§ 6.14 p.m.
§ Debate resumed.
THE EARL OF SELKIRK
My Lords, I hope your Lordships will not think it discourteous if I speak reasonably briefly this evening in view of the long list of speakers which we have. I listened with interest to the noble Lord, Lord Kahn. Indeed, it is the second time I have heard him in a week, and I feel sure we should all like to listen to him whenever he cares to talk to us. He has elicited an interesting fact from the Government, and that is we are likely to be recalled at some time, I take it, in September, in order to pass the resolutions under this White Paper. I hope we shall be told reasonably soon when that is likely to take place so that we may know.
I will not differ from the noble Lord, Lord Kahn—the Government have shown courage in producing this Bill. I only wish it had been preceded by a little more foresight, in which case so much 1371 courage would not have become necessary, and indeed if that had been the case we certainly should not have had this unprecedented form of dealing with legislation in which this important Bill will not be discussed on Second Reading in either House. It is perhaps a consolation to show the immense flexibility of our Constitution that we are able to do something of this character; it equally shows that it is possible to drive a horse and carriage through our Constitution if any Government wish to do so with a certain amount of resolution.
I came down to this House thinking we were in an extremely serious situation, but after listening to the noble Lord, Lord Shepherd, I really rather wondered where we stood. He never used the word "serious"; he rather spoke of this as a pretty routine piece of Socialist legislation and he assumed that it had a good deal of public support. I do not know whether this is true or not, but if it is there is really little else at the moment to be said. I noticed that the noble Lord, Lord Shepherd, spoke about the voluntary method, but the noble Lord, Lord Citrine, seems to have no doubt that compulsion is essential. I may be wrong in this, and I say it with hesitation, but I rather feel that a great number of people in this country are very mystified as to what is happening.
As most of us know, we have been under considerable economic difficulties for a couple of years and very few people have in fact felt the pressure at all. In a number of cases they are now going to feel a good deal of hardship, dependent on the circumstances. Many people have made arrangements resulting from adjustment of salaries, wages and other matters and they will feel this fairly keenly. I think a great many will feel that the Government could have made a bigger contribution themselves. The Chancellor of the Exchequer has at his disposal about £10,000 million and of that he is contributing, I believe, about 1.5 per cent.
I have a certain sympathy with what the noble Lord, Lord Citrine, said, that a good deal of the cut and thrust of debate, which of course is the commonplace and indeed the foundation on which Parliament conducts its affairs, does not really cut a great deal of ice outside this 1372 House, and I do not think much consolation is to be gained by mutual recrimination between Parties at the present time. I could wish the Government had a little more humility in what they are presenting. I am aware, of course, that it is extremely difficult to have humility when there is any form of Party political criticism.
I should like to ask one or two questions on how this Bill is expected to work. Frankly, I wish there was more evidence of acceptance of the importance of maintaining the value of money. I remember that many years ago the late Lord Beveridge called inflation "a highway robbery"; and we often hear thrown across the House comments on the dangers of cutting the social services. Of course, where you inflate the currency you do cut the social services. That is exactly what happens and it is no good pretending that anything else occurs. The noble Lord, Lord Kahn, mentioned the question of wages drift. As far as I can see, that is completely outside the scope of this Bill. I can see no way in which in fact this will be dealt with. Curiously enough, Mr. Cousins referred to it yesterday when he explained the extreme extent of wage drift and the great influence which it can have.
Can we be told, roughly, what the arrangements under this Bill will cost? Are we going to have price fixers all round the country? How many additional staff are going to be necessary in order to deal with this? Also, I am concerned with whether the Government may try to "pass the buck"(if I may use that expression) too much to the Prices and Incomes Board. I believe that Board has done a good job within its limits. I believe it can be a valuable adjuster but not a darn; it can be a weir to direct the water but not to stop it. If the Government try to pass too much to it I think it could destroy something which could be of very real value. I notice that apparently almost any Ministers can make a reference to the Prices and Incomes Board; in some cases they have to be associated with the Secretary of State. This suggests to me a tremendous number of possible sources of reference.
I would raise one further point. I have said something about the individual measures, and I have asked for information about how they will work. Can we have some assurance that this will not 1373 all happen again? Can we have some assurance that in point of fact we have reached a stage where we shall not go back on what has happened? I believe this is a watershed, and I believe things will never quite be the same as they were before July 20. I should like to have some recognition from the Government that that is so. I believe we suffer terribly in this country from an extraordinary insularity, thinking that we are the only country that suffers from economic problems. I have been in quite a number of countries, and hardly one is not suffering from some severe economic difficulty of one kind or another. We get so het up; we think the rest of the world is normal and we are the only abnormal one. We are not. Our problems are repeated all over the world.
A great deal of the language we are talking to-day about development of modern technology is very old. You can see these problems referred to by the Prince Consort; you can see them referred to by A. J. Balfour many years ago. This is a continuing process, and I believe we shall go on steadily until the end of the century.
I should like to know whether or not the Government believe we must have a balance in our affairs, a balance of money, a balance of material, a balance of manpower. I remember the first time I heard the words "full employment". At that time I was Commissioner for the Special Areas in Scotland. After finishing my annual report I went to Germany, and said, "You have no unemployment. Why haven't you?" I saw Dr. Schacht and I put that question to him. He said, "We have full employment", and I asked, "How?" He replied, "Because we have re-armed", and he went on to say, "If we go on re-arming we shall have inflation". That was the first time I had run into that problem. I believe that that, in a different way, is very much what we are suffering from now.
If I may take words used by the noble Earl, Lord Attlee, some sixteen years ago, he said very simply, "We are trying to do too much". I believe, with respect, that all Governments since the war have been trying to do too much. This is no sort of moral condemnation, because there are masses of things to do 1374 —housing, roads, schools, hospitals—and there will be many more things to do. But we cannot do more than we have the finance and materials and manpower to do, and if we try to do more we shall run into difficulties. In the debate last week the noble Earl, Lord Longford, said:There is no question of abandoning our conviction that you can plan constructive growth without destructive inflation.I hope that does not mean that the noble Earl is going straight back to all the policies we have had in the last 21 months. I do really hope that in that time the noble Earl will have learned something of the problems which he had to face. I hope this sincerely, because I do not think we may have a chance of even getting out of the difficulties as we had during that period.
§ THE EARL OF LONGFORD
If I may interrupt the noble Earl, I do not know whether he heard the whole of my speech.
§ THE EARL OF LONGFORD
I indicated that growth was no novelty. If we go back to Lord Balfour, I seem to remember he said, "The march of science should make a steady increase in the standard of life possible without any special ingenuity on the part of politicians"—something to that effect.
THE EARL OF SELKIRK
I am sure that is true. I made the point that there is nothing new, that this is a continuing process. What I am hoping is that the noble Earl will have learned something; the events of the last 21 months cannot be repeated and he has to learn something from that period. I was expressing the fear that when he said he was not abandoning his conviction he was merely going over the same ground again. I hope not. I believe many of us—not only on one side—will have to reassess our prejudices, our views, our desires. I hope the Government will be willing to listen to outsiders. The noble Earl spoke very warmly of Lord Robbin's speech last week. The noble Lord made a speech twelve months ago which was not very substantially different from the one he made last week. I did not notice that the Government took a great deal of notice of what he said then. I hope the Government will realise that the 1375 realities of economics cannot be disregarded.
We have in this country a quality of personnel and a quality of youth that is outstanding. What they want, if I may quote words frequently associated with the late President Kennedy, is a frontier to work to, an opportunity to show their quality. Quite frankly they show it in funny ways at the present time. I am afraid crime is one. But there is pop singing, association football; all these things are admirable, and they do them well. I think the young people of high quality we have to-day want an opening in which they can usefully and properly fulfil their ambitions and fulfil a useful service.
§ 6.28 p.m.
§ BARONESS WOOTTON OF ABINGER
My Lords, I suppose it is inevitable that those of us who are sufficiently old to remember the crisis of 1931, and even perhaps the crisis of 1925, should be very strongly imbued with the feeling, "I have been here before". History never repeats itself exactly, but even if it does not repeat itself exactly there are, I think, still some lessons that we might learn from past experience. The first lesson that I should like to draw from the experience of those earlier crises is that subsequent comment on the measures that were taken to defeat them has on the whole been pretty critical subsequent comment on the measures of 1925 and of 1931 has, I think, done a great deal to induce a sense of proportion about the economic crises of those periods, which those who lived through them did not feel at the time.
Here I must express one great regret that I have, and that is that that distinguished economist the late Lord Keynes is not now living among us in the prime of life, for there is no one whose advice I would more gladly place at the disposal of Her Majesty's Government in present circumstances than that of the late Lord Keynes. But we hope that his mantel has descended on some of his successors. I say this because I think we need to keep a sense of proportion, and because, although there may be immediate great stresses, the underlying situation is not nearly as bad as it is painted. I think it is a little indicative of the state of mind of part of the Press, and perhaps 1376 to some extent the Party opposite, that unable to laugh off figures which are not too discouraging, they are reduced to saying the figures are not true.
I was greatly surprised to hear one of the speakers from the Benches opposite say, or imply, that belief in the Press came before belief in the official figures published by Her Majesty's Government. There is another lesson I think we can learn from the crisis of 1931. We have travelled a long way in thirty years. We are now making a tremendous hoo-ha and fuss because there is going to be a six months' freeze on incomes. In 1931 there was no question of a freeze on incomes; the only issue there was how much the cut which was made in incomes was to be. This is a most significant difference between the two situations. This situation, in which everybody now assumes that it is part of the order of nature that incomes should rise automatically year by year, come what may, is really quite a modern invention. I served in a university post for 17 years during which time I received one increment in salary. I do not know any contemporary lecturer who can say the same.
One consequence of this difference is, I think, most important. It is that because there are not any actual wage cuts and because there is not anything up to one million unemployed, it is extremely difficult to bring home to the ordinary people that any crisis exists at all. I beg Her Majesty's Government to give a great deal of thought to how they will present to the public the need to make the sacrifices which are now being demanded of them. It is not much use quoting balance-of-payments figures, because these have no meaning at all to the great bulk of the population. A much simpler and more direct exposition of what would happen if we do not take these measures is urgently called for. Nobody, I think, has ever tried to convey to the public at large what would be the consequences if these, or similar, measures were not enacted. I beg Her Majesty's Government to give a great deal more thought than has been given yet to the question of how this matter is to be presented to the ordinary public.
The noble Lord, Lord Erroll of Hale, will, I am sure, approve that I have got my priorities right, because I am going to address myself solely to the question 1377 of incomes and not to the question of prices. We are now faced with a six months' standstill, freeze, pay pause, stop—similar measures have had all these names in the past. It is said that it is to be applicable to all incomes. One of the difficulties about an incomes policy, and one which I think has never received sufficiently explicit attention, is that while it is fairly easy to put a stop or a freeze on incomes that are negotiated, or incomes that are consciously fixed, it is much more difficult to control incomes that are residual, and profit incomes are residual and never consciously fixed. I think a great deal more thought has to be put into the ways in which a wage policy can really be extended, to be in the full sense of the word an incomes policy, so that it covers incomes from profits and other forms of capital as well as incomes that are earned.
