HC Deb 26 January 1979 vol 961 cc891-906
The Secretary of State for Industry (Mr. Eric G. Varley)

With permission, Mr. Speaker, I shall make a statement about the effects on industry of the current industrial disputes.

Many firms and workers have managed through strenuous efforts to keep production going. Last week, around half of the firms in the country are estimated to have produced at about their normal rate. It is impossible to calculate precise figures, but overall output was reckoned to be about 90 per cent. of normal. However, some firms were down to 70 per cent. or 60 per cent. of normal, or even less.

But this was achieved only by putting a substantial part of factories' production into stock. Goods are leaving factories at a lower rate than production, and this differential cannot be sustained indefinitely. Firms are coming up against difficult decisions this week and next concerning more short-time working, more lay-offs and even closing down their plants. Some plants are already working on an uneconomical and inefficient basis according to the availability of materials for their processes. We can expect a continuing decline in production as stocks run down. At any time the situation could abruptly get very much worse.

Shortages reported by industry include many types of chemicals, ferrous and non-ferrous metals and semi-manufactures, foundry supplies, castings, various forms of packaging, vehicle components, asbestos and timber. Besides industries making these products, industries which use them have been hit—for example, the textiles and rubber industries.

Both imports and exports of industrial many firms, large and small, is being hit, action of pickets, but this again is very difficult to quantify.

Provisional estimates suggest that around 200,000 workers are laid off as a result of the road haulage dispute. This was less than had been expected earlier. The guaranteed working week is masking the numbers affected. Firms are holding on to their workers for the time being rather than laying them off immediately.

The effects of the road haulage dispute—shortage of materials, inefficient working methods, loss of sales, or an underemployed work force—are damaging a large number of firms financially. Industry has coped remarkably well so far, but the continuation of this dispute will be damaging to our balance of trade, will undermine the efficiency and viability of many firms large and small, and endanger the livelihoods of millions of trade unionists.

Sir Keith Joseph

We are glad that the Secretary of State has not sought to minimise the effect of the dispute on industry. We join with him in his tribute to the ingenuity and efforts of management and workers. I should like to put three questions to him.

Will the right hon. Gentleman confirm that the effect on liquidity of the stock position as well as of all the other cash implications may have a crippling effect on firms of all sizes, large and small, for months after the dispute has ended? What is the effect of the dispute on those undertakings in the public sector such as British Steel, British Shipbuilders and British Leyland which are already having a hard enough struggle?

While we are glad that the worst predictions have not come to pass, at least yet, may I ask whether the Secretary of State will tell us whether the present dispute and its aftermath may have a much worse effect than the three-day week ever did because, distasteful though it may have been during the three-day week, there were priority sectors, whereas now the loss to a firm or industry of certain key commodities may be absolutely ruinous to its survival and prospects?

Mr. Varley

Undoubtedly there is a liquidity problem. The cash position of This matter is under consideration within materials are being restricted by the the Government and further consideration will be given to it. If necessary, I shall report to the House. As to the effect on some of the public corporations, so far there have been lay-offs within the British Steel Corporation. Overall, the cost to it has been £19 million. If the dispute goes on another week, it could perhaps be as high as £28 million. I do not have precise figures with regard to British Leyland, but upwards of 17,500 workers in the car industry have been laid off. I am not in a position to make any analogy with the three-day week. We are quantifying the situation all the time. In my statement the figures for the average output were around 90 per cent. of normal.

Mr. Cryer

Without underestimating the seriousness of the position, will my right hon. Friend confirm that many of the forecasts by the Tories and by news-pagers such as The Sun, that there would be 3 million unemployed by now, have been nowhere near accurate? Will he also confirm that his statement makes it incumbent on those members of the Road Haulage Association who are still holding out to follow other members who have settled, give a decent wage to the lorry drivers and get them back to work?

Mr. Varley

It is true that the effects of the strike that were forecast a week ago have not come to pass. However, I warn my hon. Friend that to a great extent we are on a knife edge. The position could deteriorate extremely quickly. Firms are holding on to their labour by re-deploying and by adaptation and flexible arrangements. My right hon. Friend the Secretary of State for Transport has reported the position on the dispute. I hope that there will be a settlement, but it will be on the basis of the negotiations that are taking place in the regions.

