Wages Councils (Hansard, 7 July 1992)

§ 6. Mrs. Fyfe
To ask the Secretary of State for Employment what are her plans concerning the future of wages councils.

§ Mr. Michael Forsyth
The Government have made it clear on many occasions that the wages councils have no permanent place in the labour market.

§ Mrs. Fyfe
Are not the Government in fact planning to rid themselves entirely of wages councils? How does the Minister reconcile the withdrawal of such little protection as is afforded by wages councils with the fantastic salaries that the heads of the formerly nationalised industries award themselves? How do those two things combine to achieve a country at ease with itself?

§ Mr. Forsyth
The Government's position is clear. Wages should be negotiated between employers and employees, based on productivity, profitability and the firm's ability to provide the wages which are the subject of the negotiation. They should not be set centrally by the Government or Government bodies. The hon. Lady will recall that in the recent general election the Opposition proposed a national wage. They were soundly defeated because most people recognised that it would cost between 1 million and 2 million jobs.

§ Mr. Peter Bottomley
Will my hon. Friend confirm that we have not had a national wage? Will he say how many wages councils there are? Has employment increased or fallen in those industries that have given up wages councils? Has he done a survey of small employers, who often find that it is of some help to have wages set by wages councils because it provides a way of finding a just level of pay for their employees'?

§ Mr. Forsyth
I shall try to deal with all five questions. There are 26 wages councils. My hon. Friend is right to point to the falling numbers of people employed in many of the wages council industries. Some of them have names which reflect the turn of the century, such as the ostrich, fancy feather and artificial flower wages council. The flax and hemp wages council and others have disappeared. My hon. Friend is right to stress that, for the rest of this century and for the 21st century, the way forward is for wages to be negotiated according to employers' ability to pay, and reflecting local circumstances.

§ Mr. Malcolm Bruce
Does the Minister accept that in such areas employers frequently ask that wages councils should be maintained, to protect them from unfair competition as well as to protect their work forces? Would not the Government's determination to retain the right for Britain to have its own labour market conditions ring a little more true to the unemployed and those with poor conditions if there were any evidence that the Government were prepared to do anything to guarantee the rights of the low paid?

§ Mr. Forsyth
The Government's record on the low paid is second to none—[Interruption.] We have taken measures through the social security system to maintain 169 the income coming into the family home. If the hon. Gentleman cares to study the facts on wages councils, he will find that many people covered by them are second wage earners. Unemployment is the greatest cause of poverty, and statutory minimum wages destroy jobs and put people on the dole.

§ Mr. Patrick Thompson
Is my hon. Friend aware that increasing numbers of employers are becoming more concerned about the operations of the wages councils? Will he also confirm that, in so far as the councils set minimum wage levels, their operations often lead to the destruction of jobs—a fact which seems to have escaped Opposition Members before and since the election?

§ Mr. Forsyth
I agree with my hon. Friend. He will recall that when we removed young people from the scope of the wages councils. Opposition Members predicted that it would result in falling wage levels. On the contrary, it has not and there is no evidence to sustain such a view. I repeat the point that I have tried to get across to Opposition Members—there is no point in giving people a minimum wage if the consequence is that they have no jobs.

§ Mr. Blair
Will the Minister answer the question put by my hon. Friend the Member for Glasgow, Maryhill (Mrs. Fyfe)? How does he justify abandoning all forms of protection against poverty pay for the 2.5 million people who work in pubs, hotels and shops throughout the country—there are thousands in every constituency—who will lose hundreds of pounds a year and more if wages councils go? How does he justify that, when the chairmen of the utilities that the Government privatised are paying themselves telephone-figure salaries out of monopoly profits while he and his hon. Friends do nothing?

§ Mr. Forsyth
The hon. Gentleman is talking poppycock. He knows perfectly well that about two thirds of the people covered by wages councils are paid more than the minimum wage set by those councils. That is an expensive, bureaucratic anachronism, which the Government have made clear has no permanent place in the labour market.