INDUSTRIAL SITUATION

HC Deb 16 January 1979 vol 960 cc1524-641

4.37 p.m.

Mrs. Margaret Thatcher (Finchley)

Whatever view the Prime Minister may take about the situation in Britain, the Opposition took the view that we were in a position of grave trouble of crisis proportions—I should have thought that that was no longer in doubt—that it was of such a nature and of such proportions as to be of great concern to the House, and that we should debate it at the earliest opportunity. The Prime Minister took a different view, and after a month's recess was not prepared to provide a day from Government time, so we have provided a Supply Day of our own.

Inquiries around the several organisations about the precise position have revealed a very grim picture indeed. Own account transport operators such as supermarkets are officially not in dispute, according to the agreement with he Transport and General Workers' Union, and should be exempt from picketing. However, the Freight Transport Association, which represents such operators, reports that own account vehicles have been widely picketed. It also reports that basic food supplies are being stopped.

The Road Haulage Association confirms that picketing is affecting the supplies of essential goods. The Freight Transport Association also reports a new problem —shortage of diesel fuel, particularly in the South-West, because of picketing al the oil terminal at Avonmouth.

British Rail reports quite simply: There are no trains today ". The British Transport Docks Board, the nationalised ports sector, says that on nationalised ports sector, says that, on average, traffic at its ports is down 40 per ting in and out of Southampton. The rail strike has added to the burden.

The report from the Confederation of British Industry is that many firms are being strangled. There is a shortage of materials. They cannot move their own products. Exports are being lost. It says that secondary picketing, picketing of firms not in dispute, is very heavy all over the country. It is particularly affecting such items as packaging materials and sugar and all vital materials necessary if industry is to keep going. Lay-offs known to the CBI are at least 125,000 already, and there are expected to be 1 million by the end of the week. There are telegrams and telexes from many companies saying that their exports are not being allowed through and that they might lose the orders for ever.

There are messages from firms such as Marks and Spencer which last week lost 20 per cent. of its food production, approximately £2 million. Unless secondary pickets are removed this week the estimate is of a 30 per cent. loss. Over last week and this week, unless there is a change, the company says that it will not shift 50 per cent. of its exports.

The food industry in particular is shambolic. There is pressure on edible oils, yeast, salt, sugar and packaging materials. No maize came through Tilbury yesterday. Associated Biscuits has already laid off 1,500 people in Huyton and 400 in Southampton and will lay off more by the weekend. Cold stores are laying off people, and all large oil mills in Hull were picketed yesterday, except the one visited by BBC television. If that is not mounting chaos, it is difficult to see what is.

The strikes today are not the only ones we have experienced recently. The tanker drivers' strike, thank goodness, is over. We have had the bread strike, hospital strikes, strikes at old people's homes, and strikes in newspapers, broadcasting, airports and car plants. Many people who thought previously that strikes were a characteristic only of large firms and that most firms were strike-free received a rather rude shock from a new piece of work by the Social Science Research Council, a Government-financed body, which found that nearly half our factories had some form of industrial conflict, stoppages, overtime bans and go-slows in the past two years; and nearly one-third suffered from all-out strikes.

This is the picture in Britain today, and the troubles will not be over when the immediate strikes are settled. Not only are there more problems in the pipeline but many of the problems arising from the present strikes will carry on for very much longer than the strikes themselves. Many export orders might never be regained. Companies and firms which have struggled hard to get them may have to lay off their workers. Some of the small firms upon which Britain depends so much may be forced into bankruptcy and they, too, will have to lay off their workers. It was interesting to hear on the BBC this morning a typical road haulage man who said that he knew what he could afford. He could survive only about another four days because he was already losing £1,000 a day.

What is our approach to this grievous strike situation? Unlike the Prime Minister, we do not go around supporting strikes when we are in Opposition. We never have and we never shall. These things are a weapon of the present Government party and the nation is reaping a bitter harvest from the attitude and approach that they have taken.

The Prime Minister will not like it, but it is pertinent that he should be reminded exactly of the attitude he took in the miners' strike during our phase 3. The offer was approximately the same as that being offered by the road haulage employers now. When the miners were being offered 16 per cent., the Prime Minister said this of my predecessor: Unless he has more money to put on the table, he has a bigger struggle on his hands than he has ever imagined. Mr. Heath is arguing that he is fighting inflation. That is utter drivel. The Prime Minister obviously expects the Opposition not to follow his example. Indeed, we shall not follow that example. We shall act responsibly, and he is very fortunate that we shall do so. No one on this side of the House will be urging the road hauliers to pay more. No one will be quoting the minimum amounts that they are paid. They are much more likely to believe the comments of many lorry drivers, heard on radio and television, that their regular pay varies from £75 to f100 a week.

The Prime Minister's answer to all our troubles is a statistic—X per cent. This year it is to be 5 per cent. But we cannot have rigid pay policies for ever. That is not a possible way of conducting affairs in a free country which has a great deal of varied industry and where industry must always be changing to keep abreast of the times and one step ahead of competitors if we are to survive. It is not a possible way. It is not even possible in the way that the Government propose to carry out their present policies. There is no way in which it will work. I thought that that was admitted by the Lord President of the Council on television last Sunday during a very long interview. He pointed out that the low-paid workers would get far more than 5 per cent. That had already been arranged.

We know that under schedule 11 to the Employment Protection Act workers just above the low-paid level can use that provision to break through any incomes policy and to get higher pay because other people in the area are getting higher pay. The Prime Minister introduced that schedule and that legislation. It was part of the price he paid to the unions for the earlier stages of incomes policy. He knows and we know that unless he has proper provisions for differentials for people who take the trouble to acquire extra skills, knowing the years this takes, industry cannot be kept going because we shall not have the skilled labour that we need. His policy cannot and will not work.

The Prime Minister said this afternoon, when tackling the problem of inflation, that he believed in money supply. That is common ground between us. Five years of Labour Government have debased the coinage to a greater extent than have any other Government for three centuries. That is not in dispute; opinion as to how or why it came about may be.

The right hon. Gentleman knows and I know that unless he holds the money supply inflation will mount again. He knows and I know that if he goes on spending money at the rate at which the Government are spending at the moment and goes on borrowing the amount the Government are borrowing at the moment interest rates will be very high indeed and industry will be in considerable trouble. It already is. That is not the way to get productivity going.

The right hon. Gentleman knows equally that the real problem is that we have lived through a long period of increasing trade union power. That period has been characterised by a series of what I would call package deals between the Government and the unions in which the Government have offered certain advantages in return for certain co-operation. The trouble has been that the advantages have tended to become permanent and enshrined in legislation, and the cooperation only temporary. In fact, the package deals got unpacked. That happened even with some of ours, as there were a number of advantages for the unions in the Industrial Relations Act. A good deal of the restraints were abolished by the present Government. It has been a very unequal situation.

That time of mounting power for the trade unions has also been a period when we have seen increasing Left-wing militancy in control of the unions. [HoN. MEMBERS: "No "1 Yes, we have, and the country knows it. The right hon. Member for Huyton (Sir H. Wilson) knows it, the Prime Minister knows it, and the people in the rank and file of the unions know it. Just at a time—

Mr. Sydney Bidwell (Ealing, Southall)

Does not the right hon. Lady understand that in a debate of this importance she must be much more specific than she apparently wishes about the dispute at issue? The characteristic of this dispute is that the rank and file have been balloted all the way through. It is only now that the leadership of, the Transport and General Workers' Union has made the dispute official and is taking a hand in it. That is the reality of the situation. The right hon. Lady's arguments are pure fantasy.

Mrs. Thatcher

The hon. Gentleman suffers from the fact that I understand him perfectly. He knows as well as I do that perhaps one of the reasons that this strike was made official was that it was already out of control. It went out of control because of the mounting Left-wing nature of that union.

We have been through a period of increasing trade union power. The unions have had unique power and unique power requires unique responsibility. That responsibility has not been forthcoming. That is the reason for the position in which the country finds itself today—about which they can be no dispute.

There has already been a good deal of comment and argument between the two sides on the vexed matter of picketing, which is playing an enormous part in these strikes. The Home Secretary had a go yesterday. He said two things with which I want to quarrel immediately. I do not like quarelling with the Home Secretary, but he gives one many opportunities to do so in some of the things he says.

He said, first, that, apart from one difference in the law which the Government side brought in, the law on picketing had remained the same. The difference which he said that the Government side brought in is that one cannot now picket at a person's home. That was not brought in by the Labour Party. It was brought in by the Industrial Relations Act—

The Secretary of State for the Home Department (Mr. Merlyn Rees)

It was in the 1974 Act.

Mrs. Thatcher

It was in the 1974 Act, but it was not an improvement, or a greater protection to people in their homes, brought in by the Labour Party. It was introduced by the Conservative Party in the 1971 Act and it was one of the things that the Labour Government retained. So the right hon. Gentleman was wrong on that.

He also said: I have no power to instruct chief constables in their duties."—[Official Report, 15th January 1979; Vol. 960, c. 1323.] He has power to send a circular to chief constables. Does he not remember, when we had debates and emergencies before, his right hon. Friend the Secretary of State for Education and Science debating with my right hon. Friend the Member for Chipping Barnett (Mr. Maudling) at the time when he was Home Secretary? The right hon. Lady said: That is why I welcome, but regard as very late indeed, his—> my right hon. Friend's— circular to chief constables, which was sent out last Friday giving advice on what steps they should take.—[Official Report, 14th February, 1972; Vol. 831, c. 48.] The Home Secretary should be giving advice on the present grievous difficulties.

Mr. Merlyn Rees

I have no power to instruct chief constables. That is what I said yesterday, and I repeat it. The right hon. Lady is wrong.

Mrs. Thatcher

Will the right hon. Gentleman give the chief constables advice by means of a circular? Why has he not done so already? He has power to give advice in a circular and, in view of the seriousness of the situation, he should already be doing it.

We on this side take the view that it is far better to take emergency powers early rather than leave it until the situation has escalated. That is the practice that we followed. Emergency powers were usually taken comparatively early. The negotiations with industry should now have been completed on what regulations it would be necessary to add to the corps which is already there, ready and waiting, under the Emergency Powers Act 1920. I doubt whether those steps have been taken and I think that that is why the right hon. Gentleman is not bringing in emergency powers as the position is now. When one has those powers there is no need suddenly to use the Army. The Army is there if the contingency plans have all been properly made.

May I continue on the question of the law on picketing? Apart from the one change to which the Home Secretary referred, which we made, he is right to say that the law on the nature of picketing has not changed for a very long time. The best exposition that I know on this—it is not for me to lay down what it is or what it is not—is an exposition given by the Conservative Attorney-General, then Sir Peter Rawlinson, now Lord Rawlinson, in a speech in September 1972. He went into it in language which is so simple that one would not have thought that a lawyer could have written it.

He set out very well the position on the nature of picketing. The only right is that of peaceful persuasion. There is no right to stop a vehicle. There is no right to threaten loss of a union card. There is no right to intimidate. There is no right to obstruct, and numbers themselves can be intimidating. He also pointed out what few other people have said—that every person in this country has a right to go about his daily work or pleasure free from interference by anyone else. That right is not being exerted or exercised at the moment.

My right hon. and noble Friend also pointed out: The right to proceed about one's lawful business is not in any way subordinate to the right of peacefully persuading. This has always been the case. So the right of a person to do as he wishes should be upheld by the police and by this Government.

But now we find that the place is being practically run by strikers' committees and that they are using such language as "allowing" access to food, "allowing" certain lorries to go through. They have no right to prevent them from going through. They have no right to stop them. Lorry drivers should look to the Government and all the agencies of government to protect their right, first, not to stop if they do not wish it and, secondly, to go through to the docks or anywhere else with their loads. That is not happening and it is most reprehensible that firmer steps are not being taken by the Government to protect the ordinary citizen's right to go about his lawful business.

Some disturbing reports are coming in from parts of the country about what is happening. I am getting a large number. I am pledged not to use any names, SO—

Mr. Robert Hughes (Aberdeen, North)

Why not?

Mrs. Thatcher

We on this side respect confidence. Of course the hon. Member would like names, would he not?

Mr. Robert Hughes

Could not the right hon. Lady at least tell us how she can reconcile her support for Ford to settle at any price and for the Government to have no influence over Ford with her sudden desire now to prevent trade unions from carrying out legitimate strike action? If she has information which she says is confidential, what value is it if she is not prepared to name exactly where and when it is taking place?

Mrs. Thatcher

At no stage, even though frequently invited to do so, did I support the Ford strike. It was a strike in breach of an agreement. We on this side believe that unions should uphold their agreements as a matter of honour.

Mr. Robert Hughes rose—

Mrs. Thatcher

I have not finished with what the hon. Gentleman said. The argument that I am developing now is that there is no right to intimidate any citizen in this country. Bit that intimidation is taking place. I propose to use actual reports in the press in which names are given. They are substantiated by many telegrams. I am not prepared to mention names, because that is what a number of people would like me to do—and then those concerned would be exposed to intimidation as well.

It is reported in The Daily Telegraph today—[Horn. MEMBERS: "Ah! "] This relates to the animal feed compounders, a very important group. I thought that everyone recognised that it was important for food to get through to animals—but it is not, apparently, recognised by Labour Members below the Gangway. The spokesman states: ' We are finding that essential ingredients —fat, salt and vitamins—are not being allowed through in a number of cases.' They are not being "allowed" through. The report continues: It is a very alarming situation.' One Reading feed firm was told its nonunion driver would have to pay £16.64, a year's membership subscription to the Transport and General Workers' Union, before he would be allowed in to collect animal feed at Southampton docks. Mr. Charles Cooper, a director of the firm, Walter Parsons and Sons, said: I think it's blackmail. I thought this was a free country. If our chaps want to join a union, they can. We don't see why we should force a chap to join '. No union has any right whatsoever to do that. I believe that it is an offence against the law to do it. Action should be taken to ensure that lorry drivers are not threatened and to ensure that they are not told that they cannot get through unless they have a union card or take one out.

One of the problems about the present law on the nature of picketing is that it is extremely difficult to enforce. Intimidation and violence are unlawful. I believe that intimidation and violence are happening and are a daily occurrence. If the present law is unenforceable, we must change it so that it becomes enforceable. If the Prime Minister wishes to embark upon that, we shall certainly support him.

The Home Secretary said that the law has not changed. He was being less than complete in his assessment of the law. The law on the nature of picketing has not changed, but the law on the occasions when and places where it can take place has changed. It was changed by this Government.

There were considerable debates in the House during the passage of the Trade Union and Labour Relations Acts of 1974 and 1976. Hitherto the position was that trade unions had immunities from the process of the law only provided, first, that there was a trade dispute and, secondly, that the immunity applied only in the case of a contract of employment. That was all. But that was not good enough for this Government. They extended the immunity of trade unions in a vital way. They made trade unions immune in a trade dispute not only in relation to a breach of contract of employment but in relation to breach of any commercial contract whatsoever.

There were constant arguments in Standing Committee on this matter. The Government were warned what would happen if they took that action. A long letter from Campbell Adamson was puhlished in The Times and was quoted during those proceedings. Campbell Adamson was not exactly the staunchest ally of the Conservative Party. He said: If the Bill is passed as at present drafted, unions … will be free in law … to ' black ', blockade or boycott, or threaten to do so, whenever they like… in respect of a trade dispute anywhere in Great Britain or in the rest of the world. Secondly, it will be lawful to use the picket line for the purpose of establishing boycotts or blockades whether against an employer in dispute or against employers, companies … or bodies which have nothing to do with the dispute in question. The Government were warned that if they passed that section of the legislation it would lead to blacking, blockades and boycotts. That is what they wanted and that is what we have got.

Mr. Joseph Ashton (Bassetlaw)

The right hon. Lady referred to the law as it was in 1972. Is she not aware that the picketing that took place at the Salt-ley coke depot which was led by Arthur Scargill—[HON. MEMBERS: "It was illegal."] It might have been illegal, but it worked from the union point of view.

Hon. Members

Oh.

Mr. Speaker

Order. The right hon. Member for Finchley (Mrs. Thatcher) gave way to the hon. Member for Basset-law (Mr. Ashton). He is making a brief intervention.

Mr. Ashton

Whatever laws are on the statute book or whatever is written on a piece of paper do not guarantee the prevention of picketing.

Mrs. Thatcher

The hon. Member for Bassetlaw (Mr. Ashton) has made one at the most revealing and significant interventions that I have heard. He is not concerned with legality. He is not concerned with protecting the rights of the ordinary citizen to go about his business. He is concerned with the convenience of the trade unions. It is because of that attitude that today many of our citizens have to apply for permits to a strike committee of the Transport and General Workers' Union. That is exactly what this Government have landed our people in. It is totally and utterly wrong.

The Government have changed the law on picketing—not on the nature of picketing but on the extent. They were warned what would happen. It has happened and they are responsible for it in large measure.

Mr. Thomas Swain (Derbyshire, North-East)

Will the right hon. Lady give way?

Mrs. Thatcher

Of course I shall. I am only too delighted to do so. Hon. Members are being most helpful.

Hon. Members

Oh.

Mr. Swain

Stop baying, hounds. We have not killed the fox yet.

Does the Leader of the Opposition agree that she has missed out two important sections of society—members of the British Medical Association and members of the associations for the legal professions? They operate a closed shop and, above all, unlike trade unions, operate their own kangaroo courts.

Mrs. Thatcher

Neither the Law Society nor the Bar Council operates a closed shop. The hon. Member for Derbyshire, North-East (Mr. Swain) should read the last presidential address of the current president of the Law Society. Of course people must acquire qualifications. That is different. A solicitor does not have to belong to the Law Society to practise as a solicitor. A barrister does not have to belong to the Bar Council to practise as a barrister. A doctor does not have to belong to the British Medical Association to practise as a doctor.

I understand from a number of the Prime Minister's comments about picketing that he does not like the present situation either. We do not always judge the Prime Minister by what he says because he does different things. Most of us did not like what happened at Grunwick, but he did not stop his Ministers joining that picket line. That picketing involved numbers, and numbers themselves can be intimidating—that is apart from the violence. The Secretaries of State for Education and Science and for Defence joined the picket line when they were not involved in the dispute in any way.

The Secretary of State for Education and Science and Paymaster General (Mrs. Shirley Williams)

Will the Leader of the Opposition also tell the House what a number of her colleagues have not said in letters to the press, that the moment that there was violence on the Grunwick picket line—which was many weeks after I was there—I immediately denounced it publicly?

Mrs. Thatcher

The right hon. Lady was not involved in that dispute. She was not in dispute with anyone, so far as I know. Nevertheless, she added her presence to the picket line and added to the numbers, when numbers themselves can be intimidating.

Mrs. Shirley Williams

The right hon. Lady knows that what I have said is true. Will she now concede that my remarks are true?

Mrs. Thatcher

The right hon. Lady concedes that she went on the picket line. I should never accuse her of wanting or condoning violence. However, she was not in dispute. She ought never to have gone on that picket line. Her action encouraged others to turn up in larger numbers. When one of my hon. Friends tackled the Prime Minister about that during Prime Minister's Questions he said that he hoped that others, including Opposition Members, would join that picket line.

The Prime Minister does not have exactly the world's best record on picketing. In a more recent quotation he said: Not crossing the picket line has become an expression of solidarity to a degree which I certainly did not know in my younger days when I was an active trade unionist. But that kind of solidarity if carried to extremes means that life could seize up in a closely knit industrial society such as our own."—[Official Report, 1st November 1978 Vol. 957, c. 53.] It seems that the right hon. Gentleman, too, is having second thoughts. If he is, if he will carry out an inquiry and investigation into picketing and will undertake, first, to repeal the extension of the law that his Government introduced and, secondly, will ascertain how both the law and practice may be changed to ensure that we do not have the problems that we are now encountering, the Opposition will support him.

Closely allied to picketing and the giving of tremendous power is the powerful weapon of the closed shop. I do not say that it allows pickets to intimidate because they are not allowed to do so, but in practice it enables them to intimidate. At present we cannot catch that and take it to the courts. It is illegal. It is the most powerful weapon for any group to have. When a lorry driver meets a line of pickets he may be alone in the cab. Therefore, he has to face a line of pickets alone. He can be identified because of the number of his lorry and the name on it. He is so fearful that he is almost bound to stop. As one driver said, "What choice have I? Who will stand up for me when I am sacked? "

In the vexed and vital area of the closed shop the Government have enhanced the powers of the trade unions. They have made it legal to have a statutory closed shop. They have made it legal for the unions to ensure that a person may be sacked from his job without compensation and without right of appeal to the courts of law. That is what the Government have done to enhance and increase the powers of trade unions. The Government have introduced legislation that allows picketing to take place at a greater number of places. The picketing that we now see taking place and the closed shop provisions have put into the hands of trade unions a considerable weapon leading to violence, and to intimidation that we cannot detect.

Mr. John Gorst (Hendon, North)

Will my right hon. Friend associate an additional feature with her remarks? Does she agree that many picket lines are being used—this applied to Grunwick and other disputes—in current disputes by extremist parties, such as the Socialist Workers Party and the Communist Party, solely as a background for making political trouble?

Mrs. Thatcher

I want to remove all possibility of violence on picket lines. I want to re-establish the circumstances under which people may go about their business without interference and without fear of losing their jobs. At present they are in grave fear.

The Prime Minister has been saying various things about the closed shop. He voted to change the earlier legislation but he has been making new statements about the closed shop. On 12th July 1977 he said: I always took the view that there was a right not to belong to a trade union, when I was a trade unionist myself, and I take that view now."—[Official Report, 12th July 1977; Vol. 935, c. 219.] If he wishes to repeal the legislation that his Government enacted, we shall support him in doing so. If he will bring forward proposals to mitigate the effects of the closed shop. again we shall support him in doing so. If he asks the unions to minimise its effects, we shall support him in that approach.

It is not impossible to do that. It has just been done at County Hall. At the instance of Horace Cutler about 17 unions have entered into a new agreement at County Hall which means that the closed shop in its present form will not continue. What has been achieved is one of the greatest breakthroughs under present Conservative government in the GLC. If the Prime Minister will secure similar agreements for all unions under all circumstances, it will be a great advance.

Let me tell the Prime Minister what has been agreed. Horace Cutler said: What we have now agreed is that any worker who genuinely objects to trade union membership on the grounds of religious belief or personal conviction can opt out without question; that there will be no Star Chamber' type of inquisition into the genuineness of such belief; and that any worker opting out will make a charitable donation equivalent to the trade union subscription. The Government made the closed shop possible and legal in circumstances in which it would never have been possible and legal before. They enabled trade unions to compel a person to lose his job without compensation if he refused to join a union.

If the Prime Minister will secure by agreement that each and every person who does not want to join a trade union because of personal conviction is able to opt out, we shall support him. If he will undo some of the measures that he supported to give greater power through the closed shop provisions of the 1974 and 1976 Acts, we shall support him. He has a chance. We shall now see whether his statements that he is against the closed shop and that there is a right not to belong to a trade union were meant in the sense that he is prepared to take action, or whether they were mere talk. If he takes steps to minimise the closed shop provisions, we shall support him.

Mr. Eric S. Heffer (Liverpool, Walton)

Was not the agreement recent]) reached with the GLC made under the existing law? The trade unions are supposed to have enormous power, yet they are willing to enter into agreements of that sort. Is not the right hon. Lady undermining the whole of her argument? The trade unions have proved that they are willing to enter into agreements provided that they can be freely arrived at.

Mrs. Thatcher

Of course I am not undermining my argument. The hon. Gentleman knows that. I believe passionately that no one should be compelled to join a trade union as a condition of keeping his job. The Government do not share that belief. The Government believe—they introduced legislation to this effect—that a person should be compelled to join a trade union and that if he does not he should lose his job. That is in the 1974 and 1976 legislation. The hon. Gentleman knows that people who have worked for British Rail for years in a perfectly satisfactory manner have lost their jobs without compensation because the Government passed legislation that enabled that to happen. We must seek to change the law and the extent to which the trade unions seek to operate it.

I appreciate, Mr. Speaker, that I am taking rather a lot of time but I am not occupying all of it by a long chalk. It the Prime Minister will do something to reverse the effect of the 1974 and 1976 Acts which his Government and his predecessor's Government enacted, we shall support him.

