarrassment, because the annex to the White Paper will not be invoked. There are good reasons for not invoking it, namely, that in several respects it contradicts the terms set out in the 48 paragraphs of the White Paper itself. For us to have invoked in a statute a White Paper which has as its annex something which contradicts it is piling absurdity upon absurdity.

Therefore, I hope and trust not only that the right hon. Gentleman will accept the amendment but that he will thank me profusely for having moved it.

Mr. Foot

I should be only too happy to thank the right hon. and learned Gentleman if I had been able to discover the good reasons why I should. But I cannot come to that conclusion. In one of his last sentences he illustrated the reason why it would be impossible for us to do so.

Although the right hon. and learned Gentleman is seeking, as he says, to clarify the basis on which the policy is to operate, it is the fact, as we have said on many previous occasions, that the White Paper and the annex must be considered as a whole. To separate the annex from the White Paper as he suggested would lead to great difficulties. We regard the annex as an essential part of the White Paper. The Bill refers to the White Paper as a whole. The selection of certain paragraphs, while intended to produce precision and greater clarity, would not have that effect. Under the right hon. and learned Gentleman's suggestion, the TUC guidance in the annex would be abandoned.

I know that the right hon. and learned Gentleman argues that there are other references to many of these matters in the White Paper, but there are certainly some aspects of the policy which are specifically referred to in the annex, and if the annex were lopped off the White Paper the confusion would be very great.

I could cite—but will not do so at any length, because the House wants to proceed fast with the Bill—several of the debates that we have already had when we have quoted the annex, and when it would have been difficult to proceed if we had been unable to do so. I cite only the debate on pensions and the reference to non-wage benefits. That is one illustration showing that it would be very difficult to divorce the annex from the White Paper.

Sir David Renton

Can the Secretary of State name a single point on which the annex adds anything to what is written in the 48 paragraphs of the White Paper?

Mr. Foot

I could. I have cited one already—the reference to non-wage benefits in paragraph 7 of the annex. Part of our discussions on pensions turned on that, and certain other debates have turned on it. I could cite several other items in the annex which, although they are referred to in some respects in the White Paper, are not covered in precisely the same form.

The right hon. and learned Gentleman says that there is a contradiction—

Sir David Renton

I see the right hon. Gentleman's point, but he overlooks the fact that Clause 7 defines remuneration. That having been done, he cannot—by quoting the annex at anybody, or by anybody quoting the annex at him, or at a judge—go beyond the terms of Clause 7. Clause 1, with which the right hon. Gentleman is most immediately concerned, is governed by the definition of remuneration contained in Clause 7.

Mr. Foot

I understand that. In his amendment the right hon. and learned Gentleman seeks to separate the annex from the White Paper. He argues that the annex is unnecessary. The annex is necessary. If we left it out, certain provisions of the White Paper would not be covered.

The right hon. and learned Gentleman claims that there are contradictions between the annex and the White Paper. There is a difference between the figures of£8,500 and£7,000, which are referred to in the White Paper. There are differences of emphasis, to which reference has been made in other debates, in that the annex deals with one aspect of a subject while the White Paper deals with another aspect.

Reference is made to the starting date of the operation. The annex says that the policy will start on 1st August. However, the White Paper outlines certain transitional arrangements. We explained the difficulties of initiating a policy of this kind and why we believed that it was necessary to have the additional explanations in the White Paper beyond what was included in the annex.

The right hon. and learned Gentleman's amendments illustrate a different approach to the proposition. We regard this overwhelmingly as a voluntary policy. The annex sets out the proposition, which is backed up in the White Paper, which was made by the representatives of the General Council of the TUC. That policy is supported by the general council and we hope that it will be supported by congress. Those representatives set out the voluntary policy which they are prepared to support. We have set that out for the country. We have set out before the House what we think is the minimum required to ensure that that policy can be carried into effect so that its fundamental voluntary character can be retained. That is underlined when the annex says that the TUC will oppose any settlement in excess of£6 per week.

The TUC has said that it is prepared to throw its weight behind this and that it will support that policy. That is not a legal operation. It is set out in a White Paper and an annex describing the situation. We are trying to enlist the support of the law, where essential, to assist that voluntary policy. If we agreed to the right hon. and learned Gentleman's amendments we would create great confusion. Nobody would know the Government's attitude to the annex as expressed in the White Paper.

We have covered a considerable number of these aspects in previous discussions. Even if I have not been able to convince the right hon. and learned Gentleman, I hope that he will be prepared to withdraw the amendment and to allow us to proceed with the Bill.

Mr. Lawson

If it is the right hon. Gentleman's intention to make the volun- tary aspect of this legislation as strong as possible, why does he not accept my right hon. and learned Friend's advice and drop paragraphs 25 and 26 from the reference in Clause 1?

Mr. Foot

References have been made to those paragraphs, and I know what they contain. As I said, the White Paper stands as a whole with the annex. We are discussing not the enticing proposal made by the hon. Gentleman but the proposition of the right hon. and learned Gentleman that we should drop the annex. In my opinion, that would be a catastrophe. It would ruin the whole shape of the proposition. I hope, therefore, that the right hon. and learned Gentleman will he prepared to withdraw the amendment.

Mr. David Howell

Despite the moderate way in which the Secretary of State has rejected the amendment, I think it is a pity that he has done so. Although he said that it would be confusing to add these additional paragraphs to the Bill. my view is that it would help to clarify an increasingly confused situation.

A feature that we have all observed during our debates on the Bill last week and this week is that the more that is said from the Government Dispatch Box the more vague and obscure become the criteria by which those who are affected will have to operate. We have moved miles from the day when the Prime Minister said that this was a policy with no exceptions. It is a "no exceptions" policy, in which the exceptions are multiplying day by day. Every hour that goes by we hear new views from the Secretary of State. Tonight he told us how the occupational pension schemes would he affected. Although the information to some extent was welcome, it was not enough. We wanted more. This is a new development. It does not appear in the White Paper or in the Bill. It appears only in Hansard, and has been read out from a brief which the Secretary of State and his right hon. Friend the Secretary of State for Social Services have cobbled together. That is a new part of the regulations.

If we were able to incorporate these paragraphs in the Bill we should have a good chance of freezing the process of liquefying the gaseous element in the Bill before it floats away into the ether. and that would be a great advantage. As for the matters not included in the amendment, there is nothing but gain from the Secretary of State's point of view in leaving them out. The reserve powers—the secret powers—are thankfully put to one side, complete with the Government's undertaking that they will not hesitate to bring them in, although we have seen a great deal of hesitation and there will be a great deal more before they are brought in.

