Incomes Policy (Hansard, 7 July 1977)

§ 8. Mr. Ridley
asked the Chancellor of the Exchequer what he intends to be the standard rate of income tax for 1977–78.

§ 9. Mr. Biffen
asked the Chancellor of the Exchequer when he next proposes to meet members of the TUC and CBI in order to discuss the Government's incomes policy.

§ 10. Mr. Adley
asked the Chancellor of the Exchequer if he will make a statement on his negotiations with the TUC on phase 3.

§ 13. Mr. Cronin
asked the Chancellor of the Exchequer if he will make a further statement on the progress of his negotiations with the TUC on the phase 3 incomes policy.

§ 15. Mr. Michael Latham
asked the Chancellor of the Exchequer whether he will now make a statement on his discussions with the TUC regarding a possible stage 3 of incomes policy.

§ 18. Mr. John Hunt
asked the Chancellor of the Exchequer if he will make a statement on the latest position regarding incomes policy for the coming year.

§ 21. Mr. Ioan Evans
asked the Chancellor of the Exchequer if he will make a statement on the progress of his negotiations with the TUC on the phase 3 incomes policy.

§ Mr. Healey
Our discussions on the pay arrangements for the period after 31st July are continuing. As soon as I am in a position to do so, I shall make a statement to the House. This will include an announcement about the basic rate of income tax for the current year.

§ Mr. Ridley
With respect, Mr. Speaker, my Question was not about the pay arrangement. Does not the Chancellor think that it is disgraceful that three months after the start of the financial year he has not yet informed the country of the rate of income tax that he thinks we shall all be paying during the current financial year? Irrespective of the failure of his stage 3 negotiations, will he now tell the House what he believes the rate of income tax should be, because the House might decide otherwise, as it has on the personal allowances? What does he believe the rate of income tax should be?

§ Mr. Healey
If disgrace is attached to not informing the country yet of the rate of income tax this year, the hon. Gentleman shares it. He has done his best in the Finance Bill Committee to change the intentions of the Government on a number of matters, and has succeeded in one or two instances, so I hope that we shall not have any more prattling from him about the morality of this problem.

§ Mr. Biffen
As there is now evidence that phase 3 of the incomes policy is free collective bargaining, by whatever other name, will the right hon. Gentleman give an undertaking to the House that the Government will fully implement their proposed public expenditure economies and, furthermore, will desist from interfering in the pricing policies of the nationalised industries?

§ Mr. Healey
The hon. Gentleman is aware that the Government have committed themselves to specific targets for public expenditure, for money aggregates, and for domestic credit expansion. They will stick to those targets, a factor not without importance in relation to any possible pay increases in the coming year. The hon. Gentleman is also aware that 1407 we inherited a deficit of £1,500 million in the nationalised industry accounts because of price subsidies forced upon them by the last Government. We have completely wiped out that deficit. I hope that he will pay this Government some credit, since he shared in the responsibility for the activities of the last Government.

§ Mr. Adley
Now that the big unions have put the seal of failure on the Government's economic policy, as Lord Ryder did last week by voting with his seat—with his feet—a Freudian slip, that —will the Chancellor nevertheless deny the scurrilous rumour on the tape this morning that the Government may be thinking of introducing an economic policy without the permission of the TUC and actually seeking to govern in the national interest rather than in a sectional interest?

§ Mr. Healey
I think that the House would be much happier if the hon. Gentleman spent even more time than he does on his seat.

§ Mr. Latham
Is not the whole concept of meaningful stage 3 now complete nonsense? If so, does the Chancellor still intend to go ahead with cutting income tax and reflating the economy?

§ Mr. Healey
I do not think that the possibility of a meaningful agreement with the TUC on pay policy after the expiry of the present round is by any means to be ignored. I shall be discussing this problem next week with the members of the economic committee of the TUC, and I shall tell the House of my intentions on income tax when those discussions are concluded.

§ Mr. Hunt
Does the right hon. Gentleman recall that only last month he was warning the Nottinghamshire miners against going back to the kind of wage explosion that we had two years ago, and what he called the "collective insanity" of that time? As he was himself in charge of the economy two years ago, was that not a quite remarkable political confession? Is not the main difference between then and now that whereas in 1975 the Labour Party had just incited the miners and others to go for the jackpot in wage claims, that free-for-all has caught up with the Labour Government and so they are now espous- 1408 ing the kind of moderation and restraint that they consistently dismissed and derided during the period of the Conservative Government?