Another complaint that is frequently made is that we cannot have free collective bargaining—I stress that we have always used the term "realistic and responsible collective bargaining "—between two sides when there is no true balance of power between the sides. There is a great deal in that argument. If we are to be able to bargain freely, there must be a pretty good balance of power between the two parties to the bargaining. That is why the powers of trade unions were strengthened many years ago when the employee was very much on the adverse side of the balance. Today it is the employer who is on the adverse side.

In many instances—this is not known by Labour Members sitting below the Gangway—a strike of three to four weeks can put an employer totally and utterly out of business, although it may scarcely affect the income of those who previously worked for him. Until that balance is a true balance once again, I believe it will be difficult, if not impossible, to get free collective bargaining.

Every freedom—trade union freedom as well—requires very grave responsibility in its exercise. I can see what will happen. Unless the Prime Minister is prepared to redress the balance of trade union power so that there is an even balance between the two sides, what he is going for will be a State in which one can never get free collective bargaining and in which he will try to have incomes policies year after year. This will mean that industry in this country seizes up and we never reach that state of prosperity to which our talents and abilities entitle us.

A good deal has been said about the way that the PAYE system works, but I might point out that the most obvious way to deal with this problem is one which the Chancellor will never take. If one did not pay so much in tax out of one's pay packet, there would not be as much to come back during a strike. But the Labour Party is the party of high personal income tax. It increases it every time it is in power, and it has many effects. It means that people have no incentive to work harder and it means —this is another side effect—that people look at their net take-home pay and demand bigger pay increases than they would otherwise get if they paid less tax.

Some unions are so powerful that they are able to deprive the community of the essentials of life, and there are people in some occupations who would not go on strike at all. The Army would not, nor would the police, and we should be very grateful to them for their loyalty in all kinds of situations.

Are there not other unions whose members' work is so essential that one would expect them to be prepared to enter into no-strike agreements? Would it not be reasonable to take them out of the usual processes of bargaining in return for different methods which could be negotiated with them? I heard someone say "water ". I know that we went against the Donovan report and took away the limitation on striking in the water, electricity and gas industries. Some of us now think, with hindsight, that we were ill-advised to do that, but the nature of the prohibition was a criminal sanction which we did not like. Moreover, it had not been used for many years. There was a third reason, that people could get round the strike provision and have go-slows or overtime bans. Donovan recommended keeping that limitation to remind people that there were particular occupations which were not entitled to inflict immense harm and damage on the community out of all proportion to their numbers.

What I am suggesting to the Prime Minister is that he enters into negotiations with some of the unions to see whether he could get a no-strike arrangement in return for a different method of bargaining which they would Lind satisfactory. Again, if he does that we will support him.

Doubtless the Prime Minister now regrets his attitude to "In Place of Strife ". We certainly regretted his attitude in 1974 when he pledged to do away with the Industrial Relations Act and to enact new legislation which, in his own words, Labour had already agreed with the TUC.

We are concerned with the well-being of all our people. The question of the powers of unions in relation to the community, Parliament and the law has been raised again by events and by crises which even the Prime Minister cannot ignore. While we are very critical of his complacency, and while we are critical of the way in which matters have hardened and he has not been prepared to take the requisite action, and while we are critical of much of his political philosophy, if he will take steps to deal with the situation of trade union power and consider new laws and new practices against picketing, of alleviating the effect of the closed shop and of trying to achieve more secret ballots so that people do not go on strike before they have been consulted about a matter which affects their whole livelihood—if he will agree to take action on these issues, we will support him through and through.

We believe that this is a matter of great significance for democracy and a free society, and we will support him if he will take steps to deal with these problems. I hope he will set them in hand soon. May I point out that this is a more generous offer than he ever made to us when we were in government. I hope that he will take those steps. If he does not, I hope that he will step aside for a party that will.

5.26 p.m.

The Prime Minister (Mr. James Callaghan)

I congratulate the right hon. Lady on a most effective parliamentary performance. It was in the best manner of our debates and the style in which it was delivered was one of which the right hon. Lady can be proud.

I wish I could offer quite the same compliment about some of the content. I think that anger and indignation are emotions that it is right to display, and when they come from a deeply felt passion it is right that the House should listen to them. But I would seriously and earnestly beg the right hon. Lady not to give way to overmuch indignation when she is negotiating on these issues. We have found by a long experience of history that it is not sufficient to refer to a large number of one's fellow citizens, as one of the Sunday newspapers did, as enemies within the gate. That is not the way that one can handle these matters. [Interruption.] Well, I suggest that hon. Gentlemen go to the House of Commons Library and look up the headings in the Sunday newspapers and they will see.

I propose to deal with what I have to say under three headings. The first heading I take is the present situation, and in view of the fact that the right hon. Lady spent the greater part of her speech on the power of the trade unions and strikes and picketing—as I intended to do myself—it would be proper to spend time on that. But I shall also embark upon a subject that she did not mention. Not one word passed her lips, as far as I can remember, about the overall question which faces this country and that is the prospect of runaway inflation. I will come to all of these matters in turn.

First, the right hon. Lady began by giving us her assessment derived from the reports reaching her of the situation in the country. I have of course, through the Department of Transport and the Ministry of Agriculture, Fisheries and Food, been getting similar reports. It is very difficult to give an overall picture, because the situation seems to change from hour to hour, and as the right hon. Lady said, from place to place. Regional officials, I am told, of the Transport and General Workers' Union are being very active in seeking to ensure that the limits of industrial action, particularly in relation to secondary picketing, are respected, and they are taking positive steps with strike committees on the basis of the priority list that the Government handed to them.

Priority supplies, I am told, are moving out of a number of ports, although usually on a restricted basis and not at all at Hull or Felixstowe. Picketing of some food manufacturers and suppliers of animal feedingstuffs continues, but has eased. In general, while vehicles belonging to the Road Haulage Association, even when carrying priority supplies, continue to face problems, what are called own account operators are not being restricted. [HON. MEMBERS: "Nonsense."] I prefaced my sentence by saying "In general ". I ask the House to accept that these reports are compiled on the basis of what is sent in by the regional officials assessing the situation for the Departments.

On the other hand, there are clearly occasions when the recommendations of the union are being ignored. There are regional differences. It is said that exports are being held up and raw materials are not reaching factories. The situation is easier in the South-West and is improving in the North-East, but the North-West and South Yorkshire continue to cause serious concern.

Mr. Michael Brotherton (Louth)

Will the Prime Minister give way?

The Prime Minister

No. As regards supplies in the shops—

Mr. Christopher Brocklebank-Fowler (Norfolk, North-West)

Will the Prime Minister give way before he leaves this point?

The Prime Minister

I am not leaving any point. I am trying to give the House the best up-to-date account I have from the regional officials of the Departments concerned of the overall picture.

Mr. Brotherton

It is out of date.

The Prime Minister

I can only reply to the hon. Gentleman that the report was assembled at 2.30 this afternoon. As I said, the situation changes from hour to hour and it is not possible to get an overall picture.

Mr. Brotherton

Will the Prime Minister give way?

The Prime Minister

No, not at the moment. Basic foods such as milk, meat and bread are widely available, and we expect that position to continue. We expect supplies of most foods to get through to the shops in reasonable amounts for the time being, although there are a number of difficulties to be resolved with important raw materials such as salt, edible oils, fats and sugar in order to get the food factories moving again and the pipelines replenished.

The effect of the instructions issued by the TGWU to its members has yet to be seen, but, if secondary picketing of own transport vehicles is removed, there will be a resumption in the flow of some of the important raw materials to which I have just referred. If the union ensures that secondary picketing of vehicles moving food is brought to an end, all these vehicles should be able to go about their business and that would greatly reduce the interruption of food manufacture and distribution and of essential supplies of animal feed.

The broad conclusion that we have reached is that the situation for trade, industry and employment in this country is serious. We shall continue to keep under review, day by day, whether a state of emergency would increase the flow of supplies, food and materials. That is the ultimate test. As of today, we do not believe that the declaration of a state of emergency would increase that flow of supplies, food or materials. Indeed, it might lessen the flow.

If the situation changes, the right hon. Lady and the Opposition need have no doubt that, as in the case of the oil tanker drivers if their dispute had continued, we would not hesitate to come to the House with a declaration of a state of emergency and ask the House to support us on it.

A number of hon. Members want to raise matters with me. I shall give way gladly, but I am sure that they will understand that I have a lot to say about other matters.

Mr. Brocklebank-Fowler

Many of us will interpret the Prime Minister's remarks as being an extremely complacent assessment of the current situation. What hope can he give to companies such as the Dow Chemical Company in my constituency which is totally blockaded by secondary strikers even though no member of its staff is in dispute with anyone? As a result of that action, an important export order to Egypt which cannot be replaced is likely to be lost and will never be won again.

In addition, because of the shortage of fuel oil and the damage that will be caused to experimental greenhouses containing plants, insects and animals essential to research, three years' important research work will be lost. What steps will the Prime Minister take to ensure that fuel and other essential supplies can get through to that firm?

The Prime Minister

If there is obstruction under the existing law, action can be taken. If the criminal or civil law does not allow action to be taken, I should like to ask the hon. Gentleman what action he thinks I should take—apart from conceding the claim.

Mr. Brocklebank-Fowler

The right hon. Gentleman is the Prime Minister and claims to have influence with the trade unions. I shall be grateful if he will use his influence to ensure that the Transport and General Workers' Union removes its pickets and enables the firm to get on with its work.

The Prime Minister

If I had the influence with the Transport and General Workers' Union that the hon. Gentleman ascribes to me, the strike would never have started.

Mr. Reginald Eyre (Birmingham, Hall Green)

Will the Prime Minister give way?

The Prime Minister

No. I shall not give way again. I am sure that in every constituency there is a complaint that every hon. Member could raise.

Mr. Brotherton

Will the Prime Minister give way?

The Prime Minister

No.

Mr. Speaker

Order. It is clear that the Prime Minister is not giving way. The House must acknowledge that fact.

Mr. Brotherton

Will the Prime Minister give way?

The Prime Minister

No. I promise the hon. Gentleman that Ministers will make reports as soon as is necessary and every day. I have a long speech to make and I have given way. I must get on.

I have given the up-to-date position in so far as any general assessment can be made.

Mrs. Winifred Ewing (Moray and Nairn)

Will the Prime Minister give way?

The Prime Minister

No.

Mrs. Ewing

Give way. The Prime Minister: No.

Mr. Speaker

Order. May I say to the hon. Lady the Member for Moray and Nairn (Mrs. Ewing) that we shall not have a reasonable debate if the right hon. or hon. Member addressing the House is not allowed to continue.

The Prime Minister

The interruptions of the hon. Member for Moray and Nairn (Mrs. Ewing) sound to me like secondary picketing.

I want to come to the question of picketing, but let me utter a word about strikes in general. The Leader of the Opposition said that the balance of forces has changed. I agree with her. There was a time when the employers were in the ascendance and when strikes were very much a matter of last resort—unlike now. Indeed, in those days men often stayed at work and accepted intolerable conditions with great bitterness rather than strike because of the privations they and their families would endure if they went on strike.

Lord Donovan, in his outstanding report—and I was a general supporter of his conclusions—said of men on strike: It would hardly be human if they viewed with composure the spectacle of other workmen endeavouring to take over their jobs ". The origin of picketing was to stop the blackleg from doing one's job and the method used was to interrupt the flow of supplies to and from one's employer. The struggle was between the employer and the workmen who had combined to assert their right to decent living conditions.

The Leader of the Opposition quoted Lord Rawlinson's remarks about the legal issue. I am not a lawyer, but I understand that there is no legal distinction between primary picketing and secondary picketing in either the criminal or the civil law. However, the plain man can draw such a distinction, and I do.

Picketing, even today when the balance of strength has changed, is intended to stop the blackleg from doing the work of the man on strike.

Secondary picketing has always been with us, but not to the extent that it is today. It grew up, I may say—without, I hope, raising too much heat—especially during the period of the ill-fated Industrial Relations Act. But it is not designed to stop the blackleg from doing the job of the man on strike. It is intended to stop another worker from doing the job that he usually does. That is the distinction that I make as an ordinary citizen and not as a lawyer. It is my view that in these circumstances indefensible hardship can be imposed on innocent people and on people who are not connected with the dispute. That is why the spectacle of secondary picketing has aroused widespread criticism, and the Transport and General Workers' Union has attempted to limit picketing to its original purposes, although so far with only some partial success.

Striking used to be a measure of last resort, because of the privations that resulted. Nowadays it is not so. Indeed, the privations are hardly to be seen in certain circumstances, although in the Grunwick case there was an indefensible attitude on the part of the employer concerned. Workers today are part of society, and I thought that one of the elements missing from the right hon. Lady's speech was a recognition that they are part of society. Workers today accept fewer constraints than they did in the past about the effects of their actions on the general public. They intend—and by using secondary picketing they succeed—to bring pressure to bear on the employers and on Governments, to make us concede the claims which are put forward.

The present actions have highlighted the problems of secondary picketing, which did not attract continuous attention, at any rate in the past, and the Government certainly have a responsibility to consider what should be done to alter the present situation. I am bound to say, however, in view of our long history in these matters, that it is much easier to analyse than it is to find a proper solution, but we must try.

I begin by asserting two fundamental principles of our society. First, we cannot deny the right of men and women to withdraw their labour and still call ourselves a free society. That to me is fundamental. The second principle that I assert is that the community has an overriding right against all sectional interests. These principles must be reconciled. This is the difficulty of a modern society.

I point out to Opposition Members that it was a trade unionist, John Boyd, the general secretary of the Amalgamated Union of Engineering Workers, who summed up the position the other day. He said that it was wrong to cause other people to be thrown out of work, food wasted, animals slaughtered and health put at risk. He said that that is not the function of the trade union movement. I am with him 100 per cent. I address the road haulage drivers particularly when I say that hey have to measure their sense of grievance against the effects that their actions are having on the community at large.

I deduce, from the speeches of some Opposition Members who have studied these matters, that they are far from clear that a change in the law would solve the problem. The right hon. Lady this afternoon made a number of suggestions, but, as far as I could understand her approach, she was saying not that these were suggestions that she would like to put into force but that if we came forward with them she would support them. I am only trying to interpret what I understand the right hon. Lady's position to be.

Mrs. Thatcher

It would help if the right hon. Gentleman were to repeal the 1976 Act which his Government passed.

The Prime Minister

I will come to that particular point a little later. I do not think it would help.

I have read the recent comments of the hon. and learned Member for Cleveland and Whitby (Mr. Brittan) and of the right hon. Member for Lowestoft (Mr. Prior). They have spoken in the last week about this matter of picketing. They have referred to the need for a voluntary code of conduct. Certainly I believe that that would have a better chance of survival than ill-considered legal provisions, which could be ignored in the future as they have been in the past.

There is the example—it was referred to earlier—of the position in 1972 with Arthur Scargill and the Saltley coke works, which led the National Union of Mineworkers in 1974 to lay down voluntarily strict rules governing the conduct of picketing. These controls were effective. Why? Because they had the force of law? No. These controls were effective because they were voluntarily agreed measures, drawn up by the union itself and accepted by its members. They could not have been enforced if they had not been accepted by those concerned, or if there had been competing factions, for example, within the union who did not accept the overall decision. But the National Union of Mineworkers has usually—indeed, I would say almost invariably—accepted decisions of this nature when they are taken, and it did so on that occasion. What I am saying to the House, and what I beg the House to believe, is that the law is only a second—no, a third—best in these circumstances unless we have the agreement and consent of those who are bound together.

As the House knows, the Secretary of State for Employment has given a lot of consideration to the question of picketing. Last October he sent to a number of bodies, such as the TUC, the CBI, and to the right hon. Member for Lowestoft, the Scottish National Party, the Liberal Party, and others, including ACAS, a series of proposals for trying to clarify the issue of picketing, to try to turn it into something that would be generally acceptable and would not result in the kind of position that we have seen today. It is a prickly subject and, as the present position shows, a little progress has been made in the comments that we have had so far from some of those whom we have asked to give us the benefit of their advice. My right hon. Friend has asked them to expedite their replies, and the Government intend that we should proceed as quickly as we can to draw up a code of conduct that will adhere to some of the principles I outlined at the beginning of my remarks. My right hon. Friend will report progress to the House on this matter from time to time.

I come now to the question of the law, which the right hon. Lady raised. It has been suggested by other Tory spokesmen that industrial relations legislation which this Administration introduced has made secondary picketing more likely because of the repeal of the Conservative Administration's Industrial Relations Act 1971.

The Conservative Administration put that Act on the statute book in good faith, with the intention that it should introduce a system which they hoped would be fair between the unions, the employers and the public, but let us recall what was the basic underlying purpose of the Act. It was to make most strikes and picketing actionable. That was the purpose of the Act. People came under the law directly in that sense. What happened? Some action was taken. I hardly like to remind the House that five picketers were arrested, five picketers were charged, five picketers were imprisoned, and the Official Solicitor was called in to get them out.

It was during the lifetime of the Industrial Relations Act that secondary and flying picketing became the nuisance that it is today. The legislative change which we have made, which it is alleged has made secondary picketing easier, is that in the Trade Union and Labour Relations (Amendment) Act 1976 the immunity, as the right hon. Lady correctly said, for acts done in contemplation or furtherance of a trade dispute was extended to inducement to break a contract instead of, as previously, only a contract of employment. That was the extension that was made.

The right hon. Lady says that this was intended to give great new powers to the unions and was part of the whole ethos. The truth is that this change was made because of a number of court decisions in the late 1960s. These decisions had made the application of the law extremely unclear. This was commented upon by Lord Donovan who said in his report that whether legal liability was or was not incurred depended on—and here I quote the words of the report— whether a legal maze is successfully threaded or not. That was the result. As it was drafted, the Act was acting capriciously and inequitably between different groups of workers and in different industries.

I have examined this carefully, and in the light of the experience that we have had it is highly doubtful, if the change-back was made, whether this would effectively curtail secondary picketing. I still recall the Trade Disputes and Trade Unions Act 1927. That Act provided for the measure that the right hon. Lady has asked us to reinstate. I was deeply opposed to it because it prevented Civil Service unions from being affiliated to the TUC. That was eventually repealed. What I would like the right hon. Lady to check is this. The law was totally ignored and unused despite that provision from 1927 until the time that it was repealed.

We must be careful about the law in these matters. I am not in principle opposed to the law in trade union matters. As a Conservative spokesman said the other day, we have introduced more law than almost anybody else. We have done so, but we must be careful where we go with these laws unless we are to bring them into contempt and ridicule. That surely is not the purpose of the Opposition in putting forward suggestions of this sort.

The 1927 Act is one that I well recall, and it is for this reason among others that the Government believe in and would favour a code of conduct drawn up in any approved way. The right hon. Member for Lowestoft suggested this, but not the right hon. Lady, as I understand it. I am not trying to make a distinction between the two, but I will if the House wants me to, and it will not be very difficult. Everybody is trying to think his way through this. I agree with the right hon. Gentleman that a voluntary code of conduct, reaffirming the existing law, would be the best way to proceed as a solution to this problem.

Mr. Eyre

May I press the matter of urgency upon the Prime Minister. He mentioned raw materials, great quantities of which are being held up at the ports by secondary strikes and other activities. The consequence of that limitation of supply will be devastating in the industrial towns and cities within a week.

The Prime Minister

I cannot undertake on a long-term issue of this sort, which has been growing up for several years, that a new voluntary code of conduct would be drawn up and agreed within a week. That is not possible. We must try within the limits of the present civil and criminal law to ensure that secondary picketing does not go beyond the proper limits. With the help of the regional officers and the aid of the police, I trust we shall be able to do that.

Several Hon. Members rose—

The Prime Minister

I must pass on. I gave way only 30 seconds ago. I turn now to the question of pay policy. My right hon. Friend the Secretary of State for Employment reports that in this pay round there have so far been 45 major settlements covering 1½ million employees. Thirty of those settlements, covering 800,000 employees, are within the guidelines. At least eight settlements covering over half a million employees are not within the guidelines. I add that most of those in breach had settlements within single figures, although, since the Government's defeat on sanctions in December and our consequent withdrawal, the situation has worsened. Some offers are being made of more than 10 per cent. and productivity conditions are being dropped from the offers.

Up to the time of the sanctions debate there were two highly publicised, confirmed breaches—Ford and British Oxy- gen. These breaches, together with the oil tanker drivers and now the road haulage drivers, tend to set a pattern. There is a knock-on effect, an attempt to set a going rate. Everybody who has anything to do with negotiations knows that this is true.

I shall enumerate some of the agreements that were outside the limits just to give an indication of where they were. There were the merchant seamen at 8¼per cent., British Oxygen at 9½ per cent., motor vehicle repair workers at 8 per cent., narrow fibre workers at 8 per cent., and electrical contracting workers at 10½ per cent. It could be claimed that this kind of settlement, although not in accord with the Government's views of the best results for the country as a whole, would not be regarded as totally intolerable. But experience has shown that when there have been some highly publicised breaches the knock-on effect works through subsequent negotiations and indeed accelerates. This is the problem and the issue that the country has to face today.

I draw the attention of the House and of the country to the warnings—the awful warning in some ways—of 1975. At the start of the pay round—history can judge the reason for it and what effect the money supply had—we had some settlements in double figures. There were those who considered this tolerable, just as we now consider that we can perhaps tolerate something that we do not really want. The settlements started in double figures, but they gradually built on each other. By the end of the year, by the end of the round, settlements were not just in double figures. They had rocketed to over 30 per cent. The right hon. Lady said nothing about this this afternoon. She said not a word about it, but here, in a sentence, is the reason why the Government do not intend, wherever they have influence, to depart from the guidelines they have laid down and which are best for the country as a whole.

I noted what the right hon. Lady said about not encouraging the road haulage workers in any way at all. The discussion on their pay has all been in terms of basic rate. I will repeat the figures accurately as I do not wish to mis-state them. Their basic rate is £53 a week. They have been offered a further £7 to bring this rate up to £60. They are on strike for an extra £12 a week to bring it up to £65. On the basis of overtime and bonus payments, their present average earnings are £84 a week. The offer made to them would increase those earnings to £95 a week—that is, by £11 a week. If they were to get the £65 a week basic rate, their average earnings would increase from £84 to £103 a week—an increase of £19 a week or nearly £1,000 a year. I put it another way—the increase they would get is as much as a single old-age pensioner has to live on in the course of a week. Is that reasonable? Is this what free collective bargaining is about?

Mr. Alexander W. Lyon (York)

These figures are fairly well known, but I understand from some lorry drivers in my constituency that they are affected by the reduction in the number of hours that are permitted under EEC regulations. The result of this for one of the drivers whom I questioned yesterday was that he had already lost £5 a week on the first instalment of the hours regulations. He expected to lose more progressively as the regulations continued to be implemented. In those circumstances, is there not a case for saying that the lorry drivers' claim should be viewed in a different light from the rather naked figures that the Prime Minister has just given?

The Prime Minister

It is my experience that every group of workers has some particular problem that affects them and them alone. I have never known a case that is not unique. These are matters that must be dealt with by negotiation.

The road haulage workers' union has already negotiated an increase of about 15 per cent. this year. That is too high, in our view, for the health of the economy. These workers also received 15 per cent. a year ago at a time when inflation was running at 8 per cent. a year. They have had tax cuts like everyone else and increase in child benefit and children's allowances, yet now they say they will not settle for less than 22 per cent. I have no doubt what the answer should be in those circumstances. They have had a better deal than could have been expected and they should now go back to work.

Mr. Norman Tebbit (Chingford) rose—

The Prime Minister

No, I shall not give way at the moment. We now face claims in the public services from the local authority manual workers, the water workers, National Health Service ancillary workers, ambulance men, railwaymen, postmen, steel workers, gas supply workers, electricity supply workers and miners. These settlements are crucial to the future health of our country. The Government's policy is that the country should not go through once again what it went through four or five years ago. We shall adhere as closely as possible to the pay limits that have been laid down. We are at present seeing the first bitter fruits of free collective bargaining.

We have been deprived, by the vote of the House, of the instruments we were using to influence the holding down of pay settlements. Therefore, we must make the best use of such instruments as are available to us.

First, I make it clear that we do not intend, as a Government, to finance inflation. We do not intend to have a situation like that of a few years ago when the money supply snowballed out of control. We intend to adhere to monetary targets, with inevitable effects both on the level of activity in the economy and on the level of unemployment.

What has been remarkable so far has been steadiness of sterling. It has not slipped; it has wavered very slightly. As long as the Government are known to be holding to those targets and to this policy, we can be certain that our currency will not slip in the way that it did previously.

