HC Deb 07 July 1977 vol 934 cc1410-3
11. Mr. MacGregor

asked the Chancellor of the Exchequer when he next plans to meet the Governor of the Bank of England.

Mr. Healey

I maintain close contact with the Governor of the Bank of England, meeting him on a regular basis and also as and when circumstances require.

Mr. MacGregor

Does the Chancellor of the Exchequer recall that the last published statement of the Bank of England was that with an expected rate of money expansion of 9 per cent. to 13 per cent. this year, the rise in wage costs will have to be significantly below this in order to allow for real growth? Will that be the Chancellor's view when he next meets the Governor of the Bank of England? Is it the Chancellor's intention that the Government's target of not more than 10 per cent wage costs, as stated by the Chief Secretary, will at least be applied by the Government in the sector over which it has responsibility and control, namely, the public sector?

Mr. Healey

I read the article in the Bank of England "Bulletin" with admiration at the time, but I think that the hon. Gentleman is confusing a number of separate factors—an increase in earnings, an increase in wage settlements and an increase in wage costs, which is an increase in earnings from which the increase in productivity over the period has been deducted.

Mr. Heffer

If my right hon. Friend should have discussions with the Governor of the Bank of England, will he avoid any commitment of any kind to legislation on the question of wage control? Is he aware that many of us believe that it is perfectly understandable that the Transport and General Workers' Union and other unions should have voted in the way they have, because of the lowering of standards of the workers over this last period? Will he therefore take these things into consideration as another view of democratic Socialism in this country?

Mr. Healey

The Government have made it clear on very many occasions that they are totally opposed to statutory control over wages involving penal sanctions against working people. They have, of course, also supported wage policy over the last two years by various types of legislation acting through prices.

Mr. Powell

As the Chancellor of the Exchequer has just told the House that the exchange rate of sterling has been one of the causes of the rate of inflation, will he tell the Governor of the Bank of England to desist from holding down the sterling rate by borrowing and by increasing reserves?

Mr. Healey

I frequently discuss this and other matters with Mr. Governor, but I think he finds that sterling is subject to pressures from both sides, rather as I am pressed on the matter of sterling values by some of my hon. Friends and by the right hon. Member for Down, South (Mr. Powell). But I think that the current policy that the Bank is following in relation to the value of the pound sterling is a very sensible one, and this view has been endorsed by the International Monetary Fund, among others.

Mr. Ashley

On the question of wages control, although Conservative Members are delighted at the recent setbacks to the Government's income policy, is it not a fact that the good sense and moderation of trade unionists on the shop floor can still prevail during negotiations, despite recent votes? When my right hon. Friend says that trade unionists are aware of the benefits of phases 1 and 2, I am not sure that he is right. Have not the Government responsibility for telling all trade unionists of the benefits that have come to them from the policy of the past two years?

Mr. Healey

I think that all who have the interests of Britain at heart share this responsibility, not only the Government. My hon. Friend will be aware that I have accepted and carried out this responsibility on very many occasions over the past three years.

I think it is undoubtedly the case that common sense will prevail in the overwhelming range of wage negotiations and that the leadership of many unions very much supports common sense. Those in the House who have the interests of the country at heart should welcome the efforts that have been made by trade union leaders—even where they have been unsuccessful, as with Mr. Jack Jones and Mr. Joe Gormley—to put the facts of the situation honestly and squarely to their membership.

Mr. Hordern

Will the Chancellor of the Exchequer give a clear assurance that the cash limits in the public sector, which allow an increase in wages of only 5 per cent., will be strictly maintained?

Mr. Healey

Yes.

Later—

Mr. Adley

On a point of order, Mr. Speaker. On Question No. 11, the Chancellor of the Exchequer announced that there would be no statutory incomes policy, and the hon. Member for Cornwall, North (Mr. Pardoe), from a sedentary position, invited the right hon. Gentleman to "Get stuffed". Is that parliamentary language, Mr. Speaker?

Mr. Speaker

Order. I am very pleased to say that I did not hear it.