Mr. Paul Dean

Will the right hon. Gentleman be more specific about two points that he admitted are causing serious long-term difficulties in the economy? First, does he recognise that many exports are being blockaded in the ports and that there is a risk of export orders being lost in the long term? What are the Government doing to get the blockades lifted? Secondly, does he recognise that many small firms now have cash flow problems because of the blockage of raw materials going in or finished products going out? What action are the Government taking to relieve that situation?

Mr. Varley

Undoubtedly our exports are being affected. I hope that the blockage can be cleared as quickly as possible so that irreparable damage is not done. Only time will tell. Around 50 per cent. of all our goods from factories are transported by the Road Haulage Association drivers, who are taking official action. Even if we were to take alternative measures, such as using the Services, we could not restore operations to normal. I agree with those who want to see an early settlement to the dispute. But it is not now within the realm of the Government to settle the dispute. It should be done by normal collective bargaining. The Road Haulage Association and the trade unions must determine a settlement.

I do not have much to add to what I have said on the cash position of firms. It is serious and we are looking at it carefully. If we can help, I shall certainly tell the House.

Mr. Pavitt

Is my right hon. Friend aware that even before the road haulage strike began to bite I received a long telegram from the chairman of United Biscuits—which is in my constituency—predicting dire consequences? I have naturally kept in touch, and so far the result has been negligible. Is my right hon. Friend aware that in my constituency the rule of law is being devalued? The workers are starting to feel that the law is on the side of management. That happened in the Grunwick dispute, where the workers are still denied the elementary right of joining a trade union.

Mr. Varley

I do not want to comment on any dispute other than that currently affecting the country, which is, in my judgment, extremely serious for industry. I hope that, if there are still employers who take hostile attitudes to their workers and do not allow them to join trade unions, they will mend their ways. I have been a lifelong trade unionist. I am saddened by the impact of the industrial dispute. Trade unionists all over the country are being bady affected. I hope that the dispute will be resolved and that the long-term impact will be taken into account.

Mrs. Chalker

Is the Secretary of State aware of the meeting yesterday of the regional emergency committee for the North-West at which dire concern was expressed at the rapidly worsening crisis on Merseyside and in the Manchester area? Is he further aware that one of the main reasons for this concern is that the Transport and General Workers' Union code of conduct is being virtually ignored throughout this area? Will he bring his obvious understanding of the severity of the crisis to the notice of his fellow Secretaries of State, particularly the Minister of Agriculture, Fisheries and Food, who was less than frank in answering my right hon. Friend the Member for Yeovil (Mr. Peyton) yesterday?

Mr. Varley

My right hon. Friends who have other areas of responsibility will note what the hon. Lady has had to say. My judgment and that of my right hon. Friends over the past few days is that there has been a steady improvement in the implementation of the code of conduct. It has not been interpreted in every location in the way in which the Transport and General Workers' Union would like it to be; it is patchy, but in some areas, as a result of the intervention by the regional officers of the TGWU, there have been improvements. It is the wish of the TGWU at national and regional level that the code of conduct should be implemented.

Mr. Skinner

Will my right hon. Friend tell us whether the information that he has given is based purely on input from the Road Haulage Association and other employers that may be affected in the future or whether he has had adequate information from the trade unions? Does he not appreciate that the Government could be used by the Road Haulage Association to lean on the workers and trade unions so that the employers can win the dispute? Should not the Government act, as in previous disputes, to ensure that the workers who have elected us get a fair deal? Will he assure the House that he is getting reports not only from the employing class but from those who represent the workers?

Mr. Varley

I can reassure my hon. Friend that the information that I have given to the House comes not only from the Road Haulage Association but from the trade unions. Much of it is assembled by the regional emergency committees. We have with firms our own emergency arrangements and direct links from the Department of Industry. There is no difficulty about getting information from the publicly owned industries. We can get information direct from the British Steel Corporation, from British Leyland and from the Post Office. In that sense, I do not question the information that we are receiving.