The annex is the core of the matter to the Secretary of State. He places enormous emphasis on it because it was drafted by the TUC. He has made no secret of his belief that this is the binding link in the relationship between the Government and the representatives of the TUC General Council that holds the whole policy together. It is a curious innovation that an annex should be written in by a party—not a main party —to a national policy of this kind.

The TUC possibly represents up to 10 million work people, but there are another 14 million work people in the country, and there is no annex they can put in. If we are to have the principle of legislation by annexes put into a White Paper which has semi-statutory implications, perhaps we should go the other way and say that the 14 million work people who are not in workers' associations, management associations or United Kingdom unions should have their annex in the White Paper. In that event we would be able to say with accuracy that this was a policy based on national consent and not only on the consent of the TUC, which represents two-fifths of the working population. However, that would be a lunatic development. That reflects the extreme dangers of starting on this course.

This is not the way to legislate. It is not the way in which the Government can claim with any truth that they have a policy based on widespread consent. It is not widespread consent, although I accept that it is important consent. I do not believe that it justifies having an annex to the White Paper which has been given legislative implications.

I think that my right hon. and learned Friend's amendment is well informed. It would greatly improve and clarify a mysterious, unclear and increasingly obscure policy and piece of legislation. I say from the Opposition Front Bench that if my right hon. and learned Friend wishes to pursue this matter and press it to a Division I shall be happy to join him.

1.30 a.m.

Sir David Renton

With the leave of the House, I wish briefly to speak again on the amendment.

First, I deal with the Secretary of State's suggestion that I do not understand the purpose of his legislation. The trouble is that I understand it only too well. I ask the right hon. Gentleman to try to understand my point of view in my approach to his Bill. I, like everybody on both sides of the House, would prefer to see a voluntary policy succeed, but owing to the failure of the original social contract I am not hopeful of such a policy succeeding. Therefore, I am not surprised that the right hon. Gentleman has had to introduce a Bill. However, I am afraid that the Bill in front of us will be misunderstood. I consider that it is confusing, and I speak not without some experience of the law. In a constructive way I have tried to put forward a point of view which makes the Bill less confusing and gets over the contradictions between the Bill and the White Paper, and especially between the White Paper and the annex.

I am not one who believes that we can solve the problem of inflation by purely monetary means. I must make my own position plain on that matter. However, I feel that the right hon. Gentleman is doing neither one thing nor the other. He is not putting forward a voluntary policy, and he does not have a credible, effective statutory policy in spite of all the help we have given him to try to make his Bill more rational and effective. For those reasons I am not prepared to withdraw the amendment and I propose to divide the House.

Mr. Biffen

Very few things in this world are sure, but it is fairly certain that new ground was being covered by having an annex within the White Paper. What is significant about the amendment is that it seeks to exclude from the White Paper references to the entire annex.

There are two matters to which it would not be amiss for the House to address itself. First, it is clearly understood that the annex has every bit of authority equal to that of the remainder of the White Paper. This is an innovation, and we are entitled to know the status of the annex. Has it a gilt-edged White Paper status? I am also anxious to know why it was so important that the TUC's view had to be included in the White Paper. Is it due to the rather delicate and informal relationship and authority which the TUC exercises over its constituent unions? This is a point which will be of developing interest to the House as the policy proceeds.

I have always believed—I speak as a non-trade unionist and as a layman—that the effect of the authority exercised by the TUC General Council over constituent unions was modest and rarely implemented and that the reaction to the Industrial Relations Act was the one incident in recent history where the TUC General Council has taken sanctions to implement policy. Is this due to the informal relationship and disciplinary powers implicit in the TUC General Council? The Secretary of State for Employment has sought to try to suspend the authority of that majority vote by including it as an annex to the White Paper. These are matters that will be put to the test of the outside working world in the next few weeks. It would be nice to have the response of the Secretary of State to these questions here and now.

Mr. Foot

I would refer the hon Member for Oswestry (Mr. Biffen) to certain passages in the White Paper. I should like him first to look at paragraph 7, which expresses the relationship between the White Paper and the annex. I also wish to refer him to the last sentence in the first paragraph of the annex—which is one of the most important parts of the annex and which some people have overlooked.

We are told that the disciplinary powers of the General Council of the TUC are modest. That is true, and the TUC has rarely sought to exercise the disciplinary powers, except in the operation of the Bridlington Agreements on some occasions and in some other relationships, but they have sought to do so only over a restricted area. They have probably been wise to operate in that fashion.

Part of the novelty of the situation is that the TUC, having set out the guidelines which it thinks negotiators should observe, has also shown that it will oppose any settlement in excess of this figure. An important element in the situation, of course, is that the matter is supported by the TUC. That body is not saying that it will take disciplinary action to deal with the situation, but it is solidly behind the policy in a way which has not happened on any previous occasion. It can be an element of major importance in securing the success of the whole operation.

Mr. Ridley

Why is the annex printed as part of the White Paper? My hon. Friend the Member for Oswestry (Mr. Biffen) has asked a pertinent question, which the Secretary of State has not answered. It appears that it has been stuck on to the White Paper. Why has not a similar thing happened in respect of the CBI statement? Why is that not published as an annex? What bothers me is that it must have some legislative effect.

We are here talking about legislation. Clause 1 is governed by the White Paper, and the White Paper includes the annex, so presumably those pay rises which might be a breach of contract will be conditioned in some respects somewhere by the annex—or is that not so? If the annex were dropped from the White Paper and the amendment were accepted, would it make any difference whatsoever to the operation of the law, or even to the operation of the policy? If the answer is "No, it would not", one is bound to conclude that the annex has been put there only for some reason of window dressing, some public relations exercise, or, perhaps, even, some sop to the TUC, which asked for its annex to be published in the White Paper. What is the reason for it? This is what the right hon. Gentleman has not told the House. We understand why it is in the White Paper, but when if the White Paper is to be used as a criterion in the Bill it would see only logical to drop out the annex.

Mr. Biffen

Is it an unreasonable interpretation to believe that the annex is there for the purpose of trying to give to the TUC General Council some kind of moral backing for the flimsy authority that in the real world it exercises over its constituent unions?

Mr. Ridley

The authority is zero. I have always believed that to pursue the chimera of a TUC-CBI agreement is pointless and fruitless in the pursuit of an anti-inflation policy. It may have wider political implications, but who am I to deny the Labour Party its important relationship with the TUC? It is perfectly proper. But the idea that the TUC can discipline constituent unions is far-fetched in the extreme. The idea that the constituent unions can discipline ordinary working people is even more far-fetched, as we know from debate after debate, situation after situation, and wage claim after wage claim. If the union does not take the initiative of demanding the wages, the chaps will, and quite right and proper, too.

