HC Deb 16 June 1988 vol 135 cc560-1
7. Mr. Cran

To ask the Chancellor of the Exchequer what was the level of wage rate settlements for the last 12 months for which figures are available and what were the figures for the preceding 12 months; and what is the underlying trend.

Mr. Norman Lamont

CBI data show that settlements in manufacturing industry in the 12 months to the first quarter of this year averaged 5½ per cent., the same as in the comparable period last year. The corresponding figures for services are 6½ and 6 per cent.

Mr. Cran

Will my right lion. Friend say what advice he has given or that he is prepared to give now to companies and to work forces to make sure that wage negotiations do not lead to a deterioration in unit labour costs, which is a far more important concept than wage levels? Does he agree that managers are part of the work force and that we shall be looking to them for considerable powers of leadership to make sure that the snouts do not dig too deeply into the pig trough?

Mr. Wilson

On a point of order, Mr. Speaker. Is it in order for Conservative Members to pass around newspaper cuttings with a clear view to conducting a stunt in a few minutes' time?

Mr. Speaker

Order. A hypothetical stunt, I think.

Mr. Lamont

In response to my hon. Friend's question, my advice to firms is to remind them that the Government intend to pursue a firm anti-inflation policy. Obviously, it is possible for excessive wage or salary increases to result in people being priced out of jobs. It is the responsibility of management to ensure that companies can afford the deals that are done, and that they apply to all people within the company.

Mr. Pike

Does the Minister accept that, despite the figures for wage settlements that he has just mentioned, many workers still have to live on unacceptably low wages? Why do the Government not do something to ensure that those people get a fair share of the prosperity that the Government claim exists at present? Why do they not lend their support to the calls for a national minimum wage? Is it not time that we had one?

Mr. Lamont

I do not agree with the hon. Gentleman. I think that a national minimum wage would mean fewer jobs available for the low paid and would be counter-productive. I would take much more seriously the hon. Gentleman's concern about the lower paid if the record of the Labour party in terms of the lower paid had been better, but many of the lower paid have done far better under this Government and have had substantial increases in their take-home pay.

Mr. John Townend

To what extent has the increase in public sector pay been covered by increases in productivity? As a higher proportion of private sector pay is covered by productivity gains, particularly in manufacturing industry, does my right hon. Friend agree that this year inflationary pressures will come more from the public sector than from the private sector?

Mr. Lamont

The Government have it very much in mind that pay settlements in the public sector must reflect what is affordable. My hon. Friend may know that in 1986–87, the last year for which figures are available, earnings in the public sector rose by less than in the private sector. My hon. Friend is right to refer to the dramatic increase in productivity, because that meant that the private sector could afford more generous wage settlements. We have been very lucky with the dramatic increase in productivity in manufacturing industry.