Water Industry (Dispute)

HC Deb 14 February 1983 vol 37 cc23-62 3.37 pm

Mr. Gerald Kaufman (Manchester, Ardwick)

I beg to move, That this House do now adjourn.

Leave having been given on Thursday 10 February under Standing Order No. 9 to discuss: The dispute in the water industry.

Mr. Kaufman

The union that sponsors me as a parliamentary candidate amalgamated three months ago with the General and Municipal Workers Union. I am now, therefore, a candidate sponsored by the General, Municipal, Boilermakers and Allied Trades Union and very proud to be so.

Today, the first ever national water strike enters its fourth week. It is a strike that has caused hardship to scores of thousands of our fellow citizens and serious inconvenience to millions more. It is a strike which, if it continues for much longer, could create great hazards for the health and well-being of the whole country. It is a strike that must speedily be brought to an end on honourable terms. It is a strike in an industry which hitherto has known good industrial relations, with a public-spirited work force represented by responsible trade unions. It is a strike which should never have begun and which need never have begun.

The trade unions presented their claim on 21 September. They asked for an increase on the basic wage linked to the going rate and a settlement that would recognise the comparability of their jobs with those of workers in other industries such as gas and electricity. In a statement on 13 October the National Water Council declared that there is no issue between the employers and the trade unions which cannot be resolved by negotiation and collective bargaining in the usual way. Seven weeks elapsed between the lodging of the claim and the time when the employers were ready to hold talks. The unions arrived at the headquarters of the National Water Council at 10.30 am on 11 November, ready for what the National Water Council called negotiation and collective bargaining in the usual way. They were kept waiting for four hours until 2.30 pm, yet, when finally they met the employers, they were greeted with an absurd offer of 4 per cent. on the basic wage and nothing in recognition of comparability, and not by any willingness to negotiate, but by an immediate demand that the claim be taken straight away to arbitration because, according to the National Water Council, it could not be accommodated within the water industry negotiating machinery. It may be that that extraordinary response by the employers affected the unions' subsequent attitude to arbitration.

What had caused that extraordinary change in the employers' position between October and November? I can state categorically that the employers had been willing to negotiate with the unions up to an offer of 6 per cent. Why, then, did they not negotiate in that way? The answer is that on the very day of the intended negotiation the right hon. Member for Bridgwater (Mr. King), now the Secretary of State for the Environment, told the negotiating group of the National Water Council that it must offer no more than 4 per cent. He put intolerable pressure on the negotiating group to conform to his wishes, and it did so.

The right hon. Gentleman's interference has been documented repeatedly in such newspapers as The Daily Telegraph, the Daily Express, the Daily Mail, The Economist, The Times and The Sunday Times. It has never been denied, because it cannot be denied. It took place on the day when the Prime Minister had the brazen nerve to tell the House: I understand that negotiations with the water industry are taking place today. The Government are not a party to them."—[Official Report, 11 November 1982; Vol 31, c. 666.] Yet at the very moment when the Prime Minister was speaking those words to the House, the reckless and highhanded interference of the Secretary of State was leading directly to the strike that we are debating.

After that day there was no contact again between the employers and the unions until just before the strike began on 24 January. The employers increased their offer, but no settlement was reached.

Through the good offices of ACAS, which has struggled hard to bring about a resolution of the dispute, a mediator was called in. That mediator's report was issued on 23 January. It recognised fully that the workers in the water industry had what it called a deeply held sense of grievance which, it said, should receive an understanding, positive and determined response as a matter of great urgency. But it also said that the workers' claim for comparability with the gas and electricity workers could not be met, not because there was no merit in that claim—indeed, paragraph 4 of the mediator's report documented in detail the merits of the claim for comparability—but because, as the mediator said in paragraph 6 of his report, conditions in the labour market have changed to an unparalleled extent as large scale unemployment has made its impact on terms and conditions of employment … Thus, I consider the water workers—through this adverse movement in relative position—to have been the victims of wage inflation elsewhere in the economy, on the one hand and the recession, on the other. So the mediator was saying that the admitted merits of the workers' claim had been made irrelevant because of the mass unemployment created by the Government. That is what the mediator's report says, and I have quoted the words.

On that criterion, genuine wage bargaining might as well come to an end, because the just claims of a group of workers providing a vital service have been invalidated by Tory monetarist policy.

The Minister who has presided over this unprecedented level of unemployment, the Secretary of State for Employment, made matters worse by insulting and reviling the major union involved. He alleged that its members had gone on strike in violation of their rule book. That was quite false. Indeed, the union had taken a ballot beyond the requirements of its rule book to ensure full consultation with the membership and had received overwhelming support. If the right hon. Gentleman had got 74 per cent. of the votes in an 81 per cent. poll he would be very happy to come to the House on that basis.

The Secretary of State for Employment claimed that there was a long trail of agreements that had been entered into voluntarily and ruthlessly broken by the unions concerned. That allegation was false as well.

Under successive Governments, the Ministry of Labour and the Department of Employment have had at their head Ministers who have regarded it as their function to conciliate and to heal. That was how Conservative occupants of the post such as Sir Walter Monckton and Mr. Iain Macleod saw their role. Dedicated civil servants who served Ministers such as they must view with revulsion the debasement of his high office by the loutish bully boy who now occupies it.

The Secretary of State for Employment has been abetted willingly by the Prime Minisiter herself. In the middle of the dispute, speaking at a dinner in Glasgow, she lectured the water workers on their obligation to abide by what she called "a puritan work ethic". The most appropriate comment on that sanctimonious piece of preaching came in a leading article in the Daily Express, which said that it was surely a blunder for her to use a glittering function, with diamonds atwinkle, to direct sharp words at sewage workers. So, in an atmosphere embittered by the Prime Minsiter and her colleagues, the strike proceeded. Attempts by the unions to resume negotiations resulted in a meeting on 6 February at which the employers tabled proposals listed on one sheet of paper. There was much anticipation of what the meeting might produce, because, on the radio three days before, Mr. Len Hill, the chief employers' negotiator, had said that water workers could look forward to a package that would add at least £5 to £10 a week in productivity gains to the offer then on the table of 7.3 per cent. over 16 months.

When the proposals were examined it was found that, averaged across the industry, the increase available was about 50p a week. But in fact nearly half of the work force would have got nothing, while 14,500 of the 29,000 workers in the industry could have expected about 80p a week, with appreciable increases available to precisely 120 of the 29,000 workers, or four-tenths of 1 per cent. of the total. That was the grand bonanza calculated to end the dispute.

Last week it emerged that the employers had found that they had added up their sums wrongly. There were reports that the 7–3 per cent. offered over 16 months was really worth 8.5 per cent.—or was it? The Daily Telegraph clarified the matter by reporting: Differing figures for water rises 'all correct. A Water Council spokesman improved the shining hour with this explanation: We claim there was never a mix-up anyway. No wonder ACAS said last week in a statement: Expectations raised by certain statements made to the media by the employers, and subsequently dashed, have not made the negotiations easier and have prejudiced the prospects of a settlement. No wonder that the Prime Minister's favourite newspaper, The Sun, put the matter with its customory elegance when it said in a leading article: What a shower of wets are in charge of the water industry! It is difficult to imagine anyone making a bigger mess of pay negotiations. I have great sympathy with the employers' negotiators. They are honourable men. Left to themselves, they would have reached a negotiated settlement months ago. The culprits are pinpointed in that same leading article in The Sun, which states: The farce began last November when a six per cent. offer had to be withdrawn because it did not have Government approval. Sir Robert Marshall, whom the Secretary of State ejected from his post as chairman of the National Water Council, said recently that the Government's interference in the affair had created an impossible negotiating position. It is impossible for employers to negotiate sensibly when they are harried and harrassed by Ministers, and when they are even called in and instructed on how to conduct an extremely expensive propoganda campaign.

The Government have always had it in their power to enable the dispute to be sensibly brought to an end. Sir William Dugdale, the present chairman of the National Water Council, said frankly that when Governments want disputes settled they want disputes settled … if you elect a Government they call the shots, and I'm a loyal servant of every successive Prime Minister who I work for. If they say do this I endeavour in my humble way to deliver it". The Secretary of State has become a great advocate of arbitration in the dispute. His Cabinet colleagues were not such devotees of that procedure during the National Health Service and Civil Service disputes. They flatly turned down arbitration and would have nothing to do with it. Of course, one problem is that the Government are completely unwilling to play any active part in bringing the dispute to a speedy and honourable conclusion. As we know, their contacts with the employers have been mainly to urge them to be recalcitrant. They have had no contact at all with the unions.

During the three years and nine months since May 1979, neither the present Secretary of State nor his predecessor have once met the unions in the water industry to discuss its problems and prospects—not even when a major reorganisation of the industry had been embarked upon. Most people would think that the Government would have wished to consult the workers representatives about the reorganisation, yet there was no prior consultation at all. Indeed, it has been the Opposition who have sought to maintain a dialogue with all those involved in this vexed dispute—the unions, the employers and ACAS.

The unions have declared that they wish to have the problems of their industry considered by a third party. They have discussed with ACAS the possibility of establishing an independent inquiry. Talks to help bring about such an inquiry proceeded throughout the weekend. The key issues have been the terms of reference of the committee of inquiry and the attitude of the parties to its outcome. The Opposition have been in close contact with developments, and during the past few hours I have spoken to all the parties involved. As a result, I can tell the House that I believe that, with good will, it might be possible to resolve the dispute speedily.

The trade unions said last Wednesday that had the employers been willing to proceed to an inquiry the dispute could have been settled within a matter of days. It could have been settled by today. Both sides have now agreed to a committee of inquiry under the auspices of ACAS. The unions are willing to go to the inquiry without conditions. They have given assurances committing themselves to the resolution of the dispute by that process. Those assurances have been given by all the unions concerned and represent their committed view. It is the employers who are laying down conditions which, if insisted upon, could jeopardise the inquiry proceeding to a speedy conclusion.

With good will, it could be possible to proceed quickly to set up the committee of inquiry. The trade unions are ready to be forthcoming in a manner that would be of great assistance—

Mr. Tony Durant (Reading, North)

I have listened closely to the right hon. Gentleman's speech. He obviously feels that he is in close contact with the trade unions. Will he say whether they will honour any agreement that is forthcoming? Will they honour its terms without question?

Mr. Kaufman

I shall repeat the words that I have spoken with great care today. The unions are willing to go to an inquiry without conditions. They have given assurances committing themselves to the resolution of the dispute by that process. Those assurances have been given by all the unions concerned and represent their committed view—[Interruption.] Do Conservative Members not want a settlement? If they doubt the good word of the trade unions, that is in line with the way that they have neglected them and the way in which the Secretary of State for Employment has insulted them during the past months.

I repeat that the trade unions are ready to be forthcoming in a manner which I believe will be of great assistance. The Secretary of State must tell the House that the National Water Council will be similarly forthcoming. If he does not, he and it will carry a heavy responsibility. If he does, and seeks to match the efforts of others, important progress could be made.

I hope that what I have said today will help to lead to a speedy settlement of this vexed dispute—[Interruption.] If that is the attitude of Conservative Members, they will carry the responsibility if the dispute is not resolved.

There has been some disposition to write off the workers' action as ineffectual and to say that the country can continue indefinitely despite the action. I reject that view. The only reason why exceptionally disturbing consequences have not already occurred is the unions' code of practice, which places great stress on avoiding action that prejudices public health and safety, and requires them to make every effort to avoid banning the health of consumers.

Because the unions have carefully adhered to that code, the strike has been far less effective than it might have been. It is the Prime Minister's puritan ethics in practice. Even so, the water system is deteriorating day by day. More people are being deprived of their water supply and many more cannot be sure of its purity. The pollution in rivers is causing great anxiety.

I hope that what I have said today will help to bring about an early and honourable settlement and that industrial relations in the water industry will return to where they were before the Secretary of State's dangerous intervention three months ago.

3.58 pm

The Secretary of State for the Environment (Mr. Tom King)

I wish immediately to pick up a comment made by the right hon. Member for Manchester, Ardwick (Mr. Kaufman) in his closing remarks. He said that some people were writing off the industrial action as ineffectual. I want to make it clear to the House that I am certainly not one of them. People are, at this moment, standing on icy paths, with buckets in their hands and possibly at frozen standpipes. It does not, therefore, behove the House to say that the action is ineffectual. I regard it as extremely serious. Many people are affected by it—whether by lack of proper water supplies, by the need to boil water as a precaution or by the deterioration of the quality of effluent and sewage works. I regard each of those as serious consequences of the action.