We have this extraordinarily weak linkage. Is it really true that by sticking the annex to the White Paper and referring to the White Paper in the Bill, this will in some way provide the sort of linkage that will inspire the man at the coalface, or on the shop floor, or in the docks, or in the factory or warehouse, to say, "We must not push for any more because the TUC document has been stuck to the White Paper as an annex and is referred to in Clause 1. That is enough for me. That proves to me that I must not try to sell my labour for its market value." Is that really the Government's thinking, or is there some other motive?

We are only trying to help the Government by clearing their own mind. We should much prefer to go to bed at this hour, but we feel we have a duty to do and that we cannot allow this extraordinary piece of legislation to be passed into law without fully understanding what it is about. If we do not understand it, how are the TUC, the constituent unions, the shop stewards or the workers on the floor to understand it and comprehend what they are supposed to do?

I hope that the Secretary of State will enlarge on the reason for the Government's action.

Mr. Ivan Lawrence (Burton)

Some of us practise in the courts and hear the judges say, a propos a statute, that this. this represents what Parliament has decided, in its wisdom. What Parliament appears to be about to decide, in its so-called wisdom, is that the White Paper should become a part of legislation, and that the annex to it should become a part of legislation. That would be all very well if what the Secretary of State has said is accurate, namely, that the annex adds something to the White Paper, and that the White Paper adds something to the legislation.

1.45 a.m.

The Bill is in conflict with the White Paper as appended, with the annex, because at paragraph 7 of the White Paper it clearly says 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. The£7,000 comes from paragraph 10 of the annex and is, to all intents and purposes, useless for the purposes of interpretation of the statute. They are not only useless words, but we, at the time we are striving together to produce a piece of legislation, know they are useless and that they should not be applied in preference to the indication the Government have given of their limitation of the upper limit for the£6 increase. So we are just churning out rubbish, utter and complete drivel, for the courts to inerpret in due course.

Regardless of the views of laymen, trade unionists or anybody else of the meaning of the code, in due course this legislation will be tested in the courts and judges will say: "This is drivel. I do not understand at all what it is intended for." Because it is drivel, this Government will get no credit for producing legislation of this kind.

I know that many hon. Members want to go home early but I should be failing in my duty as a lawyer—if I have anything to contribute, it is on the basis of my experience as a lawyer—and others would be failing in their duties as lawyers, if they did not from time to time point out how much drivel there is in the Bill and beseech the Secretary of State to come to his senses and realise that stuff of this kind which goes into legislation does no credit to Parliament or anybody else.

Question put, That the amendment be made:—

The House divided: Ayes 24, Noes 209.

[FOR DIVISION LIST 311 SEE cc 1783–86]

Question accordingly negatived.

Mr. Graham Page

I beg to move Amendment No. 52, in page 1, line 10, after '"(Cmnd. 6151)", insert: as increased by an increase (if any) in earnings that would apart from this section become payable by the employer after the commencement of this Act by virtue of a productivity agreement entered into at any time (but if entered into after the commencement of this Act only with the consent of the Secretary of State) in respect of increased productivity occurring before payment therefore."'. As this is plainly the most important amendment of the whole Report stage, I am glad to see such a large audience on the Government benches. The amendment seeks to relate pay rises to productivity increases. Neither the Bill nor the White Paper makes any attempt to take into account existing or future productivity agreement.

According to my rather naïve economics, inflation surely is too few goods for too much pay. I doubt whether we can cure inflation merely by keeping down pay and prices without doing anything about increasing productivity or production.

I suppose that I ought to draw a distinction between productivity and production, although for the individual employee I should think there is little real distinction in that. The fact is that there is absolutely no incentive in the policy laid down in the Bill, or in the White Paper which is imported into it, to increase production or productivity, and no employee will be any better off for doing better. Surely that cannot be the policy which the Government are putting before the House.

Figures which have been bandied about lately on the increase in earnings and the decrease in production show that over a recent period the country has been paying itself 40 per cent. more for producing 4 per cent. less. If, under the Bill, there is to be an increase of£6, which repre- sents an increase of 10 per cent., do the figures move in proportion? Are we going to pay ourselves 50 per cent. more for doing 5 per cent. less?

The Government's policy will get only half way towards curing inflation. To use the cliché, "too much money chasing too few goods", it will deal with the first, but not the second part of the cliché. It does nothing about increasing or providing an incentive for increasing the quantity of goods or services.

The amendment seeks to bring productivity agreements fully into the picture and into the policy of the Bill. In short, it seeks to make productivity agreements lawful. Under the Bill productivity agreements are not only discouraged and frowned upon; they are unlawful, although it is a strange kind of unlawfulness. It is not a crime which is visited by fine or imprisonment. It is not a tort which is subject to damages. It is an unacceptable act which will be visited by what in the Bill are called sanctions. The Price Code sanction is set out in Clause 3. The rate support grant sanction is set out in Clause 4. In the White Paper itself there is the industrial assistance sanction in paragraph 22, the public contract sanction in paragraph 23, and the temporary employment subsidy sanction in paragraph 41. These sanctions make productivity agreements not necessarily unlawful but at least unacceptable within the pay limits.

The amendment seeks to add a sentence to the clause which would allow the White Paper limit to be increased by a payment which would be due under any productivity agreement either made before the commencement of the Act or, if made after commencement of the Act, with the approval and consent of the Secretary of State. One condition which I have added is that it must be a payment for increased productivity which has occurred, not for a promised increase in productivity.

I have listened to most of the debates on the Bill, but I do not yet know what the Secretary of State intends to do about existing productivity agreements. If, under these agreements, employees increase their productivity, will they be allowed to have the benefit of that over and above the£6 limit? If this is to be an anti-inflation Bill, the Government are bound to accept this amendment and prove that it really is to be anti-inflationary.

Mr. Deputy Speaker (Sir Myer Galpern)

The Prime Minister.

Mr. Dennis Skinner (Bolsover)

I wonder whether the right hon. Gentleman, in outlining these rather hypothetical agreements, was trying to recall the quaint agreement carried out under phase 2 of the policy of the last Conservative Government, which he supported? Is he suggesting there should be productivity agreements along the lines of the one that gave Sir John Stratton£1 plus 44 per cent. when the rest of the people and the organised trade unions were limited to£1 plus 4 per cent? That agreement was devised for the top executives of the Fatstock Marketing Board. Is that the type of agreement the right hon. Gentleman has in mind?