Here I am a little concerned at the tone of the various snowflakes in the snowstorm of White Papers and White Bills with which we have been inundated. I notice that in what I should like to call the "skinny White Paper", the one about the standstill, the language is much more moderate in relation to the control of dividends than it is in relation to the control of wages. All that is said is that the Government's fiscal measures should prevent a growth in aggregate profits, and that it is not expected (as though this was an autonomous event) that there will be any general increase in dividends. No restraints are there mentioned and there is no reference to incomes other than earned incomes in Part IV of the White Bill.
I am also a little puzzled—I hope that when the noble Earl comes to reply he will be able to clarify this for me—by Clause 12(7) of the White Bill, which describes how the capital of a company is to be arrived at for the purpose of relating the amount of the dividend to the share capital of the company. One of the difficulties of trying to control profit incomes is that while you can stop increases in dividends, if a company is doing well the only result is that the dividends that are not paid out go into the reserves, and the capital of the company may shortly be increased by bonus issues. It is not clear to me from Clause 12(7) whether it will not be possible for a company, by increasing its capital by 1378 bonus issues, to increase the amount which it may distribute in dividend without taking part in the "early warning" system.
That relates to this extremely difficult problem, both short term and long term, of how you are going to bring unearned incomes into the picture along with earned incomes. Now may I turn to the problem of earned incomes. I think it is regrettable that we are going to move into an age of an incomes and a wages policy by way of a sudden crisis and standstill. I agree with the noble Lord, Lord Kahn, that this is not the happiest introduction to the establishment of an incomes policy; but that is part of the price which we pay for not having established our incomes policy at an earlier stage. The immediate standstill with which we are faced is, of course, a makeshift. I think we all frankly see that it is bound to be inequitable. Anything that freezes the immediate situation is bound to be inequitable, because there are always some injustices which were in process of being put right. This is the price that we pay for a sudden emergency. We can defend it only as an emergency measure; but I hope that, in spite of this rather inauspicious introduction, we are now coming to the stage where we have an incomes policy that has come to stay, and that this is going to be the long-term and valuable result of the agonising period through which we are now passing.
I have never understood—I hope my trade union friends will forgive me if I say this—how in an economy which is largely planned, which is controlled in a great many details, in an economy in which you cannot put up a garden shed or a garage without official approval, still this vital question of what everybody is to earn is left to what I can only call the process of smash and grab. I have sometimes thought that when we outgrew believing in the divine right of Kings, we came to believe instead in the divine right of collective bargaining, or, if not in the divine right of collective bargaining, in the divine rightness of every collective bargaining.
I hope that now we are getting to the point at which we may outgrow that rather childish belief as well, because in the determination of wages even arbitrators in the past have proceeded on lines 1379 quite different from those which are used for arbitrations in other contexts. In other contexts, arbitrations or judicial decisions consist in applying known principles to contested cases. In the case of the determination of wages there have never been any known principles, and arbitrators have had to go on the plan of trying to find out from the two sides what is, so to speak, the minimum level of agreement. I believe that this is the traditional Chinese way of settling disputes. But it is not the way in which disputes are settled in the law courts or any judicial decisions are made in this country. In the determination of wage questions, arbitrators have acted rather like judges would act if they were required to dispense justice without the benefit of Statute or Case Law.
We have been creeping recently towards an incomes and wages policy. Eleven years ago, when I published a book urging that these topics should be tossed into the arena of political discussion, and that the decisions which emerged should be the responsibility of Government, I was led to believe that, in referring to an incomes or wages policy, I was using dirty words. Therefore, it is a great satisfaction that these words have now been scrubbed so clean that they can be printed on the titles of White Papers, both by the Party opposite and by the present Government. We have come a long way. It is a great satisfaction to see that the shadowy form of the public interest, which has always been present at collective bargains, is at last being clothed with flesh and blood. But deciding to have a policy is not the same thing as deciding what that policy is to be.
The next phase, during what we hope will be a breathing pause, is to decide what that policy is to be. The White Paper does not take us very far. The White Paper says that the criteria which are to be applied are to be much more stringent than those in the earlier White Paper. It also says that the norm is to be zero, instead of 3 to 3½per cent. These more stringent criteria are not disclosed, and are to be discussed with the two sides of industry. Your Lordships may agree that the criteria which are contained in the White Paper cover practically all the exceptions we are likely 1380 to want to make in any agreed norm, whether a norm of zero, or 3 or 5 per cent., or whatever it may be. As your Lordships know, there are four criteria. The first relates to productivity; the second to directing labour, the distribution of labour, in the national interest; the third to cases where a wage or salary is too low for a reasonable standard of living; and the fourth to cases where there is widespread recognition that people are being paid much less than others for comparable work.
What will happen is not that we shall have new criteria, but that the emphasis given to each of these four will differ. Presumably, much greater emphasis is now likely to be laid upon the second, which is the criterion that where it is essential in the national interest to secure a change in the distribution of manpower, a pay increase would be both necessary and effective to this purpose. I would say that this is the most difficult of all to accomplish. It is not too difficult to know whether people are worse paid than others in comparable work; nor is it difficult to know whether they are paid so little that their standards are disgracefully low; nor is it difficult to measure whether they are or are not increasing productivity. But it is extremely difficult to know whether changes in wage rates will effectively re-distribute labour. I hope that a great deal of arduous work will be put into examining how that second criterion can be effectively applied. Presumably, this is the criterion which will be given the greatest emphasis, but which in existing negotiations and wage fixing usually gets the scantest attention, and in which the statistical work is the least advanced.
I hope that we are arriving at a situation when certain things will happen. First of all, that any decisions about wages and salaries, whether negotiated freely without interference by Government or whether subject to statutory control, will be stated explicitly in terms of explicitly formulated criteria, when we shall know what we are doing because we give reasons for it and relate it to criteria which will have been expressly formulated by Government. I think that the Prices and Incomes Board has taken us a long way in that direction, and deserves a great deal of praise. For the first time the Prices and Incomes Board 1381 has referred in its decisions to the criteria contained in the White Paper. Although it has not always made perfectly clear how its decisions are related to these criteria, it has at least given them a weight which no wage-fixing body has attained.
I hope, too, that we are coming to a period when the sanctity of relativities will be destroyed. One of the things which have bedevilled the fixing of wages and salaries in the community is the belief that everybody must always bear the same relationship to everybody else as he did last year or the year before. These relativities are not rational—and how well we know it! They are the legacy of history, and are formed largely by three different influences. First of all, they are formed by the pull of demand and supply as recognised by economists; secondly, they are the result of variations in the bargaining strength of different organisations; and, thirdly, they are the result of social valuations, often unexpressed, but implicit in our way of life. If anybody doubts the influence of these social valuations, let him ask himself whether, if the fear of death was less lively, and the expectation of immortality more widely accepted, the relative salaries of the medical profession and the clergy would be what they are. I see no reason why a civilised and intelligent community should not be able deliberately to match the growth of its incomes to the pace of its economic development; nor why it should not be able to shape the pattern of income distribution to suit social and economic priorities which it has openly and deliberately accepted. I should have thought that the hard history of the last fifty years makes it absolutely imperative that that task should be undertaken.
§ 6.48 p.m.
§ VISCOUNT YOUNGER OF LECKIE
My Lords, I am glad to find that the noble Lord, Lord Byers, in his forceful manner, has already said much of what I had intended to say about incomes policy. He put his finger on a fundamental weakness in the standstill proposals of the Government which they should consider most seriously. The excessive increase in incomes which is referred to is not the only symptom of the comparative failure of successive in- 1382 comes policies. At least as important is the failure of productivity to rise as it was expected to do. I would maintain that this failure is partly a natural consequence of the way in which we have tried to apply our incomes policy.
As long ago as March, 1964, I expressed the opinion in this House that the use of what was then called the guiding-light as a yardstick for individual wage or price awards was entirely inappropriate. The guiding-light is an average figure, a suitable tool for planners, for economists, and for the Government, but it is entirely unsuitable as a starting point for individual wage negotiations, for the reason that it tends to preserve the complete rigidity of the pattern of prices and incomes, which is the last thing we want.
Let me put it this way. Let us suppose that in the last two years everybody had received an annual increase in income of 3½per cent.—neither more nor less. I suggest to your Lordships that we should still have had an inflationary situation, because we should have done nothing, or nothing effective, to transfer resources from the unproductive to the productive industries, by making the productive industries more attractive to capital and labour than the unproductive ones. So that, so far as I am concerned, the reduction of the "norm" from 3½ per cent. to zero leaves me unmoved, and I hope that we shall not have another "norm".
But your Lordships will see that paragraph 2 of the White Paper calls fora breathing space of twelve months in which productivity can catch up with the excessive increases in incomes which have been taking place.> I think we should ask ourselves: what prospect is there of this catching up taking place, when all we have in fact done is to exchange a rigid "norm" of 31 per cent. for a rigid "norm" of zero? I suggest that the chances of productivity catching up during the standstill, as it is at present designed, are also zero.
The proposals in the White Paper are drastic and, of course, inevitably, unpopular. I agree with the noble Lord, Lord Byers, and others, that we must make use of this opportunity not only to solve the immediate problem, but to try to get our incomes policy on to a new line which has more prospects of success than those 1383 which we have been following. I think that the Government should make a virtue of necessity and should try to make absolutely sure that, however difficult or unpopular the new criteria may be, this is the time to bring them in, when unpopular measures are already in train. I think that so far as the present standstill is concerned, something ought to be put into this Bill to do more to encourage productivity agreements. Of course, productivity agreements are wide-ranging, of a tremendous variety, but I think we have some experience of them now. There are one or two individual cases which noble Lords know about; and, also, the decisions of the Prices and Incomes Board are very well worth studying, and many of the principles involved are very clearly stated there.
Is it not the case that if we are to get any increase in productivity during this standstill period we must try to give some incentive? I suggest that we want, as I think the noble Lord, Lord Byers, said, not merely to permit applications for income increases on grounds of productivity—that is to say, wage increases which can be absorbed by productivity and are therefore not inflationary—but actively to encourage them. If we do that, then I think that industries and firms which have a potential for expansion will be able to push ahead with their plans and will be able to attract the additional labour and other resources which they require. It is true, of course, that those firms and industries which cannot meet that criterion, cannot absorb their incomes increases, must put up with the standstill. But that is the only way that I can see by which we have a hope of getting increased productivity without inflation.
It should be remembered that so far as the individual is concerned, he has several different ways by which he can better his position. As I think the noble Baroness, Lady Wootton of Abinger, indicated, it is not altogether reasonable to expect to sit in the same job year after year, doing it neither worse nor better, and to get an annual wage increase year after year for doing it. If we are going to make a success of this, the man who wants to get on must be prepared either to qualify himself for promotion or to move to a better-paid job, or to take part in a productivity agreement. These productivity 1384 agreements can, of course, be initiated from either side of industry, and if they were sufficiently well-publicised as the only way of getting wages up I think it might be surprising how many proposals came forward from the shop floor, through the shop stewards, and so to agreement with the management. But so long as a standstill in the stagnant industries—as one might call them—or the contracting industries is accompanied by a similar standstill in the growth industries, I do not think we shall get any increase in productivity which is worth while.