Mr. Skinner

My right hon. Friend was wrong before.

Mr. Varley

I am only saying that I have no reason to believe that the information about the lay-offs in the British Steel Corporation and the effect on its financial position is in any way distorted or fabricated.

On the settlement of the dispute, my hon. Friend is an advocate of free collective bargaining.

Mr. Skinner


Mr. Varley

Free collective bargaining means at some stage that people say "No, you cannot have it" or "We will not accept it". That is exactly the situation at the moment. I hope that the dispute can be settled, but it is now for the Road Haulage Association and its members to determine the settlement. I do not think that my hon. Friend is denying that the impact on British industry and fellow trade unionists is considerable.

Mr. Freud

Is the Secretary of State aware that the disruptions at Felixstowe and Southampton docks are caused by internal disputes of the different wings of the Transport and General Workers' Union? Does he accept that the strike committees resent the inactivity of the Government? In the eyes of the strike committee, the Government are not doing enough to explain what the Road Haulage Association can or cannot do.

Mr. Varley

I find extraordinary difficulty in answering the hon. Gentleman. I had thought that the Government had made it plain day after day in the House of Commons exactly what the Road Haulage Association can do and the limits to the effective action that the Government can take. It is widely accepted in the House that we are doing everything that we possibly can. If there is a lack of communication between the TGWU and the strike committees, I can only hope that they will put it right. But, if I may say so, I find that difficult to believe.

Mr. Alison

Since the Secretary of State has been able to make an analysis of the average level of industrial activity and output and to note the areas that are well below the average, will he focus Government concern and attention upon those parts of the country which are very much below the average? In nearly every case this arises from the secondary effects of the strike that have nothing whatever to do with free collective bargaining. In particular, will the right hon. Gentleman focus attention on the problems of Selby, in Yorkshire—about which he has had a letter from the chairman of the Selby Industrial Association—where output and industrial activity are threatening employment because they are dramatically below average?

Mr. Varley

If any hon. Member has specific examples of cases in which he thinks the Government, through their emergency arrangements can help, we shall be glad to examine them. I have not yet seen the letter about Selby, but I shall look at it and see whether we can give any help.

Mr. William Hamilton

Can my right hon. Friend say whether the TUC, if not individual unions, has now been brought to the view that the principle of free collective bargaining is being brought increasingly into disrepute? Is the TUC active in trying to resolve the economic situation? Has any firm evidence been provided by the media or the Conservative Party on allegations of intimidation or extortion?

Mr. Varley

On the latter question, the Prime Minister has said that any case of intimidation or extortion should be brought to the attention of the police. The Home Secretary said something similar. I do not think that I can add anything.

On the broader issue about the difficulties of free collective bargaining, all my life my political stance has been that we need a serious counter-inflation policy and an incomes policy. I do not think that free collective bargaining associates with my political beliefs one iota. When we move into a situation like the present one, we run into this kind of difficulty. It is no good any Conservative Member pouring scorn on that view, because Conservatives have done more than most to try to destroy the counter-inflation policy.

Mr. Fell

Will the Secretary of State tell us the exact position of workers who have necessarily been laid off because of the dispute? What is their legal position? How would it be altered if a state of emergency were declared?

Mr. Varley

If there were a state of emergency, it would not affect workers' entitlement to wages or their conditions. In fact, they would be largely unaffected. Where lay-offs have occurred, some firms have continued to pay some wages. Other workers have drawn statutory payments in accordance with the Acts of Parliament relating to social security provisions. If the hon. Member has any specific constituency case in mind, he should give me the details and I shall look at it. I hope that I have explained to him that the declaration of a state of emergency would not affect the conditions of such workers or the liabilities of employers either to lay off or to pay.

Mr. Alexander W. Lyon

If the road haulage employees withdraw their labour in pursuance of free collective bargaining, is it not bound to affect the supply to industry of raw materials and the distribution of finished goods? To what extent can the Minister distinguish the effects that he has disclosed this morning between the primary impact of the strike and the impact of secondary picketing, which is outlawed by the TGWU code of conduct? Since he has condemned strikers who have gone beyond the code, will he pay tribute to those strike committees that have operated within it and thereby minimised the damage to industry?