I welcome this emergency debate, and I say to the right hon. Gentleman—because I do not believe that this is a day for spending all our time scoring political points—that I accept the second part of his speech as a genuine attempt by him to approach a difficult problem. I hope that our debate today, in the time provided, will offer a serious opportunity to address serious issues, and that it will not be seen as merely an opportunity to score points. The country expects more of us than that.

May I say a word about the general position. The latest information about the number of properties without a mains supply has now risen to around 54,000. That means that about one property in every 500 now has to rely on supply by either standpipe or tanker. There have already been far too many cases of hardship caused to groups of people who are least able to look after themselves. About 7.5 million people are now advised to boil water intended for human consumption. In some places, this is because chlorination has stopped; in other places, it is as a precaution. The water authorities will continue to monitor closely the quality of water put into supply. Wherever there is the slightest reason to doubt the quality, precautionary measures will be taken. In a small number of areas, the cessation of normal chemical treatment has led to water authorities reporting higher levels of lead. Where such a problem exists, there is close monitoring, and full advice is given to protect consumers.

So far, the effects on industry and agriculture have been relatively small, although I know that for some—farmers and some industries—it has posed real problems. Some firms have been asked to reduce consumption, and others have had to take special measures to overcome shortages in supply. There have been a very few closures. The effect of the deterioration in sewage effluent has been modified by the dilution of higher river flows, but while some streams are polluted, there have been no serious effects yet on rivers. However, there have been one or two incidents where it is feared that pollution has killed fish.

To a large extent, the limited impact of the strike reflects the considerable effort of many workers in the water industry who have made exceptional efforts to maintain supplies and level of service. I pay tribute to the management and staff of the water authorities and water companies who have worked so hard over recent weeks. I want to say, with all the authority that I can from this Dispatch Box, that the best tribute that the public can pay to them for those efforts is to give the greatest attention to economy in water use at present. The House will be aware of the words of the chief executive of the Thames water authority, the largest water authority in the country, and I hope that those words will be heeded both in that area and throughout the country.

I also want to thank the manual workers who, in spite of the strike, have recognised their obligation to safeguard public health and safety and who have carried out a number of emergency repairs. Without in any way derogating from what I said about the people who have helped, I should add that there have also been a number of serious examples of hardship and distress. Those examples have been caused by what I would call rather narrow and unfortunate arguments about the exact extent of emergency cover. In my view, it is not acceptable for union officials to threaten or carry out the withdrawal of emergency cover—to which they are committed under their national agreement—from people who are quite unable to defend themselves. I hope that a spirit of generosity will be shown in the interpretation of such events.

I shall now describe the sequence of events in this dispute—which the right hon. Gentleman also sought to trace—that have brought us to where we are today. First, I want—not to correct him, because I am sure that the right hon. Gentleman sought to put the matter into the correct context—to remind the House that the issue of what is called the upper quartile, the top quarter of average manual earnings, is not something that suddenly arose with the presentation of this year's pay settlement. The issue has been around for a considerable time. Early in 1982, as part of the last pay settlement, it was agreed between the trade unions and the employers that there would be talks, without commitment, and on a basis of mutual benefit, about improving the relative position of manual workers' earnings. I hope that the House will note carefully those words. The trade unions and the employers met on three occasions to discuss this matter in the summer of 1982. The unions made proposals for parity with the upper quartile of manual earnings. The employers put forward counter-proposals for increases in earnings, in return for specific agreements on changes in working practices, and other cost savings. They rejected the demand for upper quartile parity. No progress was possible in those informal discussions. Already in September—the House will note this—there were press reports of increased militancy among members of the GMWU and a new readiness among its leaders to take industrial action over pay this year. That was last September.

At the third meeting in September, the unions tabled their full pay claim. The unions then combined their aspirations to rise to the top 25 per cent. of manual workers, with a claim for increases relating to their annual pay settlement, due in December. The employers undertook to consider the claim and to respond at the next agreed meeting of the National Joint Industrial Council in November, in accordance with normal procedure. The union response was to call a one-day official strike. That took place on 21 October. It was the first official strike ever to take place in the water industry. It occurred more than six weeks before the settlement date.

In November, the employers responded to the initial claim with a pay offer of 4 per cent. Following the rejection of this offer by the unions, the employers, in accordance with the National Joint Industrial Council constitution, proposed to refer the differences to arbitration. The unions refused, despite the national agreement, clause 12.

Early in January, the trade unions called for a ban on overtime, and then an all-out strike. Immediately before the strike began, the Advisory, Conciliation and Arbitration Service contacted both sides and agreed a procedure to resolve the dispute. Copies of this agreement are in the Vote Office. The House knows that this agreement was signed by the chairman and secretary of both the employers and unions, and witnessed by Mr. Lowry, the chairman of ACAS.

Moreover, Mr. Lowry wrote on the same day to both sides, making clear the various points in the agreement, so that there could be no possible ambiguity. Copies of this letter are also in the Vote Office. The agreement provided for negotiations in good faith under an independent chairman. A chairman, Mr. Buchanan, was appointed by ACAS, with the agreement of both parties. It was agreed that when the chairman was satisfied that proper negotiations had taken place, and if there was still no agreement, he could then intervene, in the role of a mediator, with proposals for a settlement. The agreement also stated that if this stage did not result in a settlement recourse should be had to arbitration. It was agreed that the arbitration should be in accord with the NJIC agreement, to which both sides had previously subscribed.

To underline the nature of the agreement, the chairman of ACAS, Mr. Lowry, wrote to both sides making it clear that in the circumstances of disagreement either party would have the right to seek arbitration and the other would have the obligation to respond. As I said, copies of the letter, which will be familiar to many right hon. and hon. Members, are in the Vote Office.

In the discussions which followed under the independent chairman, Mr. Buchanan, the employers increased the pay offer, first to 5 per cent. and then to approximately 5.8 per cent. No agreement resulted and the independent chairman, in accordance with the agreement signed by both sides, assumed the role of mediator. After listening to the arguments in some detail, he made three specific recommendations.

First, he did not support any increase to bring water workers into the upper quartile of the manual workers national earnings scale. He recommended against any increase that would restore the relative position of water workers in the earnings league to some previously prevailing position. Secondly, he recognised the strength of feeling on the part of the water workers about their wage position and recommended both sides to explore, and rapidly proceed to implement, possibilities for increases in earnings opportunities. He referred to administrative efficiencies by moving to the payment of wages by credit transfer and to the development or extension of the performance-related bonus schemes. Thirdly, the mediator recommended an increased offer of 7.3 per cent. to be effective for 16 months. He also proposed to more than double the long service supplement, for which 65 per cent. of manual workers qualify.

Within 24 hours of the mediator's report the employers accepted the recommendations and made an improved offer to correspond to the proposals in the report. However, the unions then rejected the mediator's report. That, as was also clear in Mr. Lowry's letter which hon. Members will have read, was not binding upon them. Subsequently, they rejected the improved offer by the employers for increased productivity earnings which, of course, occurs under paragraph 8.

The unions were asked for, but were not able to make, any proposals of their own for cost savings that could lead to increased earnings. They made no proposals for changes in working practices that might earn such productivity payments. However, that is not the end of the story because Mr. Lowry's procedure, and that of ACAS, specifically allowed for the possibility of failure to agree at that stage. The ACAS agreement had also contained a specific clause acknowledging that the procedural rights and obligations set out in the NJIC's constitution would be respected. Clause 12 of that constitution gives both parties in a dispute the right to evoke the final stages of the procedure—arbitration—as a last resort.

I have quoted to the House before an important sentence from Mr. Lowry's letter but I make no apology for repeating it. The third sentence of the clause deals specifically with the possibility of arbitration as the final stage in the procedure. Mr. Lowry went on to say: In the absence of any intervention by either side when I was making these points the parties have signified their agreement with them. Therefore, the employers formally requested the referral of the dispute to binding arbitration.

On 9 February the unions said that they would not accept arbitration. Instead, they sought a non-binding committee of inquiry. Not unexpectedly, given the experiences of recent weeks and months, that was not acceptable to the employers. They had seen the agreed procedures rejected, the constitution ignored, and they had been subjected to severe industrial action. In those circumstances, the House will understand why the employers are most anxious to see that any further stage in the dispute will be entered into on the clear understanding that the findings of either an arbitrator or an inquiry must be accepted by both sides.

Mr. Dennis Skinner (Bolsover)

The Minister says that the decision of the committee of inquiry must be binding. Does he recall that when, in 1972, the last Tory Government took on the miners the Wilberforce inquiry was set up, to deal with matters quickly. The NUM did not accept the terms of the inquiry. As a result of the findings of that inquiry—which were not bad; they were the best that the union had had for some time—the union went along to 10 Downing street and knocked out of Ted Heath another dozen concessions. Any union worth its salt would not accept the terms of an inquiry beforehand because if it did the inquiry's judgment would be based upon that. Therefore, it is in the union's interest not to accept the terms beforehand, just as the NUM did in 1972.

Mr. King

If I thought that the conduct of responsible union leaders in Britain was dictated by the hon. Gentleman's attitude I would be very worried indeed. I worked in industry all my life before coming into the House. I worked in the printing industry, which is hardly a non-union shop industry, and I was well trained by many union leaders who drove some hard agreements with me. However, it was made clear that once those agreements had been made they took a pride and responsibility in seeing that they were honoured.

I have in my hand the national agreement for the water industry—the terms and conditions of service. I am sure that the hon. Gentleman will have read clause 12, as I and, I hope, most hon. Members have. I hope that on reflection it will be seen that it is necessary that that should be followed.

Mr. Den Dover (Chorley)

Will my right hon. Friend explain to the House why the unions rejected binding arbitration and are asking for a committee of inquiry?

Mr. King

I shall come to that in a moment.

I have now made four statements to the House about this dispute. In the last three, on 1 February, 3 February and 10 February, I said that there were two options to achieve an end to the dispute and to secure an immediate return to work. The first option was to follow the mediator's recommendations. The second was to honour the agreement through ACAS and to follow the terms of the national agreement by going to arbitration. If the first is not acceptable—that is a judgment that must be reached by both parties—the second remains. That provides a sensible procedure for resolving the dispute and it should be honoured.

I want to put the dispute and the issues around it in the context of the present. The House will have noticed that on Friday the Chancellor of the Exchequer announced that the current rate of inflation is 4.9 per cent.

Mr. Skinner

Temporarily. It will not be soon.

Mr. King

The offer at present before the water workers as recommended by the independent mediator is 7.3 per cent. over 16 months. To those 65 per cent. with long service that is equivalent to an offer of 8 per cent. That is against what I do not think it would be a distortion to describe as a union claim of the order of 20 per cent. That rather gives the lie to the somewhat facile comment that I have heard in some places that an opening offer of 6 per cent. would have saved all this trouble.

I, as well as any hon. Member, can understand a comment that was made by Mayor John Lindsay of New York who, on one occasion, found himself faced with a sewerage workers' strike. He was asked whether he thought it was good for his personal reputation to stand up vigorously for the rights of the New York people against what was thought to be an unreasonable demand. The mayor made the fairly perceptive comment that no one would come out of a sewerage workers' strike smelling like a rose.

In this situation—whether it be the Government, the Opposition, the water authorities, the unions, the people who are suffering hardship and distress, industry, people whose jobs are now threatened, firms that may close never to reopen, the general consumer or Britain's reputation—all of us have something to lose and all of us have a stake in seeing the dispute settled at the earliest possible opportunity. It threatens jobs, health and safety, future employment and the security of many people. It also threatens the important position of ACAS, which was set up by the previous Labour Government and which is supported by this Government. It is faced with a very difficult problem.

The dispute has not become unnecessary. Whatever other figures have been challenged, the figures that I am about to give have not been challenged and reveal an average increase for those concerned of more than £10 a week. Given the economic and industrial world climate, that is a not unreasonable offer. The value of that offer is very real to the water workers, and they, as well as pensoners and everyone else, have an interest in ensuring that inflation does not rocket up again as a result of a series of higher and higher claims.