Of course, there are many implications of trying to encourage these productivity agreements. One of them is that it is not likely, in my opinion, that national negotiations will very often be able to produce agreements of this sort, for the simple reason that except perhaps in certain very homogeneous industries they will be carrying a great many passengers in their productivity agreements who cannot live up to the productivity requirements. It must he a necessary consequence of any policy of this sort that productivity agreements may well be on a single there are very few firms in this country where some form of productivity agreement, however modest, is not a possible way of improving the earnings of their employees.
There are obvious exceptions to this procedure. One cannot cope with the Government service and with other industries and services where productivity is not an appropriate yardstick. But that, I suppose, is a feature of every incomes policy, and I imagine that that will have to be dealt with, so long as an incomes policy lasts, by a special section of the Prices and Incomes Board to try to keep them in step.
Another incidental implication of productivity agreements on a smaller scale is that they would, I hope, considerably reduce wage drift, because, although it probably has many causes, I think wage drift is quite often caused because nationally-negotiated agreements covering a huge mass of heterogeneous firms inevitably tend to be agreed on the capacity of the average firm, or even of the weakest firm. Therefore they fail to 1385 take advantage of the productivity in the most progressive firms, and those firms naturally make their own "side-bets" with their employees. If productivity agreements could be designed on this fairly narrow basis of homogeneous firms, I think some, at least, of that wage drift would be elimited.
So, my Lords, I would make a plea to the Government to put some urgency into this matter of productivity agreements. I do not think we should wait six month, or any particular number of months. I think that encouragement should be given to everyone in industry to start thinking about this now, and to bring forward their proposals just has soon as they can. It is quite true that they will have to be audited: one cannot have people just promising productivity and then failing to produce it, which has quite often happened. One might even go the lengths of having a trial period, during which the arrangements were put in force but the incomes increase was not. You must make sure you are going to get your productivity. But I think the experience of the Prices and Incomes Board has shown us what a lot can be done and what a lot of case law can be built up to help you in reaching suitable criteria for this kind of operation.
Another reason why I think it is urgent to get started on this line is that not only are these agreements needed in themselves, but I hope they will provide a powerful incentive, both to managements and to workers, to improve the efficiency of their firms and to accept the redeployment of labour. These incentives are at present, I think, sadly lacking, but if they are called for now, and are called for with enthusiasm, I am sure they will sweeten the pill which is offered to us at present, and which offers us little more than a prospect of unrelieved stagnation.
§ 7.2 p.m.
§ LORD WILLIAMSON
My Lords, I think that in this debate we are rather at an advantage, in that only recently have we concluded a two-day debate on the economic situation, during which many noble Lords who spoke quite unavoidably made reference to this question of the prices and incomes policy. I was able to listen to many of the noble Lords 1386 who took part in that debate, and I have also had the opportunity of reading the contributions of those I was unable to hear. As a result, I have become more convinced of the necessity for a prices and incomes policy if we are to have any possibility at all of stemming the pressure of inflation and of emerging successfully from the grave difficulties which now confront us.
During the short time that I have been privileged to be a Member of your Lordships'House—some four years—I have listened to a number of economic debates and have taken part in some of them myself, and never has it been disputed during those debates that, as a nation, we have been, as we are now, living above our income, sustained by borrowed resources, and that sooner or later we should be called upon to discharge our creditors and pay them off. That time has now arrived. In fact, it arrived some time ago, but so far our friends have bailed us out from time to time. But I am not quite sure that our kind friends have been acting in our best interests. I am sure they have been doing it from very good motives, but at some time or other we have got to face up to it ourselves.
All this, my Lords, is very humiliating. It seems to me that we have been on our knees with the begging bowl long enough—too long—and that the time has now come to end it, or, at least, to make a serious attempt to do so. I believe that, whatever measures may be necessary, no matter how uncomfortable, they should be taken, and that so long as they are fair and binding equitably on all sections of the population the country will respond. What the country is crying out for is leadership, courageous leadership—and that is what it has not had until now. With all the hullabaloo now going on in some quarters, one would imagine that we had been saddled with heavy and weighty sacrifices. The fact is that we are not being asked to make any sacrifices at all. All that the Government's policy is demanding of us is to carry on for some six or twelve months at our present levels of income, with prices, dividends and other forms of income pegged also. What hardship is there in that? We are not being asked to accept any reduction in our standards at all. Reductions would probably be justified, having regard to 1387 the situation we are in, but we are not being asked to accept any reduction at all. We are simply being asked to help, as we all have the right and duty to do, in order to get the economy on an even keel, to repay our creditors and get the country out of pawn. What a wonderful thing it would be if, after all these years of mess and muddle, it succeeded!
My Lords, I fear there is a climate of opinion in this country that believes in these matters of economic and financial difficulties. It is the Government's responsibility, whichever Government they may be, to solve the problems without too much disturbance of the even tenor of our ways. We must, not be disturbed. What these proposals will certainly do—and rightly so—is bring home to people that they themselves have social responsibilities and must behave accordingly. Furthermore, they will help to foster a realisation and acceptance of the fact that we are all in this together. I cannot understand the mentality that would put the nation at risk of complete financial collapse for the sake of an extra few miserable shillings a week, whether it be wages, salaries or dividends. There is one caveat, however, that I would enter, and it is this. I plead for the case of those who are lowly paid, and who ought to be getting a better deal than they are getting now in the matter of wages. I trust that the Minister here will make it known in the proper quarters that these lowly-paid workers ought to be the first to be released from the standstill—and at the earliest possible date.
I am sorry that the noble Lord, Lord Citrine, is not here, but he said that he had never been able to find out what a lowly-paid worker was. I shall try to tell the House, quite briefly. A lowly-paid worker is one of those who, in certain industries, is doing a very good job indeed but who is held down to the ordinary basic wage of something like £11 or £12 a week, out of which he has to pay his insurances and meet his other stoppages; so that, in the case of a married man with a family, he will probably take home something like £9 10s. or so, without any possibility of working overtime or of earning a bonus. There are a lot of those, and those are what I call lower-paid workers.
§ LORD WILLIAMSON
I do not know how to define an underpaid worker: I imagine he is one who is not getting the wages to which he is entitled. The simple fact is that, apart from the precarious position of the lower-paid, no one will suffer at all in the limited period of this six months of pegged prices and incomes. Surely the exercise of patience is a very small price to pay when we consider the real dangers that beset us and which may be closer than we think. I consider myself a democrat. I have always preferred—and do now prefer—the voluntary method to the compulsory; I have said so many times outside and inside this House. But until such time as democratic society is peopled by angels, there must be certain compulsions to curb the activities of the anti-social, the greedy and selfish; and, in times of serious difficulty, as now, this doctrine is essential to ensure the will of democratic Government.
My Lords, the proposed compulsions on wages and salaries may be new in this country, but they are not new in other parts of the world. I would remind my vociferous Left-wing friends that while these proposals are for a limited period of standstill, the so-called peoples' democracies have been operating them for years—and with severe penalties for those who dare oppose them. No one likes the exercise of these disciplines, but if there must be a temporary standstill on incomes—and I believe there should be—and if it cannot be successfully operated by voluntary means, then the Government have no option but to apply pressure.
Again, I am sorry that the noble Lord, Lord Erroll of Hale, is not in the House. I was amazed to hear him say (and I made a note of it) in the first part of his speech, when he was taking up some point with my noble friend Lord Shepherd, that in peace we should have the freedom to do what we like in accordance with our wishes and ambitions. For people to go around doing precisely what 1389 they liked was, I thought, the way to lose freedom, not to retain it. This is the basis of the argument in this House today. We are asking people to accept, and act upon, these restraints with a sense of responsibility in all matters.
I have had some fifty years' experience of trade unionism as a member of one of our greatest trade unions, which I was privileged for some years to lead. I always found that the ordinary trade union member was not so ill-informed and unknowledgeable as he is sometimes made out to be. He is an intelligent person. He knows in his heart that he cannot go on receiving a substantial increase every year without providing the means for it by increased production and increased productivity. There is a simple choice to be made by every wage-earner and salaried employee, and, if it comes to that, by every professional person. It is: "Do I prefer to stay where I am on my present income for six or twelve months, as my contribution towards rectifying our national difficulty; or do I prefer that the policy should continue of every man for himself, with the weakest to the wall, and thus to risk disaster to all the magnificent standards built up over the years, to risk massive unemployment and all its social consequences?" We had better sound the warning strong and loud; because this could happen. It has been said often enough, and clearly enough, that the world does not owe us a living any more. In my view the policy of every man for himself would be playing into the hands of those who believe that a good stiff dose of unemployment is the only sure corrective.
I will not get into an argument with my noble friend Lady Wootton of Abinger; but it is not so bad as "smash and grab". We have a good system of relationship in our joint industrial councils and in other joint negotiating bodies; but, as I have already said, it may be that the system we have—and which has not worked badly until recently—may have to be amended or altered. But it is not very long ago, in the 1930s, when work-people waited for two, three or four years for an increase—and then all they got was a farthing, or a halfpenny, or, at best, a penny an hour. Of course, we know that the corrective in those days was the two 1390 million unemployed—the figure at one stage reached, I think, nearly three million. We do not want to see those days again; I say that to all noble Lords opposite.
Some of those who denounce the Government's proposals are submitting as an alternative solution reliance on increasing productivity: in other words, as I understand it, that every body should be allowed to carry on substantially increasing their incomes, and set about improving productivity to pay for it. This, to me, does not seem very realistic, especially at this time of crisis. The more sensible policy seems to be to strive for improvement in productivity and to adjust wages and salaries according to the rate of progress. In any case, to rely on improving productivity is to rely on a short-term solution to our present difficulties.
It should be borne in mind also that the need for increased productivity is not something new. This was realised immediately after the Second World War when, in 1948, noble Lords will remember there was formed the Anglo-American Joint Council, of which I had the privilege to be a member and which did great work at that time in interchange 'visits to the United States. And noble Lords will remember that we sent from this country to the United States 60 joint teams from different industries. They came back and wrote independent reports for circulation throughout their industries. On the termination of the Anglo-American Council in 1952 there was formed the British Productivity Council, of which I was President in its second year, 1953–54, and over which the late Lord Bennett of Edgbaston presided in the following year. Lord Byers has just left the Chamber. He mentioned this matter. It has been going on for fourteen years. I wanted to say to my noble friend Lord Byers—if I may address him so—that if the British Productivity Council has not been 100 per cent. successful, it was because a lot of employers and trade unions were paying lip service to productivity and not giving it the backing that they ought to have done.
My Lords, I come to my concluding remarks. We all agree that increased productivity is essential to our progressive prosperity in these Islands 1391 but, as the noble Lord, Lord Citrine, said, it is not something which can happen overnight. It is a long-term matter and depends on many necessary readjustments in our methods of working, not least the abandonment of out-dated and restrictive practices in management, in professions and on the factory floor which impede our prosperity.