Mr. Walter Harrison (Treasurer of Her Majesty's Household)

The last statements and questions were not made on behalf of the Government, but by a back bencher. I thank you, Mr. Deputy Speaker.

Mr. Deputy Speaker

I am very much obliged for the correction.

Mr. Page

Mr. Deputy Speaker, I had already completed my speech and sat down.

Mr. Foot

I am not sure what interpretation to put on the most welcome presence of my hon. Friend the Member for Bolsover (Mr. Skinner) on the Government Front Bench. At least we can take it that the reserve powers are no nearer and in that sense we can be comforted.

The right hon. Member for Crosby (Mr. Page) has raised a most important subject and if I reply in a short time, it is not because I am seeking to minimise its importance. One of the ways in which inflation can be overcome is by increasing the actual wealth produced. We certainly do not wish to discourage that. In order to make the flat rate work and apply on a general scale, we had to reach an understanding on how productivity agreements were to apply and how they were to fit into the new pay policy. Recollections of previous policies reminded us—and the representatives of the TUC General Council with whom we were discussing this matter—that productivity agreements could be used as a way of escaping from the limitations. Neither of us wanted that to happen.

We reached an understanding on the matter which was spelled out in column 687 of Hansard on 23rd July 1975. The hon. Member for Blaby (Mr. Lawson) interrupted me on this question and I am happy to have the opportunity to apologise to him for what I said. He asked where this reference appeared in the TUC guidelines. I thought there was a reference to this topic in the guidelines and it was for this reason that I said what I did then. I did not recall, partly because of the numerous discussions we have had with the General Council, that it was in separate discussions that we reached the general view I mentioned in column 687.

That is our view of the situation. It is necessary to protect the policy by this understanding of the situation, which is that existing productivity agreements and payment by results methods will continue to operate but that improvements in those productivity agreements must be set against the£6 limit. Both the Government and the representatives of the General Council of the TUC believe that any other course would or could make such a wide loophole in the policy that it would lead to further anomalies.

My hon. Friends pointed out in our earlier discussions that certain anomalies are already bound to arise, but if we accept the contrary proposition, which is partly enshrined in the right hon. Gentleman's amendment, that productivity payments may be made in addition to the£6, the whole policy could be largely undermined. That is why we reached this conclusion and why we hope to proceed in the way we have set out.

Our approach to the matter was part of the understanding we had with the trade unions on the subject. Therefore, in spite of the importance which the right hon. Gentleman quite rightly attaches to productivity agreements, and the desire to encourage production in overcoming inflation—and that is in the end the best way to beat inflation—we cannot accept his amendment. We are seeking to make an immediate attack on the problem which will enable us to early through the real solutions to it—to provide the investment, the production and the creation of the real wealth that is needed. On that basis I ask him to withdraw the amendment. I am grateful to him for having raised the matter and for giving me the opportunity of explaining the Government's attitude once more.

Mr. David Howell

I had not intended to intervene in the debate until the hijacking of the Dispatch Box by the guerrilla from Bolsover. His action makes one wonder just what is happening in the Labour Party. I suspect that I am not the only person to ask that question. Perhaps it is being asked on the Labour benches, too. The hon. Member's performance was not particularly funny. It was a trivial intervention on a serious issue in a serious debate.

The question of productivity is near to the heart of the problem. We are trying to achieve far greater levels of productivity which would give a high-wage, high-output economy, and it is a pity that the flat-rate arrangement will knock improved productivity deals on the head. The Secretary of State is saying that people cannot be trusted not to monkey with these agreements and use them as a means of securing more than the prescribed increase. That is a commentary on the way of things, but it is a matter of regret that one of the prices we shall have to pay—and there will be many—of putting this policy into operation will be in the realm of productivity. This situation will apply in the private sector in all the areas where we need big increases in productivity where a firm not only is able but is willing to pay a large increase to secure higher productivity, for example, in North Sea oil. All these areas will be policed in a way which will require disapproval to be cast on any attempts to achieve higher productivity and higher wages and greater prosperity for all our people.

My right hon. Friend the Member for Crosby (Mr. Page) is correct to draw attention to this one more burden, this extra millstone which we are hanging round our necks as we plunge on into the quagmire of the detailed statutory prices and incomes policy.

2.15 a.m.

Mr. Graham Page

May I, with the leave of the House, Mr. Deputy Speaker, reply to one or two points which the right hon. Gentleman the Secretary of State made? He resists this amendment because he says that it is a way of escaping from the limitation set out in the Bill. I had very much in mind the statement that he made on 23rd July and my amendment is declaratory of the first part of that statement, that is, of productivity agreements already in existence. He said: As far as productivity and payment-byresults schemes are concerned, existing schemes established before 11 th July may obviously continue unchanged. In that statement he dealt with those that will come into operation in future and said that they have to be kept within the£6 a head limit." —[Official Report, 23rd July 1975; Vol. 896, c. 687.] His argument today is that if they do not do that, it would be a matter of escaping from the limitation. I have tried to meet that in the amendment I have tabled tonight by saying that in order to enjoy the benefit of my amendment those schemes made after the commencement of the Act should have the approval of the Secretary of State. If they are under his control, he could then avoid the possibility of opening wide the flood gates so that the limitation was not kept.

I shall dare to forecast that when the Secretary of State produces his second White Paper, under Clause 1(2) he will have to take into account some form of productivity agreement within the limitation. I cannot understand how the Bill can continue for longer than a few months unless he takes into account, in the pay limits, real productivity agreements—I need not go into the details of them—in which payments are made for productivity.

I shall not divide the House on this amendment because the Secretary of State and I are agreed on the principle. We are both eager to increase the wealth produced. Therefore, at this stage I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Sir Michael Havers (Wimbledon)

I beg to move Amendment No. 4, in page 1, line 13, at end insert: '(1A) Where any statement term or provision contained in any of paragraphs 1 to 48 inclusive of the aforesaid document is inconsistent with any statement term or provision contained in the Annex to the said document the former shall prevail over the latter'.

Mr. Deputy Speaker

With this amendment it will be convenient to take Amendment No. 5, in page 1, line 13, at end insert: '() Where any statement term or provision contained in any of paragraphs 1 to 48 inclusive of the aforesaid document is inconsistent with any statement term or provision contained in the annex to the said documents the latter shall prevail over the former'.

