Wage and Price Inflation

HC Deb 20 May 1975 vol 892 cc1197-8

6. Mr. Pardoe

asked the Secretary of State for Employment what was the rate of wage and price inflation over the last three months.

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

The seasonally-adjusted index of average earnings increased by 2.2 per cent and the index of retail prices by 6.3 per cent. between December and March.

Mr. Pardoe

Is the hon. Gentleman aware that it is now clear that over a period of 12 months the social contract has failed to keep the increase in the nation's pay within the increase in the nation's prices? What personal responsibility do he and his right hon. Friends accept for that? Is the Department now prepared to advocate an incomes policy based on the suggestion by Mr. Jack Jones of flat-rate increases?

Mr. Booth

I accept that, on the basis of a comparison of the movement of wages and retail prices between March 1974 and March 1975, wages have increased at a greater rate than prices. As to the responsibility for that movement in wages, I think it is true to say that the Government have had a part in it, as have private employers and trade unions. All three have a growing awareness of the economic implications, and I think it will follow from that that all three will be taking their own steps to secure a closer adherence to the TUC pay guidelines in the future.

Mr. Clemitson

Does my hon. Friend agree that two of the significant factors that have helped to push up the overall average for the past 12 months have been, first, the movement towards equal pay for women and, secondly, that lower-paid workers have on the whole done better than the average? Does my hon. Friend agree that both those factors have pushed up the overall average, whatever our view might be of whether that overall average is too high?

Mr. Booth

I agree with my hon. Friend that very large percentage increases were required for low-paid people to move them towards the TUC low-pay target of £30. It is also regrettably the case that a number of women have required considerable increases to bring them towards the equal pay target. Included in that, however, and in addition to it in some cases, have been threshold payments which have contributed in some substantial measure to the rate of wage increases.

Mr. Hayhoe

How long can these present trends continue before complete disaster overtakes our economy?

Mr. Booth

I would hesitate to engage in exact predictions as to the nearest week or day, but I would certainly join with the TUC's judgment, contained in its recent Economic Review, that any general attempt to secure increases greater than the rise in the cost of living would be self-defeating and would contribute to the inflationary pressures.