The Government do not prefer these alternatives. They are not our choice. However, we reject the alternative of allowing inflation to increase unchecked. If we do. we shall all be far worse off in the long run.

What would be the result of a small increase—and that is what it would be, only a small increase—in the quantity of money financing very large wage settlements of 20 per cent. or 30 per cent.? There could only be one result—the weakest firms would go to the wall and there would be more unemployment. In addition, instead of easing interest rates the country would be faced with further tightening. These rates are already higher than we would like. A further rise would cause industries and distributors to postpone investment where it has been running high—a 13½ per cent. increase in new investment last year. That will have to be postponed if higher wages are to be paid.

Secondly, in the public sector big settlements will push up the public sector wage bill. If settlements in the public sector were at the rate of 15 per cent., public expenditure would increase by more than £2 billion next year. The borrowing requirement would increase, on present estimates, by rather less than £2 billion.

If the local authority pay settlements are as much as 10 per cent., domestic rates will increase on average by as much as 18 per cent. If local authority pay settlements arc as high as 15 per cent. domestic rates will increase on average by up to 27 per cent. What are the consequences? Excessive pay settlements to public servants will mean worse and poorer services for the public generally. The tragedy will be that, if pay settlements are excessive, there will be cuts in rail services, longer hospital waiting lists, poorer education and fewer jobs. Let us have some sense in this situation.

None of us wants to go through this kind of situation again. I warn the House that if we were to increase the borrowing requirement by anything like that figure—and even the Leader of the Opposition would find difficulty in cutting that—sterling would slip. We would then have an increase in inflation once more and we should be off on the same old merry go round, except that it would be a tragedy.

We have considered the Government's attitude against this background. I come immediately to the question of low pay. Paragraph 17 of the White Paper correctly labelled "Winning the Battle against Inflation "said that the Government would be ready to see higher percentage increases than 5 per cent. in cases where earnings were less than f44'50 for a normal full-time week. The condition was that those on higher earnings should accept the consequential improvement in the position of the lower paid. This provision was of potential benefit to about 2 million employees nearly 10 per cent. of the total.

At the Labour Party conference at Blackpool where this policy was rejected, a number of delegates said that the Government had not gone far enough for the lower paid. I indicated that this was a matter on which the Government would be prepared to talk further with others, including the TUC. We had those talks and I regret that the result was not ratified by the General Council.

Nevertheless, the Government have continued to give further thought to this matter. We have concluded that we should go further in an attempt to ease the situation and help the lowest paid. Therefore, we propose that, in addition to the existing exception of those earning up to £44.50 for a normal full-time week, there should be a bigger increase for those in the earnings bracket immediately above this figure.

What we have in mind is that increases might be allowed, up to a specified cash figure of £3.50 a week for a normal full-time week, where this amount will be more than 5 per cent. of weekly earnings. In order to allow the maximum flexibility for negotiators, this increase, like the 5 per cent., can be applied as a kitty among those benefited, but obviously on condition that the benefit is shared between those for whom it is intended and not transferred to the more highly paid grades within the same negotiating group. Of course, it is our view that this should apply throughout the whole sector, public and private. In the case of the private sector, negotiations would have to go on as they are going on now.

As to local authorities, this development in the pay policy would have implications for next year's cash limits. It was stated in the White Paper that the 197980 cash limits would reflect the Government's policy on pay, but so far the only cash limit which has been announced has been that for the rate support grant. I should like to make clear to the local authorities that the Government will be ready to meet their share of the extra cost to the local authorities of these proposed increases to the lower paid. The cost would similarly be taken into account where appropriate in setting the rate of the other 1979–80 cash limits. For central and local government the cost will be about £60 million.

I come now to the aspect of fixing fair rates of pay for those employed in the public sector. One of the real difficulties which always emerge when one is in a period of free collective bargaining, as we are now, is that fairness is rooted deeply in the conceptions of what should be the proper rewards. Some public service groups already make use of comparisons with rewards paid to employees in the private sector in their negotiations. The Government will be ready to see in some additional areas of the public sector, other than those engaged in trading, where there is a different set of negotiations, a greater role for comparability in determining pay.

The guiding principle should be the achievement of comparable pay for comparable work and comparable effort. Where the employers and the unions concerned make a request, therefore, the Government will be prepared to agree to an investigation into the possibility of establishing, for particular groups of workers, acceptable forms of comparison with terms and conditions for other comparable work. We will be prepared that the results of negotiations based on such comparisons should be implemented by stages in subsequent years. This is by no means an ideal solution, but it seems to us that, if we have to try to find our way through the present difficult situation, it is something on which we should be ready to take a chance.

Obviously, if we are to achieve the desired effect of setting fair and equitable relationships, such an arrangement depends upon the recognition by those groups with whom the comparisons are being made that it will be self-defeating if they seek to use the consequential increases in the public sector as a basis for their own next round of claims.

Mr. Terence Higgins (Worthing)

Has not the Prime Minister yet learned the lesson, which was pointed out by the original three wise men about 15 years ago, that if one has productivity agreements in some parts of the public sector and comparability in the other—indeed, if one has productivity agreements generally and comparability in the public sector—this must be inflationary and there is no way in which that can be avoided?

The Prime Minister

That is an argument of the economists. It is one on which I have heard both sides argued. I am not attempting to insult the hon. Gentleman by calling him an economist, but in practical terms I think that this is the best way forward. But in case the hon. Gentleman has misunderstood, I am not proposing that there should be indexing, that the public sector should be able to index its earnings against others. I believe that this argument will go on, but decisions have to be taken and I believe that this is a way of trying to get through the present situation without resulting in runaway inflation.

Ministers have begun discussions with employers and unions concerned—with local authority manual workers, with National Health Service ancillary workers and with ambulance men—to see whether a comparability investigation on the lines that I have described has a contribution to make in the context of their current negotiations. The Government will naturally be prepared to give sympathetic consideration to joint approaches for comparability to be applied to other public service groups. Here I have in mind nurses, for example, because it seems to me that there there is an opportunity to try to get some sense into the present situation.

I turn now to price controls. The Government will strengthen price controls. My right hon. Friend the Secretary of State for Prices and Consumer Protection will introduce a Bill to strengthen the powers of the Price Commission by repealing the provision in the Act under which firms in both the private and public sectors are able to put up prices automatically. When the prices policy was introduced in 1977, it was the intention that the Price Commission should make judgments about price increase applications on their merits. But, because fears were expressed about the way in which the Price Commission would act, the Government introduced a requirement for my right hon. Friend to make regulations which would ensure that there would be a certain level of profitability, whatever the circumstances of individual firms and irrespective of the views of the Price Commission. These fears have been wholly exaggerated, as, indeed, we expected at the time. But these regulations apply quite arbitrarily. They allow firms to maintain profit levels by putting up prices, whether or not the same level of profit can be achieved in other ways—by cutting costs or by improving efficiency.

The effect of the new Bill will be to abolish the requirement for such regulations during and after Price Commission investigation of individual enterprises. There will then be no restriction on the Commission's ability to consider the extent to which firms can reasonably absorb costs. In this context it will be obliged to look at all relevant costs. The Bill will also provide that firms which pre-notify price increases after today-16th January—will not qualify for safeguards if the Price Commission decides to investigate those price increases. But the Bill will maintain safeguards where the Government direct the Price Commission to examine the profit margins of whole sectors of industry as opposed to individual firms, since it will not always be possible for either the Price Commission or the Government to assess clearly how hard the recommendations of the Commission, which might be proposed for a whole sector, would bear on the financial position and viability of individual firms.

The Bill will maintain the present discretion of the Price Commission to grant interim price increases to companies under investigation where justified by the circumstances of the case. This power has already been used by the Price Commission in several cases despite the existence of safeguards, and it will continue to use it.

I want to come to a conclusion. We put these proposals forward at a time —and I do not wish to re-open old sores —when the Government have not been left with many instruments in their hands to try to control the prospects for inflation in a free collective bargaining situation.

Mr. John Pardoe (Cornwall, North)

The Prime Minister has repeatedly throughout his speech made the point that all these troubles seem to stem from the time when the House voted against sanctions. Will he accept and admit that throughout the whole of the 18 months of the Lib-Lab pact I and my hon. Friends did everything we could to persuade him to put effective sanctions to Parliament? We were told that the Government could not do so because a section of the right hon. Gentleman's party would not support them.

The Prime Minister

I do not accept in any way the last part of what the hon. Gentleman has said. Although we expect the hon. Gentleman to quote private conversations in public, at least he might quote them correctly.

We have put forward these proposals in the belief that they will help the position of the lower paid and ease their lot, in an attempt to create a greater sense of fairness among employees in the public sector in the light of the changed situation we are now in, in which free collective bargaining holds the stage, and with the belief that the proposal on prices will not discourage good and efficient firms but may make less efficient firms more ready to overhaul their practices.

These proposals will not meet, and are not intended to meet, the demands of those who seek increases of 20 per cent. or even more. The best way we can help the lower-paid, the pensioner, the sick and those unable to help themselves is by having a strong and effective counter-inflation policy. In such a policy excessive wage settlements have no place. Public opinion should reject those who put them forward.

It is the Government's view that the country has been moving in the right direction up to this year, is the present setback a reason for going into reverse on all our policies? The answer is "No ". Our approach is right on incomes, on industrial strategy and on the need for a meaningful understanding with the trade union movement on how powers are limited and worked out and used by consent. Although we have not yet succeeded in carrying it out, our approach is right in relation to the uses of North Sea oil. None of these objectives needs to be changed.

No Government could today spare Britain from a bumpy ride for as long as the attack is being made on the anti-inflation programme. We shall not seek to make scapegoats of any group. We shall do everything we can to make possible the return to a realistic and rational level of settlements. We shall continue to hammer the message home. I say to the right hon. Lady the Leader of the Opposition that we shall seek to build bridges, not to blow them up. No doubt we shall lose some battles in the course of this fight.

However, our strategy must survive because it is the right one. We have heard no alternative. It is the only one for Britain. In whatever time remains in this Parliament we shall do our best to carry it out. In so far as we do not succeed in this Parliament we shall carry it out in the next.

6.22 p.m.

Mr. J. Enoch Powell (Down, South)

As the public out of doors endeavour as best they can to cope with their hardships and inconveniences, there is one aspect of our affairs which strikes them irresistibly. That is the ironical similarity—not to say symmetry—between 1974 and 1979. It seems curious to them that the 1974 Parliament is coming to a close amid industrial confusion and unrest so similar to that which marked the close of the 1970 Parliament.

I do not myself think that this similarity is accidental. I do not believe that it is just an amusing historical curiousity. I believe that there is an important lesson to be learnt from it —still more so when we notice that in each case, although this unrest comes at the end of a period of endeavour to control prices and wages in some measure by Government action, the crisis itself did not arise as a direct clash between Government and the law on the one side and the trade unions on the other. The miners at the beginning of 1974 were at no time in breach of the Counter-Inflation Act, and this crisis comes at a time when, voluntarily or involuntarily, part of their power of control has, as the Prime Minister has reminded us several times, been struck out of the hands of the Government. It is not the details but the essence of the attempt by Government—in the one case, though it was more intensive, the attempt lasted two years, while in this case, with greater flexibility, it has lasted some four years—to combat inflation by controlling prices and wages which has led to this result.

The phrase "free collective bargaining" has run through both speeches in this debate so far. When I listened to the Home Secretary yesterday afternoon and again to the Prime Minister this afternoon it occurred to me that I had never thought I should live to hear a Labour Home Secretary and a Labour Prime Minister using "free collective bargaining" as a term of abuse, one of those terms of abuse which have merely to be thrown and not argued, like "fascist" or "racist ". Apparently it is "free collective bargaining" which is the trouble.

But we do not have free collective bargaining. There is a sense, admittedly, in which there is always a contradiction between the word "free" and the word "collective ", in that the outcome of bargaining when it is conducted between collectivities on both sides is not necessarily exactly the same as it would have been otherwise. However, it is not that quibble with which I am concerned. I am concerned with the fact that those who are engaged in negotiations now know perfectly well that they are not free agents. The unions know that the Government are determined, so far as in them lies, that they shall not be free agents in the transactions. The employers cannot participate openly and fully in a genuine negotiation because they can either take refuge behind and use as a lever the known requirements of Government and the risks that they run if they override those requirements, or else they complain that they are bound to negotiate and consider individual applications within the framework, within the ground rules, laid down by the Government.

In those circumstances it is intelligible that we find ourselves now, as we found ourselves five years ago, in something which looks desperately like industrial chaos.

In the course of the discussion earlier this afternoon on the situation on the railways a number of hon. Members commented upon the apparent folly of the railwaymen in engaging in self-damaging, self-destructive action, action not only arguably harmful to the community but harmful to their own interests. This is a consequence of the framework into which the unions and the employers have both been pinned by the policies of the past three or four years.

Both the men who negotiate and those who follow them—indeed, those who decline to follow their union leaders, too —are for the most part not fools. They are no more fools than hon. Members in this House. They understand that for three or four years the real relativities have been grossly distorted if not destroyed. They are perfectly well aware of that and understand it. They will understand that what the Prime Minister announced just now in regard to lower-paid workers will merely be a recipe for an attempt to distort relativities further.

Relativities are not the outcome of greater or lesser bullying. They represent real necessities—the real needs of the economy. In the last resort they are irresistible. The men who are concerned in these disputes and negotiations sense an irresistibility which both they and the Government attempt to confront in vain. They also understand perfectly well that if their remuneration is pushed above a level which can be sustained in that firm or industry it means for them a loss of employment—they do not need us to lecture them about that. They also understand that if inflation in the next 12 months is to run at 8 per cent. or 10 per cent., or whatever the estimate, it is likely that on average the level of settlements will be 1 per cent. or 2 per cent. on either side of that line. But that does not help them. It provides no guide in settling the point at which they can and ought to settle their remuneration in their industry and in their circumstances.

So the whole process of collective bargaining has been rendered nonsensical by the framework in which it is placed through the attempt to cope with inflation by enforced control of remuneration. The word "enforced" is appropriate. The control is a detailed control, LI detailed prescription of formulae as to productivity and so on, which may be true or bogus but which has at any rate to be worked out and applied. That control is the true cause which has rendered collective bargaining impracticable and brought the country to this pass.

So we are here contemplating the work of our own hands. We may apportion the blame variously between different parts of the House; but it is this House, the policies we have supported, the legislation we have passed, that have placed the workers in a position in which their employers and their unions can no longer act rationally, can no longer use the instrument of industrial bargaining which their whole lives have been spent in practising and refining.

What, then, are we to do about it? The right hon. Lady the Leader of the Opposition said—this was not the whole of her answer, but it was a big part of it —that we must change the law so as to deal with secondary picketing and with unacceptable picketing and, perhaps, to increase the use of the ballot in the context of strike action. I do not believe that those matters, although they are, of course, important, come anywhere near the heart of the issue.

Let us suppose that all those reforms had been made and that the law had been altered to the heart's desire of the right hon. Lady. The Prime Minister aptly pointed out that we went through all this five years ago under the 1971 Act with its provisions, such as they were, designed to produce exactly those results. Let us assume all that had been done. Does anyone seriously suppose that there would be such a great difference between then and now?

The Prime Minister said that once upon a time strike action was the last resort. I will tell him why strike action is now the first resort. It is that men know that the restrictions which it is attempted to place upon their remuneration in the next 12 months are unreasonably drawn and unsustainable, and they see instances where, by strike action, that unsustainability has been demonstrated. So they say to themselves "Very well, we know what to do. We will strike first and negotiate afterwards."

It is not deficiencies in the laws governing trade unions—though they may be serious—which are the cause of the trouble. They might slightly, but no more than slightly, alter the balance of power —although I dispute the whole conception—between the trade unions and the community. The trouble arises because of the entire setting which we have created by the pursuit of control of wages and prices as an antidote to inflation.

Mr. Frank Hooley (Sheffield, Heeley)

The right hon. Gentleman appears to be arguing that the imposition or acceptance of a framework of what he calls restrictions has somehow created the industrial problems into which we are now running and which we encountered in 1974. But surely, while that framework was accepted in stages 1, 2 and 3 over a fairly long time, there was no such industrial chaos. It is the abandonment of a framework or the refusal to accept one which has produced the industrial chaos we now have.

Mr. Powell

I invite the hon. Member to consider an alternative explanation. It is that while wages can of course be frozen for a short time, can be distorted for an appreciable time, yet, if that course of action is persisted in, those concerned—the employers and employees—are placed in an increasingly impossible situation out of which they have eventually to break. Men behave unreasonably if they are treated unreasonably. The accumulation of the consequences of attempted price and wage control has put employers and employees in an inherently unreasonable setting. We have to undo the harm that we have done.

First, and apparently most difficult, though the Prime Minister came near to it, we have to admit what it has been so politically profitable and convenient for us to deny—that inflation is not caused by increase of prices or of wages, any more than rain is caused by the pavements being wet. We have been trying to prevent the rain from falling by ordering people to keep the pavements dry. The rising prices and wages are the consequence, not the cause of inflation. Inflation is caused by Government —it is well known exactly how the machinery works —but because there are certain political advantages in being able to put the blame on to sections of the community instead of carrying it ourselves, we persist in denying the necessary deductions from the conclusion to which most of us have at last come.

So we must be straightforward and candid with our fellow citizens. It is not individual rises in wages and prices that add up to inflation. The individual rises in wages and prices, however attuned, however varied, are merely an index of the inflationary forces which have been released by the Government.

The second thing we in this House have to do is to stop voting public expenditure when we are not prepared to vote the means of financing it. It is thereby that we have caused the problem of which we have wished the consequences on to our fellow citizens. We all know what the consequence is—the Prime Minister's speech was shot through with the acceptance of it—of awarding votes to ourselves by voting expenditure and declining to finance that expenditure honestly.

Mr. Ron Thomas (Bristol, North-West)

Would the right hon. Gentleman be a little more specific? Let us take the case of the retail prices index—for example, food has gone up in price very rapidly. Would he explain, in his militant monetarist terms, how the price of food has gone up in this way as a result of factors such as the common agricultural policy?

Mr. Powell

The common agricultural policy has made food dearer in relation to everything else. That is one of the reasons why it is so much against the interests of the greater part of the people of this country—certainly against the interests of those on lower incomes—in that the CAP has made food relatively dearer in comparison with other things. That is the effect of the EEC. But a rise in price which makes one thing relatively dear compared with others has nothing to do with inflation. Inflation is the rise of all prices or fall in the value of money.

When we have resolved upon the first two necessaries the third will follow. We cannot make our fellow citizens whom we think so unreasonable reasonable by coercing them; we cannot knock into their heads what we pretend to be, but know is not, economic wisdom by compulsion, direct or indirect. Indeed, this House of all places ought to resist the suggestion that our fellow citizens are foolish and misguided, and that it is for us to instruct and direct them. We must stop making laws or enforcing policies whereby we purport—for it has to be done in detail if is to happen at all, and the Prime Minister read out a whole chunk of detail this afternoon—to decide in detail exactly what should be the remuneration of this section of workers or that section of workers or the other section of workers in an economy and a world that is constantly changing and in which, if our economy does not change, it will perish.

The fault—the buck, as they say—has come home. It has come back to us. But if we were to resolve upon this self-reformation tomorrow, we would still have a hard two or three months ahead of us.

The Prime Minister indicated dissent.

Mr. Powell

I seem to have a rather higher estimation of the shrewd good sense of the trade unions and their leaders than the right hon. Gentleman. I think that most of them have a pretty good judgment of where the market lies, a pretty good judgment of how they are going to arrive at what they consider to be the break-even point. But the fact that we still have to live this through is no excuse for repeating our errors, no excuse for not recanting. It is only by telling the people the economic truth, and refraining from attempting to transfer our misdemeanours of expenditure and budgeting to their shoulders, that we shall make free collective bargaining in the real sense of the term possible again; and there is no other way whereby wages in this country can be satisfactorily fixed over a great part of the economy except by free collective bargaining.

6.44 p.m.

Mr. William Hamilton (Fife, Central)

I recollect, as others must do, when the right hon. Member for Down, South (Mr. Powell) was arguing, not so very long ago, in precisely the opposite direction from that in which he has argued today. He was then arguing that if the unions did not exist the workers would be no better off than they are today. Now he argues that the trade union leaders are sagacious, calculating and cool, and know exactly what the market will bear, and that if we leave them alone they will come to the right answer. He cannot have it both ways.

Mr. Powell

I am sorry, but there is no inconsistency at all. I do believe that if the trade unions did not exist—if we could theoretically imagine them out of existence—the real wages of the workers would be approximately what they are, or, if not, probably slightly higher. But I also believe what I have just said—that in this country as it is it is only through free collective bargaining that relative wages can be fixed. There is no inconsistency between the two statements.

Mr. Hamilton

The right hon. Gentleman may think that there is no inconsistency, but I think that those two statements are diametrically opposed in the sense that in the first he said that the unions were irrelevant, that the workers, if left to themselves individually, could get as much if not do better, and now he is saying that the union leaders are so calculating and shrewd that they can squeeze every penny out of the economy for their workers. If he can satisfy his own conscience that those two speeches are consistent, he will satisfy no one else, and he will certainly never satisfy me that the two arguments he has put are mutually agreeable.

But I want to come back directly to the speech of the Leader of the Opposition. She is obsessed with the attainment of one target—to put up her curtains in No. 10 Downing Street. Everything else goes by the board. There is no consideration of the difficulties we are facing; there is no regard for the merits of any proposal that she puts forward as to whether they will solve the problems that the nation is facing. She has one calculation to make—" How far will my rhetoric, how far will my ideas, however changeable they might be, delude the electorate into voting for me and my party so that I shall get power? "That is the one calculation that the right hon. Lady makes every time she appears on television and every time she makes a speech in this House. That is why what she says lacks conviction all the time.

Let us look at what the right hon. Lady said last week to Brian Walden on "Weekend World ". There was no mention of referendums this time—that argument is now dropped. For example, would she have a referendum today among the lorry drivers? How long would it take? What does she think the result would be if there was a referendum among them? But let us leave that aside.

On "Weekend World ", the right hon. Lady was plugging the line that we must have secret ballots among trade unionists, paid for by the Government. If they did not have them, what would she do? She was going to stop the supplementary benefit payments not to the strikers, who do not get them anyway, but to their wives and kids. The Tory Party makes great play of law and order, but what the right hon. Lady was saying was that the wives and children of strikers are more heinous individuals than the wives and children of rapists, of criminals on long-term sentences, because they get supplementary benefit. But according to her the wives and children of strikers would not. The right hon. Lady must know, and every reasonable man and woman in the Tory Party must know, that that is demagogic rubbish that contributes nothing towards a solution of the problems we are facing.

On "Weekend World ", the right hon. Lady went on, as she has done today, to her favourite theme—one that is never far distant from the mouth and mind of every hon. Member opposite—hatred of the trade unions. They hate the unions. They wish that they could get rid of them. They wish that the unions did not exist. But we had better all understand that, however much we may dislike what the unions do or say, no Government in this country can live without understanding them and cooperating with them. That is a basic fact that we had all better face.

Of course there is a lot wrong with trade unions—but there is a lot wrong with this House. There is a lot wrong with our political institutions, right from the top to the bottom. But that is not to say that we have to go round saying that, if only we got rid of one of them somehow or other, or put it into shackles, we would solve our problems.

The right hon. Lady, on "Weekend World" a week ago, said that she would declare a state of emergency forthwith. I think that she made that statement—I hope that she did—without consultation with any of her colleagues on the Front or Back Benches, without any thought of how such a declaration would ensure the supply of all goods that were in danger of being threatened by industrial action.

No, it was a design to cash in, along with the media, to create alarm and despondency which was not justified by the facts of the situation. In any case, if a state of emergency had been declared, as was made quite clear by the Home Secretary yesterday and by the Prime Minister today, it would not have tackled, except minimally, the problems that we are now facing.

I made a note before the Prime Minister rose to speak that at no stage in the right hon. Lady's speech today did she mention the crucial factor underlying the basic problems that we are all facing. The problem of inflation will not go away by the demagogic rhetoric in which the right hon. Lady and her colleagues engage. We still have not heard — she did not make it clear this afternoon—whether the right hon. Lady opposes, regrets or would argue against an outright across-the-board increase in wages and salaries, at present, of 15 per cent. or more. Do the Opposition or do they not regret that that is now happening?