Sir M. Havers

These two amendments were considered in Committee. The reason that they are again before the House is because of some faintly encouraging noises from the Secretary of State who said that he would look at this again—they were only faintly encouraging noises, but any encouragement from the Secretary of State in relation to any amendment to the Bill is always welcome.

It is important, as has become clear from the number of times the Secretary of State has talked about the difference between the White Paper and the annex to the White Paper as containing differences of emphasis, to appreciate just what those differences are. Emphasis it may be on a number of occasions, but it is very much more, particularly on the most striking one, namely, the question of the date on which this policy comes into force.

In paragraph 7 of the White Paper it is said that the annex 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. This is in conflict, which is much more than a difference of emphasis, with the provisions in the annex which speak of the policy operating from the beginning of the next pay round, which is about 1st August. It is nonsense to say that this is a myth and nothing more than a difference in emphasis. It puts a court in the position of saying that in one part of a Bill or statute, "black", for the purpose of the Bill, should be called "white", and in another part of the same statute "white", for the purpose of the Bill, should be called "black".

The Secretary of State must remember that however much he seeks to reserve the powers to himself, there is always a risk—a likelihood if not a certainty—that there will be a challenge or a number of challenges in the Divisional Court. What the Government are allowing to happen today is that these two inconsistencies—and there are a number of others—will remain and go into an Act of Parliament, and ultimately they will have to be decided by a court. That court will be placed in totally unnecessary difficulty by reason of the obstinacy of the Government at present.

It became quite clear in the debate initiated by my right hon. and learned Friend the Member for Huntingdonshire (Sir D. Renton) that what is really the position here is a disregard of trying to make certainty possible because of overdue sensitivity about a relationship between the Government and the TUC. Time after time one hears the Secretary of State saying "We really must keep this. This is an important part of the White Paper." If the amendment is accepted, the White Paper is still there and the annex is still there. All that the Government would have to do—and it is plain common sense—would be to say to the TUC when there are differences—and for the Secretary of State, only differences of emphasis; something with which I fundamentally disagree—"Gentlemen, you must appreciate that we cannot have it left that there are two versions. When Clause 1 of the Bill talks about the limits imposed"—not suggested—"by the policy, surely you will not disagree that the Government part of the White Paper should prevail."

If the Government are so sensitive about the TUC, they should accept Amendment No. 5 and let the annex part of the White Paper prevail. We cannot have a choice. We cannot have this inconsistency. I had not thought that it would be necessary to move this amendment because I thought that the amendment moved by my right hon. and learned Friend the Member for Huntingdonshire would be accepted.

Anyone with a grain of common sense will realise that one or other of these amendments must be accepted. I know that the Secretary of State has a grain of common sense. I hope that he will demonstrate it now.

Sir David Renton

I support my hon. and learned friend the Member for Wimbledon (Sir M. Havers). He has made an unanswerable case. In two well drafted amendments he has given a clear choice—although it may be Hobson's choice—for the Secretary of State to accept one or other of them.

The Secretary of State should bear in mind that in paragraph 7 of the White Paper, to which he referred earlier, he is quite specific about one inconsistency between the body of the White Paper and the annex. That is the inconsistency as to whether the upper limit for the£6 increase should be£8,500 a year or£7,000. But there is another inconsistency which has been left unresolved. I cannot believe that this was intentional. I assume it was through an oversight. It arises in this way. Paragraph 6 of the White Paper says The£6 is however a maximum within which negotiations will take place. In the annex, however, we have quite a different version. Far from being a maximum, the£6 limit is to be regarded, it seems, as the norm, because 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. That is a clear indication to anyone who reads paragraph 1 of the annex, taken as a whole, that the TUC has interpreted this pay settlement, in the broad with the Government, as not merely an agreement that£6 shall be the maximum but that£6 shall be something to which everyone shall be allowed to aspire.

There is an inconsistency which the Secretary of State will have to resolve. I should have thought that he would welcome guidance from Parliament to help him resolve it. As my hon. and learned Friend has said, it is more than likely that if he does not clearly resolve it when it should be resolved the matter will have to be taken to the courts. Rather than putting the trade unions, their representatives, employers, other people and the Secretary of State to the trouble of having to have the matter resolved by the courts, surely it is better that we should resolve it here and now in the way that my hon. and learned Friend has suggested. I commend his suggestion to the Secretary of State.

Mr. Foot

I promised that I would consider the amendment, and I have done so. The hon. and learned Member for Wimbledon (Sir M. Havers) has now offered another alternative. He has suggested that the Government could have it either way. He does not seem to care very much which way we have it, so long as we have it one way or the other.

I do not think that that is the best approach to the matter. I think that it is better for us to take the whole White Paper and the annex together. On that basis, I think that it is not necessary, and it might be injurious, to introduce such a formal statement as is comprised in either amendment. It is not a question of sensitivity as to deciding one way or the other.

The relationship between the White Paper and the annex is clearly explained in the White Paper. I do not believe that there have been misunderstandings about whether the£6 is an entitlement. That is one interpretation. Another is that it is a maximum. I am not denying that there is a difference between the two, but I do not believe that it will cause such tremendous difficulties in practice.

The Government's view is clearly stated in paragraph 6 of the White Paper, and the TUC's view is stated in the annex. I do not think that it is necessary for us to get into greater difficulties. I do not believe that there will be such difficulties as has been suggested.

I hope that the amendment will not be pressed, for the same reasons as I urged that the right hon. and learned Member for Huntingdonshire (Sir D. Renton) should not press his amendment earlier. The relationship between the White Paper and the annex is clearly stated in paragraph 7—

Sir David Renton

Does the right hon. Gentleman accept the Government's view or the TUC view of this matter?

Mr. Foot

The Government's view is stated in paragraph 7 of the White Paper. There is no doubt about that. I do not believe that there will be a conflict about it. Mr. Len Murray has stated his view. He has stated that the unions will press for the£6. He believes that that is so, and that they are fully entitled to do it under the agreement that he made.

The House as a whole has not fully appreciated, and I underline it afresh, that what the TUC has said about the£6—far more important than anything else that it says about it—is not merely that it thinks that that is the figure on which settlements should be made for the coming year but that it will oppose any settlement in excess of it. The TUC is giving its prestige, support and strength to trying to sustain this policy. It is saying it more clearly and definitely than it has ever said it before about a comparable proposition.

That is the important achievement. In most of the debates the House has underrated the significance of the arrangement and understanding that the Government have reached with the General Council of the TUC. That is the basis of the Government's policy for dealing with the situation. That basis is very important, and it would be a disaster for this country if we were to spurn the agreement that the Government have reached with the general council.