Mr. Les Huckfield (Nuneaton)

rose—

Mr. King

The proposal has been made by an independent mediator. He is not some fly-by-night mediator whom no one has ever heard of. Today I checked on Mr. Buchanan and asked how many other arbitrations he had done. I am told that between 1972 and 1981 he carried out no fewer than 66 arbitrations. I assume, therefore, that he must have been continuously acceptable to the unions. Thus, 66 arbitrations proved acceptable, but sadly the sixty-seventh proved unacceptable.

However, that is not the end of the matter, because there is another procedure for settling the dispute. The crucial factor is that that procedure is not being followed. On Friday, I was asked on "The World at One" whether the unions were dishonouring their agreement. I hope that the House will concede that I have sought at all stages and in my statements to the House not to inflame the situation, but to find a way in which this damaging dispute could be sensibly resolved. I did not accept that question. I do not regard the agreement as being dishonoured, but in my judgment, and that of the vast majority of people, it has not yet been honoured. It is important that it should be honoured at the earliest possible opportunity.

Mr. Leslie Spriggs (St. Helens)

Will the right hon. Gentleman now answer the charge which was put to him by my right hon. Friend the Member for Manchester, Ardwick (Mr. Kaufman) that he stopped the offer of six per cent.?

Mr. King

The stories that I have read suggest that I said that four per cent. and nothing more could be offered. I think that the House knows that on that first day of negotiation the offer was four per cent. and almost immediately—perhaps within an hour, although I do not know the exact time—the employers decided, on their own initiative, to offer arbitration once it had been made clear to them that that offer was not acceptable. They were familiar with the background of the dispute and with the long-standing problem over the upper quartile and decided that the gap was so enormous that arbitration was the most sensible way to proceed.

Mr. Denis Howell (Birmingham, Small Heath)

rose—

Mr. King

I should like first to reply to the very important and constructive point that has been made. The right hon. Member for Ardwick has made a constructive effort—which I take at face value—to resolve this difficult problem.

Obviously ACAS is more than willing to help to resolve this difficult problem. I have made it clear that we believe that the national agreement should be honoured. Indeed, I draw the attention of the House to its wording. It deals with the first point raised by the right hon. Member for Ardwick, and states that the difference should be referred to ACAS, or to any other agreed tribunal for arbitration. That is contained in the national agreement and that is the position on which we stand. As the remaining part of the sentence states, a settlement must be on the basis that any award made in relation to the difference is accepted by the two sides and is treated as though it were an agreement between the two sides.

Different forms of words may be conjured up and they may or may not sound more or less the same, but the issue that must be faced is whether that form of words will be accepted. We can continue with semantics and clever legal phrasing, but the real question is whether those agreements are accepted, whether the agreement will now be honoured and whether the findings will be accepted.

That is the right way to proceed. The terms of the national agreement were, I am sure, signed in good faith by union representatives, just as I am sure that they signed the agreement witnessed by Mr. Lowry on 21 January in good faith, and that must be honoured. The problem is difficult, but it is high time that the water workers stemmed their loss of earnings—and the losses are becoming very substantial—and that the dispute was ended for the health of the industry and its tradition of service, and for the health of the country and its dependence on proper and efficient water supplies. That is the way forward. That agreement provides a route to the solution of the problem. My earnest plea is that the position should be sensibly considered and that this serious dispute should be resolved at the earliest possible opportunity.

4.26 pm

Mrs. Shirley Williams (Crosby)

I very much welcome this debate. As you know, Mr. Speaker, I pressed for it several times earlier last week and during the previous week. I welcome the debate for two reasons. First, as the Minister and the right hon. Member for Manchester, Ardwick (Mr. Kaufman) have said, we are daily running the risk of fatalities as a result of the effect of the dispute on public health. Only today one of the water industry's senior managers said that he prayed every day that there would be no fatalities in his region because of the pollution of the rivers. Secondly, the industry has been marked for many years by extremely good relations between the unions and management. It is a tragedy that this industry should today be marked by growing suspicion and distrust between the two sides.

The House has been given two somewhat partial accounts of the events that led to the breakdown of negotiations in the water workers' dispute. I have no interest to declare, but it must be said—if we are attempting to be fair—that the employers did themselves no good by implying that increases of £5 to £10 per week would be available to the water workers over and above the 7.3 per cent., and by subsequently revising the mathematics of their offer to show that it was not 7.3 per cent. but 8.5 per cent. Understandably, those two admitted mistakes by the National Water Council have led to a growing lack of confidence in its ability to negotiate sensibly and aptly.

I noticed how carefully the Secretary of State avoided directly answering the question raised by the hon. Member for St. Helens (Mr. Spriggs). He must recognise that the National Water Council's decision last October to make an offer of 6 per cent.—which was considered for several hours and which was about to be made to the water unions—was suddenly changed to an offer of only 4 per cent. That change is widely believed to have been due to the Minister's intervention.

I do not blame the Minister, because he happens to be a member of a Government who consistently say that they do not believe in any public sector incomes policy, but who have one in practice. We all know that they have one. It is to make public sector income settlements match an unwritten norm. The Labour party must also admit that the unwillingness of the unions to abide by an agreement which they have signed, in conjunction with the chairman of ACAS, will make such arbitration agreements the subject of great distrust.

One must acknowledge that there were faults on both sides, but the unions—despite the distrust which I recognise existed and which was held in their minds—should have been willing to carry out the terms of the agreement which they signed.

The Minister referred to the talks last summer between the National Water Council and the unions. They dealt with productivity and whether efficiency measures could be taken which would benefit the manual workers and have corresponding benefits for consumers and managers. The talks were about comparability. The Minister said—and he was telling the truth—that the unions decided to end the talks. But he left out an important fact—on 7 July the Government announced the disbandment of the National Water Council and said that they would no longer require the services of the then chairman, Sir Robert Marshall, who had the confidence of both sides. The Minister did not mention that, but it was a significant reason for the breakdown of the talks. It is time that it was said in the House that there were faults on both sides and that those faults led to a lack of trust and to the present bad relationships.

I believe that five steps would bring an end to the dispute. I say to the right hon. Member for Ardwick that the obvious duty of anyone who wishes to speak seriously in the House on the matter is to be in touch with both sides. Like him, I have been in touch. That is no great deal. It is the minimum that any hon. Member would do. I stress that on both sides of the House hon. Members want nothing more than to see the dispute honourably settled.

The first step is to set up a committee of inquiry acceptable to both sides. I understand the Minister's support for arbitration, but one must admit that that is not likely to be acceptable to both sides now. A committee of inquiry would have to work as quickly as the committee of inquiry into the complicated steel dispute three years ago, which completed its study within two days.

Of course, secondly, there must be agreement on the committee's terms of reference. It is clear that the terms must include an examination of comparability, because the water unions feel strongly that they have the right to bring that issue before a committee of inquiry. The terms of reference should also include consideration of productivity and of flexible working, which the employers have brought to the fore. Thirdly, I hope that the Minister, or the Under-Secretary of State, will repeat in this debate that there will be no interference of any kind by the Government with the employers' evidence or with the findings of that inquiry. That would be helpful. I believe that a formula under which both sides would agree to honour the inquiry's findings and recommendations might bridge the gap between the two sides, if I understand their positions correctly.

I say, lastly, to the Labour party and trade union representatives that I hope that if we have an independent committee of inquiry, which will report quickly, the unions will find it possible to resume work or, at the very least, to accept full emergency cover with no question of its being withdrawn in any part of the country.

The House should take full note of two lessons from the dispute. The first is that our water and sewerage system is in a desperately frail condition. Hon. Members will have seen in The Times this morning the estimate that the cost of repairs required as a result of the failure to maintain the system for nearly a month will almost certainly exceed many times the full cost of the union's claim. That does not mean that the union's claim should be conceded in total. It shows how near the edge our water and sewerage system now is.

The system is kept going by dealing with collapses, emergencies, mains bursts and broken sewers. Because of unwise economies in recent years, the system has not been subjected to any planned modernisation schemes. The National Water Council believes that about £100 million more investment a year is the basic minimum needed to keep the service at a reasonable standard for public health.

Mr. Skinner

The right hon. Lady was a Minister for 10 years and did nowt about it.

Mrs. Williams

There has been a drop of 36 per cent. in water investment since 1979, and the hon. Member for Bolsover (Mr. Skinner) should know that.

Mr. Skinner

Hypocrisy.

Mrs. Williams

The hon. Gentleman does not understand facts.

I underline the following facts. The electricity workers have made a claim for a substantial pay increase and for shorter hours. Local government manual workers only this morning rejected a 4.5 per cent. settlement by a ballot showing a vote of 3:2 against the proposal. Coming fast down the track is a major crisis for the Government in public sector pay.

I conclude with a few words to each side. To the Government, who are pretending that there is no incomes policy for the public sector, I say that they are doing neither the Government nor the country any good. There is a public sector incomes policy. It would be better if it were brought out into the open and if attempts were made to reach binding agreements, with arbitration, and with a formal recognition of the Government's interests.

To the right hon. Member for Ardwick I say that when he quoted the mediator's report he underlined paragraph 6, but failed to draw the conclusions from it. The mediator said: I consider the water workers through this adverse movement in relative position, to have been the victims of wage inflation elsewhere in the economy and of the recession, on the other hand. There is no disagreement about the recession. If the party to which the right hon. Member for Ardwick belongs believes that the comparative position of the water workers has worsened as a result of wage inflation elsewhere in the economy, as the mediator said, it is high time that he followed the logic of his own argument at the Dispatch Box and recognised the need for an incomes policy.

4.39 pm

Mr. Tony Durant (Reading, North)

I intervene briefly to to make one or two points. I followed the speech of the right hon. Member for Crosby (Mrs. Williams) very closely and I should like to put one point to her. If she wants large-scale investment in the water and sewerage industries, which I agree is necessary, she cannot have it both ways. Where will the money come from? One cannot necessarily have higher wages and greater investment. That is the problem facing the industry.

It is an important industry. All of us are concerned about the strike and are worried about its continuation. We hope that a settlement can be achieved as soon as possible.

There is some confusion in the press about water workers and sewerage workers. I should like to point out that about two thirds of sewage processing is carried out by local government manual workers who are not involved in this dispute. Therefore, we are discussing the water workers and not necessarily the sewerage workers. The right hon. Member for Manchester, Ardwick (Mr. Kaufman) quoted the Daily Express. I think the Daily Express got it wrong when it quoted the sewerage workers.

My constituents cannot understand why, when a mediator with whom both sides agreed to meet, came to a figure the unions did not agree to it. As this was agreed by both sides, why did they not go along with it?

The Government have an interest in wages. There is no point in our pretending that the Government have no interest in local government or national Government workers. The Government have such an interest because they are involved in the financial aspects of these industries and they must make some reaction to the negotiations. It is not surprising, therefore, that the Government have some interest in the matter. Wage levels are crucial to inflation, and the Government set out as their main plan the combating of inflation.

I have many dealings with private industry in which, today, most settlements are running at 2½ per cent. The people in those industries, some of which use large quantities of water, feel a little put out by the fact that they are prepared to settle at 2½ per cent. because of general national circumstances, while other workers in safe and reliable jobs are offered 7.3 per cent. but are not prepared to settle. They find that worrying and puzzling and ask why they should be expected to settle at 2½ per cent.

Not everyone in the union favours the strike. Chaps in the industry who want to go back to work have been in touch with me this weekend. They said that the only reason why they are not prepared to go back to work is that the industry is a closed shop. They have been threatened that if they go back to work they will lose their cards and their jobs. The last phrase they used to me was "We want to go back to work." That is another aspect that must be considered. Is it right that those people should be forced to go on strike when they do not want to?

We have seen reports in some of the newspapers about the use of contractors. It would be helpful if the House knew the exact legal position. In a report today, The Daily Telegraph said that, according to Lord Denning, it is legally permissible to use contractors. It would be helpful to know the legal position.

The use of a strike weapon by an industry of this type is out of date. By now we should be solving these problems more sensibly. Who does the strike hurt? It hurts not the employers but the old and the sick and young families. The water workers are hurt because they immediately lose money. Some of them have mortgages, children and so on. They are equaly vulnerable.

