HC Deb 24 June 1980 vol 987 cc222-4
7. Mr. Adley

asked the Secretary of State for Employment what discussion he has had with the Trades Union Congress on the relationship between high wage claims and unemployment.

Mr. Prior

We have had a series of discussions at the National Economic Development Council with the Trades Union Congress and others on economic prospects—the latest on 16 June. The Government's view of the need to relate wage claims to productivity and output, and the consequences for employment if that were not done, were among the subjects discussed.

Mr. Adley

Does my right hon. Friend agree that the only way to create employment in the commercial and industrial sector is for companies to be able to make goods or supply services competitively, and that that might also be applied to machine tool manufacturers in Coventry? Is there any evidence that the TUC understands or accepts that, or does it prefer not to acknowledge it?

Mr. Prior

Our message is clear and goes to everyone in Britain, including those in trade, industry, the TUC and the CBI. If wage negotiations fail to lead to moderate settlements this year, the country will have to endure an unacceptably high level of unemployment. The TUC understands that. I hope that it will use its powers of persuasion to ensure that people settle at reasonable levels. It must do that if it, like the rest of the country, wishes to avoid ever higher unemployment.

Mr. Ioan Evans

When the Secretary of State meets the TUC, will he take with him the speech that the Secretary of State for Industry made in America, when he said that American industry should come to Britain because we had low wages? Will he also discuss interest rates, which have increased from 12 per cent. to 17 per cent., and the fact that inflation has doubled as a result of the Government's policies?

Mr. Prior

There are great opportunities for America and other countries to invest in Britain. Above all, those countries require good industrial relations and higher productivity. If we could get those two messages across, we could very quickly reduce the level of unemployment.

Mr. Trippier

Is my right hon. Friend aware of the recent case of Mr. Brendan Murphy, a local government officer who was employed by Stockport metropolitan borough council in Greater Manchester? Is he aware that Mr. Murphy was expelled by NALGO for criticising high wage claims? As wages account for the bulk of local government expenditure, and as last year's overspending amounted to about £600 million, does he not deplore the action of that NALGO branch?

Mr. Prior

I gather that Mr. Murphy was a NALGO shop steward. He said that he had received a 28 per cent. increase last year, and that if he received a 14 per cent. increase this year it would amount to an increase of 42 per cent. As he could not see any increase in productivity in Stockport, he thought that that was bound to lead to higher costs or higher unemployment. He was right, because that is the inevitable consequence. What happened to him was a great shame.

Mr. Heffer

Does the right hon. Gentleman agree that it is nonsense to say that high wages are the cause of unemployment? [Interruption.] If it were true, there would have been continual high unemployment in America. As hon. Members know, that is a load of rubbish. Is it not clear that many other factors lead to unemployment, not least the fact that our society is so organised that unemployment is an inherent part of the existing capitalist system?

Mr. Prior

I reject the hon. Gentleman's last remark. High wages alone will not lead to unemployment, but high wages that are not accompanied by higher productivity or higher output will. It is that that has depressed Britain's competitive position in comparison with her competitors, and that is why our import bill for manufactured goods has increased despite the fact that we can produce the goods ourselves.