That is underlined. This is not a question of sensitivity. This is a question of common sense. The common sense of that statement should be understood. It is a pity that the House has not directed as much attention to that part of the annex as it has to some others.

2.30 a.m.

Mr. Ivan Lawrence (Burton)

I do not understand what the Secretary of State said, although I understand the principle that he should do nothing to offend or upset the TUC. The TUC has expressed one or two views in its annex which the Government have clearly chosen to disregard. I do not think that the TUC will take great umbrage at that. The TUC will accept that the Government have a right to take a decision whether the level should be£7,000 or£8,500 or to take other decisions varying between what is said in the White Paper and the annex. Therefore the Secretary of State's explanation of TUC consent does not bear examination.

I find it difficult to accept that the Secretary of State believes in the accuracy or the truth of what he said. The Opposition concede that the Government must take a decision as they feel driven. The Opposition have made an effort to avoid the pitfalls which must occur if these matters come before a court. However, the Opposition are appalled at the explanation to which we have been treated and which the Secretary of State must know is rubbish. The Attorney-General was present a short while ago. I do not know how he can support, by his silence, proposed legislation which makes a mockery of the law.

The hon. Member for Bolsover (Mr. Skinner) took up a position on the Government Front Bench a moment ago. I do not know whether that was a symbolic gesture or whether is was just another of those jokes in the night so favoured by the Government.

Mr. Ian Mikardo (Bethnal Green and Bow)

It was neither. It was a piece of intelligent anticipation.

Mr. Lawrence

I am not sure whether the House will not take some time to accustom itself to the sight of a sleeveless, tieless, jacketless, briefless Minister coming to the Dispatch Box at 2 a.m., unannounced, with no statement being made as to the change and no explanation reaching us through the Press a day or two before the changeover.

This is indicative of the cavalier attitude of the Government on a matter which the Opposition regard as important.

Will the Secretary of State explain what moved him to give an undertaking to the Opposition that he would look again at this amendment? This is a simple matter. He was not required to consult books, nor was he required to consult ministerial staff. Why did he decide not to accept the amendment?

Although I do not know the attitude of the Opposition, I shall be happy to demonstrate my opposition to the Government's attitude by dividing the House.

Mr. Biffen

My right hon. and learned Friend the Member for Huntingdonshire (Sir D. Renton) pointed out the ambiguity that exists between the treatment of the£6 figure in the annex in Cmnd. 6151. I am glad that the hon. Member for Bolsover (Mr. Skinner) is leaving, otherwise I fear my arguments might have tempted him to speak. I realise that he is answering the call of the Red Boxes.

That ambiguity will give rise to increasing resentment and increasing scrutiny. Hardly was the ink dry on the White Paper when Mr. David Basnett, who, I suppose, is widely acknowledged to be a great moderate in trade union circles, made perfectly clear that£6 was the figure to which he would aspire for his members. There was no question of his taking the view explicit in paragraph 6 of the White Paper: The£6 is however a maximum within which negotiations will take place; some employers may not be able to pay it. What the House would like to know, and what the Secretary of State can answer, is how the Government regard themselves as an employer. When they introduce their cash limits will they make a value judgment whether£6 will be payable to all public sector employees, or whether there will be some gradation of payment to assume that some get the full amount and some get less.

That will not come as a startling new problem to the Government because a Question was put to them for answer on 18th July when the Chancellor of the Exchequer was asked: what is his estimate of the extent to which central Government, local government and nationalised industries will be able to settle wage claims at below the£6 per week maximum increase for some of their employees when determining cash limits and other disciplines designed to effect compliance with the policy outlined in Command Paper No. 6151. That is exactly the point touched on by my right hon. and learned Friend. The answer received to that Question underlines every doubt that has been entertained by my right hon. and learned Friend. The Chief Secretary said: Cash limits will be calculated, and other instruments applied, on the basis that all pay settlements in the areas concerned will comply with the policy of Command 6151. My right hon. Friend the Prime Minister made clear on 11th May—[Vol. 895, c. 902.]—that the£6 per week is a maximum and not an entitlement."—[Official Report, 18th July 1975; Vol. 162, c. 630.] That reply in no way answered the central question how the Government would regard their rôle as an employer and whether they felt in the application of cash limits that they were among the employers who may not be able to pay.

That the future relationship between the Government and unions in the public sector will be stormy will be acknowledged on both sides of the House. It is no use deluding ourselves. Whatever may be said by the TUC General Council there will be real difficulties in negotiating in the public sector, and there will be anxiety to know what is the cash limit philosophy in respect of the£6 figure. This debate gives the Secretary of State the opportunity to inform the House, and through the House the wider world, of his views on this topic. The longer these decisions are postponed the harsher will become the moment of truth. Therefore, these debates, far from picking away at the policy—for which I have no affection—do an instructive service.

With all the experience gained by the right hon. Gentleman in those far-off days of 1966, 1967 and 1968—and even more respectably in 1972 and 1973—he has acquired consummate skill in dealing with such questions, so I do not feel any pangs of regret about putting this question to him. If the question is not put to the right hon. Gentleman at this stage it will be put to him within days by representatives of unions negotiating in the public sector. They have the right to know, but does not this House of Commons also have the right to know? What more appropriate circumstances could be provided than this debate?

I appreciate that the hour is late, but some of the most cogent decisions and policy elaborations in respect of prices and incomes take place historically at this time of day. If Parliament did not have the chance to operate at this time of day, all the potential tyranny and stupidity implicit in these policies would be compounded. I do not apologise for pressing these points.

The amendment gives the House, the Government and the trade union movement in the public sector the opportunity to learn something of the problem to which I have adverted. I believe that it will be a problem of real and growing substance.

Sir M. Havers

With the leave of the House, Mr. Deputy Speaker—it is clear from what the Secretary of State had to say in his final speech on the amendment that on this subject there are differences which are much more than differences of emphasis—namely, differences which cannot be resolved. They are differences which will have an effect on negotiations and which may cause endless trouble, expense and delay in the courts. There is no reason for the Government not to accept one or other of the amendments. We have been given no reason for them not doing so. Accordingly, I find myself unable to ask leave to withdraw the amendment.

Amendment negatived.

2.45 a.m.

Mr. Foot

I beg to move Amendment No. 51, in page 1, line 22, leave out from 'shall' to end of line 7 on page 2 and insert 'not be made unless a draft of it has been laid before and approved by a resolution of each House of Parliament'.