Tomorrow a lobby of nurses will be coming here. Everybody in this House knows that I have a great soft spot in my heart for the nurses, and always have had, ever since I married one. I have a great emotional attachment to the nursing profession. I believe that, compared with lorry drivers or anybody else that one could name, the nurses are the most grossly exploited section of our community and have been over the years, long before pay policy.

When we had free collective bargaining, it did not matter much to nurses. The great argument against free collective bargaining always was, always is, and always will be, that it is essentially a capitalist argument: that everyone grabs as much as he can, depending not on the justice of his case but on the strength of his muscles, and to hell with everybody else. That, to me, is an obscenity that we cannot tolerate in a civilised society.

I do not know how it is to be done—nor does anybody else in this House, and we ought to be humble about it—but somehow we have got to find an acceptable alternative to free collective bargaining. Nobody knows what that acceptable alternative is. It is certainly not the free market, which the right hon. Member for Down, South was suggesting. There must be some body, some machinery created, which will try to assess the national interest and match that against social justice towards other sections of the community and their interests. We shall not solve these problems unless we get some kind of centralised machinery of that kind.

Some years ago we had the National Board for Prices and Incomes. It is with a great respect for Aubrey Jones that I say that he received a lot of abuse from his own party for taking the job in the first instance. But I think that he did a marvellous job in seeking to educate the people as to the merits of each individual case as it came along. The reports which that board produced were a model of objectivity, a model for the kind of education that the British people so desperately need in these matters today.

I hope that the Government will not throw out of the window the suggestion made recently by the Manifesto Group that this kind of machinery should be reintroduced. When we get conflicting sectional interests parading their virtues and their claims to be treated as special cases, we in this House do not take the brunt—not that I fear that—but it ought not to be left to political pressures exerted on Members of this House without the intermediary influence of an objective assessment by an independent board of that kind.

Mr. Ian Percival (Southport)

I am sure that the hon. Gentleman will remember that at the time of the industrial action that preceded the General Election in February 1974, there was a Relativities Board, which seems to me to have been assigned just the sort of task that he is saying that there should be a board to fulfil, and that the Conservative Government of the time had referred the alleged special case advanced by the miners to the Relativities Board. What was the hon. Gentleman's attitude towards the Relativities Board at that time?

Mr. Hamilton

To start with, the board got its sums wrong concerning the miners' wages. But I agree entirely that that is the kind of machinery that we ought to be thinking of reintroducing. My attitude has been consistent on these matters, although the hon. and learned Gentleman may think I am wrong in that. I am simply stating my recollection that I have always, consistently, taken the view that we shall not get social justice, and we shall not get inflation tackled in the way that the Government have tried, unless we get sectional interests to understand and believe that by free collective bargaining one may get a short-term gain, but if that short-term gain is eroded by longterm heavier inflation, which will do damage to them and to the nation as a whole, we shall not get out of the dilemmas that we are facing.

I have said before in the House that we shall not get very far, either, if we seek to apportion blame to one side as against another here, or to one institution outside as against another. It is no good the Opposition saying that this is a failure of Socialism, nor is it any good on our part to say that it is a failure of capitalism. It is a failure of the British people collectively.

In high places in many institutions we have boy scouts where we should have generals, or girl guides where we should have air commodores. The kind of leadership that we are getting at all levels is inadequate to the challenges that we are facing as a nation. I exclude entirely from that my right hon. Friend the Prime Minister. I believe that he is trying to educate the British people into believing that there is no easy or short-term solution to the problems that we face. I beg my friends in the trade union movement to understand that a little restraint over the next 12 months will pay the same kind of handsome dividends that the restraint which they have so gallantly exercised over the last three years has paid up to now. I appeal to them to have a regard for the political and economic consequences of what they are now doing.

Several Hon. Members rose—

Mr. Deputy Speaker (Sir Myer Galpern)

Order. I ought to acquaint the House at this early stage that in the remaining two hours that we have for the debate before the winding-up speeches 26 right hon. and hon. Members wish to take part in the debate. How that is worked out is for each individual Member and his conscience.

6.58 p.m.

Mr. Maurice Macmillan (Farnham)

I think that most of us have a certain sense of unreality in this debate. The events are real enough and serious enough; more serious, perhaps, because what seems to be unreal is the relevance to the present situation of this House of Commons compared with other organisations which are having more effect, even though they are less accountable.

As the right hon. Member for Down, South (Mr. Powell) hinted, in some ways the debate is like the return of a bad film. The actors have changed, but the parts that they are playing are very much the same. We need not only a new cast but a new script. For there is one very big difference between what is happening now and what happened in 1974. Our domestic tragedy is now being played out against the darkening back-drop of our position overseas, where the whole strength of the West is being weakened. Iran is but the latest example of a series of reverses.

In these circumstances, we need the greatest possible political unity and economic strength so that we can strengthen our position not only at home but in the world of today. Yet we are trying to operate with our hands tied behind our backs with a three-strand rope, the two main strands of which are, by common consent on both sides of the House, inflationary wage settlements and what might be called the negative power of the unions—as was well put yesterday by the hon. Member for Warley, East (Mr. Faulds)—which, while claiming a share in the framing of policies and demanding consultation about and responsibility for making policy decisions, are not able to exercise any control or responsibility within their own sphere. That was admitted by the Home Secretary when he said, referring to union responsibility: I do not know how it can be done, but I know that all of us—the trade unions, the employers and the political parties—have a responsibility for this in the modern world."— [Official Report, 15th January 1979; Vol. 960, c. 1325.] Despite that, there seems to be no method by which either unions or Government can control the evil effects of secondary picketing or can even try in any way to prevent these pressures that are now beginning to lose trade unionists and other workpeople their jobs.

It is indeed difficult to know who is in control now. However, we can learn much from looking back at the past. It may be difficult to see what the precise situation is, but it is perhaps worth trying to discover how we got into it and whether our past experiences can give us any indication of a way out from where we find ourselves, whether we can find any way compatible with government by consent of all the people, and not simply the consent of organised labour, important though that is.

Successive Governments have tried to buy union co-operation in various kinds of incomes policy, applied to the public sector, to the private sector and to both. They have tried to buy this union co-operation with varying degrees of success in the beginning but always ending in the sort of situation that we now have, whatever the price paid.

My right hon. Friend the Member for Sidcup (Mr. Heath) paid what was, in effect, a short-term price. He agreed, rightly in the circumstances, to try to create more jobs to deal with the problems of unemployment, and to do everything in the Government's power to stimulate new investment. That worked at first, but then we had circumstances in which we tried to negotiate, unsuccessfully, a voluntary incomes policy. Then we went to a statutory policy, which worked for a while. As the right hon. Member for Down, South pointed out, that was destroyed by the distortions that it had itself created.

The same sort of thing happened when the right hon. Member for Huyton (Sir H. Wilson) and the present Prime Minister also tried to buy union co-operation. Unfortunately, the price they paid was higher, because it was a continuing price, which is still being paid by the people of this country, for what was, in effect, a short-term gain. They paid the price of the Trade Union and Labour Relations Acts of 1974 and 1976 and the Employment Protection Act, all of which strengthened the negative power of trade unions to obstruct, to be difficult and to abuse their power in a destructive way, and made it difficult, if not impossible, for responsible leadership to act constructively or to control unofficial disruption. If one creates a situation in which those who go on strike as soon as they can do so do better in their wage bargaining than those who wait until after their agreements have run out, it is only to be expected that rational human beings, seeing the success of such tactics, will continue to use them.

The price that this Government paid in terms of concessions to the trade unions for their so-called social contract went quite contrary to their own earlier attempts to curb the abuse or onion powers. Successive Governments have in fact tried to go down that road also. They have tried to curb the abuse of union power without in any way weakening the unions' essential role. Indeed. in many cases the attempt to curb the abuse was meant to strengthen the proper and constructive capabilities of the trade union movement.

Both Labour and Conservative Governments failed. "In Place of Strife" was stillborn, and the Industrial Relations Act was murdered in infancy. Yet both my right hon. Friend the Member for Sidcup and the right hon. Member for Huyton accepted the need to include the trade union movement in consultations when framing general economic policy, to include the trade unions with other organisations and with other interest groups that were powerful and would be affected.

Now we face strikes on the railways and in transport, and we face the threat of further trouble with local authority manual workers, ambulance workers, hospital ancillaries, postmen, gas workers, miners and power workers. All those groups have one thing in common: they are part of the public services.

Whilst I would go a long way with the argument of the right hon. Member for Down, South that the one thing we in this House must do is to curb public expenditure to the amount that we are prepared to finance out of taxation, there is an element in the groups that I have just mentioned that makes it harder to put that argument into practical effect. Each of those groups, being part of the public sector, is inevitably part of public expenditure. Its remuneration and the level at which it is paid must to some extent determine the total level required to be spent to provide any given level of services. Here I cannot see that there is a market that would enable responsible collective bargaining to be undertaken with the freedom that would be desirable were it practicable, because the great weapon available to those groups of workers in particular is the fact that they can cause more disruption without damage to themselves than other groups can.

The response of the Prime Minister on how he proposes to deal with this situation seems to be to look for a new social contract, hopefully somewhere about the 5 per cent. limit or at least not going up to double figures, backed by more powers for the Price Commission, creating more rigidity in the system, generating less profit for genuine reinvestment and distorting further those all-important relativities by his efforts to help the lower-paid. I have no doubt that we shall see the link between the public sector and the private sector applied in a way which will turn out to be inflationary. I also have no doubt that when we see all the pressures on the private sector reducing the level of private investment, we shall face demands for increased public investment of taxpayers' money through the National Enterprise Board. This course must be disastrous for employment, for real investment and, above all, in preventing change in the structure of our industry, which it will tend to freeze in its present pattern. It will lead inevitably to either more Inflation or higher taxation—or both.

In these circumstances is it too much to expect the Prime Minister to forget the fact that he was largely responsible for the destruction of "In Place of Strife "and to give up his policy of finding out what the unions want and seeing that they get it regardless of the possible effect not only on other people but also on members of trade unions themselves?

Is it too much to ask the right hon. Gentleman to make a real effort to lead the country away from the sort of adversary politics which he tends to encourage and to try to unite the nation behind Government policies which will broadly be acceptable at least for the remainder of this dying Parliament, and, in so doing, to strengthen Britain abroad by playing the statesman in home policies? He should certainly consult the trade unions —and also industry and commerce. This must not simply mean the CBI but should include representatives of smaller industries and smaller organisations representing small firms, the unquoted companies, the unincorporated businesses and the self-employed.

The Home Secretary yesterday referred to the responsibility of the political parties in all this. I suggest the Prime Minister should also consult the leaders of other political parties to see whether he could not work something out. The Prime Minister himself said he believed it was necessary to try and find some code of practice to control secondary picketing. He quoted Mr. John Boyd as being strongly in favour of that. He quoted the result of the mass picket by the National Union of Mineworkers.

Can the Prime Minister try to work out in the sort of consultation I have suggested an acceptable and enforceable method limiting union action in a way which, as he said, will need support from within the trade union movement itself? I recognise that this is the negative aspect of policy—preventing people from doing things in their self-defence which are too damaging to their fellow citizens —but it is a necessary part of any policy to restore confidence, not so much in his Government but in the trade union movement among people who are now beginning to fear and dislike it when they have never done so before.

Could not the Prime Minister try to make some coherent method of determining wage levels and methods of bargaining allowing different groups to negotiate pay and conditions with a degree of flexibility but without the full dangers of escalation?

In all such consultations he should also talk about direct taxation. I said at the beginning that I thought that we were fighting the economic battle with our hands tied behind our backs with a three-strand rope, two strands being inflationary wage settlements and the abuse of union power. I believe that the third is over-high direct taxation on the average and below-average wage-earner. The Inland Revenue raises in direct taxation about £19 billion a year. Of that, 94.6 per cent., over £18 billion, is paid by people at the standard rate of tax or less. Only 5-4 per cent. is paid by people who are taxed at 34 per cent. and above. It is the standard rate taxpayer and the taxpayer below that level who is bearing the whole brunt of direct taxation. This means that any increase in money wages is doubly reduced in real terms. It is lessened because it puts the wage-earner into a higher tax bracket. At the same time, inflation makes what remains of his real wage worth less.

This kind of consultation would be difficult and probably could not take place in time to have any direct bearing on our immediate problems. But it could help to deal with them, for it would at least give hope of some authority for this Government in handling the various matters with which they are now trying to deal. It would provide some authority in dealing with the public sector wage claims, some justification for the Prime Minister's appeal for restraint, and some credibility to his Government in the last months or weeks of their somewhat shoddy life.

7.18 p.m.

Mr. John Ellis (Brigg and Scunthorpe)

If the right hon. Member for Farnham (Mr. Macmillan) will forgive me, I want to dwell more on the present strike and why it has occurred.

I speak as a member of the Transport and General Workers' Union and as a Member sponsored by that union. Some very unfair things have been said in the debate. Some of them were actually wrong. We have to understand what has happened in this industry and talk about the actual problem. I do not remember a strike in which more misinformation was given, more fanciful headlines were written or there were more false portrayals of people. Moss Evans, for instance, seems to be a villain dripping with blood from every claw.

Therefore, it is instructive to start by saying how this strike happened. It happened simply because the union was negotiating wages. One must remember that we have moved away from central negotiations following the Advisory, Conciliation and Arbitration Service Report No. 6. Hon. Members should read it to see what was involved. The TGWU did not feel that the Road Haulage Association was capable of entering into any meaningful arrangements and rather than any national collective bargaining machinery it favoured the development of the assenting haulier agreements at local level. So hon. Members should understand that in some 19 locations up and down the country representatives of the Transport and General Workers' Union and the road hauliers in their local committees were trying to negotiate an agreement. In area after area, they failed.

It is not the case that Moss Evans then ordered the strike because he was in conflict with Government policy. The customary process is that the union representatives put in an application that they want to go on strike because the negotiating channels have been exhausted. That is then considered by the finance and general purposes committee. That has happened in every area except the Midlands. The employers there agreed to accept whatever was agreed in the other negotiations.

There are many ideas about why this strike will break. I believe that it will break on these regional committees which are talking with the employers, who then get together. I understand from the unions that some areas are willing to reach agreement on a 40-hour week for £66. That cannot be bad.

Tory Members say that we should consider all the factors that bump up earnings. Both the Leader of the Opposition and the Prime Minister referred to this. All sorts of wages are paid in all sorts of conditions in this industry. This is part of the difficulty over secondary picketing. Even when firms have their own drivers, all sorts of other people are going in and out delivering goods.

The Price Commission report on the road haulage industry was published on 24th October 1978. It revealed that average weekly gross earnings ranged from £120 right down to £65. About the middle was the general haulage rate of £80 per week. At the top end were the car transportation men in the motor industry. They are not concerned in this strike because they belong to another industry and are classed as skilled.

There is a tradition that what one is paid depends on one's job and one's industry. This industry used to be badly organised and the strains have been greater. If people want to blame something, it may be the fact that a licence is needed to drive an articulated truck. In the old days, anyone could drive a lorry and the wages over the years have been a disgrace.

About 20 or 25 years ago, I was a shift worker at Dishforth, near Darlington. I owe something to my union, which has made it possible for people such as me to be in this place today. At about 3 o'clock in the morning I would see these drivers going past hunched over the wheel, with red-rimmed eyes, coming from Fraserburgh and Peterhead to the London fish markets. Every night I would see at least one lorry stuck on the new roundabout because the driver was tired and, although he knew the road like the back of his hand he had gone straight on to the new roundabout.

There is better organisation. Now, in Annie's Cafe somewhere, drivers will meet own account operators on vastly different wages. The majority of drivers are paid according to the carrying capacity of their vehicle and not according to the licence held. Current basic wages range from £49 to £53. The large amounts of money are paid not to RHA drivers but to the own account people who are linked to motor car factories and have better conditions. Low basic rates have been a scandal for years and have led drivers to do the maximum overtime.

As for road safety, the Price Commission report said: Looked at on the basis of occupation, gross earnings of Heavy Goods Drivers generally (hire and reward ' and other ') have remained significantly above those of other Goods Drivers, both on a weekly and hourly basis. Heavy Goods Drivers also worked substantially longer than average weekly hours —overtime hours being nearly three times the average for all manual occupations. Lorry drivers work that much more overtime because they have this low basic wage.

Mr. David Madel (Bedfordshire, South)

As the hon. Gentleman said, the ACAS report showed that there should not be a national negotiating forum, that it should be done regionally. Will he accept that if future negotiations are done regionally there is a danger that a region which cannot settle will not be able to immunise itself against trouble from another region? Did not that report suggest also a new national forum for, say, organising a new national negotiating structure? Does not the industry need a brand new national wage negotiating structure?

Mr. Ellis

That is as may be, but until the road hauliers have an organisation which can work in that way there are difficulties. One of the hon. Member's main points relates to the difficulty of getting the boys back at the same time, although they all came out together. The union does face this difficulty but it has always been the tradition of the industry to have many disparate wage rates negotiated locally. There are some organisational difficulties in this fragmented industry.

I was talking about the overtime, which is three times the average. My hon. Friend the Member for York (Mr. Lyon) made a good point, which the Prime Minister brushed aside. He referred to the effect of all the talk about Common Market regulations on drivers' hours. The lads talk among themselves and realise that in every week they must have 24 hours off and will be able to drive only a certain number of miles or for eight hours. They become concerned about the effect on their wages. It is not by chance that they fixed on the basic working week. They have to consider that their earnings will drop. For all these reasons, the militancy was strongest at local level, where the strains were particularly telling.

The first action taken by the unions when the strike was declared official was on Friday night. It has had really only 24 hours in which to operate. There are many sections of this big empire to be considered—various organisations and regional offices have to be notified. But the union is well aware of its responsibility. Someone should have at least commended its role in the strike of petrol drivers. I am sure that Northern Ireland Ministers would have something to say about that matter were they taking part in the debate.

Union officials work themselves into the ground. The national officer, Jack Ashwell, worked for 23 hours on one occasion and 17 hours on another over Christmas in order to persuade union members to take a wise decision. Now regional committees are being established. An instruction has been sent out about those who are not directly involved in the strike. The unions are doing everything they can to ensure that union members co-operate with the Government and the regional committees.

However, we should make no mistake that the unions are determined to achieve what they consider to be a reasonable remuneration for their members. I do not think that £66 is unreasonable for a 40-hour week. The House would do well to look at the arguments.

Mr. Kevin McNamara (Kingston upon Hull, Central)

Will my hon. Friend bear in mind the figures mentioned by the Prime Minister? He referred to £3.50p and 5 per cent. In fact, £3.50p is 5 per cent. of £70 a week. The Prime Minister was talking about £4 more than the lorry drivers are asking for.

Mr. Ellis

That is the relevant point. EEC legislation has an impact and it is bedevilling the current dispute. I have spoken to union officials and all that they are anxious to do is to sit round a table and negotiate as they should. They want to get the country out of its present difficulties. But union officials insist on doing their job—to look after the pay and conditions of their members.

Hon. Members and the media should do more homework about the dispute. They should investigate the situation in depth rather than merely asking "Why are you holding the country to ransom and instructing pickets to stop good men from going to work? "The TGWU has authorised me to say that it would be willing to demonstrate its case and argue it out. Then perhaps people would realise that. this industry, which has been the Cinderella for so long, should be regarded more seriously. One should remember that motorways are built without provision being made for lorry drivers to sleep.

It would have been courteous for the so-called quality newspapers and the BBC to get in touch with the union and ask for a proper presentation of the case so that people might understand it. Instead of that they are hacking at the subject, as always.

7.33 p.m.

Mr. Donald Stewart (Western Isles)

The hon. Member for Brigg and Scunthorpe (Mr. Ellis) has defended cogently the lorry drivers' case. In the past there have been many reasons for wage restrictions. I was not in the House at the time, but I remember that the aim of the last Labour Government was to get the balance of payments right. Wages were restricted for that reason. Hey presto, the balance of payments was put right, but it never made the slightest difference to those who suffered during that time.

It is right that there should be a debate on that issue. But the Tory Party has acted precipitately by forcing a vote. After the screams about chaos, the Tories have retreated to a paltry procedural motion. The Tory Party leadership is behaving like a chicken with its head cut off. Perhaps that is what led journalists to say that the Leader of the Opposition was making policy "on the wing ".

There are numerous instances of changes in the Tory Party's policy. The right hon. Member for Cambridgeshire (Mr. Pym) said at the weekend that devolution would be well down in his party's priorities if it came to power. He was saying that he had reneged on all 1968 policies.

The Tories should make up their minds where they stand on industrial relations and how they would deal with the unions. The Leader of the Opposition and the right hon. Member for Lowestoft (Mr. Prior) remind me of the old weather-house. The lady came out and, according to the weather, went back into the house and the man came out. In this weather-house the right hon. Lady comes out for a stormy bit of union bashing. When she goes back in the right hon. Member for Lowestoft comes out and says "We shall all be good boys when we come to power and everything in the garden will be lovely."

There is no doubt that the position is serious. But it is part of the malaise which is spreading throughout the United Kingdom. It is not confined to the unions. There is much to be said for the claim that the unions have taken over the worst aims of their capitalist opponents. Mr. Buckton of ASLEF wants to get his hands on the kitty first. He does not worry about what will be left for members of the NUR.

As the hon. Member for Briggs and Scunthorpe said, there is a case for claiming that the lorry drivers' basic wage is low. It has been cut back because of EEC directives, and there will be a further cut-back on 1st July. The lorry drivers have real cause for concern and it is not enough to bandy figures about.

The Home Secretary said yesterday that those who voted against the Ford sanctions would have to live with free collective bargaining. But free collective bargaining is part of a free society.

The hon. Member for Fife, Central (Mr. Hamilton) suggested that there should be a centralised bureau to fix wages. But the more that such agencies are multiplied, the quicker free society goes out of the window. Nothing will work 100 per cent. perfectly. We must make the best of a free society. We must have free collective bargaining. It is odd that the Labour Government should try to penalise those firms which are eager to give their workers rises.

We have experienced years of wage restraint. I was pleased that the Prime Minister should talk about attempts to control prices. I do not know whether that will work. But I am sure that one will not work without the other. There is no sense in expecting workers to con- tinue year after year with wages restrained and prices escalating. It is unrealistic to expect anybody to accept that.

I object to secondary picketing. It is totally indefensible and there is no justification for it. I am sorry that there seems to be a willingness on the Labour Benches to overlook breaches of the law by trade unionists. Nobody needs the law to be upheld more than working people and those who are unprotected. Wealthy and powerful people do not need to worry much about laws. They will always float to the top.

Miss Joan Lestor (Eton and Slough)

The right hon. Member is making an important point. Can he explain where secondary picketing is breaking the law and which law it is breaking?

Mr. Stewart

It is totally indefensible that pickets should go—

Miss Joan Lestor

That is another matter.

Mr. Stewart

The hon. Member for Bassetlaw (Mr. Ashton) referred to certain action that may have been illegal. He spoke about that in an airy-fairy manner as if it did not matter tuppence. That cannot be accepted.

Miss Joan Lestor

My hon. Friend said that it was an illegal act.

Mr. Stewart

The hon. Gentleman condoned that action. He seemed to imply that it did not matter because it was being undertaken by trade unionists. Trade unionists, and certainly people in the lower brackets of society, have more need for the protection of the law than the wealthy and the powerful who can always look after themselves.

Scotland has been suffering the result of the road haulage strike for two weeks longer than the rest of the United Kingdom. The severe weather conditions have had an exacerbating effect. Some areas have had their lowest recorded temperatures for 100 years.

The half-hearted regional policies of successive Governments have resulted in the creation of a branch-line economy in Scotland that has left us dependent on distribution centres beyond our borders in the Midlands and the South of England. The scattered communities of the Scottish islands and the rural areas are the most frequently affected by transport difficulties. For that reason I wish to thank the Secretary of State for Scotland for the assurance that he gave to my colleagues who saw him yesterday about safeguarding essential food supplies, animal feed supplies and supplies to hospitals, old folks' homes and welfare services generally. I welcome the arrangements made to safeguard the fishing industry by agreement with the unions.

The Tory Opposition have moved too quickly against the Government. It appears that the situation is in hand for the moment. The Government should be given the chance to see how matters develop. However, I warn them that they are on trial. If the situation deteriorates, or if there is any change that departs from the assurances that have been given, my party will take the necessary action. In the meantime we shall give them the opportunity to continue in the hope that conditions will return to normal. My party will vote with the Government on the technical motion that is before the House.

7.42 p.m.