I urge the unions to consider whether it is time to go back to work, and to take the committee of inquiry as a basis of discussion. I intervened during the speech of the right hon. Member for Ardwick, who appears to have been in close touch with the unions today, who implied that the unions would accept the findings. I have before me today a document sent by the National Water Council to all hon. Members. I shall use its words rather than my own. Under the heading "Arbitration", it states: During the negotiations the Employers have asked for arbitration on three separate occasions in accordance with the National Agreement. The Trade Unions have steadfastly refused this. Instead they have offered a court of inquiry but have not committed themselves to its findings. I received the document today. I cannot act on any more than that, although the right hon. Member for Ardwick seemed to imply that the unions might accept the findings. We ought positively to know the answer. If we are to go to the great trouble of an inquiry, it should be binding on all parties or there is no point to it.

I urge the workers to take this matter seriously, to go back to work and to settle the matter through a proper, well-run inquiry.

4.44 pm

Mr. Reg Race (Wood Green)

We have today heard some extraordinary speeches from right hon. and hon. Members. The Government have only themselves to blame if the water workers do not trust their words. After all, this is the first Government in the history of this country who have managed to engineer a strike in the water industry. It is the first time ever that this group of workers has been on strike. The Secretary of State should reflect on that, because it is of significance.

The most significant part of the dispute is the way in which the Government have intervened in the negotiations and the discrepancy of view between the employers and the trade unions on whether serious and proper negotiations have taken place. We know, not from the unions, but from the National Water Council through its former chairman, that it was, Ministers who telephoned to tell the water council to reduce the offer that was to be made.

Relationships in the industry between employers and the trade unions have traditionally been cordial. Trade union negotiators have consistently argued that relationships with the employers were better than elsewhere in the public sector and that there was a certain degree of trust between the trade union and employers' sides, a trust which was broken by the Government's intervention last October and November when they instructed the National Water Council to reduce the offer that it was to make and which it had intimated it was going to make. That prejudiced the negotiations.

The Secretary of State told us today that the employers asked for binding arbitration very shortly after the 4 per cent. offer was made. They asked for binding arbitration after their first offer. What they were really trying to do was to suggest that there was a small difference between their position and that of the trade unions. There was not a small difference between the positions at that stage, because the trade unions had submitted a claim for comparability with the gas and electricity workers, a claim which had not been properly dealt with over a number of years. Therefore, there was a substantial difference between the two positions.

Both at that time and since the trade unions have argued that, because of the Government's intervention, and because of the failure of the employers to deal properly with the issue of comparability with gas and electricity workers, the negotiations had not been properly and seriously conducted by the employers. That is why the trade unions have consistently said that they are not prepared to go to arbitration and have a restriction placed on the issues that the arbitrator can consider.

Mr. Anthony Beaumont-Dark (Birmingham, Selly Oak)

rose—

Mr. Race

If the hon. Gentleman will allow me to develop this point, I shall give way in a moment.

What is crucial is that arbitration has been asked for on a number of occasions by the employers, but the trade unions want all the relevant factors to be considered. An arbitrator might simply consider the labour market conditions in this country. He might not consider very seriously the employers' ability to pay. The water industry is highly profitable. When trade unions are establishing a claim for an improvement in wages, they consider the employers' ability to meet the claim. We know that over the past year the employers made profits amounting to £189 million. Therefore, the industry's ability to meet an increase in the wages paid to its workers is extremely high—

Mr. John Townend (Bridlington)

rose—

Mr. Race

—especially when we consider that labour costs are a small proportion of the industry's total costs.

Mr. Beaumont-Dark

Is the hon. Gentleman aware that, according to the published figures, the water workers have done better than the miners and local government workers over the past three years, and marginally better than gas and electricity workers? The water workers are not hard-pressed employees who keep on falling behind. Does the hon. Gentleman agree that they are trying to shove and push themselves to the top at a very difficult time?

Mr. Race

As usual, the hon. Gentleman does not know what he is talking about. Average earnings in the water industry are lower than the national average for manual workers. The hon. Gentleman is wrong. Gas, electricity and water workers are all previous employees of local authorities and until 1974 they had virtually the same rates of pay. Since then, major differences have been created and the electricity and gas workers have had increases which have been substantially more than those achieved by the water workers.

Mr. John Townend

rose—

Mr. Race

No, I shall not give way. I want to pursue my argument.

Mr. Skinner

The hon. Member for Bridlington (Mr. Townend) has 12 directorships.

Mr. Race

The costs of settling the dispute would be microscopic compared with the Government's public sector borrowing requirement and in terms of consumers' bills. It has been estimated that settling the claim in full would cost an extra ½p a day for the average family. The overall cost of the claim is only £40 million, and the industry's profits were £189 million. It is absurd that we have reached the position where the Government are saying to water workers that they cannot have a modest increase in pay this year and, in effect, that they would prefer the workers to go on strike. It seems that the Government want a confrontation.

Mr. Beaumont-Dark

Is 20 per cent. a modest claim?

Mr. Race

The hon. Gentleman should remember that the water workers have lost ground since 1979. Like many other groups, they have fallen behind when account is taken of increases elsewhere, especially the increases that have been given to company directors and others over the past few years. I hope that the hon. Gentleman will not forget that during the last election the Conservative party pledged itself to cut taxes for the low-paid and for those on average earnings. Does he remember that during the 1979 campaign the Prime Minister said that it was an article of faith to cut taxes for those people? What has happened? The hon. Gentleman and his right hon. and hon. Friends have voted to increase taxation for the low-paid. They have increased taxation for those on average earnings. Only those who are on five or 10 times average earnings have seen their taxes reduced. The hon. Gentleman has no real argument. He has voted to increase taxes for the low-paid and for those on average earnings and he should not expect them to do other than try to maintain their living standards. I am sure that he does not expect them to do otherwise.

I am a member of the National Union of Public Employees and I am proud to be sponsored by it in this place. NUPE wants an inquiry into the way in which the dispute has been handled. It wants an inquiry that will consider all the relevant factors and take into account the pay of gas and electricity workers and the ability of the employers to pay. It wants it to exclude from its consideration factors such as the impact of mass unemployment in the market place. If we wish to set a correct rate of pay for the job, it is absurd to tell workers, "You cannot have an increase in pay because all those outside the gate want your jobs and are reducing the value of the work that you do."

The findings of the inquiry should not be binding on both sides in advance. The Wilberforce inquiry's findings were not binding on both sides in advance. Similarly, other industrial relations inquiries' findings have not been binding in advance. If an inquiry is conducted speedily and a conclusion is reached in a matter of days, as is necessary, it is crucial that the National Joint Industrial Council should have the ability to firm up the results at the end and to reach a negotiated settlement. That is a reasonable way of settling the dispute.

We should have in mind the position in which the workers find themselves and the work that they do. The water workers' jobs are not confined to purifying the water that we all drink. These people wade through raw sewage up to their waists to keep the sewers free. They are the people who have to fish out the dead dogs and the dead bodies that are found in the reservoirs. They are the people who maintain the filter beds to produce clean and pure water for everyone.

The Secretary of State showed his ignorance when he told me that the sewerage workers were not really involved because they are local authority employees. The local authority workers are doing the same jobs as the water workers because they are subject to water industry contracts. They are part of the same negotiations. The right hon. Gentleman did not know what he was talking about.

Mr. John Townend

The hon. Gentleman does not know what he is talking about.

Mr. Race

We must recognise the important job that the water workers and the sewerage workers perform for society and ensure that an inquiry is set up as soon as possible. The inquiry should have terms of reference that bring in the factors which the trade unions want to discuss with the employers. We must put an end to the nonsensical view that there have been proper negotiations already.

The ACAS statement has been widely quoted, but one crucial sentence has not been drawn to the attention of the House. It reads as follows: One party considers that the bargaining has been conducted in good faith and the other does not. That is the crux of the matter. The employers, on the Government's instruction, have reduced their wage offer. They have placed themselves in difficulties and they have tried to get binding arbitration, but the trade union side does not believe that the negotiations have been free and unfettered, as they have been in the past to a certain extent. They believe that great pressure has been put on the employers by the Government. It is that pressure that has produced the first national strike in the history of the water industry. If anyone is to blame for the present circumstances, I suggest that it is the Government.

4.59 pm

Mr. Douglas Hogg (Grantham)

The hon. Member for Wood Green (Mr. Race) reminded us that he is a sponsored member of NUPE. Sponsored Members usually take some care to present an accurate account of the relevant facts. I listened to the hon. Gentleman's speech with some care and I find that his adherence to accuracy must be called into question.

As I understood the hon. Gentleman's speech—some parts of it were quite unintelligible—his principal contention was that the water workers had been treated badly as compared with other workers in the public sector. I expected him to let us have some figures. I expected him to answer robustly when my hon. Friend the Member for Birmingham, Selly Oak (Mr. Beaumont-Dark) pointed out that he was wholly wrong. When it came to figures and facts, the hon. Member for Wood Green was as silent as he normally is. The reason is that the hon. Gentleman's basic proposition—that the water workers have done worse—is simply untrue. I shall tell the House how untrue it is. The figures are well known and certain.

Mr. Skinner

Is the hon. Member for Grantham (Mr. Hogg) aware that at the weekend there was an illustration of a water worker whose pay packet, based on a normal week's work less tax, amounted to £58.50 for a five-day week? I suggest that that water worker's pay has fallen behind that of Mr. Len Hill who gets £19,000 for three and a half days a week and Sir William Dugdale who gets £30,000 for working for a water authority for four days and who works for someone else on other days. It is certainly less than that of the hon. Member for Grantham who picks up his salary as a Member of Parliament and God knows how many thousands of pounds for working in the courts before he comes here.

Mr. Hogg

I am not surprised by what the hon. Member for Bolsover (Mr. Skinner) has said. He hoped, no doubt, to divert me from giving the figures that I shall now quote. [Interruption.] He obviously hoped that, as a result of his intemperate intervention, I should not embarrass his hon. Friend—[Interruption.] Nevertheless, I assure him that I shall embarrass his hon. Friend.

Mr. Speaker

Order. May I say once again to the hon. Member for Bolsover (Mr. Skinner) that he was heard in silence. The House listened to what he had to say. The least he can do is to show some good manners and listen to other hon. Members.

Mr. Hogg

I shall give the figures for 1979–80. In that year, the average water worker's pay increased by 21.4 per cent., local government employees' pay increased by 13 per cent., coalworkers' pay increased by 17 per cent., gasworkers' pay increased by 18 per cent. and electricity workers' pay increased by 19 per cent. That year was not in any sense an exception. In 1980–81, water workers' pay increased by 12.3 per cent., local government workers' pay increased by 7.5 per cent., coalworkers' pay increased by 9.7 per cent., gasworkers' pay increased by 12.6 per cent. and electricity workers' pay increased by 12.5 per cent.

Mr. Skinner

What about lawyers?

Mr. Hogg

Nor was 1980–81 an exception. In 1981–82, water workers got an extra 8.8 per cent., local government workers 6.9 per cent., coalworkers 7.4 per cent., gasworkers 7.9 per cent. and electricity workers 7.4 per cent.

Mr. Skinner

What about lawyers?

Mr. Hogg

It is not my purpose to bore the House with a series of figures of this type, but occasionally one has to produce the evidence simply to gainsay the nonsense, the factually inaccurate nonsense, that some hon. Members utter. That simply will not do. The hon. Member for Wood Green should be ashamed of himself, although I suppose he is seeking reselection somewhere.

Mrs. Shirley Williams

Perhaps the hon. Member for Grantham (Mr. Hogg) would discover how to make his remarks compatible with the findings of the mediator, who referred to the relative deterioration of water workers' circumstances since 1979 and said that it provides the basis for a deeply held sense of grievance. How does the hon. Gentleman explain that?

Mr. Hogg

I have no doubt that there is a sense of grievance. Most people would like more money but whether they are entitled to it is quite another matter.

About a fortnight ago, I took the liberty of seeking leave to adjourn the House under Standing Order No. 9 to discuss a matter that my hon. Friend the Member for Reading, North (Mr. Durant) spoke about 10 minutes ago. I refer to the operation of closed shop agreements in the water industry. You, Mr. Speaker, were unable to grant my application. Of course, I have no complaint about that. Indeed, if you had, Mr. Speaker, it might have been a trifle embarrassing for the Government, who had urgent business for that and the next day.

My reason for the application was serious. Since 1975, closed shop agreements have been operating in the water industry. Since 1975, membership of a trade union has been a condition of employment for manual workers. It follows, therefore, that if a trade union member is deprived of membership, he faces the substantial risk of dismissal.