Mr. Varley

I take this opportunity to pay tribute to those who are on strike but who have observed the procedures laid down by the national officers of the union. I want to see good order and discipline in every trade union. On the question of picketing, I cannot go too far into that aspect because there is a case before the courts and if I were to comment I might run into trouble with the sub judice rule.

Mr. Graham Page

To what extent has the Secretary of State taken account of dock workers in the figures that he has given for lay-offs and productivity? The dock worker is not laid off; he continues in employment on standby pay. Has the Secretary of State any estimate of what that is costing the port undertakings?

Mr. Varley

I am sorry, but I do not have precise figures on the number of dock workers who have been laid off, the cost to the docks, and so on. However, that information can be obtained, and I shall see that the right hon. Member receives it.

Mr. Litterick

Does the Secretary of State appreciate the irony of this morning's parliamentary proceedings? He is obliged to come to the Dispatch Box to deplore the industrial and economic consequences of three years of wages policy—which, by the way, the Labour Party repudiated in 1974—while the Conservatives whine about the industrial and economic consequences of a short, sharp bout of free collective bargaining which they are anxious to persuade everyone they favour.

Mr. Varley

There are all kinds of inconsistencies in this situation. Government policy is pretty clear in all these matters. We want to see an earnings outturn in 1978–79 which is consistent with holding down the rate of inflation and, if possible, bringing it down further. That is what we have tried to impress on the trade unions, the House and the country over the past four and a half years. It has been successful.

In industrial terms, 1978 was not a bad year. Investment increased, living standards improved, the economy grew and, for the first time in seven years, exports were improving. Unfortunately, in the first 26 days of 1979, we do not look as though we are on course. My hon. Friend and all hon. Members who have any influence should try to ensure that we get back to sustained growth in the economy and high investment so that living standards can continue to improve. There is no way in which some of the claims that are being talked about at the moment are consistent with achieving the goals of high growth, high performance and good living standards.

Several Hon. Members


Mr. Speaker

Order. It is Private Members' day today, but I shall call those Members who have stood up if they will help me with brevity.

Mr. Clegg

I press the Minister about the situation in Merseyside, particularly in the port of Liverpool. It is quite clear that the guidelines in the code of conduct are not being kept and this is having a special effect in the North-West. At what point will the Minister intervene to ensure that the guidelines are operated properly?

Mr. Varley

In the present arrangements the Government can use their influence to ask the Transport and General Workers' Union to ensure that the guidelines are observed. Although the situation is patchy, there has been an improvement in the operation of the guidelines. My hon. Friend the Member for York (Mr. Lyon) rightly paid tribute to the strike committees that are operating them. We shall continue with the persuasion and hope that it is effective. We hope that those essential goods and supplies which should be permitted to go through will do so.

Mr. Ioan Evans

The Minister said that the dispute had been referred to the regions, and the Opposition feel that there should be no Government interference. But, if the situation is to be prolonged, will my right hon. Friend consider bringing ACAS and the TGWU together? As well as the subject of limits, there is also the subject of drivers' hours, as governed by EEC regulations. That matter also could be examined. After the dispute is settled, in view of the co-operation of the trade union movement in recent years, will the Government consider setting up a top-level conference on this topic between the TUC and the Government?

Mr. Varley

My hon. Friend is aware that there has already been close co-operation between the TUC and the Government. The question put to me about ACAS is a matter for my right hon. Friend the Secretary of State for Employment. I understand that ACAS was involved in the dispute last Sunday. No progress was made in national negotiations. Whether it is practicable for ACAS to intervene in the regions is a question for my right hon. Friend the Secretary of State for Employment. I do not know whether he intends to invite ACAS to involve itself.

Mr. Ronald Bell

Does the Secretary of State agree that it is impossible to separate consideration of the road haulage dispute from railway strikes in this context, and that if both continue in the coming week the half-hidden effects will emerge in a most striking and damaging manner? How can the Government shrug off responsibility in this matter when they have so armed the trade unions that free collective bargaining is impossible?