Mr. Cyril Smith (Rochdale)

When the Prime Minister returned to the United Kingdom last week he referred to the present situation as parochial. He said that there was no chaos and spoke about people being jealous. My experience in Rochdale over the past weekend is that those remarks caused much greater offence than the effects of the strike. People were prepared to have a go at putting up with those effects, but they were not prepared to be insulted by the Prime Minister in the process of so doing.

I hope that the right hon. Gentleman has sorted out those who misinformed him. Clearly, he had been ill informed on his arrival. His remarks were native, offensive and ill informed and I hope that whoever advised him has been sorted out.

The present situation is serious and, in the view of my hon. Friends and myself, it warrants Government action and interference, even if such action upsets some of the Government's paymasters or some members of the Gov- eminent. Surely, the Government have a responsibility to ensure adequate food supplies and supplies of feedingstuffs. Wherever a danger to public health arises, they have the duty to ensure that that danger is contained and overcome.

Before I proceed further, I shall make a few remarks about the deep and real effect that the water dispute is having on health in my constituency and in about 10 constituencies which surround mine and form the area of which my constituency is part. I hope that other hon. Members will be interested in the dispute because my information is that it may spread to other areas before Friday, and certainly on Friday.

I do not blame the strikers entirely. It is an unofficial strike. I spent some considerable time yesterday trying to persuade the chairman and the chief executive of the North-West water authority to meet the unofficial strikers. The strikers were prepared to have a meeting with the water authority. The chairman said that on no account was he prepared to meet the strikers. He said that the only people that he was prepared to meet were the official union leaders.

The leaders of the strike are shop stewards. It is a committee of shop stewards that is running the strike. The strike has not been declared official by the trade union. Therefore, the chairman sits in his ivory tower miles away from the centre of the dispute and says that he is not prepared to meet the strikers. That is a stupid and idiotic posture, and I said so on television last night.

That does not alter the fact that, while all the silly wrangling is going on, the health of my constituents, and of constituents in other areas, is very much in doubt and at risk. The water filters in the reservoirs are not being cleaned or flushed. They have not been cleaned or flushed since Thursday of last week. The result is that the water supply is suspect. It is so suspect that thousands of leaflets have been issued and advice has been given on television to the effect that everybody should avoid consuming water unless it has been boiled.

If the dispute continues and the filters are not flushed, they will be clogged in two or three days and it will be a question not of whether the water is contaminated but of whether we shall get water. The Government have a moral responsibilty to act.

have been in touch with the water authority and with the strike committee. I have reason to believe that the cleaning of filters is not a highly technical job. I asked both sides of the dispute separately whether troops could undertake the cleaning of the filters. I asked them whether it was a task that required highly technical training. Both sides agreed with me privately that troops could be moved in immediately to clean the filters. I am not saying that troops should be moved in to undertake that work. I am merely saying that both parties agree that if troops were moved in they could do the job.

The Government cannot sit back and ignore what is happening. They have a responsibility to ensure that the health of those that I represent is protected. At present they are not acting in that way. The Government must keep the matter under constant review. I raised the issue with the Prime Minister at Question Time this afternoon. He said that there are to be further discussions on Thursday on the wage negotiations. If the strike continues and if the discussion does not resolve the difficulty by Friday morning, I hope that the Government will not hesitate to bring in troops to clean the filters. The Government have a real and basic responsibility.

That responsibility is one of the three responsibilities that I have outlined. The first responsibility is the safeguarding of animal feedingstuff supplies. The second responsibility is the protection of food supplies. The third responsibility is to protect the health of the people, or to avert dangers to health. Those three matters are vital and it is essential that the Government act to provide that protection.

It has been argued that we are overemphasising the present situation. I received a phone call this morning from Span Express Parcels Ltd. of Rochdale, which has already negotiated a new wage deal with its lorry drivers. I am sorry that the hon. Member for Brigg and Scunthorpe (Mr. Ellis) is no longer in the Chamber. The hon. Gentleman is sponsored by the Transport and General Workers' Union. The firm negotiated an agreement with its drivers in September 1978. It pays the wage that the TGWU is now demanding, but there is picketing outside the depot. The picket line will not allow the firm's drivers to leave the depot.

My hon. Friend the Member for Colne Valley (Mr. Wainwright) received a telegram this afternoon while the debate was proceeding. It states: TGWU pickets illegally halting our own account transport. Home delivery services also food distribution affected at Heywood. If not removed thousands of your constituents' jobs at risk. I received a telephone call this afternoon from a large manufacturing company at Old Trafford. I was told that the factory was being picketed and that food was not being allowed to be taken out of the factory and that raw supplies were not being allowed in. It is no good pretending that everything in the garden is lovely, because it is not. The Government must make strenuous efforts. They must say clearly to the unions that, unless they take away the pickets—I am not saying that they are acting illegally because I am prepared to accept that the action is open to argument, but they are acting against the interests of innocent people in terms of the dispute—the Government will be compelled to take action. They must make it clear that secondary picketing must cease.

The truth is that picketing took place before the Industrial Relations Acts of 1974 and 1976. I accept that. I am not blaming those Acts for the fact that people are picketed. What I am saying is that secondary picketing is going on and shortly I hope to say another word about it.

That is one side of the story. The other side is the circumstances in which these activities are taking place. The fact is that they are happening, no matter what anybody may say, in the context of free collective bargaining. Certainly, pickets are not barred by statute. Free collective bargaining is, as I understand it, exactly what the Conservatives want. This is their policy and they cannot have their cake and eat it. They cannot on the one hand argue that all this is a disgrace and should not be happening, and on the other hand argue that they are a party which is in favour of free collective bargaining.

I know that the Conservatives want responsible free collective bargaining, but do they have some sort of secret weapon in a phial which they can inject into somebody which says that if there is a Tory Government then free collective bargaining is responsible, but if there is a Labour Government it is not responsible and in such circumstances becomes something like blackmail? Yesterday the Home Secretary, in answer to my hon. Friend the Member for Cornwall, North (Mr. Pardoe), accused him, and in consequence his colleagues—I refer to column 1323 of yesterday's Hansard—of voting for free collective bargaining in December.

This is totally untrue. We voted in December against sanctions and I would like to place on record why we voted against sanctions, which is not the same thing as voting for free collective bargaining. Sanctions we found were ineffective. They were not credible. For example, there were regions where regional grants were not being withdrawn. In other words, they were selective—they were not applied to all—and they were selective even amongst offenders. Some offenders got away with it and some did not. Sanctions were not even a deterrent: as my hon. Friend says, it depended on which constituency the company was located in. A deterrent is something that one knows is going to happen to one. We know that if we break the law something will happen to us and therefore we are deterred from breaking the law. But if sanctions are applied only to some people and not to others, and if when one breaks the law there is no certainty anyway that sanctions are going to be applied, how on earth can it be claimed that sanctions are a deterrent if the determination to apply them is made only after the offence has been committed?

In any case, these sanctions were not approved by Parliament, so certainly we voted against them. My party, and that includes all of us, has never swayed from its belief in a statutory prices and incomes policy. Anyone who says otherwise makes a gross mis-statement of the truth. I very much hope that when the Home Secretary reads these remarks tomorrow he will feel it worth while dropping a line to my hon. Friend the Member for Cornwall, North and perhaps apologising for a misinterpre- tation of that vote in December. The Liberal Party wants a statute-backed policy, but we do not place sanctions in that particular category.

I want now to deal with one or two of the remedies which have been suggested. My party does not believe, and I certainly do not, that one can legislate to stop strikes. Experience has shown that to attempt to do so is useless and it often leads to an escalation, rather than a cessation, of strikes. We cannot legislate to stop strikes, but what we can do is to legislate in an attempt to make sure that striking becomes less easy, or at any rate less attractive. I have heard all sorts of remedies suggested—for example, that there should be balloting. That remedy is not as attractive as it looks, because if one takes a ballot amongst people about whether they want to strike the odds are that they will vote "Yes". One may therefore get more strikes as a result of a ballot rather than fewer.

A secondary question is: if there is a ballot to decide whether there should be a strike, will there not also have to be a ballot to decide when the strike is to be called off? If people take the one decision, presumably they will take the other. Therefore, the issue of balloting before a strike takes place is not as attractive as it may appear. That is not to say that ballots for the election of trade union officers for example, ballots at factory floor level, and postal ballots, should not be encouraged by the Government. Certainly, the Liberal Party will be very much in favour of balloting in those circumstances.

On the question of taxing benefits to the members of strikers' families, I have made it clear, and I have never varied from this—I took this view when I served on Committees in 1974—that I support the principle of State benefits being taxable, but not just State benefits to strikers. It seems to me that if a bloke draws £50 from working and is liable to pay tax on it, the same man should pay the same tax if he draws £50 from the State. If he is not eligible for tax on his £50 at work. he is not liable to pay tax on the £50 from the State. But if he receives a benefit from the State sufficient to render him liable for tax, he should pay tax. But I would certainly not be in favour of taxing benefits to strikers' families and not taxing such benefits to anybody else.

The Leader of the Opposition has raised the question of the closed shop. It is extremely important, but I am bound to say, and I am prepared to be corrected, that I had not understood that it was any part of Conservative Party policy to make the closed shop illegal. Indeed, I seem to remember that the very opposite argument was advanced at the Tory Party annual conference two years ago—namely, that there were circumstances in which the closed shop must be legalised and must be continued. I have always taken the view, and I confess that it is easier to do this in a minority party than it would be in a majority party—though perhaps that is one of the functions of a minority party—that the closed shop was illiberal and that it was incompatible with liberalism. I have never been in favour of the closed shop and I would be prepared to see legislation to alter its legality or minimise the strength given to the closed shop.

Closed shops make unions extremely powerful on the basis that people can lose their jobs as a consequence of closed shop legislation. I am therefore prepared to vote for legislation that reduces the power of a closed shop. When the Leader of the Opposition spoke of what the Conservative Party did in 1974, she overlooked the fact that the Conservatives could not have done anything without the support of certain minority parties including my own. The power of the closed shop is something I want to see reduced.

Let me say something on secondary picketing. I do not believe that secondary picketing has been made possible by the Trade Union and Labour Relations Act 1974. I think it was possible before then. As far as I know, picketing rights go back as far as the 1906 Act and were not introduced by a Labour Government as such. New clauses were certainly introduced into the 1974 Act because that Act repealed the 1971 Act, and if such amendments had not been written into it we would not have had any laws on picketing at all. That was the reason for the amendment. There is considerable doubt as to whether secondary picketing is legal. I have heard it said in the House today that there is no difference in law between first and secondary picketing. My legal advice is that it is highly doubtful as to whether secondary picketing is legal. I do not know, but there is a recent court ruling in a case concerning the National Union of Journalists which certainly casts some doubt on whether secondary picketing is legal.

If secondary picketing is illegal, the law should be enforced. If it is legal, the law needs to be looked at to see if there are ways in which it can be stopped or the effects of such picketing considerably reduced. That is all I want to say about the suggested remedies.

I turn to the causes of strikes. The first thing is that we desperately need in this country to recreate the will to work —that is, to make it attractive to work. My party and I have never strayed from our belief in a statutory incomes policy. We do not believe that free collective bargaining is the answer and we said so at the last General Election. There are those in the party, including myself, who believe that that view cost us votes in October 1974, but we stuck by it and my hon. Friend the Member for Cornwall, North took some stick behind the scenes from party candidates who believed that our speeches in favour of a statutory prices and incomes policy had a detrimental effect on the response received by the party. But at least we had the courage to preach that view and we have never wavered from it.

We take that view because we believe that there must be rationality in wage settlements and relationships between settlements. We cannot, for example, expect dustmen to settle for 5 per cent. when they see others receiving 12 per cent. or 15 per cent. rises.

The BBC settlement has not been mentioned in the debate, but I saw in my local paper that one member of the Cabinet was taking great credit for being one of the Ministers who met the BBC and ensured that we got our television programmes over Christmas. Ministers have claimed great credit for their part in those negotiations, but that led to a settlement which was far in excess of 5 per cent. and, indeed, well over 10 per cent.

Mr. Emlyn Hooson (Montgomery)

Is it not important to remember, in the context of the Prime Minister's speech today, that the Government control the income of the BBC and, indeed, the BBC itself, yet still sanctioned a pay settlement of 16 per cent.?

Mr. Smith

That is a relevant point. The people of this country, including rank and file trade unionists, are decent and honest and seek only fair play. They will not sit back and accept a 5 per cent. pay rise when they see other- 15 per cent. increases. That is why we say that there must be rationality and that that can be achieved only by statutorily backed State interference, including permanent machinery for solving disputes and dealing with differentials, and so on. We want to see the strike weapon being the last resort rather than the first.

My party has also long advocated—and I hope that Labour Members will note this fact—a statutory minimum wage. We were the only party preaching that policy when the TGWU was pressing for it. I have preached that message from these Benches in the past four years. There is a great deal to be said in favour of statutory minimum wages, but I have never advocated a minimum wage without telling members of the audience, whoever they were, that they had to understand that some of them would have to stand still on one occasion until the problem of low pay was solved. That means lifting the person at the bottom and not the person on the second rung. I have never run away from the consequences of a statutory minimum wage.

The Liberal Party has always preached profit sharing, which we believe would help. The hon. Member for Honiton (Mr. Emery) is making a noise which sounds as though he has stomach ache or indigestion. He should understand that profit sharing is not as daft as some people imagine. I have practised it in my own company for the past seven years. I am talking not about dishing out shares but about dishing out money from the profits that have been made. If many of the people who are being asked to forgo high wage settlements understood that some of the increased profits that will accrue to their companies as a consequence of those deferred wage increases would be passed on to workers at the end of the year, that would not be irrelevant in helping to solve our problems.

The meaningful application of worker participation in industry, and I do not mean its use as an excuse to increase union power, would also make a considerable contribution. That is why we strongly advocate worker participation, though we stress worker, not merely trade union, participation, which is where we part company with some Labour Members.

We cannot go on as we are. Parliament is not the place rationally or logically to discuss a long-term solution, especially with a General Election round the corner. However, a way forward must be found and discussions must take place between all parties involved, not just the CBI and chambers of commerce, but political parties as well. We must not be afraid of getting round the table to see whether we can find a way forward. Of course we shall not all agree and have a common policy, but we could at least pool our ideas and see whether there is anything we can get out of it.

Political slanging matches are not the answer. People are sick and tired of strikes and if the Labour Party went to the country early they would find that out in a big way. People are fed up with being urged and pushed into strike action when they do not want to strike. Many of the people on strike do not wish to take that action, but they feel that they have no alternative.

There is an abuse of power by some unions and some union leaders—not all —and that cannot go on. If the Government cannot stop it, they should get out. However, if they made the effort, the), could stop it and they could succeed because all people want is fair play. If the Government want to sit down and produce a sensible prices and incomes policy with statutory backing and Government intervention to guarantee the supply of food, animal feedingstuffs and supplies such as water, where a danger to public health may be involved, they would convince the people of this country that there was a point in holding out and would have our guarantee of support throughout the period involved in order to enable them to do what was necessary.

Several Hon. Members rose—

Mr. Deputy Speaker

Order. We have had four speeches in the past hour. I appeal to hon. Members to limit their speeches to five minutes are, in my opinion, unjust.

8.7 p.m.

Mr. George Rodgers (Chorley)

My constituency lies in central Lancashire, in the heart of the North-West region—an area which has felt the full impact of the current spasm of strikes and industrial upheaval. Of course, people resent the misery and confusion brought about by this disruption to their everyday lives and by shortages of essential commodities.

The situation has been worsened considerably by inflammatory speeches by Opposition spokesmen who are determined to snatch some political advantage, regardless of the fact that the policies they have advocated have encouraged the present state of industrial discontent. Hysterical headlines in the Tory Press have stimulated panic buying and generated artificial scarcity in the shops. So the country has already paid a heavy price for this activity.

It is surely time that we examined the causes of the disputes instead of concentrating exclusively on the consequences. The original and essential role of the trade union movement is to protect and enhance the living standards of its members and there should be no great surprise that it is attempting to fulfil that obligation.

It is to the enormous credit of the trade union organisation that it has extended its area of concern and for many years has been acting to serve the wider community by campaigning for improved pensions, health provision and social benefits. This community concern is in marked contrast to that of the employers' organisations. I cannot, for instance, recall the CBI pressing for better pensions or facilities for children or disabled people. Indeed, the reverse is true. Its only pressure has been on behalf of those who are already prosperous but who object to paying income tax at appropriate levels.

Few tributes are paid to trade union shop stewards, but every day throughout the country they resolve a multitude of industrial relations problems without cost to their employers or the nation. Yet we find that at every opportunity certain Conservative Members heap abuse on trade unionists in general and on shop stewards in particular.

It is no coincidence that in circumstances where it is most difficult to recruit and organise trade unions wage rates are low and working conditions often deplorable. Farm workers are a good ex- ample. Despite high skills and ferocious physical effort, the rewards are very meagre indeed.

The simple truth is that if workers do not organise and demonstrate their solidarity they and their families are penalised and disadvantaged. This is why so many Conservative Members wish to see the unions diluted and eventually destroyed. But the strength of trade unionism lies in the spirit and unity of the members. Anyone foolish enough to believe that the members can be bludgeoned into submission by legislation designed to punish the wives and children of the workers who take strike action is in for a rude awakening. We have all travelled this road before, yet there are still those who cherish the rather bizarre fallacy that industrial harmony can be achieved through laws and imprisonment.

If the Government are to move towards a long-term understanding with the trade unions, certain facts of life must be recognised. When my right hon. Friend the Member for Huyton (Sir H. Wilson) introduced his incomes policy, he conceded that it contained rough justice. It is now surely time that we set about rectifying such injustices, especially in the public sector. It is not sufficient simply to ask workers, who are hard-pressed economically, to look at the wider economic picture. Indeed, those of us who have gazed upon the wider picture are not very impressed with what we see, for it is apparent that many people in our lopsided society are doing very well for themselves despite the incomes policy.

I have here a copy of a Labour research document which lists 38 company directors who receive over £1,000 per week. I know all about the story that they pay tax at 83 per cent. on taxable income above £23,000 a year, but I am fairly confident that the lorry drivers would accept that taxation burden if their wages were adjusted so that they could qualify to pay tax at that level.

In reality, of course—and this is revealed by Kay and King in their recent book, "The British Tax System "—the average rate of tax paid by people in these high income brackets is only 50 per cent. In addition, there are all sorts of fringe benefits, such as the company car, low interest loans, private medical insurance, aid with children's education and so on. The present incomes policy tolerates this and also allows one individual to accumulate a multitude of company directorship. From the same publication I note that last year employees of the Distillers' Company received a 72 per cent. pay rise. Their chairman, one J. R. Cater, fared rather better. He was awarded a 92.9 per cent. increase, to give him an annual income of £50,440 a year, or £4,204 a month.

It is against this background that working people assess the incomes policy, and who can blame them if they take a somewhat jaundiced view of its selective impact? Incomes policy has never set about securing a redistribution of wealth, and that should be the first purpose of any incomes policy. I see the necessity for an honest incomes policy as an important ingredient in an overall Socialist economic strategy. I see no merit in a collective bargaining free-for-all, as is advocated on some days of the week by the right hon. Lady the Leader of the Opposition.

However, the economic mix must include an effective control of prices. We have had examples recently where petrol retailers have charged as much as £3 a gallon for petrol—and petrol is a tool that many workers have to use. But there was no restriction imposed and no breach of the law took place when the position was abused in that way.

There must be a direction of investment. I find it hazardous to leave investment in the hands of investment trust managers, whose outlook is narrow and usually confined to the prospects of making a quick return on behalf of their investors.

Finally, I accept absolutely that trade unionists possess enormous power. The country's food supplies, industrial capacity and communications operate by means of a very fine mechanism. The fact that this delicate mechanism is only very infrequently disturbed should remind us that trade unionists also have a very high sense of responsibility. I am convinced that an agreement between a Labour Government and the trade union movement can be achieved, and that such an agreement would bring immense benefits to our people.

The policies recommended by the main Opposition party would bring about an industrial calamity that would make our present problems seem small and insignificant. I would much prefer a common sense approach that would recognise the rights and entitlement of our whole people, including the many millions of trade union members. I believe that only a Labour Government, implementing a Socialist programme, can secure this invaluable understanding.

8.15 p.m.

Mr. Hugh Fraser (Stafford and Stone)

I shall not follow the speech of the hon. Member for Chorley (Mr. Rodgers). It was a speech, made at a time when we face really serious problems, which reminded me of a speech made by a member of the Duma in 1917.

I want to report what is happening in Staffordshire. We depend very much on the port of Liverpool, which at the moment is entirely controlled not by the port authorities but by what is called a special committee of the Transport and General Workers' Union. It is for that committee, not the Government, to decide what goods go in and what goods come out. Some hon. Gentlemen may find it amusing, but it is not amusing for the farmers of Staffordshire that there is picketing of the two molasses companies which are necessary for the survival of their cattle. This picketing is going on in areas which are not concerned with the dispute, and it is a very serious matter indeed.

I do not want to talk about what the political or long-term solutions of the dispute may be, but the fact is that there is what the Prime Minister referred to as a knock-on effect in inflation. There is also a knock-on effect when administrative action is not taken, and the position is worsening.

The Prime Minister this afternoon made two proposals, one of which seemed to affect prices, when he suggested a further restriction of prices. That is like putting a weight on a boiler which is about to explode. Secondly, he said that there should be some alleviation of the proposals in relation to the lower-paid workers. That would only tend to heighten the dispute by throwing out the arrangements for the various differentials.

Despite this very serious position, the Prime Minister and other Ministers have so far failed to give any confidence to the general public, who by the end of this week may be facing considerable deprivations in regard to food and employment, not to mention the difficulties of the farmers.

It is quite clear, from what the Prime Minister said, that the port of Hull is not working at all. It is fairly clear, from information I have, that the port of Liverpool is working only at a very low level indeed. This is a crisis for the Executive, for the Government of the day. So far, the Government of the day seem to be totally incapable of dealing with it.

If the Government propose to adopt a low-key approach, the least they can do is to talk to the Transport and General Workers' Union, and ensure that the Government's own special regional committees are working alongside and in control of the special committees set up by the union. I know of a case in Staffordshire where a lorry went up to the port last Friday and was given permission by the Transport and General Workers' Union to go through. When it went up again on Monday, the driver was told that it could not proceed. That lorry will not be going again. Can hon. Members imagine anyone driving an empty lorry from Staffordshire, and back again?

Two of the Government's so-called regional offices, in Hull and in Bristol, have caused problems. Their telephone numbers were announced by the Minister of Transport on Thursday, but by Monday it was quite clear that these numbers were not working and that the wrong ones had been given. Yesterday the telephone numbers were newly issued for the so-called regional organisers, but even now it is impossible to get through after nightfall on the numbers given by the Minister.

This is a very serious situation which the Government should face. They seem not to be facing it. I suggest that at this stage talks should be opened with the TGWU. At the moment that union is being allowed to control the ports, which, constitutionally, is a quite extraordinary conception. These committees, which are called the dispensation offices of the union, should be put under some sort of Government control, with priorities being laid down—priorities for food, cattle food and essential materials for running industry. Otherwise, the Government will be seen for what they are. They have lost their nerve, and the sooner they get out the better.

8.21 p.m.

Mr. Giles Radice (Chester-le-Street)

The right hon. Member for Stafford and Stone (Mr. Fraser) has given a graphic account of the serious situation in his constituency, but he has not said what should be done about it. All he has done is to suggest that talks should be opened with the TGWU, but that is already happening. He also suggested that some agreement should be made on the priorities of vital supplies. That also has been done. Therefore, I do not think that he made a helpful contribution to the debate.

The Leader of the Opposition made a very skilful speech, but once again she did not say what should be done. She made vague hints about changing the law as it relates to the trade unions. She said nothing about counter-inflation policy or how one can get men who are out on strike back to work. She seemed to be trying to exploit the undoubted anti-union feeling which exists at present without making any real commitment as to what should be done.

As a contrast the Prime Minister at least tried to face up to the serious problems in a way which would not irreparably divide this nation, yet would prevent us from returning to the 20 per cent. to 30 per cent. inflation that we had in 1974–75.

I do not want to refer to the road haulage dispute—my hon. Friend the Member for Brigg and Scunthorpe (Mr., Ellis) made a very able speech supporting the lorry drivers—except to say that clearly it is a serious situation which affects a large number of jobs in my constituency. I hope that it is settled very soon.