The powers now being sought in the Prices and Incomes Bill are temporary, and this is made perfectly clear in the White Paper, Cmnd 3073. If the provisions of the Bill are brought into operation no one knows whether they will succeed fully or partially, or not at all. All I would say in conclusion is that what we do know is that failure could result in our paying a very heavy price.
§ 7.21 p.m.
§ VISCOUNT SIMON
My Lords, we are discussing a very heavy matter against a sombre background, and I think that all your Lordships will agree this is not an occasion for carping criticism, nor, if I may say so, for Party polemics. I should like to ask one question of the noble Earl who is to reply, of a somewhat political nature. It is: Do the Government believe that the economic situation of the country to-day is worse than it was when they first came to power 22 months ago? The noble Earl will appreciate that by asking that question from these Benches I am not implying in the least that, if the answer is, "Yes", the Government are accepting the blame; for, in my view, the management of the economy in an industrial society such as ours is far too complex a matter for any Government by themselves to control; and, indeed, there are many other forces at work all the time.
Successive Oppositions of either Party are much too apt to blame Governments when the economic climate turns sour, just as Governments of every colour are accustomed to claim the credit for achievements which, very often, are achievements made in spite of Governments rather than with their help. It is only the Government which can really assess the seriousness of the position. I take the view, expressed so movingly by the noble Lord, Lord Citrine, that when a Government of this known philosophy find themselves compelled to introduce 1392 an incomes and prices standstill we must assume—I hope that the Government will be able to confirm this—that the situation is indeed very serious and that they believe this to be the right policy at the moment to see us through the next six or twelve months.
I agree with the noble Lord, Lord Byers, that of course this is not a permanent policy, and cannot be, and that the way back to prosperity is through expansion and increased productivity, about which many noble Lords have said some very sensible things. But at the moment I take it that our situation is such that it is essential—and I will accept the view of the Government on this that it is essential—to apply an incomes and prices standstill. If that is so, I am sure that your Lordships will agree it is essential that it should succeed.
I pass over the curious remarks attributed to the Chancellor of the Exchequer the other day because I cannot believe either that he said what was attributed to him or, if he did, that he meant it. The White Paper makes clear that the Government regard this as an essential step and it must succeed if we are to get out of our immediate difficulties. In that case I agree with the noble Lord, Lord Kahn, that the Government should not shrink from imposing compulsion right away. Obviously they fear that the line may be breached, because they are providing themselves with reserve powers; but once the line is breached in one or two places, will it be possible to hold it even with compulsory powers? I should have thought the Government would be well advised—this would be my plea to them—when they get a Bill of this nature on the Statute Book forthwith to seek Orders in Council to bring parts II and IV into operation so that, at any rate, the machinery is there.
There is one other aspect about this matter to which I should like to call attention, because it has not been mentioned before. I think that one noble Lord said it was a curious kind of voluntary plan which said, "You will voluntarily do this—or else". But I want to think of the position of the people responsible for industrial negotiations under these conditions; the trade union leaders at different levels, on the one hand, and management at different levels, on the other.
1393 May I invite your Lordships to cast your minds back to the time of the last war and food rationing? At that time the common enemy was much easier to see than is the common enemy of our economic progress. The harsh necessity of having very little food was evident to all, yet no one would have thought of going to people and saying, "We are not going to introduce compulsion; your ration is two loaves of bread a week and that is all you are expected to eat". Yet, my Lords, that would have been much easier to put across than this, because not only was the objective much clearer in the minds of everyone, but people were asked only to restrict themselves. Here the great difficulty is that those who have to conduct these negotiations are conducting negotiations which will restrict the position of other people. I suggest that it is only a cynic who believes that it is easier to restrict someone else than to restrict oneself. So I feel, on those grounds also, that it would be far better were this policy made compulsory at an early date.
There is only one other matter to which I wish to refer. It is in the White Paper Prices and Incomes Standstill, paragraph 20. When a line is drawn, obviously there will be hard cases on each side, or rather, on the wrong side of it, and I think that all one can ask anybody to do is to draw the line in a logical position so that people in roughly the same circumstances receive roughly the same treatment. I am extremely doubtful about the wisdom—I would almost say the possibility—of a provision that agreements to increase pay which have been reached before July 20 and which are operative before July 20 are, nevertheless, to be subjected to the standstill if they have not in fact been implemented.
May I suggest a very simple case to your Lordships? Let us suppose that there is a firm which, quite properly, in the month of June negotiated with its staff and agreed to a 3 per cent. increase across the board for salaried and wages staffs operative from July. The wages staff will have received the increase for two weeks before July 20 and therefore they are in. But the salaried staff, because they do not get their increase until the end of July, will be out. My Lords, that seems to me utterly indefensible. 1394 There could be another case of two similar firms who have made what is perhaps a rather more complicated agreement and the details have to be worked out before the pay packets can be made up. One firm has a computer and is able to do this in two or three days and therefore the increases are made effective and actually paid from, let us say, July 5 or 6. The other firm, which does not possess a computer, has these things worked out by clerks, and two or three of the clerks are on holiday. The long and short of the matter is that the details have not been worked out, and so the increase has not been paid. Again, this seems to be an indefensible distinction and the line has been drawn in the wrong place.
I am not quite clear whether the Prices and Incomes Standstill Paper is not in itself embodied in what the noble Lord, Lord Erroll of Hale, called the White Bill, but if the principles are to be applied perhaps this will constitute Schedule 2. I suggest that the Government should look at this and see whether it is not making a tremendous amount of trouble for what I am sure will be a relatively small matter—though, if I am correctly informed, it affects doctors' pay. My Lords, I feel sure that these steps would not have been taken unless the Government had felt them to be necessary, and we all ought to try to stand behind them in making this an effective policy, but it would be easier if anomalies of this kind could first be undone.
§ 7.31 p.m.
§ LORD WINDLESHAM
My Lords, the Command Paper on Prices and Incomes Standstill which was referred to by the Government Chief Whip and others is in fact the fourth to be introduced on the same subject in the last 18 months between February, 1965, and July, 1966. The decline and fall of the Government's hopes are rather poignantly recalled by the titles of these four White Papers. The first, your Lordships may recall, was published in February 1965, Machinery of Prices and Incomes Policy (Cmnd. 2577). This was concerned with the establishment of a Prices and Incomes Board. Then in April, 1965, there was Prices and Incomes Policy (Cmnd. 2639) which set out considerations for the guidance of employers, trade union leaders, 1395 manufacturers and also for the Prices and Incomes Board. That advice was based on the objectives contained in the Joint Statement of Intent on Prices, Productivity and Incomes. As the noble Lord, Lord Byers, remarked earlier in the debate, how far away that emphasis on productivity seems to-day! The third White Paper in November, 1965, showed a hardening—Prices and Incomes Policy: an "Early Warning" System (Cmnd. 2808). Then finally—desperately, last week came Prices and Incomes Standstill (Cmnd. 3073).
These four statements, all presented to Parliament by that unhappy figure, the First Secretary of State and Secretary of State for Economic Affairs, provide a sad commentary on the Government's economic management capabilities. As an example of snowballing of powers it is almost unique. I do not know whether it is more or less charitable to the Government to suggest that this was deliberate, or that there was no intention to escalate, but the situation just got out of their control.
Even if scrutiny is limited to prices and incomes, the Government's performance over the last three weeks has been extraordinary. Let me recap some of the highlights. On July 14, the Prime Minister announced that in addition to a rise in bank rate to 7 per cent., further measures would have to be taken, but he declined to say what those measures would be. On July 16 he went to Moscow, and The Times was surely right to comment, as it did in its leader on July 30:When the history of these summer days of 1966 comes to be written nothing will seem stranger than the fact that at a time of such acute domestic crisis the Prime Minister should have spent the better part of a week out of the country on irrelevant visits".On July 19 Mr. Wilson returned, and the following day, July 20, he made his Statement on the economic crisis and the measures he proposed to meet it. What did he say in his Statement about prices and incomes, a Statement which was repeated in this House by the noble Earl, the Leader of the House? He said:The Government are now calling for a six-month standstill on wages, salaries and other types of income, followed by a further six months of severe restraint, and for a similar standstill on prices."—[OFFICIAL REPORT, Vol. 276 (No. 40), col. 453; 20/7/66.]1396 Then followed two paragraphs dealing with definite commitments which had already been entered into and the implementation of which should be deferred for six months, and a reference to other types of money income, including dividends.
The Prime Minister went on to say:The Government similarly call for a twelve-month standstill on prices of all goods and services, except to the limited extent that increases are necessitated by increases in the cost of imported materials, by seasonal factors or by the action of the Government, for example, through increased taxation.It is not our intention to introduce elaborate statutory controls over incomes and prices. This is a situation in which the Government look with confidence to everyone concerned with these matters to act in accordance with the public interest."—[col. 454.]What did this mean? Noble Lords might be forgiven for thinking that on an occasion of such importance the Prime Minister would have gone out of his way to make his policy clear, and would have had spokesmen standing by to clarify and explain, in reply to queries addressed to the Department of Economic Affairs, just what the Government had in mind. Not a tall. Even after the closest study of the oblique wording of the Statement, nobody could tell whether the price and income controls were to be voluntary or statutory. The Times reported on its news pages on July 21 that:Mr. Wilson's description of the incomes standstill. and the 12 month standstill on prices and services that will accompany it, raised more questions that it answered".That was the comment of an experienced and impartial observer trying to understand and report what the Statement meant.
The most widely held view was that the wage and price freeze was to be voluntary. No less responsible a figure than Mr. George Woodcock, General Secretary of the T.U.C., when that same evening the following question was put to him:Did you get the impression that this is going to be an entirely voluntary wage freeze or is it going to be incorporated into some sort of Bill?"replied:It must be voluntary. It can't he anything but voluntary. Indeed, not only must it be voluntary but to get off the ground at all, it must be very strongly supported by the 1397 trade union movement and indeed by everybody. You can't legislate in this field."It is true there was a reference in the Prime Minister's Statement of July 20 to strengthening the provisions of the Prices and Incomes Bill, which at the start was confined to the early warning machinery, but that reference hardly suggested any sweeping new legislation, particularly in view of the Prime Minister's assurance, which the noble Earl the Leader of the House will recall as he read the Statement out in your Lordships' House, that:It is not our"—the Government's—intention to introduce elaborate statutory controls over incomes and prices."—[OFFICIAL REPORT, Vol. 276 (No. 40), col. 454; 20/7/661So, until last Friday, July 29, the Prime Minister having left the country once again in the intervening period, there was confusion as to what was intended.
Then came the fourth of the White Papers, the "Standstill" Paper, and it was found that, after all, despite what had been said in the Statement of July 20, the Government were taking powers which have been described as "sweeping and dictatorial". Some of your Lordships may wonder if the words "sweeping and dictatorial" are not too harsh, but they are chosen with care, not from those old bogeys, the Tory Press and the Tory commentators, but from what is—what shall I say?—the least hostile newspaper towards the Labour Party and the Labour Government. The Daily Mirror used those words on its front page on July 30. It seems to me that it is no exaggeration to use the word "dictatorial" of measures which override both the Common Law, for whatever reason, and set aside normal constitutional practice. These measures set aside contracts and other binding obligations; they require the shelving of wages arbitration awards and settlements; and they are incorporated in a new addition to a Bill that has already been given its Second Reading and is in Standing Committee in another place.
