HC Deb 06 July 1982 vol 27 cc139-40
9. Mr. David Atkinson

asked the Secretary of State for Employment if he will commission a survey to investigate whether, and to what extent, employers are inhibited from recruiting new employees by reason of the level of wages council awards.

Mr. Tebbit

It is self-evident that wages are ultimately limited by the ability of employers to pay, which is in turn limited by the prices which, in the light of home and overseas competition, they are able to obtain for their products. There is, therefore, little doubt that the higher the level at which councils set minimum wages the fewer people will be employed, but I am doubtful that a survey could readily quantify this effect.

Mr. Atkinson

I thank my right hon. Friend for that encouraging reply. Does he agree that the weekend speech by my right hon. and learned Friend the Chancellor of the Exchequer in which he referred to the Conservative manifesto commitment to abolish wages councils, will be warmly welcomed by both unemployed people and trade union members alike—[Interruption]—because of the interference by wages councils, which has resulted in the loss of thousands of jobs in the private sector?

Mr. Tebbit

Let us be quite clear about what my right hon. and learned Friend the Chancellor said. He asked: is there really a case for wages councils imposing minimum rates that frustrate market forces? In my opinion, any reasonably minded man must come to the same conclusion as my right hon. and learned Friend. To put it mildly, the answer to the question would appear to be "No".

Mr. Ashley

Does the Secretary of State accept that, of all the methods for reducing unemployment, the most offensive and despicable would be to cut the wages of those who are already receiving the lowest wages in our society?

Mr. Ashton


Mr. Tebbit

I am sure that the right hon. Gentleman understands that no job can exist for long if what it produces is less than what the market is willing to pay for the product. That is the problem of wages councils, when they set wages above what the market will bear.

Mr. John Townend

Does my right hon. Friend agree that our main priority should be the preservation and creation of jobs? If, as many of us believe, wages councils destroy jobs, should we not take prompt action, regardless of the International Labour Organisation? Does my right hon. Friend agree that this is a case for turning a Nelsonian blind eye to that body, in the interests of unemployed people, and especially the young unemployed?

Mr. Ashton

On a point of order, Mr. Speaker. May I draw your attention to the fact that Conservative Members who are asking questions have a vested interest—

Mr. Speaker


Mr. William Hamilton

The hon. Member for Bridlington (Mr. Townend) runs a sweat shop.

Mr. Tebbit

Opposition Members could not run a sweet shop—I do not know about a sweat shop.

The British Government do not lightly turn aside from treaty commitments. We are bound by the treaty into which we have entered, and we should comply with its provisions.

Mr. Radice

On the subject of the Minister's theory of job creation by lower wages, has the Secretary of State seen the report issued by his own Department, showing that variations in youth unemployment have little systematic relationship with changes in earnings? Are the Department of Employment Ministers frightened of being confused by the facts?

Mr. Tebbit

No, not at all. That is not the central point at issue. The central point of that survey was the relationship between youth wages and adult wages. Here we are talking about the overall level of wages. Unless someone has repealed the law of supply and demand, I am afraid that the hon. Gentleman has to accept that the higher the price that is asked for labour, the less labour will be employed.