I wish to comment on the local authorities claim. As a General and Municipal Workers Union-sponsored Member of Parliament, I have a great deal of sympathy for the local authority workers. They are among the lower paid members of the community by any standards.

However, I do not see how one can improve their situation except within the context of an incomes policy. If we had totally free collective bargaining, their lack of bargaining power inevitably would put them at the bottom of the queue. But if we have an incomes policy, particularly a flat-rate policy as we had in 1976 or a low paid exceptions policy as we have now, we have the tools to help the low-paid workers. Therefore I welcome the Government's improvement on the low paid exceptions, and the discussions about comparability which are about to open. This offers a basis for an honourable settlement for local authority and other associated workers without a costly strike and without having a highly inflationary pace setter in the public sector which would be bad for everybody, including the local authority workers.

I refer to the speech of the right hon. Member for Down, South (Mr. Powell) who supports free collective bargaining. I am strongly in favour of joint regulation of wages and conditions and a lot more besides. I want to widen the area of joint regulation and I am a strong supporter of industrial democracy. However, collective bargaining by itself is not and cannot be enough in the determination of wages. What the advocates of free collective bargaining seem to forget is how the wage round really works. Perhaps that is because they have not really been involved in industrial relations.

Such advocates forget the concept of the going rate within a wage round. Bargainers take account of a lot of things, and in the ideal world of the right hon. Member for Down, South they would take account entirely of the free market. However, they must take account of things such as the cost of living, the profitability of the company, and so on. But the really crucial factor is what the bargainers believe is, or is likely to be, the going rate which will be negotiated in other comparable companies and industries.

Clearly this approach is inherently inflationary. What one company or industry may be able to afford out of profits another will be able to pay only by raising prices and passing on the costs to the consumer. This idea of the going rate becomes particularly inflationary when the going rate keeps going up as we saw in 1974-75. As the Prime Minister said, we started the wage round that year with a 13 per cent. going rate and ended up with a 30 per cent. going rate. Obviously there is a clear danger of going down the same road this time.

The task of an incomes policy is to push down the going rate to something approaching what the country can afford. Without some form of incomes policy—and do not forget that one-third of employees are under Government control—the Government can have no direct influence on the wage round, and the result in terms of both inflation and employment can be disastrous, as we saw in 1974–75.

I cannot go along with those who suggest that the answer is free collective bargaining. However, although I am in favour of an incomes policy, I am strongly against a statutory policy or using the law to weaken the power of the trade unions. This is not just a question of principle—it is a question of practical expediency and experience.

It is extremely difficult to make any policy stick if it has not got support, and this gives the opponents of statutory policy an argument which they would not otherwise have. They can argue that it is restricting and that it is bringing the law into incomes where it should not be.

On the question of using the law to weaken the power of the trade unions, we saw in 1971-74 that this does not work. The employers did not use the powers, and that is a major argument against anybody who talks about reintroducing the law into industrial relations in this way. The employers do not want to use the powers because they have to negotiate, bargain and live with the employees. Also the Government, as we saw in that period, were very chary about using the powers. They did so once and got their fingers burnt. Therefore, I am against using the law in the way which has been hinted at vaguely by the right hon. Lady.

There is certainly a case for strengthening the powers of the Price Commission in order to prevent companies from automatically passing on wage increases to the consumer. I am glad that the Prime Minister mentioned that and suggested proposals.

My right hon. Friend also made the right point with regard to secondary picketing. It is much better to get voluntary agreement, because if one can get voluntary agreement it is likely to be obeyed. One can have all the laws in the world, but if people do not want to obey them they will not.

In a democratic society there is no alternative to persuasion or voluntary agreement —persuasion to bring home to people the consequences of their actions, that, in the words of the cliche, one man's wage can be another man's price increase, or that one man's dispute can be another man's job loss. As to a voluntary agreement, there is no alternative but to work with the trade union movement. There is no other way. That is the only way to achieve an agreement which will include a general view as to the way wages should go in the economy. This certainly ought to be part of a wider social and economic policy. As has been said, we must look at the question of having a general monitoring body, which I personally would like to be on a voluntary tripartite basis.

In the end it is a question of democratic leadership, the kind of leadership which this Government arc trying to give. At this time, I am extremely glad that Conservative Members are not in power. Otherwise, my goodness, we would be in a frightening situation. There is no other way than that kind of leadership unless it be the totalitarian way, and I do not believe that any hon. Member wants that.

8.31 p.m.

Sir Nigel Fisher (Surbiton)

I know that the hon. Member for Chester-leStreet (Mr. Radice) will forgive me if I do not follow him, because I have promised to be very brief.

Last week was a very bad one for the British people and also for the credibility of the British Government. I do not want to enlarge on that, except to say that the Ministers mainly concerned said and did very little. We hoped that when the Prime Minister returned we could expect a more decisive grip on a rapidly worsening situation. All we got was a complacent, dismissive, totally irrelevant and inappropriate comment on "little local difficulty" lines. The Prime Minister really should know by now that he does not have the style to try to emulate Mr. Harold Macmillan, nor were the circumstances the same.

The nation was looking for a lead and for a positive policy. So far, Ministers have failed to provide one. The Govern- ment's only reaction to this crisis in our affairs has been to appeal ineffectively to the unions to refrain, in the interests of party loyalty, from embarrassing Ministers and losing them the next election. I quite understand that, because the unions are the Labour Party's paymasters and no doubt the Prime Minister does not dare to offend them. But it is not a very elevated appeal. Worse than that, it will not work.

Even in electoral terms. I believe that the Prime Minister would do better to appeal to the people to support a strong policy, because the British have a sure instinct when a section of society is becoming too powerful for the national good. The barons, the church, the king and, in the last century, the industrialists, all became too powerful in their turn. Now it is some of the trade union leaders and the factory agitators who are too powerful and who are, therefore, becoming unpopular in the country and even among some of their own members.

The climate of opinion, certainly in my constituency and probably in many other areas, is very different from what it was five years ago. People today are simply longing for a lead and would respond to one, even from this Government, if resolute action were now taken.

I cannot believe that price curbs will be a sufficient sop to the unions, and they will certainly cause further unemployment. As many hon. Members are I hope aware, I am not the sort of Conservative who normally advocates what might be described as Right-wing measures. But the circumstances and dangers today seem to me to be such that I believe strong steps to curb union power and irresponsibility have become absolutely essential in the national interest.

Many people believe that the law on picketing should be changed. It must be made clear, simple and effective, which it certainly is not today. Only those involved in a dispute should be allowed to picket their premises; the number of pickets should be limited and so-called secondary picketing should not be allowed.

Some people also believe—I subscribe to this myself—that secret ballots should be held before a strike. Tax rebates could be delayed until a strike is over.

Payments to strikers' families, which have already been mentioned, should be made by the union concerned in the first instance, and by the State only when union funds are exhausted. Even then, they could be paid as a loan instead of as an outright gift and repaid out of earnings when the men have gone back to work.

As The Daily Telegraph pointed out recently, there is no other country where the Government, and therefore the taxpayers, finance a strike through the social security system, or where the victims of a strike pay benefits to those who are causing it. The 1966 Labour Government passed the Act which brought about that result. This Government should now repeal it.

We are today the poorest industrial nation in Europe. I believe that trade union power is at the very centre of our problems. We face food shortages for people and for animals, a crippling rail strike and mass unemployment in productive industry. We are moving, in the words of the Chancellor of the Exchequer, towards the precipice. Yet, as I read in one newspaper on Sunday, Mr. Moss Evans is simply standing on the edge of the precipice admiring the view, no doubt determined to prove his militancy as the new general secretary of the Transport and General Workers' Union. Let him remember the fate of one of his predecessors, Mr. Frank Cousins, who tried the same trick and was humiliatingly defeated by kin Macleod in the London bus strike 20 years ago.

The truth is that union power today is being abused and some union leaders are acting with complete irresponsibility. They are blackmailing the country and operating a veto on Government and Parliament. They should remember the words of Aneurin Bevan, quoted on Sunday by Lord George-Brown, the former deputy leader of the Labour Party. Thirty years ago Bevan said: If there is one thing we must assert it is the sovereignty of Parliament over any section of the community. I believe that the Prime Minister should assert that sovereignty today or, if he lacks the will to do so, he should hold a General Election. But I can see the difficulty about that. The Government's only electoral card has hitherto been that they alone can deal with organised labour.

That card can no longer be played. It will not win a trick or a vote.

Hon. Members opposite may say that the Conservatives could not cope with union power any better than they can. That is the same as saying that this country is now ungovernable by any political party. If that is so, the last hope for parliamentary democracy may well be a National Government, a coalition, or at least a temporary alliance to deal with the present emergency.

The offer of that is most unlikely to come from the Treasury Bench because it would split the Labour Party. But that is what the people want and it is what the country needs. I hope that my right hon. Friend the Leader of the Opposition, who is now almost certain to win the next election, will rise above party politics and make this offer from these Benches. There would be a ready response to it from the beleaguered and long-suffering people of this country.

8.38 p.m.

Mr. Austin Mitchell (Grimsby)

A depressing sense of realism compels me to say that in this debate we have come to bury pay policy—to praise it, yes, but essentially to bury it. For practical purposes the 5 per cent. pay policy is dead. To work, a pay policy has to have credibility. It has to be seen to be fair, and it has to be seen to be working, which is more important. The 5 per cent. pay policy now, tragically, has none of these characteristics. To deny that is the politics of the boy standing on the burning deck.

I say this with regret because I believe in an incomes policy, in contradiction to the theoretical points made by the right hon. Member for Down, South (Mr. Powell). The three years of incomes policy that we have had have prevented the currency of this country degenerating into the confetti paper money which it would have become, faced with the inflationary pressures coming from outside, if there had not been an internal pay policy.

The problem with pay policy is that it is used as the emergency treatment of the economy. It is almost the poultice of the economic system. It is slapped on hot and hastily and is then messily scraped off in disarray. To use it in this way, as both parties have, and, no doubt, will again, undermines the contribution that pay policy could and should be making over the long term. It is a way of allocating reward which is more effective and more sensible and more in the national interest than to have worker putting worker on the dole as is happening now. It is more fair than the situation in which muscle, which means the ability and the readiness to disrupt, determines priorities and rewards. That situation is to me neither sense nor Socialism. So I believe in a pay policy.

When I say that the 5 per cent. pay policy is dead, I say it with genuine regret. It was right to try it. It was the right level that the country could afford without pushing the rate of inflation up again. It was popular—the polls showed that two-thirds of the public supported it. But we have to recognise that it has now failed. It has failed because, of the pressures, anomalies and problems built up under three years of pretty strict incomes policy. Indeed, the lorry drivers' case is one of those pressures and anomalies.

One of the key elements in their claim is that in December, thanks to EEC regulations which are being phased in over three years, they lost two and a half hours' driving time a week and in July next year they will lose another two and a half hours' driving time. There is an anomaly, too, because of the dependence on long hours of overtime with comparatively low basic rates. It is the long hours of overtime that has kept up their wages and that kind of anomaly has built up under incomes policy and now explodes to the fore.

These pressures mean that we have not been able to secure the fourth year of pay policy that we hoped for. It is inevitable that as an incomes policy disintegrates, as this one is doing, we shall face both strong inflationary pressures and a resurgence in industrial unrest and an increase in strikes. That has always happened in the past.

Secondly, the pay policy has failed because in the sanctions debate last December a vital prop was knocked away. To be fully effective, a pay policy has to have influence in both the public and the private sectors, and sanctions—an imperfect weapon, admittedly, and no one has said that they were anything better than that—still provided a means of influencing settlements in the private sector.

They were a weapon that the Government could use because of employers' ability to hide behind it and say "We would like to pay but we cannot because of sanctions."

The Conservative Opposition were against stanctions, as they are against every aspect of incomes policy—that is, until they find themselves in power and introduce their own, worse, policy. The Liberals, who favour a stronger stautory incomes policy, voted against the only incomes policy politically practicable at this moment. The Scottish National Party, on its usual political strategy of gangin' "aft a-gley ", voted against it, too. That destroyed incomes policy effectively for this year, because to be effective a pay policy must have influence in both the public and the private sectors.

What was decided in the House in December means that the incomes policy is effectively dead therefore. It is true that there are two last ditches in which the Government could still fight in the pretence of maintaining a policy. I would not like to fight in them, however. First, there is now no justification for imposing on the public sector a norm that has effectively been shattered in the private sector. Equity demands that the going rate—a rate that is certainly going up—should be applicable in the public sector as in the private sector, and even if considerations of equity were ruled out altogether the same pressures would be developing there, the same reluctance to abide by a norm that has been exceeded by everyone else. Therefore, I think that we cannot, for considerations of equity, hold the line in the public sector in the way that has been urged.

There is no justification either for the kind of deflationary retaliation against the increase in incomes which has been talked about, whether through cash limits, control of the money supply, or cuts in Government spending. Such retaliation would not only be electorally disastrous, which is one consideration on this side of the House, but nationally and economically disastrous as well, which is far more important, because it makes no sense to react in that fashion with unemployment at the level it is, and to treat an economy that has been expanding so painfully and so slowly to that kind of deflation, which drives up unit costs and so stimulates rather than controls inflation. It checks investment and depresses expectations, and it increases unemployment. It also increases the demands on welfare expenditure and, therefore, the burden of Government expenditure. In other words, it amounts to kicking the economy when it is down simply for reasons of retribution.

So we have lost this year's incomes policy, and I think there is no effective alternative at the moment. The Opposition cannot take any pleasure in this. It is an outcome that they wanted, it is an outcome which they have worked for and it is an outcome to which they have no alternative suggestion, because their only alternative is to cut Government spending, which, in turn, would produce a massive increase in unemployment.

What should Government policy now work towards? I think that it has to recognise that inflation will go back up again. Having made this tremendous achievement of getting inflation down below 8 per cent., we shall now, because of this situation, see it go back up again. There is no way of escaping that fact. The only way that we can cope with that is to stop the increased demand which will come into the economy, sucking in more and more imports, in the way that imports have been sucked in in the last year so that the consumer boom which took place in fact meant an import boom and not a major expansion of manufacturing and employment in this country. In other words, it has to be a policy of controlling imports.

I shall not argue now about the way to control imports, but it seems to me that, in this situation in which inflation will increase, the only effective way to ensure that that inflation stimulates demand, which in turn stimulates manufacturing and employment in this country, is to control imports.

Secondly, I think that we need a recognition of the fact that this is, for all the rhetoric and all the drama about the crisis, only an industrial dispute, and that all the emotion that has now been engendered is largely irrelevant to the solution of that industrial dispute. There are no easy solutions. Indeed, the right hon. Lady the Leader of the Opposition recognises this in her tactic. Her tactic is one of a willingness—which is shared by far too many on the Opposition side of the House—to stir the pot, to stimulate every grievance against the unions, to hint and to grumble but never to propose solutions to the problems that they pose.

In other words, the right hon. Lady will say that she is thinking about—and that in itself is a brave political stance —venting the sins of the fathers on the sons by withholding social security benefits. She will think about making ballots on strikes compulsory. She will mutter about the closed shop. She will stand there, as all too many of the Opposition do, willing to wound and yet afraid to strike.

In this situation, the Opposition have no positive solution, because they know that what they would like to do was tried and failed in 1971. What they most want to do they recognise they cannot do. Therefore, it amounts to a chorus of muttering against the unions.

Indeed, it could be argued that many of these solutions are not the kind of solutions that the Opposition should press. What they want is a weaker union system to redress, they say, the bargaining balance. Yet the proper solution is stronger unions, unions which are better organised and which are better able to lead and better able to commit their members. We want stronger unions, not the kind of union bashing that trips readily from the tongues and hearts of Opposition Members.

I believe that the basic need is to get back to co-operation with the trade unions, which has been weakened and undermined in the past year. I am glad to see that it is now being pursued in the talks which are now taking place between the Government and the unions. It must be pursued not in a spirit of retribution because of the present dispute but in a spirit of compromise, to bring Government and unions together by concessions on both sides, concessions of economic policy on the part of the Government and concessions on the union side, to bring them together to work out a new framework of incomes policy. Recognising that the incomes policy has been lost, effectively, for this bargaining year, we have now settled down to the serious job, the long-term job, of devising a new structure of incomes policy for the next bargaining year.

8.50 p.m.

Mr. Hector Monro (Dumfries)

We are in a sorry mess. The policies of the present Government have come home to roost in a big way. The Government have rightly received universal condemnation for their complacent attitude. The Prime Minister gives the impression of being out of touch with reality.

The problem started earlier in Scotland, where the transport strike was called officially somewhat earlier. Yet what has the Secretary of State for Scotland being doing? There seems to have been a deathly hush from St. Andrew's House. He should get out and about in Scotland to give some leadership and see the problems for himself—problems which have certainly been added to by the exceptional weather, which has turned to hard frost again tonight.

The Government try to shelter behind the unions. But who put the unions in this position of power? It was this Socialist Government. It was this Socialist Government who introduced the social contract—" Yes, we can deal with the unions. Yes, all will be peace and quiet." But what have we got? Absolute chaos.

The myth that the Labour Government can handle the unions has been blown away during the recent months. Never again can the country believe in the Prime Minister's perpetual optimism. Tonight it merely highlights his incompetence.

The legislation passed by the present Government in the trade union Acts of 1974 and 1976 and in the Employment Protection Act gave immense power to the unions. We have discussed that in detail today. There has been built-in encouragement to picket. From that has developed secondary picketing. But the blame lies with the Government for their legislation and the disastrous economic climate, bringing with it high unemployment.

Tonight the Government really ought to go a great deal further in the winding-up speech than the Prime Minister did in relation to the legal position on picketing and secondary picketing. More importantly, the Government should give us an idea of what action they propose to take to protect the lawful citizen.

Industry cannot last much longer, yet the Road Haulage Association is only trying to hold a responsible line. What help is it getting from the Government? Some small hauliers will be forced out of business. They cannot recover what has been taken from them by the pickets and union officials.

There is no joy anywhere, and strikes abound. We have been talking about them throughout the debate. We know of the rail strike and the road haulage strike. But can the Minister give us any information tonight on, for instance, whether the runways at Edinburgh and Glasgow airports will be kept open? The pickets will not permit de-icing fluid to be moved there. Can he give us any information on the authentic news that the pickets are charging the drivers of the vehicles wishing to cross on ferries to the islands, particularly to Arran, £26 per vehicle? That is the sort of problem affecting Scotland at present.

Why should agriculture dance to the tune of union officials? Why should it have to go to union officials to get clearance to move goods? Why should industry be without raw materials? Why should it be impossible to move finished goods? Why should newspapers be without newsprint?

My hon. Friend the Member for Fife, East (Sir J. Gilmour) has just handed me a telex message from the Guardbridge paper mill saying that the strike committee in Fife today has refused it permission to move its own paper on its own lorries out of the mill. That is the sort of problem that we are facing.

I wanted to mention agriculture specifically because the Minister of Agriculture keeps stating that all is going well. The Prime Minister's complacency seems to have rubbed off on him, as well. The Minister says that food is protected—but that just is not so. Milk is food. Does the Minister know what is happening in South-West Scotland? Does the Secretary of State for Scotland know? If he does not know, he ought to, because I have been telephoning his office to pass him the information. This is the one area in the United Kingdom where a local official of the union will not allow milk tankers of private hauliers to operate. Only a superhuman effort by farmers and farmworkers, helped magnificently by the staff of Express Dairy and the Carnation Foods creamery have kept this vital food moving.

The Scottish Milk Marketing Board has done well to organise the emergency service, helped by its own tankers, but in the main farmers have had to take milk by tractor and trailer to the creamery over dangerous, icy roads. Hours and hours are wasted, yet one official seems to be able to veto, against union headquarters advice, the return to work by the tanker drivers, who are keen to return. Therefore, this movement of milk is taking place despite the union, and the Government's voice is totally inaudible. What surprises me, as the position is so serious in Scotland and the Government's voice is so inaudible, is that the Scottish National Party, which has agricultural interests, is not joining us in voting against the Government tonight.

My next point concerns food again. Picketing and secondary picketing of auction marts and slaughterhouses are preventing the movement of beef and lamb to—eventually—the housewife. Livestock that is ready to kill cannot leave the farms. This will eventually cause a shortage of food supplies. Here again the Minister's grandiose words do not seem to be effective.

With stock being kept unnecessarily on the farms, winter keep will be running short and will dwindle fast if something does not happen soon. The Minister says that concentrates will be available for livestock, but I share the view of my right hon. Friend the Member for Stafford and Stone (Mr. Fraser) that hauliers going to the docks have not had success. The Minister must give more information tonight about feedingstuff and tell us that it will be freely available in the mills to manufacture concentrates for livestock in the immediate future.

The procedure is complicated. One must go through the NFU to the strike committee and then to the docks. Why should a decision by a union official, who perhaps knows nothing about agriculture, be crucial in this regard?

Can the Minister give a firm assurance that agriculture will be safeguarded in a much more practical way than he has spoken about over the past three or four days? Time has been wasted and food is being wasted. Livestock are at risk. Is a trade union official to be the regional dictator who will control agriculture in my part of Scotland?

Let us keep matters in proportion. Let us see the Government take an initiative and be seen to be running the country. The situation is desperately serious. The Government's inactivity has given the country a great feeling of depression. The Prime Minister must wake un and move from his hyper-complacency, take effective action to curb the activities of certain union officials and give the country a chance to survive until the General Election.

8.58 p.m.

Mr. James Prior (Lowestoft)

It has been a quieter debate than one might have expected having read the press at the weekend, and I think that it has been the better for that. It has been a very responsible debate. The speech of my right hon. Friend the Leader of the Opposition was one of the best speeches I have heard in this House for a long while.

The Chancellor of the Exchequer (Mr. Denis Healey)

The right hon. Gentleman has got over that point quite nicely.

Mr. Prior

I shall say just one thing to the right hon. Gentleman. I might as well get this out of my system early in the debate. I watched him on television the other night. He was up to all his old tricks again. He put words into my mouth and tried to say that I had said them in an interview with Mr. Day about my right hon. Friend the Leader of the Opposition. As usual, the right hon. Gentleman was totally wrong. I have not even had an interview with Mr. Day about my right hon. Friend's speeches.

I hope that the right hon. Gentleman has read what was said about him last night by his hon. Friend the Member for Luton, West (Mr. Sedgemore). That was just about the best thing that has been said about him for a long time. The right hon. Gentleman has behaved absolutely disgracefully on this matter and should apologise to me tonight. I hope that he will have the courtesy to do so.

There is a crisis. Many of the speeches, particularly those by my right hon. and hon. Friends, have made that perfectly clear. Food supplies are endangered, exports are suffering, and animal feed is not getting through. As my right hon. Friend the Member for Stafford and Stone (Mr. Fraser) and my hon. Friend the Member for Dumfries (Mr. Monro) pointed out, there are many cases where animal feed has been coming out of the mill but no raw materials have been going in. When the decision is left to the local strike committee, or often not to the strike committee but to the pickets who happen to be on duty, they really do not understand—there is no reason why they should—what commodities need to get through in order that a run of production can be sustained. It is not much good letting some commodities get through if other commodities such as salt are not there, and this also applies to packaging material. If no packaging material is getting through, the goods cannot be produced.

There have been a number of very serious cases. My hon. Friend the Member for Barkston Ash (Mr. Alison) has produced a telegram which I would like to read to the House: Requesting any assistance you can give by way of pressure on Government and for information the following facts are relevant. Supplies to our Selby and Thetford factories ceased due to picketing at Grimsby and Harwich, this despite our own transport company, AngloDanish Food Transport, not being in dispute. Many hundreds of tons of bacon lie at extreme risk at quay, being 10 days old. On Monday, we laid off 830 and put 275 on short time. Next week, the 275 will be laid off and about 200 more will be on short time. We face cash flow problems and already several of our customers in the distributive trade appear likely to face liquidation. Requests to the strike committees have failed, even those made by our own employees' branch of the Transport and General Workers Union ". The telegram is signed by the managing director of Danepak.

That is a typical example of what is happening up and down the country. We are in a very serious situation. There has been a certain amount of stocking up from the supermarkets. That is all right for those who have the money and can afford it but the people who really get hit at a time like this are poor people who cannot afford to stock up. Those are the people that the pickets are hitting most. We should make that absolutely plain.

A number of schools are running out of oil. I gather that buses in the North-East are also affected. That is a matter which does not involve people directly connected with the strike. It should not be taking place.