It was made clear to me that a number of my constituents who are members of trade unions and work in the water industry would like to go back to work and accept the mediator's offer but for the fact that they fear for their jobs. They believe that if they go back to work they will be expelled from the union and thus lose their jobs. That would be a terrible act of injustice. I wrote to the chairman of the National 'Water Council, Sir William Dugdale, asking him for a formal undertaking that he would not bring about the dismissal of any employee. I regret to say that he would not give that undertaking. I also wrote to Mr. Bickerstaffe and Mr. Basnett, of the trade unions, asking them to give me an undertaking that they would not bring about the dismissal of any employees. I regret to say that they have not taken the trouble to reply to my letter. One must take the view that, to put it mildly, a failure to reply is discourteous and, to put it more robustly, is lamentable in the extreme.

The right hon. Member for Manchester, Ardwick (Mr. Kaufman) would do well not to laugh. He may be a good film critic but it does not suit him to laugh when I am talking about the possible dismissal of trade union constituents of mine. Since I raised the subject some 10 days ago it has become more urgent. A substantial number of trade union members in the water industry are working in Lincolnshire. It is clear that the unions are taking, or contemplating taking, disciplinary action against some people who work on the east coast. I strongly fear that the unions will expel those people and then try to procure their dismissal. I would regard such an action as an affront to natural justice. I suspect that such action would be unlawful. It would certainly bring discredit on trade unions, and the House would not be able to overlook the matter.

The trade unions concerned must be aware that to try to procure the dismissal of any employee who tries to exercise his right to return to work would be dreadful and that hon. Members on both sides of the House would deeply resent it. I hope that my hon. Friend the Under-Secretary of State will confirm that the Front Bench of my party agrees.

I shall now deal with hardship. The right hon. Member for Ardwick has complimented the trade unions on their adherence to the code of practice. In many cases they have adhered to it. However, we should not blind ourselves to the fact that, whatever their adherence might be, real hardship is being caused. Hardship is being caused in general to the consumer, who has a tainted water supply or no water supply, to the livestock farmer, who has immense difficulty in keeping his stock alive, and to industry and commerce, where the jobs and salaries of millions are being put at risk. Those are the general consequences. They amount to hardship.

A more particular matter causes me in my constituency role great concern. The village next to mine is Ancaster. Last Tuesday the water main burst. Unfortunately, that prevented water being supplied to premises called Angel Court, which happens to be a warden-controlled group of houses used exclusively by old people. Since Tuesday that group of houses inhabited by old people only has been entirely deprived of water. Local residents, under the guidance of the vicar, have arranged assistance. They have been lugging water across a busy road, where someone was killed in the latter part of last year. That is hardship of a high order. Those people are 70, 80 and older. They cannot put buckets into cisterns. They want their cup of tea. They do not want to be without water. They are old. To try to pretend that that is not hardship of a high order is to deceive the House.

I got in touch with the Anglian water authority. I shall try to persuade it and the unions involved that this is an emergency and that the mains should be connected. I am sure that what is happening in Ancaster is happening throughout the country. Why on earth should old people be injured in that way by trade union leaders? I find it deeply offensive. What is more, I do not believe that ordinary trades union members would try to justify that; my experience of ordinary trade union members in the water industry is that they are conscientious and hardworking people who would deeply regret those consequences.

I have great respect for those who work in the water industry. I have had the opportunity to go round sewage plants in my constituency. I know that hard work is being undertaken by my trade union constituents. If they were to reflect on the matter a little longer and not be led astray by some people such as the hon. Member for Wood Green, should they bother to listen to him, which I doubt, they would appreciate that the present offer is essentially reasonable. If accepted, that offer would represent an increase of 65 per cent. in the real value of their wages since April 1979, which contrasts with an increase in the RPI of 52 per cent. That is a substantial increase—however one measures it. The workers should bear in mind unemployment in the private sector, the fact that in many areas in the private sector wage settlements have been much lower, and further that what is now an offer is the result of the mediator's determination after due consideration of all the facts. I am fairly confident that if they give the matter unbiased and careful thought they will see the merit in the offer.

I should like the water workers to go back to work straight away. If they feel that they cannot accept the offer, I hope that they will feel able to accept some form of arbitration, whatever its name, which is binding on both parties. I hope that in the meantime they will withdraw their present action and return to work.

5.15 pm

Mr. Robert C. Brown (Newcastle upon Tyne, West)

I declare an interest in that I am the secretary of the General Municipal, Boilermakers and Allied Trades Union group in the House of which 16 hon. Members are members. Being a sponsored Member means that my union undertakes to pay 80 per cent. of my election expenses and an annual sum to my constituency Labour party in accordance with the agreement reached with the Labour party under the Hastings agreement.

There are many sponsored Members in the House who are not sponsored by trade unions. The sponsorships are recorded in the declaration of the Members' interests as parliamentary consultancies or as directorships. I say without fear of contradiction that I hope that each Member with such sponsorship can put his hand on his heart and say that there is nothing personal going for him. Let me use an unparliamentary expression and say that the first time that my union demands that I should say or do anything in the House I shall tell it to stuff its sponsorship. I hope that other hon. Members with the type of sponsorship to which I referred would be prepared to say the same. I doubt it.

There is no doubt that the full Whitehall propaganda machine and the frenzy among the political correspondents in Fleet street have been directed against the unions involved in the water dispute, accusing them of tearing up national agreements and refusing to go to arbitration. As those attempts at black propaganda emanate from the office of the Secretary of State for the Environment, it is necessary once again to lay before the House the facts of the dispute and the honourable role played by the unions throughout in trying to find a solution and, further, in response to what the hon. Member for Grantham (Mr. Hogg) said, the honourable role of the workers in the industry who have seen that the least possible hardship has been imposed on the general public. There is no doubt that, had those workers not taken that attitude, the strike would have bit much harder and earlier. In the area covered by the Newcastle and Gateshead water company members of my union have been breaking the strike to alleviate hardship to groups of old people such as those to whom the hon. Gentleman referred. By contrast, we have had a record of ham-fisted interference by Ministers, and astounding and, at times, tragically hilarious incompetence from the management of the National Water Council.

As long ago as September 1981 the unions first submitted their claim for a restoration of the comparable position of water workers to something approximating that of gas and electricity workers. In the 1981–82 wage settlement it was agreed that that should be referred to a special working party. The unions attended that special working party in good faith. The secretary of the employer's side insisted that the unions should quantify what they meant even before the special committee considered any factual evidence. The unions were reluctant to do so, but eventually put forward a mechanism that would link their wages to the upper quartile.

The discussions in the special working party continued, but suddenly in May they were broken off by the employers. The unions have justifiable reasons for assuming that they were broken off at the behest of Ministers. From then on, industrial relations in the industry regrettably started to go downhill. The incompetence of management and the dictation of Ministers became more and more apparent.

The situation was exacerbated in July 1982 when Ministers announced that the Government intended to abolish the National Water Council and therefore abolish the national agreement in the water industry. That is precisely what the Bill proposes. At that time the trade unions wrote to the Government via the TUC stating: the Trade Union Sides want to warn the Minister and the public that his irresponsible proposals far from improving industrial relations in what is already a very volatile situation would seriously exacerbate matters". Since Ministers determined that this year's negotiations would, in effect, be the last national negotiations in the industry there was bound to be a major problem. That was made dramatically more likely by further Government interference. The unions had submitted their claim in September. Item 1 was the reference to the comparability issue and to the upper quartile. Despite the fact that the employers discussed that in the special working party for several months, they threw up their hands in horror. They said that it was a completely new claim and that they would not give a response for a further two months, on the spurious excuse that the unions were introducing completely new matter.

It is well established that at the 11 November meeting the employers were under clear instructions from the Government to offer only 4 per cent. Only a few days earlier the employers had been telling industrial correspondents of the national press that the figure that they intended to offer would be close to the miners' settlement of 6 or 7 per cent. but the Government stepped in and stopped that. All the deliberations since then have not produced an offer from the National Water Council which, if expressed as a 12-month settlement, is as much as it was prepared to offer back in November had it not been for the Government's interference. That has not been denied by the Treasury Bench.

The trade union side responded to the 4 per cent. offer by consulting its members about the offer and about strike action. In the painstaking consultative process, my union, the GMBATU, received an overwhelming mandate from its members for rejection and for strike action. I believe that it was about 4:1. It was clear before Christmas that there would be an overwhelming rejection. The announcement on 7 January was made by all the unions and confirmed overwhelming rejection, yet there has been no move by the employers or the Government.

The trade union side was therefore forced to name the day for a strike. On the weekend before the strike was due, ACAS provided facilities for reopening negotiations. The agreement on procedure adopted under the auspices of ACAS committed the parties to negotiate in good faith on the earnings league issues. It also provided for the involvement of a mediator.

The mediator reports the offer from 4 per cent. to 7.3 per cent. over 16 months—that is, 5.5 per cent. over 12 months. There were no negotiations whatever on the earnings league issue, let alone negotiations in goad faith. Since Conservative Members keep talking about the national agreement, let them take into consideration the issue of good faith. Good faith has been singularly lacking from the employers and the Government.

The mediator's recommendations have been subject to major distortions by the Government. The mediator found in favour of the unions that a grievance existed, but recommended against the upper quartile mechanism to put it right and against other proposals by the unions on the earnings league. But he asserted that the problem would not go away and should be dealt with urgently. I repeal that the employers refused to negotiate on paragraph 8 of the report. The strike went on.

We then had the completely irresponsible intervention of the Secretary of State for Employment, whose predecessors, as my right hon. Friend the Member for Manchester, Ardwick (Mr. Kaufman) said, always sought industrial peace and harmony. The right hon. Gentleman, in contract, seeks confrontation and union bashing. It was preposterous for him to attack my union as having broken its rules on the strike. It was a lie born out of ignorance and malice. The overwhelming support that the water workers have given the strike shows their overwhelming support for the negotiators' position. To pretend that union democracy has not been observed is a gross calumny and a ludicrous absurdity. I am sorry that the right hon. Gentleman is not in his place. Does he wonder why I accuse him of behaving like an industrial skinhead? That is precisely his attitude.

Mr. Douglas Hogg

I am happy to accept that the hon Gentleman's union tried to ballot its members, but will he accept that in a number of areas, including my constituency, individual members, and whole groups of them, never received a ballot paper or any other form of consultation? Will he see whether that can be put right?

Mr. Brown

I am not prepared to accept that from the hon. Gentleman. I shall find out from officers of my union whether it is so.

Make no mistake. Any hon. Member would be laughing if he could be sure of 81 per cent. of his electorate voting in a general election and getting 60 or 70 per cent. support from that 81 per cent. The hon. Gentleman and very few of his hon. Friends can expect such support at the next general election.

After two weeks of the strike the employers appeared to move. It subsequently emerged that they had moved further than they were being allowed to by the Government. Len Hill, the chairman of the employers' side in the negotiations, announced via Robin Day, who had not been appointed as arbitrator, following an earlier exchange with Jimmy Young, that if the unions negotiated on paragraph 8 of the mediator's report—something that until then the employers had refused to do—there was, to quote Mr. Hill, at least another £5 to £10 available to them.

That statement was not only rapidly retracted by the employers' side, but the Secretary of State for the Environment waded in promptly to clarify the statement by the employers' leader. At the same time he continued to assert that the Government were not interfering and had no intention of interfering in the negotiations.

When the employers eventually returned to the negotiating table, rather than £5 to £10, they offered 86p, and to only about half the workers. It was nearly three weeks after the strike began before the employers made any offer relating to comparability or the earnings league, and then it was a miserly 86p for half the work force. It is no wonder that the trade unions consider that there have not been negotiations in good faith on the main point of their claim. The procedure agreements that Ministers constantly accuse trade unions of breaking require negotiations to be conducted in good faith.

The national agreement in the water industry and the procedure agreed via ACAS at the time of the mediators' report both refer to negotiations taking place before we move to arbitration. Apart from the minimal 86p offer, no negotiations have taken place in good faith on the unions' main case. The failure to negotiate is a breach of the spirit of the agreement. In the unions' judgment, it means that the agreement Cannot be invoked to impose compulsory and binding arbitration. In any case, it ill behoves either the Secretary of State or any other member of a Government who have announced the complete tearing up of the national agreement to cite its clauses—wrongly and mischievously in this case—against the trade union side.

Despite that provocation and failure to observe agreed procedures, the unions have sought a way out of this damaging dispute. With ACAS, they have proposed the setting up of a committee of inquiry under ACAS auspices. They have made it clear to ACAS and to the employers for several days, and now to the public, that they are committed to the resolution of the dispute through that process.