Who can doubt, who can seriously argue, that these measures do not go beyond what was contained in the Bill as debated on Second Reading in another place? In consequence, your Lordships are left debating, not a Bill (and the Government Chief Whip has not even suggested that it is a Bill), but a phoney Bill, a text, a constitutional oddity which 1398 has been issued by the Government so that the Members of your Lordships' House can have some idea of what it is that has been inserted into the Bill that is already in Standing Committee in another place. This devious and unorthodox procedure is treating Parliament with contempt. The Government are here, in both Houses, to answer for their actions and to explain their reasons.
§ THE EARL OF LONGFORD
My Lords, may I intervene at this point? The noble Lord is making an interesting speech from his own Front Bench. I understood that this procedure was agreed, although maybe reluctantly, through the usual channels. If it has been agreed through the usual channels, I hardly think it is right to say that this procedure treats the House with contempt.
§ THE EARL OF LONGFORD
The noble Lord used the word "contempt". I say that it is an agreed procedure. Perhaps the noble Lord the Leader of the Opposition will say whether it was agreed.
§ LORD CARRINGTON
My Lords, if I may intervene, indeed it was, because we had no option but to agree it. But the whole of the Government's management of their affairs in the last ten days has meant that this House has been treated with contempt.
§ LORD WINDLESHAM
The same point was made (and perhaps we could look at it now) in one of a series of leaders in The Times over the last few weeks, which have been thoughtful and profound. What The Times leader-writer said on August 1 was:The rights of the official Opposition and of private Members of Parliament are conferred for good reason: to protect the liberties of the people from arbitrary government and to allow the varied interests in the state to be heard. They are not less but more relevant when a Government is seeking exceptional powers in an atmosphere of crisis.That was the comment, not of one of my noble friends in this House, or my honourable friends in another place, but of a Times leader. I should have thought it was an issue of principle, and one which might well be commented on in a leader of this sort.
1399 I have one final point which is at the root of all the Government's problems. It is something which I believe will destroy their prices and incomes policy and, in the end, destroy the Government itself. I refer to the Government's proven lack of ability to carry the people with them. There is not only, as some Labour supporters would like to imagine, a loss of confidence on the part of those mythical and much caricatured figures, the so-called capitalist bankers on the Continent of Europe. It is conscientious people in all Parties who have lost confidence in the Government. It is not just because of the incidence of the economic crisis, but because of its unnecessary severity, and, above all, the Government's admitted un-preparedness to meet it. And the Government have admitted this, or certain members of the Government have. For instance, Mr. Crossman. the Minister of Housing and Local Government, in a broadcast interview on July 20, said as follows:I think it is perfectly fair to say. as you always can after a crisis: 'Look: you should have seen this a long time earlier.' This did take us—let us be honest—by surprise in the last ten days.The lack of ability to inspire confidence was demonstrated vividly after the Prime Minister's broadcast to the nation on July 20. He was immediately followed by a number of other public men, including the Leader of the Liberal Party, the General Secretary of the Trades Union Congress, the general secretary of a trade union, and a number of others. None of the three I have mentioned, Mr. Grimond, Mr. Woodcock or the trade union general secretary had any vested interest in opposing what the Prime Minister had asked for. I have left out the fact that there was also an Opposition spokesman present, because one might expect him to oppose what the Government had to say. But nevertheless all these three coming on immediately after the Prime Minister, expressed reservations, if not outright rejection: two out of the three expressed rejection, and one had severe reservations. Since then, we read that the TUC are unhappy about the incomes policy and that it may be defeated at the Trades Union Congress this autumn; and consequently, if it is, in all probability (such are the ways of the Labour Party Confer- 1400 ence) it is likely to be defeated by the Labour Party itself in October.
So, in conclusion, I would argue that this is hardly the stuff out of which calls for national unity are made. The plain fact is that the Government have not been able to command support. It is lack of confidence in the Government which has perpetuated the crisis, just as it was the Government's mishandling that deepened it. If this Government cannot gain the support and confidence of many more people and interests in the summer months, then it will soon be their duty to give way to a Government that can.
§ 7.47 p.m.
§ BARONESS GAITSKELL
My Lords, I speak as a non-economist and with great diffidence on this subject, and I can only approach the measures set out in this Motion in a general way—not in the expert and brilliant way in which my noble friend Lady Wootton of Abinger approached it. The two-day economic debate was a curtain-raiser to this Motion. This standstill is the first step towards implementing measures to halt the recent steep economic dive in sterling, for reasons both beyond and within our control. The situation needed quick and urgent action and this is embodied in these measures.
Having a respect for your Lordships' House, I have been trying to learn what everybody wants to know about money. In recent weeks the welter of words that has poured out in the Press and in Hansard has been an education in itself, and has added up to a kind of "crammer" course, though the curricula in "crammer" establishments do not usually include as much sermonising as we have been subjected to. But I have found the quantity of information, opinion and advice instructive as well as confusing—but essential before considering this White Paper. Incidentally, I think I learned more from the brilliant speech of my noble friend Lady Wootton of Abinger than from anything else.
It seems that currency problems are as indivisible to-day as are many other things in this international world. For better or worse, the judgment of European bankers affects our lives. They are not always right, and we are not always wrong. Even in the overemotional climate of the last few weeks, this has been voiced. This thing called 1401 confidence is a wondrous thing—not purely scientific, not purely psychological, not even divinely inspired. We just have to play by the rules of Zurich. My noble friend Lord Snow, in his remarkable speech in the economic debate, stressed the financial handicap that a Socialist Government always encountered on taking office, whatever they do, and whatever measures they take. Conservatives always regard themselves, somehow, as the chosen people for managing money. I do not quite see why this is. They have not in this debate, nor even in the debate in the other place, done more than specify aims. We all want more production; we all want growth; we all want fewer restrictive practices. We really all do want these things. But I had not noticed, not even in the last speech by the noble Lord, Lord Windlesham, that any practical measures were put forward to achieve this. All these considerations of finance are highly complicated and difficult to communicate to the people, and I am in complete agreement with my noble friend Lady Wootton of Abinger when she says that not enough has been done about this, though as Alan Watkins, the political commentator in the Spectator, has said, putting our economic difficulties in excessively simple and pious terms is highly misleading.
It is against the backcloth of the dramatic events of the last few weeks that we are presented with the dramatic measures set out in this paper of amendments to the Prices and Incomes Bill. We have asked for a standstill and many noble Lords have spoken as if we were being asked to forfeit all our wages for a year. We are asked to make this standstill compulsory. I am not very clear how this is to be done. However, there are measures to make it statutory.
I should like briefly to consider the main arguments for putting the standstill into effect, and then the speed with which it was presented in Parliament and which has been an affront both to the other place and to this Chamber. Parliament is jealous of its constitutional rights, and the attacks on procedure by the Government are valid on political grounds but not on economic grounds at this moment. If the crisis is as severe as everyone makes out—and many noble Lords have spoken in this way—then something 1402 ought to be done immediately and quickly.
Imagine, my Lords, if these amendments took their leisurely course through Parliament, line by line, clause by clause, made more leisurely by the natural thirst of the Opposition for attack. Imagine if Members of Parliament had gone off on their holidays—is this the kind of behaviour that would impress the international banking community? Would this have helped to restore confidence in sterling? No, my Lords. Those bankers wanted a sign from us that we meant business. These amendments are urgent. They are more equitable than the measures taken by Mr. Selwyn Lloyd during his pay pause because they do not discriminate against employees in the public sector only; they are overall measures and they are temporary, for one year only, and the restrictions are there to help recovery and to achieve greater efficiency.
They have been attacked in our own Party because they will increase unemployment. I may say that any measures which proclaim this must always be abhorrent in the Labour Party, but we cannot have it both ways in our arguments. If, as many noble Lords have suggested, we have over-full employment, then I should hope that the real unemployment will not be as severe as the deflationary measures suggest. I have noticed that many of us talk, as I have said, as if we had been asked to forfeit our wages for a whole year, whereas in fact we are asked to stay as we are, and it is only the lower paid workers who have any excuse to grumble. Again, we cannot have it both ways in the argument. If we keep on telling ourselves that we are paying ourselves too much and living on borrowed money—and this has been the theme song throughout all the economic discussions—then a standstill for a year is not so great a sacrifice and is both salutary and necessary.
I believe we should not exaggerate the immediate sacrifice we are asked to make. Personally, I am slightly repelled by the comparison between our economic battles of 1966 and the hardships and sacrifices of 1940. I think this has an adverse effect on confidence. It is not "blood, sweat and tears" that are called for; only a bit more sweat.
1403 It is in this context that I was somewhat disappointed with the end of the speech of the noble Lord, Lord Reay, in the economic debate, and I am sorry he is not here at the moment. I followed his speeches with interest, particularly because he is young and he said he was speaking for youth. He said he expected two things to happen as a result of the way in which the Government were managing their economic affairs—from the mismanagement of our economic affairs, as he put it. I completely discount his suggestion that unconstitutional groups will begin to arise and flourish in this country as a result, but the noble Lord, Lord Reay, also threatened mass emigration by young skilled workers, young executives and technicians; men with capital and men without capital—a comprehensive list of the better paid people in this country.
Now, my Lords, I believe that one of the most precious freedoms in a democracy is the freedom to get out and leave the country, as I am never tired of telling my Soviet colleagues when I am at the United Nations. But this kind of threat of emigration uttered when things are not going too well in a country leads me to plagiarise a line from Lovelace, and I do not mean this in the least personally to the noble Lord, Lord Reay, himself:I could not love thee, dear so much, loved I not money more".Finally, when those dazzling productivity figures are dangled before my eyes, showing Japan, the United States of America, West Germany, all ahead of us, I feel sad that we are bottom of the league among highly industrial nations. But, my Lords, there is a quality of life in this country which is unequalled and which will endure, so long as we can put our house in order and so long as the long-term financial difficulties are solved—a quality of life that is more tolerant and civilised than any in the world. For our size and capacity, we contribute more to the stability of the world than does any other country, even the United States of America.
We are very overstretched, and I commend to your Lordships the column in to-day's edition of the Guardian by Leonard Beaton on this subject. We need to look at our defence expenditure 1404 in depth, from every aspect, historic and economic. Meanwhile, these measures that we are discussing to-day, set out in the amendments to the Prices and Incomes Bill, though harsh and uncomfortable, can be borne with realism and stoicism. I believe that the prices and incomes policy is a right one, though it will take longer to be made to work properly than the Government at first envisaged. I think it is a really worthwhile measure, and the standstill completely relevant to our difficulties to-day.
§ 7.59 p.m.
§ LORD REDMAYNE
My Lords, if I may say so, and with respect, I think that the noble Baroness, Lady Gaitskell, was over-modest in opening her speech. The one thing I quarrel with is that she used the phrase, "playing along with the rules of Zurich". It seems to me that all we play along with are the rules of a capitalist society, and so long as we remain a capitalist society we must abide by those rules. And the firstrule—and this applies both to nations and to people—is that we pay our way.