There have been a number of nasty incidents. I heard of an incident this morning where the picket line was manned by a number of people including one who carried a crowbar. When a lorry driver was trying to get through, the crowbar was much in evidence. So the lorry driver complained to the police. The police officer said that he recognised that the chap had a crowbar but that, unless he actually used it, he would not take any action. This sort of thing is not good enough. I would like to hear from the Chancellor of the Exchequer a firmer condemnation than we have perhaps heard from some of his hon. Friends in this debate.

I have been especially asked by my hon. Friend the Member for Manchester, Withington (Mr. Silvester) to mention the water strike in the North-West. It has become the forgotten strike, but it is a real danger to health for people in that area. In a case where it is not possible for management to carry out the duties that are normal in emergencies of this nature, troops should be brought in straight away. It is fantastic that large numbers of people are being asked to boil their water or not to drink their water and that there should be a positive danger to health. Surely, this is a case where emergency powers should be used.

Let me say to the Prime Minister that there has been no pressure from this side for the hauliers to increase their offer. When my right hon. Friend said that today, some Labour Members below the Gangway laughed. It is clear that the pressure for increases across the board has come not from this side but all the time from Labour Members. It is the Prime Minister's own troops who have undermined his position time and time again.

It is no use the right hon. Gentleman or any Labour Member saying that the present position has arisen because sanctions are not now operating. This strike has taken place after an offer of 15 per cent. Does anyone really suggest that if an offer of 5 per cent. had been made and stuck to there would not have been a strike? Of course no one can make that case. Therefore, I cannot see how sanctions have possibly affected this case. In any event, Ford workers settled for 17 per cent. before sanctions came off. It was only the gross, arbitrary and unfair nature of the sanctions against Ford in the first place, when they were not used against a number of other companies which was the basis of the House of Commons reaching its decision.

Although a number of us had made considerable efforts to help the Government to sustain a figure of round about 5 per cent., the pass had been sold, chiefly by Labour Members, a long while before the sanctions debate.

The question that we must ask ourselves also is—if there is a crisis, which we think there is, are we satisfied with the Government's performance? Of course it appears to everyone—it certainly does to the national press, even to the press friendly to the Labour Party —that the Government were caught completely napping over this crisis. They were totally unprepared, although they had been warned.

I know, for example, that people in the food industry and agriculture were ringing up the Minister of Agriculture and his Ministry telling him what was happening and the difficulties they faced. They thought that the Minister was adopting an extraordinarily complacent point of view.

In the absence of the Prime Minister, the Government made no efforts to keep the public informed in any way. What happened to the Chancellor? He did not even speak on Leeds Radio. Normally, I get fed up with hearing the right hon. Gentlemon on Leeds Radio—he is there at the drop of a hat—but he was singularly quiet in the period over Christmas. There was never a word from him until the Prime Minister returned to London.

There was never a word from the Lord President; he made no effort to defend his own policy, or to bring any pressure to bear on the unions, particularly the TGWU. We heard simply nothing from the Government until the Prime Minister came home and made that ghastly bloomer of trying to make out that there was no crisis and saying how parochial it all looked. Then, by God, it hit him —and I presume he hit the rest of his colleagues very soon afterwards.

Where the Secretary of State for Employment has been in all this, heaven alone knows. [HON. MEMBERS: "Where is he now? "] He is not even here now, but I do not think that it makes any difference. The trouble with this Govern- ment and the Government Front Bench is that the whole way through their period of government they never quite realised what they were letting themselves in for.

The Prime Minister

Yes, I did.

Mr. Prior

The right hon. Gentleman says that he did, but they kept saying "We will not have hyper-inflation," yet we got it; "We will not have more than 1 million people unemployed," but we did; "We will not have trouble with the unions, "but we have had. Throughout the last five years, they have made no effort to come to grips with the central problems of our economy. They have trimmed and they have balanced. They have bullied and cajoled. They have lived from day to day. Where has that got us? It has led to a standard of living which will soon fall in absolute terms and which has fallen relative to almost every other nation in Europe.

Today the Prime Minister announced that he will introduce a Prices Bill. More than most people he must know, with all his contacts, that profits in Britain have halved in the past 10 years. That has meant that investment has fallen. When investment falls our competitive position declines and our unemployment rises. It is not a question of needing to put any more pressure on prices. Competition and the present measures are more than sufficient for that. Competition has done more on the High Street in the last year to keep down prices to the consumer than anything that any Government could do.

Once again we are faced with a totally irrelevant measure which is to be introduced as a sop—I am not quite sure to whom—to try to keep prices down when inflation is on an upward course again.

The Government won the 1974 election because of their so-called special relationship with the unions. There is no doubt that such a relationship no longer exists. The price of sustaining that special relationship or seeking it through the social contract was too great for any Government or any country to sustain. It was too great in terms of the public expenditure which was the price that the unions demanded for some form of wage control, and too great in terms of legislation. We are seeing the fruits of some of that legislation today with its damaging effects on the life of the country. During this period our industrial base has narrowed, our economy has become less competitive and our prosperity relative to Europe has declined.

We must ask why we have been less successful in running our affairs than many of our competitors. Some people would say that it is the nature of our people. We are a free and non-deferential society. Some people would say that it is the history of the industrial revolution. Some would say that it is the effect of two world wars, or the nature of our union negotiations which are born out of conflict rather than co-operation—the order of things in a number of other countries.

Whatever one believes to be the cause, there is an imbalance of bargaining power. It will not be put right easily. It is there whether we have statutory policies or free-for-alls or responsible collective bargaining. There is an imbalance between the bargaining power not only of unions with employers but of groups of workers within the unions. That must be dealt with by the House.

Because of the imbalance in bargaining power we have become involved in incomes policies. Governments do not advocate incomes policies with alacrity. They are forced into them because that is the only way that they can see of dealing with a situation.

I enjoyed the speech by the right hon. Member for Down, South (Mr. Powell). I do not wish to become involved in an argument with him.

Mr. Powell

Why not?

Mr. Prior

Because I might come out of it the worse. The right hon. Member underestimates the reality of union power. He also neglects the course of history. He overlooks the psychological need for groups of workers to form associations. But that is bound to happen. Therefore, union power is a force with which we have to reckon. It does not seek to conform to the laws of supply and demand or the free market in the way that the right hon. Gentleman would suggest.

The constant change between incomes policy on the one hand and freedom on the other has resulted in our bad econo- mic performance. As my right hon. Friend the Leader of the Opposition said, it has resulted in the narrowing of differentials, the creating of anomalies and so many people considering that it is no longer worth while following a skill because those who do will not be properly rewarded. All these factors have been destroying our economy in the past 10 to 15 years. At a time when we need trained and skilled people more than ever before, we cannot afford to allow that situation to continue. Parliament must act, and let it be now.

We offered the Government and the country as a whole the proposition that we would stand on industrial relations legislation as it was at the beginning of August 1974. When the Labour Government took office they repealed the 1971 Act. They did not leave matters there. They gave new and greatly extended immunities and privileges to the trade unions. At the time we were highly critical of that legislation, but we could not stop most of it from reaching the statute book.

A number of important changes were made. The House of Commons made those changes. They were made with Conservative, Liberal and other party support. There was cross-party support. Those changes did something to mitigate what we thought were the worst effects of the Trade Union and Labour Relations Bill.

The first and the most important of the changes that we made had the result of confining the immunity from action for inducing breaches of contract to immunity for inducing breaches of contract of employment—in other words, a trade union would not be immune from action if it went beyond persuading workers to go on strike and tried to stop the supply of goods to those who had nothing to do with the industrial dispute.

In addition, the House insisted that workers who were arbitrarily or unreasonably expelled from a union, or not admitted to it, should have a right of appeal to an industrial tribunal.

The third protection was that the House decided that a worker should be entitled to compensation if he were sacked because, on reasonable grounds, he refused to belong to a trade union. The fourth protection was that we required union rule books to contain rules covering certain basic aspects of the organisation, al-thought we did not specify what the content of the rule book should be.

The House made it clear that action could not be regarded as in the course of a trade dispute if it was in support of an overseas dispute having no effect on people in this country. That was, perhaps, the fifth change.

That was not the basis that we would have liked, but it was the one on which we thought the nation as a whole should stand. In 1979 I think that what we said in 1974 was a good deal more acceptable than the present situation.

We were bitterly disappointed. The moment that the Labour Government came back into office in October 1974, that time with a clear majority, they insisted on returning to the fray. They sought to remove all the protections that the House had inserted in the 1974 Act. The new Bill was delayed for a year on the issue of press freedom, but finally the Government had their way and forced the Act on to the statute book.

The Act extended trade union immunities to the inducing of all breaches of contract, not only contracts of employment. The Act took away the right of appeal against unfair exclusion or expulsion from a trade union. It denied workers compensation if they were sacked because on reasonable grounds they refused to join a trade union. It removed the provision about union rules and it encouraged industrial action in support of overseas disputes. It was a sustained piece of partisan legislative intolerance. It repealed what we had placed on the statute book and went a great deal further in putting on to the statute book an Act that has caused so many of the troubles from which we now suffer. Those are some of the issues which have to be put right. I do not put that forward in a partisan frame of mind, but as something which the House itself should do.

There are other things that we have to do as well. We must go in for secret ballots on a much larger scale. It would be useful to have a secret ballot before a strike is called. I looked up recently "In Place of Strife" which said: It is, however, a matter for concern that at present it is possible for a major official strike to be called when the support of those involved may be in doubt. If that was true in 1969, it is 100 times more true today.

Mr. Heiler

I did not support certain parts of "In Place of Strife" and I did not support the right hon. Gentleman's Industrial Relations Act. If he is in favour of secret ballots before a strike takes place, does he also favour secret ballots being held before strikes are called off? There could be a time lapse of three or four weeks before a dispute could be settled if the union's executive committee is not given power to call off a strike.

Mr. Prior

I know all the arguments. The hon. Gentleman should at least give me credit for having gone into this matter in great detail. Of course if there is a secret ballot before a strike is called, there would have to be a secret ballot before the action was called off, but there is no earthly reason why a secret ballot should take long to organise. It could be organised very quickly and, if help is required in the organisation of ballots, let us give it as quickly as we can. The more representation there is by people within unions, the better the results will be for unions themselves and for the whole nation. Let us get on with that. I have heard it commended by the Prime Minister and by his predecessor. Let us get it in operation.

It is all very well for the Prime Minister to tell us that the Secretary of State for Employment is now proposing to draw up a code of practice for picketing, but during the Committee stage of the Employment Protection Bill, we put down an amendment calling on ACAS to draw up a code of practice. It was defeated by the then Secretary of State for Employment, the present Leader of the House, and his colleagues on the basis that, although the Home Secretary was not prepared to allow lorries to be stopped on the highway, they claimed that there was no ground for having a code of practice as laid down by the National Union of Mineworkers during its strike. It went by the board and we never got our code of practice.

It ill becomes the Prime Minister to come along almost four years later and say that a code of practice is now being prepared. Why have we had to wait all this time? Why could we not have had it before?

The Prime Minister conceded that immunities were extended by the 1976 Act and that it had contributed to an increase in so-called secondary picketing. However, the right hon. Gentleman then tried to say that the effects were minimal and that what the Government had done was justified by what Lord Donovan had said. All I can say on the first point is that the Prime Minister should have been on the Committee that considered the 1976 Bill. He should have heard the Lord President and his colleagues. They did not think that it was an unimportant issue. They fought it tooth and nail all through. If it was not an important issue, why did the Government go to the extent of re-enacting it in that Bill? It was regarded as an important issue and was rightly thought at that time that it would make a big difference. That was why it was done.

When Lord Donovan recommended that immunities should be extended to commercial contracts, he recommended as well that they should be restricted to registered trade unions and those acting on their behalf. In the House of Lords debate on "In Place of Strife ", Lord Donovan said: But if unofficial elements and ephemeral combinations which are here today and gone tomorrow are to have the same licence then a prospect is opened up which I find alarming. Yet this is apparently what is contemplated, and I find it all the more alarming because it is true, as the noble Lord, Lord Cooper said, that there are those who have a vested interest not in industrial peace but in industrial unrest, and here we give them another opportunity for exploitation of a licence which they should never have."—[Official Report, House of Lords, 18th March 1969; Vol. 300, c. 852-3.] That is why we fought the immunities provisions in the 1974 Act and in the 1976 Act. I think that we were absolutely justified in doing so, and I believe that it would be right for this House to return to the 1974 position.

I turn now to the question of changes in the Employment Protection Act. We all know that the Chancellor of the Duchy of Lancaster wants to make them. We know that he is not satisfied about the recognition clauses and about the operation of the unfair dismissal procedures, and so on. He makes no bones about the fact that he considers that for small businesses the Act is a deterrent to taking on additional employees. Why do not the Government do something about it? There is not much between us on this. We know that schedule 11 is operating very much against the interests of controlling inflation, but nothing is done about it. This is another matter on which we could get all-party agreement.

I turn next to the closed shop. It is just possible, where there is a strong Conservative council, such as the GLC, and one is dealing with responsible unions, to negotiate an agreement which gives reasonable exemption for those who, on grounds of conscience or for other reasons, do not wish to belong to a trade union. But hon. Gentlemen must recognise, as we do, that those exemptions and those cases have been few and far between in the last four years. It did not apply to the 40 or so people in British Rail, some of whom had worked for British Rail for 30 years. They lost their jobs.

One of the great worries of lorry drivers now is that if they go through the picket line their names will be taken and that they will be marked down from that moment onwards. They are frightened. We know that on a number of occasions lorry drivers have been told that if they want to go through the picket line they must join the union, and that pressure is put on them in that way. Of course, it is totally unjust and totally wrong that a man should lose his job, or indeed be subject to dismissal, simply because he has been working for a company which has made an agreement about union membership, and so the man has to join the union. Surely we ought first to have the provision that we wrote into the 1974 Act which governed exclusion or expulsion, and also a proper code of practice, which everyone should follow, dealing with the closed shop.

The Prime Minister mentioned comparability with the private sector for certain sections of the public service and local government service. We must have a proper regard for the public sector, but we should not look at this in isolation from the suggestion that there should be a form of non-aggression pact to ensure that certain sections of the community, particularly the old and the suffering, are looked after in a proper way. in exchange for comparability there should be an undertaking not to strike. That suggestion should be followed up, and only in those circumstances should we entertain what the Prime Minister said about comparability.

We have to carry through a number of reforms. They may not do everything, but they are necessary and they will help. One of course understands the difficulties about legislation in this field, but the amount of legislation that this would require is very limited indeed. The House of Commons must not be frightened of carrying out legislation of this nature and seeing it enforced. It will not always be easy to enforce, and I recognise what the Prime Minister said. But that should not deter us from putting on to the statute book what we know is in the interests of the whole nation. This is in the interests of the whole nation. What is more, these changes are best carried out by agreement in this House and across the Floor of the House. As my right hon. Friend the Leader of the Opposition said this afternoon, we offer the Government the opportunity to put these measures through speedily.

The performance of our nation in the last 15 years has been poor. Our social and medical services are now far behind those of other countries. We must make greater efforts. Our standard of living is only about half that of Germany and about two-thirds that of France. [HON. MEMBERS:" That is not true." I am afraid that it is true. It has never been a question of talking my country down, but one sometimes has to ask the country to face the facts. When the British face the facts they come out on top. I believe that we can do that again, but not unless we make the sort of changes that my right hon. Friend and I have suggested today.

9.32 p.m.

The Chancellor of the Exchequer (Mr. Denis Healey)

The right hon. Member for Lowestoft (Mr. Prior) told the country on 3rd January: It is better in these matters to play a quiet game rather than to shout too much. He went on to say that it was better to take a balanced and reasonable view, and to look at the practical side rather than rush into statements which would be very difficult to fulfil and which would immediately result in less co-operation and less conciliation and lead hack once more to confrontation. Those are wise words, and I propose to accept the right hon. Gentleman's advice.

This has been mainly a quiet and certainly a very concerned debate and I shall try to observe the spirit in which most Members on both sides of the House have tried to deal with the problems. I know it is not easy to keep calm and to keep one's head when much of the country is gripped by a justifiable mood of anger, bitterness and frustration. That mood is easy to understand, but it will not assist the House of Commons in finding a solution to the problems if we allow it to infect our approach.

In spite of what the right hon. Gentleman said, we have just ended a year of exceptional achievement for Britain. I do not think that the country will agree with the jeers from the Opposition when I remind the House that we have halved the rate of inflation, we have had a higher rate of growth in Britain than any country in Europe except Ireland, we have reduced unemployment by over 100,000, the pound has been strong, the money supply is under control, and we are paying our way in the world despite the fact that our invisible earnings fell more than we gained from the increase in the production of North Sea oil.

The value of our exports last year rose twice as fast as the value of our imports and their volume rose 5¾ per cent. We maintained the increase in our share of world trade which was established in 1977. One of the consequences of this achievement was the biggest increase in living standards for the British people in one year than at any time since the war.

There were some areas of disappointment, and I shall face those as the right hon. Member for Lowestoft suggested I should. Pay increased somewhat faster than the Government had hoped and productivity somewhat less. Manufacturing output was well below the growth in national wealth as a whole. Like all Chancellors of the Exchequer, I am always under pressure from both sides of the House to take action to increase demand. But there is no point in increasing demand for goods in this country if British industry is not producing the goods to satisfy that demand.

It is true that the disappointing record in manufacturing industry has been concentrated in a few areas—above all in the motor car industry. Last year demand for motor cars and sales rose by over 20 per cent., but output actually fell over the year as a whole. It fell because there was widespread industrial disruption caused by strikes and stoppages which, until the Ford stoppage at the end of the year, were mainly unofficial.

This year we could get very close to last year's performance, provided that we deal with the rate of inflation and the number of industrial stoppages. We have started badly in both areas, and that is the subject of our debate today.

Several hon. Members, particularly the right hon. Member for Down, South (Mr. Powell), have pointed to some similarities between the beginning of 1979 and the beginning of 1974. But the right hon. Gentleman, of all hon. Members, should have drawn attention to one striking difference—that the country is not now awash with money which has been printed by the Government to accommodate inflation.

I remind the House of the words of the hon. Member for Oswestry (Mr. Biffen), who has recently rejoined the Opposition Front Bench. The other day he wrote: In the light of Conservative economic policy between 1971 and 1973 it is extremely difficult to mount a sustained and fundamental criticism of Labour's economic policy. The fact is that our money supply is still below the lower end of the range which I set for it in the middle of the fiscal year. Public expenditure is under firmer control than it has ever been in our history, due to the introduction of cash limits and a firm observance of the contingency reserve.

As a result, in spite of the difficulties we have faced in recent weeks, the pound remains strong. The stability of the pound is mostly a reflection of our performance on inflation and of our financial policies. Also, of course, it is a very important contribution to it.

Mr. William Clark (Croydon, South)

What about the German mark?

Mr. Healey

I should point out to the hon. Gentleman that in Germany the money supply targets are three or four times higher than the level which the Germans set themselves. In Switzerland the money supply is running at about six times higher than the target. Therefore, I do not think that on this occasion we need take any lessons on monetary control from either the Germans or the Swiss, who are often held up as examples.

Because the Government are pursuing, and will continue to pursue, firm and adequate fiscal and monetary policies, I do not believe that we shall have runaway inflation such as we had in 1974-75 following two years of fiscal and monetary profligacy under the Conservative Government. But because we are observing strict monetary and fiscal policies, if wage increases continue at the sort of level at which they have been running since the Ford settlement, the result will be seen in rising prices, fewer jobs, lower output and more bankruptcies. I am glad that the hon. Member for Croydon, South (Mr. Clark) feels so abashed by the irrelevance of his recent intervention that he has decided to go and consult the oracle.

It is not too late for us to put the situation right. On the pay front, the proposals that the Prime Minister announced this afternoon will help us to achieve responsible settlements in the public sector. I believe that the £3.50 underpinning for the low paid will be of great assistance in reaching sensible settlements in the public services, and I believe that the offer to endorse comparability studies on a job-for-job comparison, where both unions and employers want to pursue this approach to pay bargaining, will also be of assistance. I also believe that strengthening the powers of the Price Commission by abolishing safeguards for companies under investigation will be of significant importance.

What the right hon. Member for Lowestoft said a few moments ago gives me some ground for hoping that on the pay front we shall get support from the Conservative Opposition from now on. The Conservative Opposition must be somewhat abashed—particularly the right hon. Lady the Member for Finchley (Mrs. Thatcher)—at the consequences of the gospel of free collective bargaining which are now visible to the nation as a whole, a free collective bargaining which she promoted at her own party's conference as something which should be limited only by market power. I know that many firms which supported pressure from the industrial organisations for the abolition of sanctions against excessive pay increases in the private sector are now bitterly regretting the vote which the Conservative Opposition forced on the House before Christmas.

After what the right hon. Gentleman has just told us, I hope that the Opposition as a whole will now publicise the fact that they support 5 per cent. as the right average for pay claims. The right hon. Gentleman has said that. So has the right hon. and learned Member for Surrey, East (Sir G. Howe), Lord Carrington, and, a very recent convert, the hon. Member for Henley (Mr. Heseltine).

Of course, there is some flexibility in the 5 per cent. But I found it rather odd that this afternoon the right hon. Lady should have pointed to the evidence of the flexibility as a criticism of the Government's policy rather than as a reason for supporting it. We have introduced two new elements of flexibility by the changes in our pay policy announced by the Prime Minister this afternoon. I hope that some day the right hon. Member for Lowestoft will reciprocate. I explained to him some months ago why I now thought that he had been right and I wrong when he was arguing that the 10 per cent. last year should be a norm and I was arguing that it should be an average. He is now taking the position that I then took, but he must see from experience in recent pay settlements how difficut it is to establish an average as low as 5 per cent. unless it is treated as a norm.

I now turn to the second question raised in the debate, that of industrial disruption. The whole House and the country are, I believe, worried about two aspects of recent industrial behaviour—first, excessive use of the strike weapon, particularly as a first resort in pay negotiations, and, secondly, the application of the strike weapon in a way which damages the interests and livelihoods of millions of people who have no direct interest or responsibility in the matter under dispute.

As has been made clear by the Home Secretary, the Prime Minister and by all other Ministers who have spoken, the Government have an inescapable responsibility to take whatever action is possible and required in order to reduce damage to the innocent caused by industrial disputes. As the Prime Minister said this afternoon, the key to our approach to a state of emergency must be that of course we will introduce it at any moment when we believe that its introduction will increase the flow of food and materials.

In answer to those many hon. Members who cited the difficulties faced by firms and workers in their constituencies, perhaps I can say that in all cases of such difficulty the first step to be taken is to get in touch with the 24-hour emergency committees in every region. [HON. MEMBERS: "Oh ".] With great respect, hon. Members must recognise that these committees are making a major contribution to easing the impact of the current dispute. If they are unable to get in touch with them, they can contact the private office of my right hon. Friend the Secretary of State for Transport.

Dr. Keith Hampson (Ripon)

Surely the right hon. Gentleman, as a Leeds Member, knows full well that the telephone numbers issued for the committee in that part of the country were all wrong. How can the Government be satisfied with the position in which by now cliques of local shop stewards issue dispensation, for example, for medical supplies while at the time time halting the supply of sulphuric acid from ICI, which means that Beechams cannot produce antibiotics?

Mr. Healey

I shall come to those issues immediately.

The House must recognise what the right hon. Member for Lowestoft accepts. There are limits to what any Government can do—there were limits to what the Conservatives could do when they were in power during the three-day working week—whatever the state of the law, and however widespread the use of troops. That is true not only in a democracy but in a dictatorship, too, as we can see from what has happened in Iran in recent weeks.

It is significant that when the hon. Member for Norfolk, North-West (Mr. Brocklebank-Fowler) naturally complained to one of my right hon. Friends about difficulties faced by some of his constituents, and when he was asked what action the Government should take, he stated that the Government should talk to the unions. Of course, that is right. There is no way of dealing with many of these problems unless the Government talk to the unions, and unless the Government are capable of talking fruitfully to them.

The right hon. Member for Lowestoft said the other day: I do not think there is any particular way in which you can deal with an individual strike", and he made it clear that it is not his party's intention to go for a whole range of legislative change. He made it clear in the same interview that the current Conservative leadership had no intention of repeating the experience of the last Tory Government by reintroducing the Industrial Relations Act, which, as he rightly said, had not been a conspicuous success. The only specific proposal that he made at that time was to facilitate, not to compel, secret ballots, a proposal that he has repeated today.