§ Mr. Healey
The complexity and confusion of the hon. Gentleman's supplementary question is exceeded only by its feebleness. I stand by every word that I said in Nottingham to the miners about pay. It was repeated by Mr. Daly and Mr. Gormley at the NUM conference two days ago. I was shocked to find that when a decision was taken by another union to go back to unfettered free collective bargaining a day later it was immediately quoted and welcomed by the official spokesman of the Opposition Front Bench.

§ Mr. Evans
As my right hon. Friend has said that the trade union movement has made a great contribution to bringing about changes in our economy, and as the economic indicators show a great improvement, will my right hon. Friend. in his consultations, ensure that the trade unions begin to reap the benefit of the contributions that they have made in recent years?

§ Mr. Healey
I think that the trade unions are well aware of the benefits that they have gained over the last two years. That is why a majority of the members of the movement, whose unions have already declared their position on the policy for the next round, wish for an orderly return to free collective bargaining. It is well understood by most of the union membership that to go back to a free-for-all or a wage explosion would be more disastrous to the members of the trade union movement than to any other part of the population.

§ Dr. Bray
As hon. Members will have to make decisions about how they vote on the Report stage of the Finance Bill, and in view of the developing economic situation, will my right hon. Friend consider issuing either a White Paper or a full statement of his view of the economic situation in plenty of time for us to consider it before Report?

§ Mr. Healey
I propose to make a statement to the House about the matters germane to the Report stage of the Bill as soon as discussions with the trade union movement are completed, and in good time for a debate in this House. 1409 The Government plan to produce a White Paper on their counter-inflation policy in the coming year, also in time for it to be debated during the course of the Report stage of the Finance Bill.

§ Sir G. Howe
In view of the right hon. Gentleman's clear indication that the proposed cuts in income tax are still conditional on the achievement of a satisfactory agreement on pay, can he give at this stage some indication of what he now regards as a satisfactory agreement? In particular, can he give an assurance that he will not be tempted to buy an agreement that amounts to no more than a piece of paper by making dangerous concessions towards premature reflation? Will he now answer specifically the question put by my hon. Friend the Member for Oswestry (Mr. Biffen) and assure us that he will not go back on the public expenditure cuts previously announced or re-embark on subsidising nationalised industries' prices, but will stick to his letter to the IMF?

§ Mr. Healey
I have already answered the last of the right hon. and learned Gentleman's questions. I do not know whether he was here at the time or whether he was listening. I said that the Government intend to stick to the ceilings that they had set for money supply, domestic credit expansion, the public sector borrowing requirement, and public expenditure during the coming year. On the question of the relationship between tax cuts and pay policy, I quote again what I said in my Budget Statement on 29th March. I said that I could not commit myself to a decision on the second group of tax concessions until a satisfactory agreement on a. new pay policy has been reached…."—[Official Report, 29th March 1977; Vol. 929, c. 283.] I made it clear that that would require assurance of a continuing fall in the inflation rate.

§ Mr. Atkinson
Does my right hon. Friend agree that the theme common to the conferences of the transport and engineering workers and miners has consistently been the threat of rising prices? If the whole argument about the future is about the restoration of confidence and credibility, should he not now arrange some discussions with the Secretary of State for Prices and Consumer Protection, taking a leaf from his book in 1410 arguing for price controls as the only reasonable way to make progress in wage negotiations, so that trade unionists can freely bargain their wages against price ceilings readily agreed by the Government?

§ Mr. Healey
No, Sir. I am in constant contact with my right hon. Friend the Secretary of State for Prices and Consumer Protection, and we never disagree about anything, as my hon. Friend the Member for Tottenham (Mr. Atkinson) will be glad to hear. I am aware that there is very great concern and that a great deal of suffering has been caused to many sections of the population by the rate of price inflation over the past 12 months. The House will also be aware that a major cause of price inflation was the depreciation of sterling, which resulted from excessive levels of inflation in the previous year and which at least one of my hon. Friends wishes to go a very great deal further. I do not think that he has much support in the trade union movement for that.
The fact is that sterling has been stable over the past seven months at a level 16 cents above the value it reached in October last year, and that will be working through into the year-on-year retail price index in a couple of months' time.

§ Mr. Pardoe
Has the Chancellor of the Exchequer read this week the Fabian pamphlet, written by Nicholas Bosanquet, which says that a return to free collective bargaining would be unthinkable for the present wage bargaining system? Does the Chancellor regard that view as the authentic voice of British social democracy, and does he agree with it?

§ Mr. Healey
I know, like and admire Mr. Nicholas Bosanquet, but I do not think that he has any more claim than hundreds of my other friends, including many of my hon. Friends, to be the authentic voice of British social democracy.