It has seemed to me that certain noble Lords to-night have been a little oversensitive about criticisms of a Government in trouble, perhaps notably the noble Lord, Lord Citrine (and I am sorry he is not in his place), who seemed to take great offence that members of the Opposition Party in another place should be so outspoken in their criticism. Certain noble Lords who were with me in another place in the last five years of Conservative Government will recollect that we were not without our troubles too, and will remember the fiendish glee with which the Opposition turned the knives in our wounds. But, if I may say so, for all the troubles that we had, we never at anytime sought so to bulldoze Parliament as this Government have done in these last few days in both Houses. What is interesting about this to me, as a student of politics, is that sooner or later in the life of any Government it becomes accident-prone. What is significant about the present situation is that this Government are suffering from that unhappy state, not after thirteen years, but after little more than thirteen months.
One point of detail about this White Paper is this. As I understand it, 1405 Schedule 2 to what is in fact the Bill reproduces (I think I am right in this) the White Paper, Cmnd. 2639 of April, 1965; and in fact that White Paper and Schedule 2 contain certain criteria as to price control, but make no reference at all to the fact that it has been said more recently that Government policy is that those who are in control of prices can take account of increases in taxation. So far as I can see, that does not appear in the White Paper in any place, and it seems to me that, when we come to our very abridged further stages of this Bill, this point must be attended to by the Government, and I hope very much that the noble Earl who is to wind up will to-night say there is no change in policy at all so far as that point is concerned.
§ LORD SHEPHERD
My Lords, if I may intervene, perhaps I might help the House. The statement the Prime Minister made was that, in regard to prices, increased costs that might arise from Government legislation and the like obviously would be a point to take into account where prices were raised.
§ LORD REDMAYNE
I thank the noble Lord. I am sure he will agree, if that is so—and I do not doubt that it is—we must have it written in, or at least we must not have something written in which does not say that, which is negative in its approach.
It seems to me, and I am very young in your Lordships' House, that these days, last week and this week and next week, the more we debate the more we debate the same thing, and I therefore do not apologise at all for referring back to the admirable speech of the noble Lord, Lord Beeching, on Monday. It was a speech of a man who had suffered much from these ills that beset us. In his previous appointment with the Railways Board he had sought to do a job which desperately needed to be done—and I hope there is really no argument about that anywhere—and it needed to be done not only in that field but in fact throughout the economy. I think he could not possibly have made that speech on Monday while he was still in that job. Therefore, we can be thankful—although I will not now go into the reason why this occurs—that he is free to make it. My only comment on it is that the noble Lord, possibly with great wisdom, because it 1406 might well have enabled him to get across his point more surely without criticism, pitched his norm on unemployment, which was 2 per cent., too low. I think he was probably wise to do it because he is a voice to whom people listen, but only will they listen if that voice is moderately spoken. I myself would say that possibly 2½ per cent., 2¾per cent., 3 per cent., is a more practicable figure.
He was careful to say, as any of us would say—I do ask the noble Lord to believe it—that he was just as well aware as anybody else of the horrors, and I mean horrors, of being unemployed for any great length of time. The noble Baroness, Lady Gaitskell, said that unemployment was abhorrent to the Labour Party. Of course it is to all of us, and I trust we shall not quarrel on that point. But the noble Lord, Lord Beeching, painted most vividly the much worse ills that follow from the debilitating effects of a permanent state of over-employment. As I say, I make no apology for referring back to that speech, because I believe it contained one of the greater wisdoms which everyone in this country, both individually and collectively, ought to take account of.
It is quite natural that this debate, as so many debates in this field, should centre on the strains and stresses of the economy as a whole, the need to get wages and production in balance as a whole in the economy. But I think it is wise to reflect, however, that this imbalance is not only a national matter; it is in fact precisely reflected in the personal habits of living of our people. Over-spending, or over-trading as it is called in commerce, has in fact become something of a national vice. If I may say so, this is shown very clearly by the experiences of those Londoners who have moved to overspill areas. In those areas they have no difficulty in finding work at wages comparable with the official London rates, but of course lessened by those premiums and bonuses over the official rates which have arisen from the extreme scarcity of labour in the London area itself. Let me say that those emigrés enjoy their surroundings and are particularly appreciative of the beneficial effect which those surroundings have on their children. But, nevertheless, coming from the London area, where take-home 1407 pay is very high indeed, they are used to a way of living which demands a minimum take-home pay of £20 a week.
I do not know whether your Lordships know this, but if you inquire into these matters in these overspill areas you will find that in countless cases men are working 50, 60, 70, even 90 hours a week to maintain the standards which they and their wives and their local Joneses demand. Yet, though they work these long hours—and in a funny sense, of course, they are sweated labour; sweated not by their employers but by their own ambitions—many will freely admit quietly if you talk to them that the pace at which they work during those hours would in fact be a disgrace in a better ordered society. There is no reflection in that on the men themselves.
I dislike people who say that the British working man is idle, but there are certain factors in our economic state to-day which make him idle. They are not of themselves lazy-minded men, but the fact is that the pressures of their social life, the way in which they must manage their own personal family economy, forces them into this habit of working over-long hours and of enduring those hours at the slowest pace which they can get away with, because that is what they are forced to do. The noble Lord, Lord Williamson, as I understand him, would say, "What hardship is there in that?" The hardships, of course, of the comparatively young in this particularly economic world are much more vital and vivid than the hardships of those of us who, fortunately, are old.
I heard my noble friend Lord Eccles make a most attractive plea the other day for a new radicalism. This was on the first day of the Economic Debate when, as I say, we were debating the same subject that we are to debate now for days. I would say only this, and again I make no apology for referring to that speech: without any question at all, that radicalism must infect all of us, through every level of our society, until we have learned to cut our coats more closely to the cloth of our productive capacity. Strangely enough, if only this was done as a national effort, I do not believe that the individual sacrifices 1408 need be so great, provided, as I say, the urge towards this new approach to the way in which we live was universal.
I wish to take up one point which was made by the noble Lord, Lord Shepherd, and reinforced by the noble Lord, Lord Williamson. Both noble Lords said that one of the advantages of this pay freeze would be that the lower paid worker would catch up. I think this is about the worst economic illusion with which we have been cursed in the last twenty years. It is vitally important, whether we have a wage freeze, or a stop, or a pause, or whether in due course, as one prays, the thing will open up again, that the differentials which skills command should still stay in the same proportion in the wage structure. What the lower paid need to catch up with, as, indeed, what the highly paid need to catch up with, are the inflated standards of life which have been forced on them. Whereas I, as a Conservative, am prepared to take some blame for that, I must say that this Government in two years is more blameworthy than was the Conservative Party in thirteen years.
The noble Lord, Lord Shepherd, made a peroration which was a clarion call to the nation. I am sorry that the noble Baroness, Lady Wootton of Abinger, is not in her place. She referred back to 1931, and said that the question then was not one of a standstill in earnings, but of how much the cut would be. I would say only this (and I think I should have said it as honestly if I had been on the Government side as I do now on the Opposition side), that in these circumstances, in this stringent situation, it is a great pity that Ministers did not set an example by accepting a cut in their own salaries. This is not a cheap point. Let us recollect that the salaries of Ministers and Members of Parliament are fixed only quite occasionally. When they are increased, they are increased quite generously at that point of time, because we who are in politics all know that it will be many years before they are increased again. Therefore, it is perfectly reasonable that, only two years after this increase, Ministers should have laid their heads on the block and accepted a cut as an example to the nation.
When this Government falls, and fall it will, I firmly believe—and this is not 1409 politics—that the solution to our problems lies in a striking reduction of direct taxation (or, shall I say, of taxation both central and local, because the local rate has just as big a part to play in this as direct taxation). I admit that, if we were going to do that, we should most certainly have to cut back some large parts of central and local expenditure.
In regard to this, I quarrel with my noble friend Lord Erroll of Hale, because it seemed to me that he was suggesting that such cuts could not be made. It is easy to say, "Well, we cannot cut Health, we cannot cut hospitals, we cannot cut schools, we cannot cut this or that". But it is better to cut them than to go even more swiftly downhill year by year. I believe that these cuts would not last long in those circumstances, for the increased production, the increased effort, and the increased zeal which would result from a policy of reduced taxation, would quickly restore the balance in terms of production.
As I understand it,the Chancellor of the Exchequer has admitted, in so many words, that he gambled in his Budget. This was a gamble in a losing battle. But reduction of direct taxation would be a gamble to win real reward in a new society, and it would win. I am quite sure that it would win if a Government have the courage to do it. The pity is that every fumbling day that passes by under this Administration will, in due course, make it harder to achieve.
The noble Lord, Lord Citrine, suggested that we thought the Government were incompetent. He was quite right in that. Also, with a shade of sarcasm which I thought was a little out of character in what was otherwise a most instructive and enjoyable speech, he suggested that at least we thought that they were not as competent as we were. The naked truth is that they are not as competent as we were; and the trouble, if I may say so without offence to noble Lords on the Front Bench opposite, is that everybody in Whitehall and elsewhere knows that this Government is not as competent as we were—that is, everyone except those who occupy the Front Benches of both Houses.
§ LORD SHEPHERD
My Lords, may I interrupt to say that I am really surprised 1410 at the noble Lord? He at least is one Chief Whip whose memory is remarkably short.
§ LORD REDMAYNE
My Lords, on the contrary. I have purposely stuck my neck out in this debate by saying things which, perhaps, in wisdom, I would not say. But what is the point of your Lordships' House if, having achieved the greater freedom of it, you cannot say these things? Since, as also on one previous occasion, I shall be quoted as saying that the Front Bench opposite have destroyed my peroration, I will conclude with only this: that the noble Baroness, Lady Emmet of Amberley, despaired that there was no glimmer at the end of the tunnel. What I am afraid of is that if this Government go on much longer, there will be no tunnel.
§ 8.20 p.m.
§ LORD PARGITER
My Lords, having sat through the debate, and having listened with considerable care to the speeches that have been made, particularly by noble Lords on the other side of the House, what has struck me most about their speeches is the quite remarkable sterility of all they have said. I listened carefully for one glimmer of a suggestion of an alternative policy from the other side, something on the lines, "If we were in power, we would do this or that." I challenge the other side to say what they would do in the present circumstances other than what the Government are now doing. This is being presented to us at the moment as a crisis of confidence because of the incompetence of the present Government. Apparently, when the Tory Party went out of office with £800 million deficit on our visible balance of payments this was all right, there was no lack of confidence. It is possibly true that there was no lack of confidence at that point of time.
§ LORD PARGITER
Well, there is not all that much between £750 million and £800 million; but I thank the noble Lady for that correction. At any rate, there was then apparently no crisis of confidence. We were then told that the position would be rectified by borrowing; and at that stage there was no difficulty about borrowing. I can understand why 1411 the crisis of confidence developed. The bankers of Britain and the international bankers have something in common. There is a bond of confidence between bankers as a body and, in the nature of things, bankers would have confidence in the Tory Party. I do not complain of this; I merely say that it is a factor to be recognised. However, must we always be bound by this sort of situation? Must we always be bound by the view that because the Tory Party enjoys the confidence of the bankers we must always have a Tory Government, and that if they are not the Government then we shall have an international crisis?