The right hon. Gentleman admitted, however, in that interview, acting very fairly as he usually does, that secret ballots might often help the extremists rather than the moderates in trade unions. Of course, he is right.

Mr. Ron Thomas

Does not my right hon. Friend agree that, like the Opposition, the media have blown up this so-called crisis out of all proportion? Would it not be informative and salutary if the Robin Days of this world were made to disclose their salaries when lecturing lorry drivers who drive 30-ton wagons for £53 a week?

Mr. Healey

I think that there has been a tendency at earlier points in the current phase of industrial relations for some of the newspapers and the commentators to exaggerate the nature of the problem. I hope, however, that the House will accept the truth of what I said last Thursday which has been repeated since by many representatives of various interests. I forecast that 100,000 people would be laid off by last weekend if the strike continued along the lines on which it was proceeding. That was right. If it continues for the rest of this week, a million people could be laid off, and I do not think that any hon. Member could regard that prospect as being tolerable in any respect.

The right hon. Lady raised the question of banning strikes, trying to get the unions to abandon the right to strike in certain areas, but she rather engagingly admitted why the Government of which she was a member decided not to pursue that course with the electricity and gas workers. It was on the ground that there were too many other methods of disrupting industry for a ban on strikes to be adequate. She must also know that to define essential services in a society and economy so interdependent as ours is today is a mammoth and probably impossible task.

There are far too many groups in the country at the present time—and by no means all in the trade union movement—which have the power to inflict great damage on society and on the economy. The right hon. Lady talked of dealing with the problem by withdrawing social benefits from the families of strikers, but I note that in one of the weekend newspapers it was reported that in the twilight days of the Heath Government the very same notion was put forward. Mrs. Thatcher was there when the Cabinet discussed it. She read the compelling case made out against the plan by one of her senior colleagues…Sir Keith Joseph. The fact is that that is not a way which offers very much promise of dealing with the problem.

The whole House is deeply concerned with the question of secondary picketing. But here again the right hon. Member for Lowestoft has admitted that it is far from clear how the law could help. Whenever attempts have been made to use the law to punish people for industrial action, the result has been a catastrophic failure, discrediting the law and humiliating the Government concerned. That happened in the case of the wartime Emergency Powers Act, as was reported in an annexe to Lord Donovan's report on the trade unions, and of course it happened in recent memory when the tip-staff was called in to release pickets who had been imprisoned under the Conservative Government's Industrial Relations Act.

The fact is—and the House and the country must face it as a fact—that when the Conservative Government had the powers which the right hon. Gentleman has asked us to restore secondary picketing grew in frequency and in effectiveness. Much the same is true about dealing with the closed shop.

The right hon. Lady quoted the agreement recently made by a number of unions representing people employed by the Greater London Council. This agreement was made under the existing law, and the right hon. Gentleman himself said in his speech in Huddersfield only last Friday: Therefore, we believe that the best way of protecting and upholding individual rights. including press freedom "— this was in the closed shop context— is for union membership agreements to be drawn up in keeping with a sensible Code of Practice. The fact is that there is no obvious way of dealing with these problems by legislation. The right hon. Gentleman himself has pointed out again and again, in honest, thoughtful contributions to debate over the last few weeks, that this problem, like the problem of secondary picketing, can best and probably only be dealt with by agreements inside the trade union movement itself.

Mr. Prior

The right hon. Gentleman really must not go on distorting what I have said. In that speech, I made it abundantly plain that I believed that we had to have a code of practice and that we also had to be prepared to change the law to allow compensation for unfair dismissal in a closed shop situation, and that no one should be expelled or excluded from a trade union without recourse to a proper court. Why does the right hon. Gentleman miss all that out, because it totally alters the concept of what he is saying?

Mr. Healey

Of course I accept—the right hon. Gentleman has just quoted himself, in his speech a moment ago—that he made these specific suggestions. But they do not deal with the core of the problem which may be created by the closed shop. The right hon. Member for Down, South was so right about all the proposals made by the Conservative Party in this field. In so far as they are precise, they are scarcely relevant to the problems which the nation is facing.

There is an extraordinary contrast between the approach of the right hon. Member for Lowestoft to these problems and the approach of the Leader of the Opposition. Her weekly changes of position on this particular matter reflect nothing except a desperate opportunism. She is very skilful. She has the skill of the demagogue, in recognising public feeling and giving it voice. I think that we can all concede that. But she does so by inflaming emotions, particularly the emotions of fear and hatred.

The right hon. Lady started last year by doing it on immigration. She then did it on the question of law and order. She then picked, even a year ago, the question of union power. But then her proposal was to have referendums on strikes—something which, mercifully, she has not resurrected in the intervening nine months.

The other day the right hon. Lady made no specific proposals whatever, and she made none this afternoon. The only specific proposal she made this afternoon was that if the Government could devise any means of using the law to deal with these problems the Opposition would support them. But she made no suggestion whatever as to what means the Government could find.

While I think that there is scope for a wide measure of agreement on these matters between the two sides of the House, it must be on the basis of the recognition of the right hon. Gentleman that the law has a very limited role, if any, to play in dealing with our present discontents and that these problems can be dealt with only by talking to those concerned, both in industry and in the trade unions, and talking on a basis of reason, common sense and patriotism, rather than by inflaming the emotions of fear, hatred and greed, as the right hon. Lady always insists on doing.

9.58 p.m.

Mr. Michael Marshall (Arundel)

The House has rarely heard a more disgraceful speech from the Chancellor of the Exchequer. His attitude was incomprehensible. He made not a single constructive comment. He simply wound himself up into the old party political routine—[Interruption.]

Mr. Speaker

Order. I cannot hear what the hon. Gentleman is saying.

Mr. Marshall

I am obliged, Mr. Speaker.

It is typical of the Government that they are so far out of control of things that the Chancellor cannot any more even talk up to 10 o'clock. His speech tonight was unmitigated nonsense. He did not respond in any way to the sensible views put forward from the Opposition Benches. Nor did he face up to the problems affecting many companies, includ-

ing those in my own constituency —[Interruption.]

Mr. Speaker

Order. Perhaps the House is not aware that all this noise is being broadcast.

Mr. Marshall

If the Government seriously want to take advantage of views on both sides of the House, they must think again, and quickly.

Question put, That this House do now adjourn:—

The House divided: Ayes 277, Noes 301.

Division No. 32]	AYES	10.0 p.m.
Adley, Robert	Durant, Tony	Howe, Rt Hon Sir Geoffrey
Aitken, Jonathan	Dykes, Hugh	Howell, David (Gulldford)
Alison, Michael	Eden, Rt Hon Sir John	Howell, Ralph (North Norfolk)
Amery, Rt Hon Julian	Edwards, Nicholas (Pembroke)	Howells, Geraint (Cardigan)
Arnold, Tom	Elliott, Sir William	Hunt, David (Wirral)
Atkins, Rt Hon H. (Spelthorne)	Emery, Peter	Hunt, John (Ravensbourne)
Atkinson, David (B'moutit, East)	Eyre, Reginald	Hurd, Douglas
Awdry, Daniel	Fairbairn, Nicholas	Hutchison, Michael Clark
Baker, Kenneth	Fairgrieve, Russell	Irving, Charles (Cheltenham)
Beith, A. J.	Farr, John	James, David
Bell, Ronald	Fell, Anthony	Jenkin, Rt Hon P. (Wanst'damp;W'df'd)
Bendall, Vivian	Finsberg, Geoffrey	Jessel, Toby
Bennett, Sir Frederic (Torbay)	Fisher, Sir Nigel	Johnson Smith, G. (E Grinstead)
Bennett, Dr Reginald (Fareham)	Fletcher, Alex (Edinburgh N)	Johnston, Russell (Inverness)
Benyon, W.	Fookes, Miss Janet	Jones, Arthur (Daventry)
Berry, Hon Anthony	Forman, Nigel	Jopling, Michael
Bitten, John	Fowler, Norman (Sutton C'f'd)	Joseph, Rt Hon Sir Keith
Biggs-Davison, John	Fox, Marcus	Kaberry, Sir Donald
Blaker, Peter	Fraser, Rt Hon H. (Stafford amp; St)	Kershaw, Anthony
Body, Richard	Freud, Clement	Kilfedder, James
Boscawen, Hon Robert	Fry, Peter	Kimball, Marcus
Bottomley, Peter	Galbraith, Hon T. G. D.	King, Evelyn (South Dorset)
Bowden, A. (Brighton, Kemptown)	Gardiner, George (Reigate)	King, Tom (Bridgwater)
Boyson, Dr Rhodes (Brent)	Gardner, Edward (S Fylde)	Kitson, Sir Timothy
Bradford, Rev Robert	Gilmour, Rt Hon Sir Ian (Chesham)	Knox, David
Braine, Sir Bernard	Gilmour, Sir John (East Fife)	Lamont, Norman
Britten, Leon	Glyn, Dr Alan	Langford-Holt, Sir John
Brocklebank-Fowler, C.	Godber, Rt Hon Joseph	Latham, Michael (Melton)
Brooke, Hon Peter	Goodhart, Philip	Lawrence, Ivan
Brotherton, Michael	Goodhew, Victor	Lawson, Nigel
Brown, Sir Edward (Bath)	Goodlad, Alastair	Lester, Jim (Beeston)
Bryan, Sir Paul	Gorst, John	Lewis, Kenneth (Rutland)
Buchanan-Smith, Alick	Gow, Ian (Eastbourne)	Lloyd, Ian
Buck, Antony	Gower, Sir Raymond (Barry)	Loveridge, John
Budgen, Nick	Grant, Anthony (Harrow C)	Luce, Richard
Bulmer, Esmond	Gray, Hamish	McAdden, Sir Stephen
Burden, F. A.	Grieve, Percy	McCrindle, Robert
Butler, Adam (Bosworth)	Griffiths, Eldon	Macfarlane, Neil
Carlisle, Mark	Grimond, Rt Hon J.	MacGregor, John
Chalker, Mrs Lynda	Grist, Ian	MacKay, Andrew (Stechford)
Channon, Paul	Grylls, Michael	Macmillan, Rt Hon M. (Farnham)
Churchill, W. S.	Hall-Davis, A. G. F.	McNair-Wilson, M. (Newbury)
Clark, Alan (Plymouth, Sutton)	Hamilton, Archibald (Epsom amp; Ewell)	McNalr-Wilson, P. (New Forest)
Clark, William (Croydon S)	Hamilton, Michael (Saffsbuty)	Madel, David
Clarke, Kenneth (Rushcliffe)	Hampson, Dr Keith	Marshall, Michael (Arundel)
Clegg, Walter	Hannam, John	Marten, Neil
Cockcroft, John	Harrison, Col Sir Harwood (Eye)	Mates, Michael
Cooke, Robert (Bristol W)	Harvle Anderson, Rt Hon Miss	Mather, Carol
Cope, John	Haselhurst, Alan	Maude, Angus
Cormack, Patrick	Hastings, Stephen	Maudling, Rt Hon Reginald
Costain, A. P.	Havers, Rt Hon Sir Michael	Mawby, Ray
Craig, Rt Hon W. (Belfast E)	Hawkins, Paul	Maxwell-Hyslop, Robin
Critchley, Julian	Hayhoe, Barney	Mayhew, Patrick
Crouch, David	Heath, Rt Hon Edward	Meyer, Sir Anthony
Crowder, F. P.	Heseltine, Michael	Miller, Hal (Bromsgrove)
Dean, Paul (N Somerset)	Hicks, Robert	Miscampbell, Norman
Dodsworth, Geoffrey	Higgins, Terence L.	Mitchell, David (Basingstoke)
Douglas-Hamilton, Lord James	Hodgson, Robin	Moate, Roger
Drayson, Burnaby	Holland, Philip	Monro, Hector
du Cann, Rt Hon Edward	Hooson, Emlyn	Montgomery, Fergus
Dunlop, John	Hordern, Peter	Moore, John (Croydon (C)
More, Jasper (Ludlow)	Rhodes James, R.	Stradling, Thomas J.
Morgan, Geraint	Ridley, Hon Nicholas	Tapsell, Peter
Morgan-Giles, Rear-Admiral	Ridsdale, Julian	Taylor, R. (Croydon NW)
Morris, Michael (Northampton S)	Rifkind, Malcolm	Taylor, Teddy (Cathcart)
Morrison, Hon Charles (Devizes)	Roberts, Wyn (Conway)	Tebbit, Norman
Morrison, Peter (Chester)	Rossi, Hugh (Hornsey)	Temple-Morris, Peter
Mudd, David	Rost, Peter (SE Derbyshire)	Thatcher, Rt Hon Margaret
Neave, Airey	Royle, Sir Anthony	Thomas, Rt Hon P. (Hendon S)
Nelson, Anthony	Sainsbury, Tim	Thorpe, Rt Hon Jeremy (N Devon)
Neubert, Michael	St. John-Stevas, Norman	Townsend, Cyril D.
Newton, Tony	Scott, Nicholas	Trotter, Neville
Nott, John	Shaw, Giles (Pudsey)	van Straubenzee, W R.
Onslow, Cranley	Shelton, William (Streatham)	Vaughan, Dr Gerard
Oppenheim, Mrs Sally	Shepherd, Colin	Viggers, Peter
Page, Rt Hon R. Graham (Crosby)	Shersby, Michael	Wainwright, Richard (Colne V)
Page, Richard (Workington)	Silvester, Fred	Wakeham, John
Paisley, Rev Ian	Sims, Roger	Walker, Rt Hon P. (Worcester)
Pardoe, Arthur	Sinclair, Sir George	Wall, Patrick
Parkinson, Cecil	Skeet, T. H. H.	Walters, Dennis
Pattie, Geoffrey	Smith, Cyril (Rochdale)	Weatherill, Bernard
Penhaligon, David	Smith, Dudley (Warwick)	Wells, John
Percival, Ian	Smith, Timothy John (Ashfield)	Whitelaw, Rt Hon William
Peyton, Rt Hon John	Speed, Keitn	Whitney, Raymond
Pink, R. Bonner	Spence, John	Wiggin, Jerry
Prentice, Rt Hon Reg	Spicer, Michael (S Worcester)	Winterton, Nicholas
Price, David (Eastleigh)	Sproat, lain	Wood, Rt Hon Richard
Prior, Rt Hon James	stainton, Keith	Young, Sir G. (Ealing, Acton)
Pym, Rt Hon Francis	Stanbrook, Ivor	Younger, Hon George
Raison, Timothy	Stanley, John
Rathbone, Tim	Steel, Rt Hon David	TELLERS FOR THE AYES:
Rees-Davies, W. R.	Steen, Anthony (Wavertree)	Mr. Spencer Le Marchant and
Renton, Rt Hon Sir D. (Hunts)	Stewart, Ian (Hitchin)	Mr. Michael Roberts
Renton, Tim (Mid-Sussex)	Stokes, John
NOES
Abse, Leo	Cowans, Harry	Gilbert, Rt Hon Dr John
Allaun, Frank	Cox, Thomas (Tooting)	Ginsburg, David
Anderson, Donald	Cralgen, Jim (Maryhill)	Golding, John
Archer, Rt Hon Peter	Crawford, Douglas	Gould, Bryan
Armstrong, Ernest	Cronin, John	Gourlay, Harry
Ashley, Jack	Crowther, Stan (Rotherham)	Graham, Ted
Ashton, Joe	Cryer, Bob	Grant, George (Morpeth)
Atkins, Ronald (Preston N)	Cunningham, Dr J (Whiteh)	Grant, John (Islington C)
Atkinson, Norman (H'gey, Tott'ham)	Davidson, Arthur	Grocott, Bruce
Bagier, Gordon A. T.	Davies, Bryan (Enfield N)	Hamilton, W. W. (Central Fife)
Bain, Mrs Margaret	Davies, Rt Hon Denzil	Hardy, Peter
Barnett, Guy (Greenwich)	Davies, Ifor (Gower)	Harrison, Rt Hon Walter
Barnett, Rt Hon Joel (Heywood)	Davis, Clinton (Hackney C)	Hart, Rt Hon Judith
Bates, Alt	Deakins, Eric	Hattersley, Rt Hon Roy
Bean, R. E.	Dean, Joseph (Leeds West)	Hayman, Mrs Helene
Benn, Rt Hon Anthony Wedgwood	Dell, Rt Hon Edmund	Healey, Rt Hon Denis
Bennett, Andrew (Stockport N)	Dempsey, James	Heffer, Eric S.
Bidwell, Sydney	Dewar, Donald	Henderson, Douglas
Bishop, Rt Hon Edward	Doig, Peter	Home Robertson, John
Blenkinsop, Arthur	Dormand, J. D.	Hooley, Frank
Boardman, H.	Douglas-Mann, Bruce	Horam, John
Booth, Rt Hon Albert	Duffy, A. E. P.	Howell, Rt Hon Denis (B'ham, Sm H)
Bottomiey, Rt Hon Arthur	Dunn, James A.	Hoyle, Doug (Nelson)
Boyden, James (Bish Auck)	Dunnett, Jack	Huckfield, Les
Bradley, Tom	Eadie, Alex	Hughes, Rt Hon C. (Anglesey)
Bray, Dr Jeremy	Edge, Geoff	Hughes, Robert (Aberdeen N)
Brown, Hugh D. (Provan)	Ellis, John (Brigg & Scun)	Hughes, Roy (Newport)
Brown, Robert C. (Newcastle W)	English, Michael	Hunter, Adam
Buchan, Norman	Ennals, Rt Hon David	Irving, Rt Hon S. (Dartford)
Buchanan, Richard	Evans, Fred (Caerphilly)
Butler, Mrs Joyce (Wood Green)	Evans Gwynfor (Carmarthen)	Jackson, Colin (Brighouse)
Callaghan, Rt Hon J. (Cardiff SE)	Evans, loan (Aberdare)	Jackson, Miss Margaret (Lincoln)
Callaghan, Jim (Middleton amp; P)	Evans, John (Newton)	Janner, Greville
Campbell, Ian	Ewing, Harry (Stirling)	Jay, Rt Hon Douglas
Canavan, Dennis	Ewing, Mrs Winifred (Moray)	Jeger, Mrs Lena
Cant, R. B.	Faulds, Andrew	Jenkins, Hugh (Putney)
Carmichael, Neil	Fernyhough, Rt Hon E.	John, Brynmor
Carter, Ray	Flannery, Martin	Johnson, James (Hull West)
Carter-Jones, Lewis	Fletcher, L. R. (Ilkeston)	Johnston, Walter (Derby S)
Cartwright, John	Fletcher, Ted (Darlington)	Jones, Alec (Rhondda)
Castle, Rt Hon Barbara	Foot, Rt Hon Michael	Jones, Barry (East Flint)
Clemitson, Ivor	Ford, Ben	Jones, Dan (Burnley)
Cocks, Rt Hon Michael (Bristol S)	Forrester, John	Judd, Frank
Cohen, Stanley	Fowler, Gerald (The Wrekin)	Kaufman, Rt Hon Gerald
Colquhoun, Ms Maureen	Fraser, John (Lambeth, N'w'd)	Kelley, Richard
Concannon, Rt Hon John	Freeson, Rt Hon Reginald	Kerr, Russell
Conlan, Bernard	Garrett, John (Norwich S)	Kilroy-Silk, Robert
Cook, Robin F. (Edin C)	Garrett, W. E. (Wallsend)	Kinnock, Nell
Corbett, Robin	George, Bruce	Lambie, David

Lamborn, Harry	Ogden, Eric	Stewart, Rt Hon M. (Fulham)
Lamond, James	O'Halloran, Michael	Stoddart, David
Latham, Arthu' (Paddington)	Orbach, Maurice	Stott, Roger
Leadbitter, Ted	Orme, Rt Hon Stanley	Strang, Gavin
Lee, John	Ovenden, John	Strauss, Rt Hon G. R.
Lestor, Miss Joan(Eton & Slough)	Owen, Rt Hon Dr David	Summerskill, Hon Dr Shirley
Lever, Rt Hon Harold	Padley, Walter	Swain, Thomas
Lewis, Ron (Carlisle)	Palmer, Arthur	Taylor, Mrs Ann (Bolton W)
Litterick, Tom	Park, George	Thomas, Daiydd (Merioneth)
Lofthouse, Geoffrey	Parker, John	Thomas, Jeffrey (Abertillery)
Lomas, Kenneth	Parry, Robert	Thomas, Mike (Newcastle E)
Loyden, Eddie	Pavitt, Laurie	Thomas, Ron (Bristol NW)
Luard, Evan	Pendry, Tom	Thompson, George
Lyon, Alexander (York)	Perry, Ernest	Thorne, Stan (Preston South)
Lyons, Edward (Bradford W)	Phipps, Dr Colin	Tierney, Sydney
Mabon, Rt Hon Dr J. Dickson	Price, C. (Lewisham W)	Tilley, John
McCartney, Hugh	Price, William (Rugby)	Tinn, James
MacCormick, lain	Radice, Giles	Tomlinson, John
McDonald, Dr Oonagh	Rees, Rt Hon Merlyn (Leeds S)	Torney, Tom
McElhone,Frank	Reid, George	Tuck, Raphael
MacFarquhar,Roderick	Richardson, Miss Jo	Varley, Rt Hon Eric G.
McGuire, Michael (Ince)	Roberts, Albert (Normanton)	Wainwright, Edwin (Dearne V)
McKay, Alan (Penistone)	Roberts, Gwilym (Cannock)	Walker, Harold (Doncaster)
MacKenzie, Rt Hon Gregor	Robertson, George (Hamilton)	Walker, Terry (Kingswood)
Maclennan, Robert	Robertson, John (Paisley)	Ward, Michael
McMillan, Tom (Glasgow C)	Robinson, Geoffrey	Watkins, David
McNamara, Kevin	Roderick, Caerwyn	Watt, Hamish
Madden, Max	Rodgers, George (Chorley)	Weetch, Ken
Magee, Bryan	Rodgers, Rt Hon William (Stockton)	Weitzman, David
Mahon, Simon	Rooker, J. W.	Wellbeloved, James
Mallalieu, J. P. W	Roper, John	Welsh, Andrew
Marks, Kenneth	Ross, Rt Hon W. (Kilmarnock)	White, Frank R. (Bury)
Marshall, Dr Edmund (Goole)	Rowlands, Ted	White, James (Pollok)
Marshall, Jim (Leicester S)	Ryman, John	Whitlock, William
Mason, Rt Hon Roy	Sandelson, Neville	Wigley, Defydd
Maynard, Miss Joan	Sedgemore, Brian	Willey, Rt Hon Frederick
Meacher, Michael	Selby, Harry	Williams, Rt Hon Alan (Swansea W)
Mikardo, Ian	Sever, John	Williams, Alan Lee (Hornch'ch)
Millan, Rt Hon Bruce	Shaw, Arnold (Ilford South)	Williams, Rt Hon Shirley (Hertford)
Miller, Dr M. S. (E Kilbride)	Sheldon, Rt Hon Robert	Williams, Sir Thomas (Warrington)
Mitchell, Austin (Grimsby)	Shore, Rt Hon Peter	Wilson, Gordon (Dundee E)
Molloy, William	Short, Mrs Renee (Wolv NE)	Wilson, Rt Hon Sir Harold (Huyton)
Moonman, Eric	Silkin, Rt Hon John (Deptford)	Wilson, William (Coventry SE)
Morris, Alfred (Wythenshawe)	Silkin, Rt Hon S. C. (Dulwich)	Wise, Mrs Audrey
Morris, Rt Hon Charles R.	Sillars, James	Woodall, Alec
Morris, Rt Hon J. (Aberavon)	Silverman, Julius	Woof, Robert
Morton, George	Skinner, Dennis	Wrigglesworth, Ian
Moyle Rt Hon Roland	Smith, Rt Hon John (N Lanarkshire)	Young, David (Bolton E)
Mulley, Rt Hon Frederick	Snape, Peter
Murray, Rt Hon Ronald King	Spearing, Nigel	TELLERS FOR THE NOES:
Newens, Stanley	Spriggs, Leslie	Mr. James Hamilton and
Noble, Mike	Stallard, A. W.	Mr Donald Coleman.
Oakes, Gordon	Stewart, Rt Hon Donald

Question accordingly negatived.

BUSINESS OF THE HOUSE

Ordered,

That the Motion relating to Ways and Means may be proceeded with at this day's sitting, though opposed, until any hour.—[Prime Minister.]