I am appalled by the inference drawn more than once by Conservative Members about the good will, honour and integrity of Eddie Newall, my union's national industrial officer, and latterly of David Basnett, the general secretary. The advantage of a committee of inquiry over enforced and ex-parte arbitration is obvious. An inquiry can look at the whole issue and decide it in principle. An arbitration award, particularly one arrived at under the agreement, would have to be set in tablets of stone and applied as though it were itself an agreement.

In calling for a committee of inquiry rather than arbitration, the unions are not attempting to avoid their responsibilities. They, more than any other party, want the committee of inquiry to produce a solution so that the strike can be called off. The strike is costing the strikers, my colleagues in the union, a lot of money. It is also costing the union a lot of money, and it will damage industrial relations in the industry for a long time. We all want a solution. The best solution, given the employees' commitment, a similar commitment from the employers and adequate term of reference, is to set up a committee of inquiry now. It need not take long; the issues are very simple. The committee of inquiry could have been set up in the middle of last week, but it was not. One may ask why. Let us set up that inquiry now so that this damaging dispute can be drawn to a close.

Several Hon. Members

rose—

Mr. Speaker

Order. Before I call anyone else, I should make it clear that it is hoped to begin the winding up speeches at 6.6 pm. Clearly not all hon. Members seeking to catch my eye will be able to be called, but much will depend on the length of speeches.

5.34 pm

Mr. David Penhaligon (Truro)

The nub of the argument concerns the quartile, and I do not see how it can be conceded. It is mathematically impossible to put into the upper quartile all those demanding to be put there. I recall an anxious mother coming to my constituency surgery in a positive rage because the headmaster of the local school had told her that her daughter was of below average intelligence. Thinking to help her, I was foolish enough to tell her that that applied to half the population. I wished that I had never said it, as I spent the next 15 minutes trying to explain what an average was. The quartile argument therefore cannot be conceded.

Some water workers, however, have a good case, because basic rates in the industry are not high. It is not for me to judge the entire pay structure of the industry, but the difference between basic rates and average pay is extraordinary. I believe that workers who have only basic hours and basic pay rates at their disposal have a case. The difference between basic and average rates is such that one wonders who is the highest paid manual worker in the water industry and how much the dear gentleman is actually paid. Simple arithmetic suggests that he must be making at least £10,000 a year. That is not a satisfactory way in which to deal with pay in such an important industry, in which, by definition, round-the-clock working arrangements are required because of the nature of the service.

The Government downgraded the original offer from 6 to 4 per cent. We had an admission of that, or as near as we ever get to an admission, from the Government today. I admire the Minister for not denying it. He did not admit it either, but one cannot have everything. That downgrading of an offer that was apparently willingly made was an unmitigated disaster and the key to many of the problems that have arisen since then. Nevertheless, those who have based all their behaviour on that experience should realise that there is a limit to which any disaster of Government decision-making can be extrapolated to other actions.

The union's refusal to accept arbitration, for example, is quite extraordinary. It is clearly laid down and I see no reason to suppose that the unions would have done other than rather well out of it. As some water workers have pointed out to me, however, the Government themselves are not always willing to go to arbitration. I argued strongly, and with more confidence than I do now, on behalf of the health workers when the Government refused arbitration on that pay claim, so the Government are not always consistent in these matters. Nevertheless, I believe that the water workers should have accepted arbitration and that their refusal to do so will prove in the long run to have been a mistake.

Mr. King

It depends on what is in the agreements. As I said, this is included in the water industry's national agreement, which is signed by the unions as well.

Mr. Penhaligon

I accept that the Minister had a strong point there—almost strong enough to make up for the fact that he probably wrecked the whole thing in the first place by reducing the offer from 6 to 4 per cent.

As for the effects of the dispute, this is a classic case of the media judging the situation according to what is happening in London. In this instance, very little is happening in London, so the media suggest that the dispute is having little effect, but that is not so in the remoter parts of the country. I estimate that more than 10 per cent. of the houses in my constituency have had their water cut off at some point in the dispute. I understand that half of my home town of Truro is currently disconnected. Malpas is disconnected. Trispen and St. Erme are disconnected, although at the best of times they have water only on a good day when the wind is blowing in the right direction. Perranporth, a substantial town with a population of 4,000, has also suffered disconnection, as has St. Dennis, so at least 10 per cent. of my constituents have suffered disconnection at some time. At present, some will be totally disconnected from the water supply. Moreover, everyone in my part of the country has been boiling water from the outset.

I understand that eight primary schools in the county, most of them at the Penzance end, are today closed. That is a considerable number. The situation in the Penzance area is intolerable. People have been putting up with conditions that amount to far more than merely waiting a few hours for water to be restored. Those living in isolated communities, virtually in what seems like the middle of the Atlantic, experience weather conditions in February that have to be witnessed to be believed. In those communities there are elderly people who have seen no water come out of a tap for several days. The conditions are intolerable. They are the worst of which I am aware in my part of the world, although not necessarily the worst in the country. It is not satisfactory that people in their 70s, 80s, and, in the odd case, in their 90s should be treated in this manner.

It seems obvious that there should be an inquiry—I detect general agreement on that in the House, with varying degrees of emphasis—the result of which should be binding on both sides, and that the unions should agree to resume work.

I have no wish to inflame the dispute, but there are arguments in the area that I represent for bringing in the troops. That is a move which all concerned wish to avoid, because it creates scars and wounds that take years to heal, but the arguments are strong for bringing in troops to those areas where water is unobtainable within three or four miles.

I hope that today's debate will have helped both sides to work off steam. I trust that within hours of this debate there will be news that an inquiry has been established and that its finding will be binding on both sides.

5.41 pm

Mr. David Model (Bedfordshire, South)

This is a dangerous dispute. Almost every hon. Member has mentioned the fact that industry, although it has not so far suffered to any great extent, is on the brink of great difficulty unless there is a speedy settlement and return to work. Such issues as that now before the House are not normally debated by hon. Members. They are transferred to ACAS. I agree that this should be the normal procedure. However, this debate is essential because widespread hardship is being caused. It is incumbent on hon. Members to suggest how a speedy resumption of work might be achieved.

The right hon. Member for Manchester, Ardwick (Mr. Kaufman)—I am sorry that he is not in his place—is aware of the dangers if the dispute continues. The right hon. Member served in a Labour Government that saw Ulster almost collapse in ruins during the Ulster workers' strike in 1974, when essential services were hard hit. The right hon. Gentleman also spent much time trying to sort out the difficulties in British Leyland. There is one looming question that I should like to put to my right hon. Friend the Secretary of State, although lie may not be able to give me an answer today. If the dispute continues, domestic consumers and industry are asking whether they will get a reduction in their water rates. Some water companies say yes and some say, no. The National Water Council has yet to give advice.

Most of the last day before the dispute started was spent arguing over the employers' increased offer. It went up twice. At the last minute, the mediator—all hon. Members share in respect for him—suggested that improved bonus and efficiency payments could provide an answer. It was then probably too late to stop the strike. It is tragic, however, that there have so far not been detailed discussions of the mediator's suggestion of improved bonus and efficiency payments. I have asked previously in the House that the mediator should be recalled quickly to help steer unions and management out of the difficulty on the basis of his recommendation that there could be improvements in bonus and efficiency payments.

In some areas local emergency services are working well. It is a complication that more than one union is involved in the dispute. I should like to ask the unions, as the weather worsens, to have urgent talks with local management to try to lift the hardship caused by the sudden drop in temperatures. Many improvements are needed in industrial relations in the water industry once this dispute is over. That improvement will be hastened if local emergency cover is improved through immediate discussions between management and unions.

The TUC should have been involved earlier in these discussions. If the dispute continues, it will be detrimental to the trade union movement as a whole. In the past, the TUC has intervened to try to achieve a settlement of disputes. Throughout industry generally, in the past few years, management and unions have co-operated excellently in grappling with the severe recession. I wish to see the Government participating in that improved climate which exists in many parts of industry. Where they are an indirect employer, the Government should seek to build on that state of affairs. If agreement is not possible through ACAS, there is an overwhelming case for early intervention by the TUC. It may be that the TUC is on the verge of intervening, as it is entitled to do under its constitution, off its own bat.

I agree with those hon. Members who have called for a committee of inquiry. I do not believe that the trade unions would have agreed to a committee of inquiry that merely established another inquiry. I do not believe that this domino effect can continue. It is my belief that the unions would abide by the findings. I agree that there is a risk. Often, in industrial relations, there is an element of risk. It is at least worth establishing the inquiry to see what happens. If the unions were unable to accept the findings, I believe that unions in other industries, which depend desperately on an uninterrupted supply of water, would raise the issue through TUC and other trade union channels to insist that the findings of the inquiry were observed.

There has been haggling for weeks over the issue of arbitration. Under section 3 of the Employment Protection Act 1975—the Act which set up ACAS—a matter is not normally sent for settlement to arbitration unless there is agreement by both sides or unless, in the opinion of the Service, there is a special reason which justifies arbitration". On an issue where public health is involved it will be necessary for unions and management, when renegotiating arbitration procedures, to examine carefully the backstop role of ACAS. Once the dispute is over, ACAS will have to use section 5 of the 1975 Act which says that it can order an inquiry into if it thinks fit … industrial relations in any particular industry". There has been more than enough misunderstanding in this industry to justify ACAS conducting such an examination under section 5.

All hon. Members are aware that the dispute is on the verge of becoming entangled in the pay claims of gas and electricity workers. It is a triple alliance with a difference. I do not fear the old triple alliance because industry has moved on and modernised. However, unless there can be an agreement for handling the problem of a triple alliance of gas, electricity and water challenging any Government, we would be facing great difficulty. It is not necessary to rewrite the Employment Protection Act or to establish a separate inquiry. It is only necessary to fulfil section 4 of the Act under which ACAS may give advice if it thinks fit, on request or otherwise". In view of the turn that the dispute has taken, ACAS should give advice to the gas, electricity and water industries to seek improvements under the paragraphs which state: (c) machinery for the negotiation of terms and conditions of employment, and for joint consultation; (d) procedures for avoiding and settling disputes and workers' grievances; and (k) payment systems, including job evaluation and equal pay. It is inevitable that these industries are coming together. This would happen whatever party formed the Government. We are moving to a stage where the new triple alliance that provides these vital services will probably start to negotiate together. The sooner that ACAS can give advice on how matters should proceed, the better.

The strike should be suspended at once. I feel that there is sufficient trade union confidence in the good offices of ACAS and in its practical experience for a solution to be found swiftly. We should not add to the distress and difficulty that exists over unemployment, as will happen if the dispute continues. It is incumbent upon hon. Members, ACAS, the employers and the unions to bring about an immediate resumption of normal working, to use the good offices of ACAS and to improve industrial relations generally in the country.

5.50 pm

Mr. Les Huckfield (Nuneaton)

I shall be brief, so I hope that the hon. Member for Bedfordshire, South (Mr. Madel) will understand if I do not take up any of his arguments.

I speak as an hon. Member who is sponsored by the Transport and General Workers Union, which has between 4,000 and 5,000 members working for the various water authorities, and I am sure that the Secretary of State for the Environment is rather remiss to be surprised that the dispute has reached the stage that it has.

It was as far back as September 1981 that talks on comparability and relativity first started, and they have been proceeding since then. It was no wonder that in the Sunday Times of 9 January this year, Sir Robert Marshall, who recently retired as chairman of the National Water Council, said: Water workers are dedicated men who feel that they have lost ground, and I think that that is right. Four per cent. is well below the going rate in pay offers. The Secretary of State should not be surprised at the attitudes currently being taken by the trade union negotiators, especially in view of the fact that in their various meetings with the employers they do not feel that any real negotiations have yet taken place.

I want to underline what was said by my hon. Friend the Member for Newcastle upon Tyne, West (Mr. Brown). The offer was first discussed in the November meeting. In the January meetings the reaction of the employers, when the trade union side started to want negotiations to get going, was immediately to want to refer those negotiations to binding arbitration. My hon. Friend was right to refer to the document of 21 January which set up the mediation—and it was mediation and not arbitration. That document was signed by the employers' side and the union side and said that the parties committed themselves to bargaining in good faith and that they would exercise their right to invoke the final stage of the procedure only in the last resort.