Mr. Deputy Speaker

With this amendment it will be convenient to take Amendment No. 35, in page 2, leave out lines 4 to 7.

Mr. Foot

My right hon. Friend the Chancellor of the Exchequer, speaking in the Second Reading debate made clear the following: In practice, we envisage that if such an order were required the Government would ask both Houses to approve the new rules before it came into effect; in other words, that the Government would not bring new pay limit rules into effect without the prior consent of Parliament.…"—[Official Report, 23rd July 1975; Vol. 896, c. 577.] In the face of representations made by my hon. Friends, led by my hon. Friend the Member for Bethnal Green and Bow (Mr. Mikardo), it was said that the Government's intention and the practice defined by the Chancellor should be translated into procedure incorporated in the Bill. My hon. Friend the Member for Bethnal Green and Bow pointed out the deficiencies in the Bill as originally drafted—namely that we could be left in a position in the recess where some new provisions could be brought into operation without Parliament, and the House of Commons in particular, having the power to decide whether any new provisions should be introduced. Therefore, the Government undertook to introduce an amendment to deal with the situation to make clear that any new provision would not become operative in any way until approved by Parliament.

The amendment gives effect to the undertaking which I gave to my hon. Friend. It ensures for Parliament a full degree of control in these matters—a degree of control which I am sure it is right the House should have. It was an important proposal put forward by my hon. Friend, and I hope that he and others will feel that we have now safeguarded the situation in a way which did not exist in the Bill originally.

Mr. Graham Page

I do not want to detract from the concession granted by the Secretary of State for Employment to his hon. Friend the Member for Bethnal Green and Bow (Mr. Mikardo). I thank the Secretary of State for the concession because it was I who suggested it on Second Reading. I was delighted that the hon. Member for Bethnal Green and Bow supported me in Committee. The proposal will bring about a great improvement in the Bill.

Mr. Mikardo

I thank my right hon. Friend the Secretary of State for Employment for meeting the point put to him in Committee. My sincere gratitude is not diminished by recalling that this change is the only tangible outcome of the non-stop 24-hour Committee stage. As the matter might have been put in Roman times, partiurunt montes nascitur. However, it is not much to show for that long night's Sitting.

Mr. Ridley

I am delighted to note the facility with which the hon. Member for Bethnal Green and Bow (Mr. Mikardo) occasionally breaks into instant Latin. I join with the hon. Gentleman in welcoming this form of amendment.

There was, however, another point that was raised in Committee and it has not been cleared up. I am afraid that I must draw the Secretary of State's attention to it.

This clause is not about pay limits. It is about allowing employers to breach their contracts with legal impunity. The circumstance could well arise that an employer enters into a contract after the commencement of the Act which would be within the terms of the policy contained in Cmnd. 6151, and which he would in good faith believe to be within the terms of that policy. Later, the Secretary of State comes to the House with an order, which is duly passed, lowering the permissible limits and thereby causing the employer to have to break the contract he has made if he is to stay within the revised limits of the new policy. But under the clause as drafted he is not, of course, indemnified against breach of contract. The wording at line 12 is payable under any agreement entered into before the commencement of this Act. It should not be the commencement of the Act. It should be the date of the policy or the new policy, whichever it may be, as revised. Employers could be put in an impossible position, and the whole purpose of the clause could be frustrated if the new policy were brought in still further restricting the limits which are payable but causing an employer to breach a contract which was negotiated after the commencement of this Act.

I have an amendment—No. 33—on the Order Paper to this point, though as it has not been selected, I should not dream of talking to it. But I ask the Secretary of State, as he has given us this tiny concession, to deal with the point which I have just made. If I may echo the words of the hon. Member for Bethnal Green and Bow, it is an extraordinary thing that, after such a long and searching debate, which has thrown up so many appalling muddles and double-thinks in the Bill—the Remuneration, Charges and Gobbledegook Bill—the only concession the Goverment have seen fit to make is the tiny one represented by this amendment.

Sir G. Howe

I wish to endorse what my hon. Friends have said by way of welcoming the small change which the Government have made. It is only a very modest movement towards recognising the many criticisms advanced of the way in which this policy is being handled. It embraces Amendment No. 35 standing in the names of myself and my hon. Friends, and I am glad of that.

But the point that my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley) has just made is important, because it gives one an insight into the nature of the Government's policy. It is indeed right that, even if this amendment is accepted, employers will from now on find themselves being required to disregard contracts entered into after the commencement of the Act. Because of the words set out in line 14 on page 1, they may enter into agreements as a result of collective bargaining, and they may then find that they can be required to disregard those agreements, and as a result of the process we are looking at here, to the extent of documents yet unknown, yet to be laid. It is only a small concession to agree that Parliament should be able to discuss those documents before contracts are affected in that way.

It is worth reminding the right hon. Gentleman of the ground on which he opposed the corresponding provisions in the Prices and Incomes Act 1966. It is very close to the heart of this matter. The right hon. Gentleman said: …although I am sure that my right hon. Friend is sincere in wishing the Measure to be carried through voluntarily, the element of compulsion is already present and is applied in circumstances and with results which to me are highly objectionable. The most serious feature of the Bill is the broken bargains, the broken promises to the railwaymen and many others. Once we break bargains we will not be able to make such bargains so readily or advantageously for the community in future. In any case, we have no right to break these bargains and Parliament should not be a party to it. Yet that is what we are doing, and I object."—[Official Report, 10th August, 1966; Vol. 733, col. 1773.] That very same right hon. Member for Ebbw Vale is now before the House writing into this Bill a modest modification to the very principle to which he then objected. The provisions which we are discussing are enabling him to rewrite bargains retrospectively in relation to agreements yet to be made, between now and the laying of any future order. This is a modest concession in response to the hon. Member for Bethnal Green and Bow—that Parliament may be able at least to discuss in advance the terms and the basis on which the right hon. Member for Ebbw Vale should be enabled to do that which he denounced so trenchantly on 10th August 1966.

Mr. Lawson

I shall be brief, but I hope that the Secretary of State will answer the point made by my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley) because he made a request which concerns precisely the point which I put to the right hon. Gentleman during a debate we had in Committee on an amendment moved by my hon. Friend the Member for Guildford (Mr. Howell). The right hon. Gentleman will see it reported in columns 964 and 965. It was shortly after one o'clock on Friday morning, a little earlier than now. The right hon. Gentleman did not answer it. I hope that he will now do so, because the subject will become of increasing importance.

The argument he used then—that employers have their eyes open—is proved not to be the case when they cannot know what is likely to be laid before the House by way of variation of the limits.