§ LORD REDMAYNE
My Lords, might I interrupt to say that the answer is that the Socialist Party should so conduct itself that it can create that same confidence. It is quite simple.
§ LORD PARGITER
That is not the answer. If that were the answer, then we should not have seen this Government immediately halving the deficit, as they did. But perhaps that was not good enough because it was a Labour Government that did it. Do not let us get carried up that particular lane, for it does not lead us very far.
§ LORD BYERS
My Lords, is this a private argument? Would the noble Lord not recall that there have been crises under both the other Parties over the past six years. This is what we are all fed up about.
§ LORD PARGITER
My Lords, if I might be permitted to develop my argument, I will deal with this question. The noble Lord was not in the House of Commons for the length of time which I spent there to see these crises developing over this period of time. It has been an interesting period to watch. During thirteen years of Tory rule we have had promises of "The sky's the limit" before the Election, and then afterwards have had restriction back again. This is a pretty general pattern of what has happened during those thirteen years. Again, the international bankers did not mind inflation and the attitude of "The sky's the limit" just before an Election, in the belief that the Tories would get back again and they were pretty certain they would continue their deflationary policy 1412 so as to enjoy the confidence of the bankers. I do not complain about it, but the other side must not come here in white sheets and talk about how good they are and how bad we are.
This crisis of confidence at present is not something which has happened suddenly. For very nearly half a century we have been living on our fat. During the latter half of the last century and continuing in this century we piled up enormous capital investments and were able to live on our fat. But sooner or later the chickens come home to roost. The fat does not last and you cannot keep on larding it on, although international financiers and monied interests in this country have hankered after the past. One of the causes of our troubles is that in trying to invest vast sums of money overseas in order to get some invisible return, that money has been lost to the productive capacity in this country. Had we paid more attention to the facts of life and set about putting our own productive capacity right in this country, so that we were able to pay our way through our visible exports, that return, in addition to our invisible trading, would have helped us to pay our debts. But we did not do that. As I have said, I have listened carefully for some alternative policy to be put up by the other side. The fact is that we are not going to get an alternative Government. In fact the Tories would not like to be in power at this particular point of time. They would like us to get out of trouble and will then talk about the wicked Socialists and how better they could run the country. They will highlight the difficulties without mentioning the achievements which will result from them.
I should like now to turn from the unhappy past to the future. I hope that in the future we shall see arising from the standstill a proper incomes and prices policy. If that does not happen then this period is utterly wasted. We must find some means of dealing with the situation for the future. It is no good damming the river and then releasing the flood: you are worse off than you were before. This is appreciated by the Government, and I hope that during this respite period we shall be able to lay down for the future precisely what is proposed to be done to get a more balanced idea of our economy.
1413 The catch phrase of the moment is greater productivity. When one asks people to define it so that it can be understood by the man on the factory floor, one finds that the majority of people in Parliament are remarkably ignorant about it. What we really want is a good, stable, basic wage, to come back to Lord Citrine's point about the underpaid person. On this point it will be difficult to have productivity agreements on a national basis, because of the unevenness of production and the unevenness of the whole process of manufacture. But what one can have on a national scale is productivity agreements to provide for increased wages and salaries within a particular factory or group of factories or even within an industry. One can calculate it and deal with the matter on that basis.
The important and fundamental point for the future is that productivity must precede increased wages and salaries. I am not thinking of the man on the shop floor. I am thinking of cases where we see directors' remuneration being increased in spite of a reduction in the earnings of the company. That sort of thing just will not do. All that is said about the worker promising to increase his productivity is not only applicable to the worker, but goes right through the scale. It is a hurdle which must be cleared and must be applicable at all levels. This is the advantage of a standstill.
I would echo some of the views which have already been expressed that the Government should now proceed with the necessary Orders, to ensure that the standstill will be effective, rather than to do so in a month or two and perhaps half way through the Recess bring Parliament back to approve those Orders. I consider that the effect of that procedure would be far worse than if the Orders were made now. The essential thing is for the Government to make the Orders so that they may have them in reserve. If the Orders were held in reserve, this would do nothing to undermine confidence, because the standstill would still be in operation. If the Orders are made, the chances are that they will not require to be used. In fact, the chances that they will require to be used may be less if the Orders are already made it might be in inverse ratio. I have taken up as much time as I propose to do, but I 1414 should like to hear from the other side some alternative constructive policy for the future of the country.
§ 8.30 p.m.
§ LORD MILFORD
My Lords, I am absolutely against this Bill and, as a former speaker has said, I think this has been a game with both sides agreeing, and criticising one another purely on the surface. I am against the Bill because I am fairly certain that it will not solve the problem at all, because it is not even scratching at the cause of our problem. On the contrary, I am convinced that in the end it will make matters worse. It will create the danger of a major recession, and of mounting unemployment.
The Labour Government, which is based on the trade unions and the Labour Movement, have launched a campaign against the existing activities and practices of the trade unions, which is really the greatest attack since 1926, at the time of the General Strike under the Tories. But even then Baldwin did not dare to force cuts in real wages through legal action, which is what this White Paper means—because it will cut real wages and, as I believe, prices will go up. Certain things are bound to go up in price. We have heard already about the 100-odd groceries which are going up. Raw materials will go up, while the new taxes are bound to have an effect on prices. Some foods, affected by seasonal shortages, hire purchase, and some rents and rates will also go up. So, in fact, there will be an attack on real wages. No wonder that a large section of the trade unions and the Labour Movement is worried or in a ferment.
It is true that we have also been promised a dividend freeze, but I think that those of us who receive dividends can smile, because we know that we shall get our money in the end, if not next year. But that is not the case with the working class at all. Those who have had their wages frozen, and those who have legally, by agreement, won awards but are not to get them, will not see the whole six months' or a year's money ever again. There are the railway men, the bus drivers and the doctors. I know that something is happening about the doctors, but they will not receive the full amount that they were promised.
The trouble is that the Bill does not tackle the real causes, one of which is 1415 surely that we are over-spending abroad in our military expenditure. We are spending overseas £350 million to £400 million, and in another place last week, when I was listening to the Prime Minister's Statement on the causes of the crisis and the causes of our difficulties, I did not hear him mention this at all. It is true that we have been promised a cut of £100 million in overseas expenditure, but that is a mere fleabite; and I gather that there was to be a cut, anyway, before the crisis came. I feel, along with the Sunday Times, that in Washington the Prime Minister committed himself to foreign, defence and reserves policies far in excess of anything Britain has the economic strength to carry out. So that, whatever happens through this Bill, or the White Paper, in the next six months we are going to go on getting into the red the whole time.
By continuing our vast military obligations in Germany, the Middle East and East of Suez, all of which are militarily, morally and economically wrong, our economic freedom of action—which is the same as our political freedom—will always be very limited. We shall permanently be in deficit on our overseas account, always be exposed to violent fluctuations due to foreign financiers' doubts on how we are comporting ourselves. Unfortunately, because of these fluctuations and crises, we see again and again a Labour Government turning further and further away from Socialist ideas, which have been the dreams of so many of us in the past, and using classic Tory methods to try to solve their problems.
This Bill will not stop us from going in and out of crises. It is like plugging up a hole with very rotten material which will give way in the end. We all agree primarily on the importance of modernising industry and increasing economic efficiency and the last two Labour Governments were elected on this ticket. Yet we are having massive cuts to-day in our economic efficiency—roads, railways, airports and services, docks, gas, electricity, coal, the Post Office—just when we need real modernisation of these spheres. We are to have cuts amounting to £500 million on home productive enterprises financed by our own sterling, while only £100 million is to be saved on the 1416 non-productive sector of foreign commitments using mostly foreign currency. Surely, these proportions should at least be turned round the other way.
The other great factor which is the cause of all the difficulties at the moment, and on which this White Paper does not really touch, is the export of capital which is sorely needed to modernise our industries at home and to set up new enterprises. Unfortunately, British firms and financiers are investing abroad around £300 million which is urgently needed here, because they get greater profit from their investments abroad. This, along with our overseas military expenditure, amounts to the whole of the balance-of -payments gap. Surely, here is the answer. It is true that there is a tightening up—a wee one—on the export of capital, but it must be far more drastically curbed. It is becoming clearer and clearer, since the British Government are determined to base their policies, especially their foreign policy, alongside those of America, the Far East, Vietnam, NATO and all that, that these harsh measures in this Bill, and the speed with which they are being pushed through, derive from desires to please American big business and American financiers. This is why, when these measures have been put on the books so quickly, Mr. Wilson was able to get such tremendous praise in America a few days ago. Alas! these measures are the dream of every employer and businessman: "Cut real wages, freeze this, freeze that and your dividends will be all right." This Bill is a Bill which, first and foremost, hits the workers, the pensioners and the housewives. This is a Bill to create unemployment—admittedly so: unemployment, my Lords, with all its humiliation, degradation and demoralisation, in spite of what the noble Lord, Lord Beeching, said in this House last week. I am sorry that Lord Redmayne has gone.
Somebody referred to the slogan which the Tories used a few years back, "You've never had it so good". That could have been true if we had cut the image of ourselves as a huge world Power. Now the people of Britain are suffering cuts in real wages; they face a lower standard of living, and have colossal anxiety about the duration of their employment, with the horror that perhaps they will be out of work—and 1417 just because of a megalomaniac foreign policy, and kow-towing to foreign financiers. My Lords, what a madhouse! I do not happen to be an economist, but I have always been taught that to bring in a Bill to create unemployment in order to increase wealth and prosperity is absolute lunacy—out of Alice in Wonderland—and that is what we are doing. The workers are slandered again and again, as they were by Members opposite just now, for not working hard enough; for not producing enough; for having too much money, et cetera; and the unions are under continued attack from the same sources. But it is not that side of industry which has got us in a mess, or which is at fault. Given modernised equipment and a modernised environment, the British workers would increase production enormously. But these proposals affecting home expenditure will impede all the modernisation that we need, and will make us less competitive in foreign markets.
Every one of us is concerned with the situation of this country, but there is a great volume of opinion which sees quite a different way of solving our problems. We plead that, first of all, we must slash our overseas military expenditure, not by a mere £100 million, but by £350 million or £400 million, which is now being poured down the drain. None of that expenditure is of any use to the British people here at all. Our whole foreign policy must be altered in the interests of the British people, not of the Americans. Secondly, we must stop British firms taking their money out of Britain for higher profits. That money is needed here now, and we should keep it here to modernise our industry. The wages freeze must be scrapped. Low purchasing power has always led to a slump. Instead of a wages freeze, keep up the purchasing power of the people, increase it by higher wages, and in this way spur on the introduction of improved production methods in industry.
§ 8.44 p.m.