The union side does not yet feel that any bargaining in good faith has taken place because it believes that the employers' side has the Government permanently breathing down its neck. How can the employers bargain in good faith when they have the Secretary of State looking over their shoulders the whole time?

Let us consider the mediator's recommendation—and I say again that it was mediation and not arbitration. It is interesting to note that in both paragraphs 5 and 8 of his report he recognises that the unions have a deeply held grievance. It is not to be dismissed lightly, as one hon. Member tried to do. What is more, the mediator says in paragraph 8 that there should be talks as a matter of great urgency.

The mediator himself recognises that there is a deeply held grievance on the part of the trade unions.

Unfortunately, in a most peculiar reference, he goes on to brush aside the claim for relativity and comparability merely because of economic circumstances. It is a long time since I have seen a mediator's recommendation which dismisses a relativity claim or reference simply by referring to the prevailing economic circumstances.

Let us go on to consider the claims of the Secretary of State, some of which he repeated today. The right hon. Gentleman talks of water workers being able to earn at least £10 a week more under the present offer. What kind of water worker is the right hon. Gentleman referring to? According to figures that I have seen, if a water worker benefited by an increase of about £10 a week he would have to be a class 1 employee, he would have to have 33 per cent. bonus earnings and he would have to be working shifts, weekends and at least two hours' overtime. If the right hon. Gentleman is arguing that all water workers would get that kind of increase, I suggest that he should check his figures, because they are very misleading. Some of the water workers in my constituency whose pay slips I have seen qualify for family income supplement. I hope that the right hon. Gentleman will get some of the figures in correct proportion.

The right hon. Gentleman also claims that the Government are not intervening. They are, of course. They are proposing to wind up the National Water Council. That is intervening. They are saying that the employers cannot offer more than 4 per cent. That is intervening. They prevented the employers' latest offer. That is intervening as well.

The Secretary of State even tried to suggest last week that in some way the employers were non-political. I come from Warwickshire. I can tell the Secretary of State that Sir William Dugdale, the chairman of the employers' side, used to be the leader of the Conservatives on the Warwickshire county council.

Dr. Keith Hampson (Ripon)

Mr. Hill?

Mr. Huckfield

The chairman of the National Water Council is Sir William Dugdale, who was leader of the Tories on the Warwickshire county council. He flies his own aeroplane. When the chairman of the Severn-Trent water authority, Sir William Dugdale, buys land in Warwickshire he is usually buying it from himself as a private person. Is the right hon. Gentleman claiming that the chairman of the National Water Council is in some way non-political?

Let us look, finally, at the report of the Monopolies and Mergers Commission on the Severn-Trent water authority and at some of the extravagant expenses allowances that members and officers of that authority were claiming. Recently, for example, that employer spent £7,000 sending officers and members and their wives to an international water conference in Zurich which was nothing but a Swiss junket. That is the kind of employer that water workers in my constituency have and that is why they feel justified in standing firm for their claim.

The inquiry suggestion came from the unions. It did not come from ACAS. The unions asked for the inquiry because they wanted the inquiry to recommend a formula for resolving the dispute. They made that suggestion in good faith. I hope that even now the Secretary of State will use his influence to see that that suggestion is taken up.

5.57 pm

Mr. Den Dover (Chorley)

One matter always puzzles me in circumstances such as these. Why do the Government or the employers always have to give way and allow the unions to gain ground in disputes of this kind? We have seen wage increases put on the table. A mediator has been appointed following the agreement of both sides, and he has rejected the upper quartile argument and also a comparison with electricity and gas workers.

We have a formal agreement, signed before the chairman of ACAS, saying that there shall be binding arbitration agreed by both parties and that the findings will be accepted by both parties. However, when I asked my right hon. Friend earlier in the debate why the unions did not want binding arbitration and instead wanted a court of inquiry, I received no real answer.

We now have a suggestion from the unions that there should be a court of inquiry. However, I hope that before the court of inquiry begins we shall see a return to work. I also look for a categoric assurance from the unions that they will accept the findings of the inquiry.

The unions want upper quartile earnings and they also want to be compared with gas and electricity workers. I suggest that they should also be compared with workers engaged in similar activities in the private sector. As a civil engineer, I know the earnings of those employed by private contractors up and down the country. When we are considering comparability, we have to remember that workers in the private sector have to work hard, have to compete and have to live or die by their efforts Water workers in the public sector have their jobs for life and have no enforced redundancy.

I hope that the court of inquiry will take those factors into account, because there is complete disparity between public sector and private sector workers. I do not believe in comparability. I feel that there is the market place. There is the law of supply and demand. It is that which should apply in disputes such as the present one.

6 pm

Mr. Don Dixon (Jarrow)

I declare an interest, not only as a sponsored Member of Parliament, but as someone who pays water rates. This Government have achieved something that no other Government have achieved. They have caused the most moderate of workers to decide, by a majority of four to one, to strike.

The strike has been caused by the interference of the Secretary of State for the Environment. He reduced the employers original offer from 6 to 4 per cent. It is no good him talking about settlement by arbitration when he has upset that possibility by his interference. He compared the pay offer with the present rate of inflation. He should compare it with the rate of inflation that prevailed when negotiations began.

I do not want to repeat all that has been said by my night hon. and hon. Friends. The Minister has asked union officials to restrain their members and to ensure that emergency services are maintained. Unless the employers or the Government are prepared to negotiate in a worthwhile manner, the matter will be out of the hands of the responsible union negotiators.

After holding my surgery last Saturday, I visited the Howden water works, which are being occupied by a workers sit-in. I spoke to the workers for two hours. They are moderate men who have never been on strike in their lives. They have never broken the law. Yet they are so infuriated by the Government's interference in the negotiations that they are prepared to take the law into their own hands.

People are boiling water, using standpipes and some of the elderly are without water. The responsibility for that lies squarely with the Secretary of State for the Environment. He interfered in the strike and prevented negotiations which would probably have settled the dispute some time ago. What faith can the trade unions have in binding arbitration when the Government abolished the Clegg commission on comparability? Only one person can settle the dispute, and that is the Secretary of State for the Environment. He began the dispute by his interference. Let him accept the union's suggestion for an inquiry as soon as possible.

6.2 pm

Mr. Anthony Beaumont-Dark (Birmingham, Selly Oak)

I hope that you, Mr. Speaker, will look after the rights of Back Benchers. More than two-thirds of the debate has been taken up by Front Bench spokesmen. These debates are as much for Back Benchers to make their views known as they are for distinguished members of either Front Bench.

The hon. Member for Nuneaton (Mr. Huckfield) referred to Sir William Dugdale as a prominent Conservative. I was not aware that Mr. Len Hill was anything other than a prominent Socialist. If anything has jaundiced the negotiations, it has been the talk of £5 or £10 a week being available. It appears to have bedevilled so many of the negotiations.

This is a short debate and I shall not repeat the comments of other hon. Members. The most important clause in the national water agreement is clause 12, which was introduced to save the country from the position in which it is now placed. As my hon. Friend the Member for Grantham (Mr. Hogg) said, the elderly are cut off from water supplies. In my constituency there have been 38 burst mains. I am sure that every other hon. Member can tell similar tales.

Public services are meant to be what the name implies. They are meant to serve the public, whether they be electricity, gas or water. They are vital services for the well-being of people in their homes, and also for industry. Nobody is decrying the fact that the water, gas or electricity workers, because they provide a vital service, should be properly attended to when they put forward a wage claim. However, we must bear in mind the wide gap between the two sides. One party offered 4 per cent. while the other demanded 20 per cent. Therefore, was it not sensible for the employers immediately to suggest arbitration? Surely if the case was so good, and if we can trust ACAS and the negotiators—and good cases have been put forward for having such trust—was not it more sensible, responsible and honest to suggest arbitration?

People are going without water because we are arguing about what is arbitration and what is an inquiry. One side will not accept that the outcome of the inquiry or arbitration should be binding. The British people will not forgive either side for not quickly realising that, although they have some rights, those whom they are meant to serve have even more rights.

The dispute has not been handled well by either side. The Secretary of State was honest enough to say, when quoting the mayor of New York, that one never comes up roses from a sewerage workers dispute. No one will come out of this dispute with any credit. The employers have not done well. They have lost public support because they have put the case poorly. The unions have lost support because 3 million people who are without a job look upon those being offered 8 per cent. in addition to a safe and secure job as doing well in the present position. In all these matters—whether water, gas or electricity—we must decide on some form of compulsory arbitration when people cannot reach a sensible agreement. The people and their representatives cannot be blackmailed or find themselves suffering as a result of other people's foolish negotiations.

I hope that we can agree that clause 12 should operate and that the unions and the employers should agree that the people should be freed from the present trouble. If negotiations had been handled properly in the first place, none of us would be in this position.

6.7 pm

Mr. Denis Howell (Birmingham, Small Heath)

The dispute was born out of the distrust that was created—or the good will that was destroyed—by the continuous intervention of Government in the free bargaining of the water industry. Like all industrial disputes, at the end of the day it must be settled around the table.

I am sorry that the Secretary of State today appeared to close options when he should have created them. Even if there is a committee of inquiry, a mediator, binding arbitration or any other method of third party judgment, the findings must be accepted and implemented. That requires trust and good will. They have been systematically destroyed during the past six or seven months by the Government's actions, as I shall seek to show in some detail.

The main task of the debate is to create trust and to generate good will. But that will not happen until we understand the processes that have destroyed them. The unions believe that the Government's intention is to destroy their national bargaining position, to divide them, to carve them up and to force them into regional negotiations. Such negotiations would be far more dangerous for the industry and for Britain than central negotiations have ever been, but that is another point. The essential point is that by their every action the Government have convinced the unions that their strategy is to destroy national negotiations. There have been eight stages in the development of that strategy. The process goes back some six months. It started last July, well before the water negotiations got under way. It started when the Chancellor of the Exchequer made it perfectly clear to the chairmen of the nationalised industries that he wanted national bargaining replaced by local bargaining. That happened last July, and that set the scene for this developing strategy. It is no good the Secretary of State shaking his head. I am telling him what happened, on quite good authority. If the Secretary of State is not shaking his head in disagreement, he must be keeping himself awake.

This policy first saw the light of day in the Government's consultation paper, which came out last July. That consultation paper could not have been more damaging or more serious for industrial negotiations. I shall quote paragraphs 21 and 22. The Minister will know these quotations by heart. Paragraph 21 says: Legislation to effect the abolition of the Council will include repeal of section 26 (2) (3) and (4) of the Water Act 1973. It is not intended to replace these statutory provisions". Paragraph 22 says: Bargaining machinery established under … the Act will however cease to exist on the day appointed by the Secretary of State for the Council's functions to cease (expected to be 30 September 1983); and the collective agreements themselves will cease to operate on that day". In other words, the Government were saying directly to the unions in the consultation paper as long ago as July "We are going to end all national negotiations in this industry". On the day that the Government said that, they turned the unions' doubt into certainty. That was the beginning of the whole story.

That certainty was reinforced when the Water Bill was published in October, by the proposed abolition of the National Water Council, and the total absence of comment on the National Joint Industrial Council machinery.

It was in that setting that we came to the famous day in November. [Interruption.] I know that when the Secretary of State cannot answer a point he holds a conversation with his next-door neighbour. I know him well. I hope that the Minister will reply to what I am about to say, although of course the Secretary of State ostentatiously refuses to give way, for obvious reasons, when we seek to intervene in his speeches. On that day in November, when the water chairmen were about to start with an offer of 6 per cent.—that being the offer that they judged to be reasonable—the Secretary of State himself—he knows this; I have put this to him four times in the House, and he has never denied it—intervened by telephoning his negotiators and virtually telling them that they were not to offer a penny over 4 per cent.

Mr. King

I am sorry if I appeared discourteous to the right hon. Gentleman, but I was on another point at the time. I am glad that he has raised this matter, because it gives me an opportunity to say a word on it. I have it on the best authority that at no time did the employers intend to open their offer at 6 per cent.

Mr. Howell

The Secretary of State clearly refuses to tell the House that he did not telephone anyone, that he did not intervene, because he was relying on his chairmen to do what he knew they knew he expected them to do. That is the truth. I said that they wanted to open at 6 per cent., but that they opened at 4 per cent.

I was described by one newspaper at the time as being "very angry" when I raised the matter in the House in a private notice question in November. Indeed I was, as would anyone be who knows anything about the industrial relations of this union and the inevitable results of a serious breakdown, with the consequences that we are now seeing. That situation is a result of the Minister's monstrous intervention.