Mr. Varley

The hon. and learned Gentleman should take up that last point with his right hon. Friends on the Opposition Front Bench, who in the last year or so have, to the despair of many people, been advocating untrammelled free collective bargaining. Of course, the railway dispute has had an impact on the position. I am sure that the House wishes to pay tribute to the efforts of the TUC, and particularly of its general secretary, Mr. Len Murray, in trying to bring the two sides together. I hope that the dispute will now be resolved and normal working resumed.

Mr. Grylls

Following the point made by my hon. Friend the Member for Wallasey (Mrs. Chalker) about the North-West, may I ask the right hon. Gentleman about the North-East of England? The intimation I have from that area is that the code of practice is not being followed by the local committees of the TGWU and that workers at BP Chemicals, Hull, and ICI, Billingham, are completely blockading essential chemicals for the pharmaceutical industry. What does the Secretary of State intend to do about the situation?

May I ask about exports? We have been told that 50 per cent. of materials are not involved in the RHA dispute. What is the right hon. Gentleman doing to free the remaining 50 per cent. in the docks so that exports can get moving again? He must tell the House what he intends to do about the situation.

Mr. Varley

I can only tell the hon. Gentleman that we shall do everything we can to urge the TGWU to use its influence with local strike committees to observe their own code of conduct. It is being effective in some areas but not in others. I understand from this morning's news that the TGWU is making every effort to bring about some easement of the situation in the North-East.

Mr. Gow

Is it not the case that among the 200,000 workers who have already been laid off are many members of the TGWU, who have been flung out of work because of the persistence of secondary picketing by members of the same union? Is it not the case that the Prime Minister, when he told the House a week ago yesterday of the code of practice agreed by the unions, said that this would cut out secondary picketing? Since it has failed to do that, and since unemployment is growing and exports are being held up, will not the Government have to think again and bring in the law where the code of practice has shown itself to be useless?

Mr. Varley

The question raised by the hon. Gentleman has been addressed to a whole series of Ministers, including my right hon. Friend the Prime Minister, in the past few weeks. The hon. Gentleman knows the answer to his question. There is no case at all for the Government to introduce legislation on the lines that he suggests. I suggest, with respect, that the hon. Gentleman is over-simplifying the position. My right hon. and learned Friend the Attorney-General made a long statement to the House yesterday showing the complexity of the situation. I hope as a result of that statement that nobody will follow the example of the hon. Gentleman in believing that there are easy solutions to secondary picketing.

In some respects, the impact on industry is brought about not by secondary picketing but by primary picketing—over which we cannot do anything at all, because in a civilised society nobody is suggesting that strikes should be banned. This matter must be viewed in the new area which the Opposition so strongly support, namely, that of free collective bargaining.

Mr. Sims

Does the right hon. Gentleman agree that, if there are to be adequate supplies of food, there must be sufficient supplies of food packaging materials? Is he aware that earlier in the week two factories producing a high percentage of food packaging papers had to close down because of secondary picketing, laying off 1,350 employees? The Minister of Agriculture, Fisheries and Food yesterday showed some concern about this matter and said that it was being considered from day to day. Has the position improved, and, if not, will the right hon. Gentleman take steps to ensure that adequate packaging materials reach food factories?

Mr. Varley

That is an area which is of serious concern to the Government. My right hon. Friend the Minister of Agriculture referred to this subject yesterday. He is examining the matter further, and, if he has anything to report to the House, I am sure that he will do so.

Mr. Giles Shaw

Is the right hon. Gentleman aware that since the code of practice has been published there have been many instances of increasing difficulty? For example, is he aware that two companies in my constituency—one a subsidiary of GEC, and another a subsidiary of United Glass—are now in greater difficulty than they were 10 days ago? When does the right hon. Gentleman intend to discuss with the TGWU how far the code has been observed, and, secondly, if that code has not been implemented, what the union will do to see that it is implemented?

