Pay Settlements (Government Action) (Hansard, 23 February 1978)

§ 11. Mr. Flannery
asked the Chancellor of the Exchequer what plans he has to apply the 10 per cent. guidelines in 1978–79; and on what criteria his decision depends.

§ Mr. Healey
It is far too early to expect me to have firm plans.

§ Mr. Flannery
Does my right hon. Friend agree with me that the intractable problem of unemployment can be only partially solved if the stimulus to which he referred in answering an earlier Question from my hon. Friend the Member for Bolsover (Mr. Skinner) is applied to the economy? Does he further agree that production is allied to stimulus being given to the economy and that it is almost idle to want unemployment figures to drop, a stimulus to be given to the economy and production to be expanded, unless the stimulus to which he referred is given to the economy fairly quickly?

§ Mr. Healey
Of course, I accept that, but I think that one has to relate it to the question that my hon. Friend asked. The fact is that any stimulus that I give 1686 to the economy is liable to lead to a dangerous extent into imports and inflation unless we can narrow the gap that exists in Britain between productivity and earnings to about the size of that of most of our trading partners. It is in this area that the question of the level of earnings will remain important.

§ Mr. Michael Latham
Will the Chancellor let us into the secret of how he is getting on with the discussions with the CBI over the publication of the black list? May we, particularly, expect to have the names of those on the black list and on the white list before a new black list is drawn up for stage 4?

§ Mr. Healey
That Question is stupe-fyingly irrelevant to the original one. I do not propose to be led by the hon. Member into breaking the confidentiality of discussions with the major employers' organisation in this country.

§ Mr. Litterick
Will the Chancellor of the Exchequer devote rather less of his mental energies to the problem of holding people's wages down and rather more to fulfilling his Government's side of the social contract, which would release productive energy and regenerate the economy?

§ Mr. Healey
My hon. Friend has a later Question on this matter, which I shall answer. The extent to which any stimulus that a Chancellor is to give to the economy increases employment depends on the extent to which British industry is competitive. The level of earnings in relation to productivity is the central issue in this regard.

§ Mr. Peter Walker
The Chancellor's original guidelines, he will recall, were an increase of 6 per cent. or 7 per cent. on wage rates and 10 per cent. on earnings. Are his guidelines now 10 per cent on wage rates and 14 per cent. to 15 per cent. on earnings?

§ Mr. Healey
The right hon. Gentleman knows as well as I do that the guidelines as given in the White Paper are that we wish the increase in earnings for the nation as a whole to be limited to about 10 per cent. All the indicators are that although that limit may be slightly overtaken, it will be very much less exceeded than Conservative Members were telling us some months ago. No one was more 1687 gloomy in his predictions than the right hon. Gentleman. I hope that we shall receive congratulations from him on the success of the policy so far.

§ Sir G. Howe
Will the Chancellor reconsider his answer to my hon. Friend the Member for Melton (Mr. Latham)? Does he agree that it is of the greatest importance for the country to know whether he even has it in mind to continue into next year rigid guidelines of the kind that have proved so intolerable this year? Does he agree that British industry is becoming increasingly resentful about the impossible obligations that he is seeking to impose upon it in the new terms of contract, and that unless he makes it clear that they are not to be placed under an obligation of this kind, he is bound to get a hostile reaction from British industry?

§ Mr. Healey
The right hon. Gentleman seems very badly out of touch with organisations which purport to represent British industry, which have given and are giving full support to the Government's pay policy, which accept the need for sanctions to support that pay policy, and which have discussions with us about some aspects of the latest addition to those sanctions, namely, the contract clauses.