Mrs. Elaine Kellett-Bowman (Lancaster)

Alleged.

Mr. Howell

I have alleged it, and the Minister cannot deny it. I have now raised the matter five times in the House—three times at this Dispatch Box, and twice upstairs in the Committee considering the Water Bill. The matter has been clearly put to the Secretary of State, and on not one of those five occasions has he denied the truth of what I am saying.

The truth is that the Government have never attempted to convince the industry that those allegations are not true, and the Secretary of State has certainly not convinced this House. Indeed, the opposite is true. There has been continual Government intervention. When Mr. Len Hill made his famous offer of £5 to £10 as a minimum for productivity, it was the Secretary of State who demanded time on "The World at One"—all these negotiations seem to take place on "The World at One" which is a quite remarkable situation—so that the following day he could correct what Mr. Hill said on the same programme the day before. When he was asked by Mr. Brian Widlake what he was doing, was he attempting to correct, or was he interfering with the negotiations, he said "No". Mr. Widlake then asked him, "If you are not interfering, Secretary of State, what are you doing in this studio?" Game, set and match to Mr. Widlake. The Secretary of State was back to his old tricks of giving a tortuous three-minute answer so that we all forgot the original question. However, we listened very carefully to what he said.

The next step in the timetable was three months of Total indifference. Nothing happened between November and January. There has never been such a critical period of absolute indifference in industrial relations. From November until 21 January, when the mediator was appointed, there were no meaningful negotiations. It is no wonder that the unions went to the mediation feeling that the Government were interested in nothing but arbitration and had no interest in purposeful negotiations.

Throughout the long negotiations at ACAS—all 12 hours of them—after the mediator's report, there was no proper negotiation. I notice that the Secretary of State had the procedure agreement in his hand, but he could not point to a single clause that allowed him a locus in these negotiations. This is an independent nationalised industry. It does not depend on funds voted by Parliament. We should ask the chairmen of nationalised industries whether in future they should allow themselves to be shoved around in this way by Ministers who have no responsibility. I know what the Secretary of State will say. He will say that on previous occasions, when Labour was in power, there were discussions with the chairmen. Indeed there were, because then we had an open incomes policy on the table. We all knew what it was and we were all negotiating from it. Now we have a Government who profess to believe in free collective bargaining, and then proceed to have an incomes policy in the public sector alone. That is totally irresponsible.

We all hoped that the famous paragraph 8 in the mediator's report would get us off the hook in this dispute. The Secretary of State said repeatedly today that the unions would not accept the mediator's report.

The truth is that the unions accepted the mediator's report, which said that there would be additional sums for productivity deals. The unions went back to ACAS to negotiate—they thought—with the employers and the famous £5 to £10 was immediately brought up. Those productivity deals, whatever they were worth, had to be judged against what the leader of the employers' side said that they would be worth. The men, as we all know, believed that they would negotiate productivity deals worth between £5 and £10 and instead were presented with a deal worth 50p. The men are intelligent and honest workers and they thought at the end of the day that they had been sold down the river. Their negotiators could not have negotiated any deal worth 50p when they had gone in the morning thinking that they were about to receive between £5 and £10 in exchange for productivity. It was never possible to produce such productivity deals because that sort of money is not in the industry any longer. All these productivity deals have been made before in years past. This is a capital-intensive industry.

It is a completely new twist for the Government to say now that everything must go to arbitration, when, as we know, the NHS and the Civil Service workers, represented by the same unions, were refused arbitration last year. I shall add a new dimension and tell the House that two years ago, when the negotiations in the water industry reached a critical stage with 10 per cent. on offer, the Secretary of State—then the Minister of State —encouraged the employers not to go to arbitration but to up their offer so that they settled for 12.3 per cent., much to the disagreement of many regional water authorities in Britain. Those chickens are partly coming home to roost in this dispute. It is the Government who are destroying the arbitration procedures and they have no right to be lecturing the unions or anybody else about the sanctity of arbitration. The Government refused to take the dispute to arbitration when they had the opportunity and the responsibility to do so.

The Government's statutory obligation is another important aspect of the dispute that has not been mentioned at all today. Nobody can have any doubt that the Government are behaving unlawfully at present. About three months ago when we discussed the matter in the House I asked the Secretary of State what he was doing to maintain his statutory obligations and, again, he avoided the issue. This is not a new point as some hon. Members may think. Those statutory obligations are twofold. The first is to supply the British people with good wholesome water and the second is to maintain the quality of river water. Both those statutory obligations are contained in the Water Act 1973 and at least three or four EC directives. The industry has not maintained the lawful supplies that the Government have a duty to ensure. I am glad to see that this morning no less an eminent authority than Lord Denning has upheld the "Howell judgment" in this House as to the Government's lawful duty. The Government have contracted out of their obligations and they have had several months to say a word about that but have done no such thing. Quite apart from the contractual obligations, they have failed in their obligations to people who pay for their water in advance and who are not now receiving any.

At the end of the debate the important point is simply that it is in everybody's interests for the dispute to be settled by honourable means as soon as possible. That is one thing on which all hon. Members can agree. I believe that it can be settled and so does ACAS. I know that the unions believe that it can be settled and I was glad to hear this morning the spokesman from the NWC saying the same thing on the radio. The terms of reference can be agreed by ACAS immediately and the inquiry set up at once. Its findings will then be received by the NJIC. It will treat them in the responsible way that we would expect. Indeed, I know that both sides of the industry will treat the inquiry's findings in an honourable and responsible way. As one of the industrial negotiators on the union side said, "We shall not walk away from them." That is a phrase of great significance.

I started my speech by talking about the distress that has developed and about the killing off of national negotiations because it must be understood that when the unions receive the inquirt's findings they will use the national negotiating machinery. The findings will be received and improved and that is important for the unions. It is important not just that they should change the findings but that the national machinery, which they think it is the Government's strategy to destroy, will be used to receive the findings and to honour them. Therefore, I hope that when the Minister replies he will endorse the hope and belief that the inquiry should be established, the findings should be published, and they should be received and implemented by all sides.

6.26 pm

The Under-Secretary of State for the Environment (Mr. Giles Shaw)

I must confess to astonishment that the right hon. Member for Birmingham, Small Heath (Mr. Howell) should trace the genesis of the dispute to the possibility that the national wage negotiating structure should no longer be in place due to the Water Bill, which is presently passing through the House. That is tantamount to saying that 50,000 houses are without supply and that 7.5 million people are required to boil their water as a precaution and are consequently put at risk because there appears to be the view that somehow or other the future of national negotiations is the major issue.

The right hon. Gentleman knows that when the Bill was in Committee hardly any major attempt was made to deal with that point. Indeed, the clause abolishing the NWC, and with it the relevant sections of the Act, went through unopposed. There was no Division on the clause.

Mr. Denis Howell

rose—

Mr. Shaw

The right hon. Gentleman must recognise that if he believes that to be the background to the dispute we are in for a most extraordinary time. Will the right hon. Gentleman accept that no decision has yet been made on the pattern of wage negotiation to be installed after the abolition of the NWC? He knows that in good faith the chairmen have agreed to examine that point and to decide on their recommendation. Neither the right hon. Gentleman nor the Opposition should believe that the genesis of this massively important matter should be held to be in the structure of the negotiations.

I remind the House, as did my right hon. Friend the Secretary of State, of the scale of the problem that is presently before us, in terms of water supply, sewage treatment and pollution policy. We recognise that this is an extremely grave dispute. The right hon. Member for Crosby (Mrs. Williams) referred to pollution, and it is a fact that there have been one or two pollution incidents which have affected rivers. However, I wish to remind the House that about 99.8 per cent. of properties are still receiving their proper domestic supply, that there has been no serious dislocation of industry as yet, and that there has been no serious health hazard or pollution incident.

In almost every case attempts have been made to restore supplies to vital premises such as hospitals and renal units. I pay tribute to the fact that in nearly every case the trade unions have agreed that such attempts should be made. However, a twofold lesson can be drawn from that. First, the regional water authorities have been doing a fantastic job to maintain services under the most difficult conditions. Secondly, despite the enormous difficulties, it behoves everybody to try to overcome them by the speediest and most effective route.

There has been rather an orgy of hindsight today, although it is easy for hon. Members on both sides of the House to indulge in that when examining such a problem. However, I should like to take up some of the points made about where we should go from here. My hon. Friend the Member for Reading, North (Mr. Durant) raised the question of Lord Denning's remarks this morning. Far be it from me to be able to comment on the legal aspects, but I undersand that Lord Denning suggested that home owners who had been left waterless should resort to self-help and that if they had the mains repaired privately they could recover the cost from the water authority. With all respect to the former Master of the Rolls, I must warn householders that they cannot dig up highways at will and that under the Water Acts interference with equipment could be an offence. It is by no means clear that they can recover the cost of repair from the water authority, even if repairs are justified. Therefore, it would be right to show a modest amount of caution in that regard.

My hon. Friend the Member for Bedfordshire, South (Mr. Madel) asked about water rate rebates. The water authorities greatly regret the fact that there has been a disruption of supply and are making great efforts, at considerable cost, to ensure that alternative supplies of some type are made available either through standpipes or bowsers. He will also recognise that they are fully entitled, at least under the Act, to maintain their regular charges for that, just as they did during the drought of 1976.

However, I noted my hon. Friend's views and we have already asked the water industry urgently to consider in what circumstances it would be right to give rebates on domestic water charges where consumers have suffered hardship that can clearly be identified. I refer, in particular, to those who have been deprived of a mains water supply and who have to rely on standpipes and tankers that are at considerable distances. Therefore, we are taking that matter up with the National Water Council and I shall report to the House about it in due course.

The hon. Member for Wood Green (Mr. Race) attacked the water industry for the profits that it makes. He quoted £189 million, but even that is a very small return on the industry's capital assets. If it does not make an adequate return, it will be unable to afford to increase wages. The hon. Member for Newcastle upon Tyne, West (Mr. Brown) asked about the negotiation machinery.

Mr. Race

rose—

Mr. Shaw

I understand that the hon. Member for Newcastle upon Tyne, West has particular knowledge of such matters and I respect his point, but I hope that he will accept the assurance that no agreement has been reached and no proposal has yet been made about what negotiation machinery will follow the abolition of the NWC.

The hon. Member for Truro (Mr. Penhaligon) gave a robust defence of the situation, saying that there must, indeed, be room for arbitration. He gave full support to the proposition that that arbitration should be binding. That is the crucial factor. My hon. Friend the Member for Grantham (Mr. Hogg) mentioned the closed shop and the work that has to be done by private contractors. Indeed, he has raised that point before in the House. He will know that individual water authorities are making their own arrangements to consider the matter carefully. He will also know that some workers have already returned to work. It is for the employer to decide what is appropriate in each circumstance.

There can be no doubt that the debate centres on what can be done to end the dispute. My right hon. Friend the Secretary of State has made it clear that the proposal for an inquiry exists, and was made by Mr. Lowry, the chairman of ACAS, in his recent statement when he said: It is our view therefore that the dispute can now only be resolved, and further hardship avoided, by a reference either to arbitration or to some other third party, for a final decision. That is the position that the Government fully accept. Those who believe that there is an intention to intervene in ACAS's recommendations about the inquiry must be ignored. The Government are four-square behind the view that a way can be found to resolve the dispute. However, the House must understand two undoubted facts. First, given the agreed process of mediation, it is surely right to ensure that the parties that agree to the next and, we hope, final step will agree to abide by its findings. It would be absurd to encourage the setting up of machinery for a final decision if the decision as to whether it should be final rests in other hands. That must surely be so.

Mrs. Shirley Williams

rose—

Mr. Shaw

Secondly, there has suddenly been a national water strike in an industry that has never known a national dispute and we must seek a resumption of the honesty and integrity that has existed for so long between the employers and employees. This country has been extremely well served by the water authorities and water unions, which have maintained very high standards of service and supply. We cannot allow that to be put in jeopardy simply because there is an unwillingness to accept that parties that have entered into an agreement must abide by the decision that is reached.

It being three hours after the commencement of the proceedings, MR. SPEAKER interrupted the proceedings pursuant to Standing Order No. 9 (Adjournment on specific and important matter that should have urgent consideration) and the motion for the Adjournment of the House lapsed, without Question put.