Mr. Foot

In reply to the hon. Member for Cirencester and Tewkesbury (Mr. Ridley), if I have understood it aright, the concession, or amendment to be made, protects the situation in the sense that if alterations are made and it is proposed that the later provisions to be introduced are to take effect to relieve a protection retrospectively, the House, under the amendment, will be able to discuss whether it wants to do it or not. Therefore it will be open to the House to decide whether to take that step and to take that decision in a vote on the affirmative order which the Government have agreed shall be required before the House proceeds to such action.

I should have thought that there was protection in the sense that—and I doubt that I am wrong—it is provided by the amendment. Better protection will be available than if we had not made this concession.

Admittedly the change from negative to affirmative resolution does not make all that much difference. It does, however, make this much difference—that the order does not go forward unless the House so decides.

Mr. Ridley

All that the Secretary of State has to do is to say that he will amend the last line of the subsection, which he could arrange to do in the other place. It is not in the Secretary of State's nature to cavil.

This is a point which has already been raised, and the Secretary of State should meet it rather than rest on the totally spurious ground that, the Government having proposed a new policy, the House could throw it out on the ground that it would cause employers to breach their contract without being indemnified. The Secretary of State knows very well that the House will not do that because he has a majority behind him.

3.0 a.m.

Mr. Foot

It is a protection in the sense that the House can take that consideration into account along with other considerations that it may want to take into account at the same time. Therefore, it is that much of a protection. However, if I have misunderstood the point I am certainly not eager to cavil at it. as the hon. Gentleman described it. If I have misunderstood it and, if there is a simple way of achieving the result without creating other difficulties that we would have to look into, I will see whether there is a possibility of achieving it by another amendment.

I am not retracting from that proposition, but I must add that in the debates which we had in August 1966 what we were talking about was bargains that had to be breached by what the Government were doing. What the Government seek now is a wider power in this sense, that in order to make another proposition, other steps have to be taken about contractual obligations. If those steps were not taken, it would be impossible to operate any flat-rate£6 scheme. The insistence on the contractual obligations would forbid any such policy as has been discussed in the guidelines. My hon. Friend the Member for Bethnal Green and Bow (Mr. Mikardo) said that this is the sole fruit of the labours of that long night. I do not believe that it is an unimportant result. It means that the Government cannot go ahead with some White Paper and introduce new propositions which are not to be discussed by the House. That can have a very considerable effect on the way in which Governments approach their business. That is the proper way to proceed.

I am grateful to my hon. Friend, and the whole Government should be grateful to him, and to the right hon. Member for Crosby (Mr. Page) for having had the original inspiration. It was the right hon. Gentleman's proposition, but it was the mass forces of my hon. Friend that ensured that we had to yield. However, we yielded to common sense. I hope that my hon. Friend will not continue to say that this is the sole fruit of the whole of those discussions or even of the discussions we are having now, because I believe, and I certainly trust that it will be the case, that the discussions we have had on the whole Bill—I have made no complaint about any of them—can have a powerful effect on the way in which Governments approach their policy in different respects, not least in regard to the reserve powers. All that has been done is not to be written into clauses. What has been done is that the House of Commons has presented its view to the Government—different points of view. I am sure that that will have an effect on the Government.

Sir G. Howe

It is important that the right hon. Gentleman should understand precisely what he is doing. What he is doing is to give himself power to set aside contractual arrangements—or, rather, he is seeking and Parliament is giving him power so to do. We are considering the extent to which he should have it. It is a power to set aside collective agreements and individual agreements both made in the past and to be made hereafter in order to enable them to comply with his voluntary policy of a£6 limit.

The proposition to which the right hon. Gentleman was objecting on 10th August 1966 was precisely the same. At that time Parliament was being asked to impose a wage freeze on pre-existing contracts. It was a flat-rate limit, except that the flat-rate limit was zero. To enable that to prevail it was necessary for Parliament to set aside existing agreements. The only difference—it is a very important difference—is that at that time Part IV of the Bill was added, and the schedule setting out the pay policy was added. Parliament sat until at least 10th August debating in detail the powers set out in Part IV and the White Paper which was scheduled, and the right hon. Gentleman objected even to that because he had not had an opportunity to debate those matters on Second Reading. But he had had a full opportunity to debate them in Committee and on Report. We have been denied that opportunity on this Bill.

That is the fundamental objection to the constitutional impropriety of what the Government are doing. The point made by commentators both inside and outside the House is that the details have not been subjected to Parliamentary scrutiny, and thereafter all we shall have will be an affirmative resolution, with no power to amend it, whatever new details the Secretary of State may care to substitute to provide the statutory element which is essential to the operation of the voluntary policy—precisely what the right hon. Gentleman objected to so trenchantly nine years ago.

Mr. Foot

I shall not enter into a discussion about the parallels between the two forms of legislation. There are great differences between the 1966 legislation and the present legislation. I do not believe that the 1966 legislation was based on the kind of understanding that we have had with the General Council of the TUC. There are great differences in character and degree between the 1966 legislation and the present Bill. The right hon. and learned Gentleman knows that the 1966 legislation was of a much more elaborate character, and that effects the time to be allocated.

The hon. Member for Cirencester and Tewkesbury (Mr. Ridley) raised an important point. The difficulty to which he referred arises only where a contract allows for an increase at a future date, and employers can see the risk of such contracts. If they enter into them, their operation could depend on compliance with the Government's current pay policy. The difficulty which the hon. Gentleman suggests could be overcome if employers enter into fresh arrangements.

However, if I am wrong and there is another way in which the matter can be dealt with without causing difficulty, I shall consider whether an amendment can deal with it. Although I make that commitment to look at it, it is not a commitment to amend the Bill.

Mr. Powell

The difficulty arises where, by an order under subsection (2), the limits are reduced. They would then bite, or might bite, upon new agreements made after the commencement of the legislation but not in infringement of the limits in the Bill as it stands. I do not believe that the problem could be solved, as the hon. Member for Cirencester and Tewkesbury (Mr. Ridley) suggested, by amendment of the words in line 13—"the commencement of the Act". It would be necessary to make a rather more elaborate amendment of subsection (2).

It is a possible difficulty which no contracting parties could of their own motion avoid without quite unrealistic foresight, and it is in the Government's interest to give more freedom of action to the Secretary of State to find the means of meeting the point of the hon. Member for Cirencester and Tewkesbury.

Mr. Foot

I have said that I will look at it, and I shall do so.

Amendment agreed to.

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