Mr. Varley

The hon. Gentleman asks whether we have discussed with the TGWU the code of conduct and its operation. Ministers discuss these matters with that union every day; it is a continuing process. That will go on throughout the dispute.

Mr. Peter Bottomley

Will the right hon. Gentleman confirm that the battle against free collective bargaining in which some members of the Government Front Bench are engaged was lost, first, at the TUC conference and, secondly, at the Labour Party conference? Will he also confirm that the country is already losing out in the battle of the road haulage dispute, because even a settlement of 15 per cent. is far more than the country can afford? Will he confirm that the industrial effects of the road haulage dispute will be seen not in the present dislocation but at the time when industrial workers put in claims to match those of the road haulage workers?

Mr. Varley

I am not sure about battles being lost at conferences. I suppose that one could add to the list given by the hon. Gentleman the loss at the Conservative Party and CBI conferences. That does not mean that the Government's stance has been wrong. It means that we must persuade people that double-figure pay increases do not necessarily improve the standard of living. That is the message which the Government will put out time and again in the next few months.

Mr. Costain

Does the Minister appreciate that there are a number of trade union members, and indeed lorry drivers who are not union members, who realise the damage that this dispute is doing to the economy and who would like to return to work? However, they are genuinely worried that if they return to work they will be termed blacklegs. Would it not be helpful for a Minister to announce that, although at one time it was thought bad to be a blackleg, in these days it is even worse to be thought of as an export saboteur?

Mr. Varley

The conduct of this strike is a matter for the Road Haulage Association and the TGWU. It is for them to determine whether their members want to work, and this is part of the internal discipline of the TGWU. I shall not enter into that line of argument. I hope that in the context of the new arrangement into which we have moved in the private sector, with all the so-called glories of free collective bargaining, people will realise that, if the situation continues, the country will be damaged, as will fellow trade unionists.

Mr. Eyre

Is the Secretary of State aware that one of the most serious aspects which is affecting manufacturing centres such as Birmingham is that exports are trapped at the docks? That means that there is a danger of loss of contracts and future loss of jobs for working people in those industrial centres. What special measures can be taken by the Minister to give priority to the release of those exports?

Mr. Varley

The only possibility of release for these exports, if they are affected by primary picketing and a constitutional dispute—because that is what it is—is the early settlement of the dispute. That is what I hope will happen. That is what I hope that anybody with any influence will help to bring about.

It is for the Road Haulage Association and the Transport and General Workers' Union to settle the dispute. When they have settled it, of course, the problems will be solved. In the short-term and during the continuation of the dispute, the Government will do everything that they can through the regional emergency committees and through their influence to ensure that essential supplies come through. That has been done with considerable success in the past two weeks, much against the predictions of many Opposition Members.

Mr. Eldon Griffiths

As a director of a number of companies, may I say to the Secretary of State that his sombre statement this morning was a welcome dose of harsh reality? On the subject of liquidity, will he accept that with invoicing very much down and unit costs up the cash flow in many small firms is now negative? Will he therefore resist any measures on prices or on bank lending that could make this problem worse?

Mr. Varley

I accept that cash flow is a problem. It is under consideration in the Government. There are many implications to the problem, as I am sure the hon. Member realises. If we have anything to report to the House, we shall do so.

Mr. Norman Fowler

I welcome the frankness of the Secretary of State's report, but is he aware that about one hour ago I spoke to an officer of the Freight Transport Association, which represents the own-account operators in the industry? Does he realise that the major complaint is that many local strike committees are not honouring the TGWU code and that own-account vehicles are being picketed? Is he aware that nationally the union is powerless to intervene or impose its will?

Is it not totally intolerable that we should suffer the rule of local strike committes in that way? Since it is clear that the union cannot impose its will, what do the Government intend to do? Is not that a question which they must answer?

Mr. Varley

I reject the suggestion that the TGWU is not using every influence to ensure that its code of conduct is observed. There has been plenty of evidence in the last week that when it does use its influence there is an easing of the situation. The question raised by the hon. Member will be taken up by Ministers in their continuing discussions with the TGWU to see whether further improvement can be made.

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