§ LORD COLLISON
My Lords, it is a matter of great regret to me that I have not been able to listen to the debate to-day. Your Lordships will be aware of my very great interest in this matter, and in the White Paper in particular. The 1418 hour is late, and one therefore has to be as brief as possible, but I should like to make it clear that, although as a member of the General Council of the T.U.C. I have been playing my part in the discussions which have been going on between ourselves and the First Secretary, and within the General Council itself, I am not attempting this evening, and should not wish to attempt, to represent the view of the T.U.C. Nor am I speaking as the general secretary of a trade union; I am speaking as a citizen, and the views I express are entirely my own. Unquestionably the nation is in dire straits. We face a crisis, and I think this crisis falls into two parts. The first is long-term, and it concerns us in the sense that we continue to pay ourselves more than we earn. This, of course, is incomes policy.
I think I should say that nearly two years ago I happened to be Chairman of the T.U.C., and I signed the Declaration of Intent on Productivity, Prices and Incomes. I want to assure this House that I did not have my tongue in my cheek when I signed that document. I was, of course, aware—and I have said this in many places—that one could not achieve an incomes policy overnight. Largely, I think it was a case of understanding and, if you like, of education. People have to learn that you cannot go on indefinitely paying yourself for more than you produce. People have to learn the simple economic fact that, to avoid inflation and inflationary pressure, you have to balance the gross national income against the gross national product. Therefore, I never expected a miracle overnight.
Nevertheless, I believe that the signing of that document, and its acceptance by the employers, the trade unions and the Government, marked an historic step in our economic and political thinking, because it showed for the first time—and this could not have happened two years ago, not even on the General Council—that people were beginning to think in more realistic terms, and it is the outcome of that thinking which, in the end, will produce the result that we want.
This is a matter of national concern. It is also a matter of individual concern to workpeople. I am a trade union secretary, and I have to negotiate wages on 1419 behalf of a large body of workpeople. My Lords, I am tired of going into my wages negotiating council knowing that, before I can make any real advance, I must get an increase in money terms which at least enables my people to catch up with the increased cost of living since we got our last settlement. I go in there knowing that if I get ten shillings its real worth is probably three shillings; and on occasions I come away with an award which I know does not mean a thing in terms of real improvement. No trade union leader wants that situation, and no worker, if he understands it, will want that situation either. It is this understanding, this very simple understanding, which will give power to this educational drive that we are making to get the idea of an incomes policy accepted. That is the first element in the situation. There is going to be no long-term solution of our problem until we get an incomes policy which is a practical thing, which is viable and which is really working.
But the immediate situation contains another element. Whether we like foreign bankers or foreign financiers or not, we are facing a crisis of confidence. Everybody admits that this is a fact, and in this situation we have to take measures which will restore confidence in the Government of this country and, indeed, in the people of this country. In this context I have no doubt whatever that the need to relieve the pressure on sterling and to deal with the balance of payments problem gave the Government no alternative but to take the decision and the determined action they have taken now. I personally also fully accept that the policy aims outlined by the Prime Minister—the need to make an impact, and an immediate impact, on our balance-of-payments problem, and to deal with the problem of internal demand, together with a drive for increased productivity—are the right ones.
If I may say this is passing, I do not quarrel with Mr. Frank Cousins when he says that one of the objects of policy should be to increase productivity. Of course he is right. But I do not understand why he imagines that this excludes the need also to deal with an incomes policy, because the two things, I think, run together. Of course we want more productivity; of course we want more 1420 wages; of course we want a higher standard of living. However, we can have these things only if we also tackle the incomes policy side of the problem and see that we give ourselves real and not fictitious increases.
My Lords, we are facing a really critical situation. I would not compare the situation with the war years when we were fighting for our lives, for democracy; but we are fighting for the economy and we are fighting for sterling. I believe that to a large degree this is a situation above politics. I would not attempt to prevent the Opposition from properly criticising the activities of this or any Government, but in a situation like this these criticisms ought to be kept down to the proper level and ought not to be put in such a way as to help destroy the confidence that we are seeking to restore. The point I want to make is that in a situation like this the Government have to make unpopular decisions. It is my belief that every responsible leader, be he the Prime Minister, a Cabinet Minister or even the secretary of a trade union, must at times—in the interests of his constituents in the case of a politician, in the interests of the people of the country in the case of the Prime Minister or in the interests of the members of his union in the case of the trade union secretary—where responsibility and duty demand unpopular policies to be evolved and unpopular decisions to be made, make those unpopular decisions.
I am one who believes firmly in telling the people—this is a question of communication—what is demanded of them and why it is demanded of them. I believe they will respond. I know it is quite common to hear the trade unions denigrated. Criticisms are made of the workpeople; but not so widely as some imagine. We also hear criticism of the other side of industry; and some of those criticisms unquestionably are justified. But I believe that in this situation the response from the workpeople themselves will be much more ready, much more zealous and understanding than many of us realise.
As I said at the beginning of my speech, I have been in these discussions. They have been heartbreaking; in some senses, agonising. It is not an easy thing to accept—"acquiese to" is the phrase 1421 we use—these policies of Government knowing that it would mean a complete standstill for all the workpeople for a period of at least six months. I submit to your Lordships that it is more difficult for those who have not got plans in the pipeline to take decisions they know will affect railway men, builders and others. But I must say again that we of the T.U.C. were distressed that these measures were announced by the Government before the T.U.C. was consulted. I think this was a mistake. I understand, of course, the pressure of events. But we should have been less than sensible men, less than responsible men, had we allowed our sense of pique to stop us from looking objectively and realistically at the plan put to us. I am glad that the General Council has, in fact, done this.
I should like to make one final remark. As I said just now, to a degree this is above politics. Criticisms have been and will be levelled at this Government; criticism can be levelled, I think, properly, at the Governments which preceded it; but there is an element in this situation which is very difficult and which is beyond our control. We have got international obligations. I believe, with others, that we should try to relieve ourselves of them where it is possible to do so, but we should not do so recklessly and without a sense of responsibility to the world. It is because we have these problems that some of these issues are forced upon us; that sterling, for instance, comes under strain. I believe, this being so, that it is right and proper that Governments abroad should understand that we are providing a service to the rest of mankind, and should show generosity and willingness to help when a situation of this kind occurs.
My final word is this. I believe we have two problems before us: the problem of an incomes policy and the problem of the allied prices policy and production. But essentially the long-term incomes policy is the only answer. I think the Government measures of deflation will help us immediately in this regard, to give us a platform from which we can later spring. But over and above that there is this immediate and urgent problem of confidence to which an answer has to be given. The Government must show, the people of this country must 1422 show, that they are prepared to accept proper demands made upon them because of the circumstances in which we find ourselves. I believe the Government have done a good job. I believe the people of this country will respond. I believe, with others, that after the next six months we shall still have much to do. But, having done the essential task at this point in time, I believe we have made for ourselves a platform from which we can make further advances in the interests of the people of this country in terms of a real improvement of the standard of living running into years to come.
The National Plan may have to be amended; but it certainly must not be dropped; the date may have to be put back a little but we must keep our Plan, the first we have had. I believe we shall achieve it in the end.
§ 8.58 p.m.
§ LORD PEDDIE
My Lords, I am conscious of the lateness of the hour. In the course of my remarks I will endeavour to avoid any repetition of the arguments that have already been advanced. We have all an interest, indeed a personal interest, in the subject that is being debated this evening. My special interest as a member of the Prices and Incomes Board will cause me to refrain from any special advocacy based upon such membership. One can appreciate the measure of opposition to the proposals of the Government that is expressed by Members opposite, based presumably upon political considerations. One can understand it, but I was intrigued by a comment of the noble Lord, Lord Erroll of Hale, when he indicated his personal opinion that the proposals were likely to get emotional support from the nation as well as from his Party if the Government admitted to gigantic miscalculations. My personal view is that if there has been any miscalculation on the part of the Government it has been rather an underestimate of the erosion of the economy over the past years that has necessitated these measures.
I was particularly interested in the comments of the noble Lord, Lord Byers, especially in the light of the statement made by my noble friend Lord Pargiter. He said he had heard no alternative from the other side of the House. I share the view expressed by the noble Lord, Lord Pargiter, that we did not hear any 1423 reasonable alternative to the proposals that the Government are advancing.
§ LORD BYERS
My Lords, will the noble Lord recall one proposal that I put up was not a wages freeze, but a pay-roll freeze which is quite different and much more positive? I also expressed the view that we should have to regard the standstill very much as a last resort because it will play havoc with the productivity agreement. This is a positive approach to the problem, not a negative one.
§ LORD PEDDIE
My Lords, if the noble Lord, Lord Byers, had contained himself in patience he would have found that in the course of but a few seconds I should have arrived at that point. Indeed, I was going to pay the noble Lord the compliment of indicating that there was at least some measure of an alternative proposal emanating from the rumbustious speech of the noble Lord, Lord Byers. He indicated that he was against the incomes freeze but would give support, as he has now reiterated, to the fixing of an overall amount to be paid by companies. Very well, it is an alternative, and I refer to it because it deserves some attention. But, my Lords, I submit that such a proposal would indeed create a completely static economy and make for a greater inequity even than the present proposals. Furthermore—and this is of very considerable significance—it would make almost impossible the redeployment of labour which is absolutely essential if we are to secure the increased productivity which this nation needs.
§ LORD BYERS
My Lords, may I interrupt the noble Lord? It is the opposite because it gives flexibility. If you want to attract people to your firm, you can do it not by increasing your payroll total but by making sacrifices to pay the incoming person more money to attract him.
§ LORD PEDDIE
My Lords, if there is a fixed amount, an overall amount fixed for a company, it makes it impossible to recruit further labour, and one of the 1424 factors needed to-day is the re-deployment of labour to developing industries. I would also indicate a further comment of the noble Lord, Lord Byers, on the question of prices. The noble Lord offered two, in a way, constructive criticisms. He opposed the present proposals regarding prices and said, "Let free competition do all that is necessary". But, I would ask the noble Lord, would he agree that all sectors of the economy have the free and full play of market forces? Indeed they have not, and it would be impossible to leave the determination of prices solely to competition.
§ LORD BYERS
My Lords, I am sorry to interrupt the noble Lord, but he is making a complete fallacy of my speech. I asked for much tougher measures, of anti-trust and anti-monopoly, in order to get real competition and real play of free market forces. The noble Lord must not be allowed to put that on the record as what I said.
§ LORD PEDDIE
Precisely, my Lords. The indication is that we wait until we have the full expression of anti-monopoly law till this can operate. We are dealing now with an emergency and therefore measures of this kind cannot be sidetracked until the proposals of the noble Lord, Lord Byers, are put into effect, because those proposals must precede any of the further suggestions which he makes with regard to the control of trusts and monopolies.
There has been an indication, too, of a question of lack of confidence, and it is true that there must be a measure of lack of confidence. But it is not born out of some incident or event within the last weeks or months. I believe that the economic difficulties which have made necessary the measures we are discussing to-day are not of recent origin. They are related to deep-seated deficiencies in the economy and are created by an inability or unwillingness on the part of both management and labour to adjust them-selves to change. This has expressed itself over past months, and indeed past years, in an imbalance between money incomes and productivity. In consequence, the Government launched their incomes policy and created the Incomes and Prices Board. I believe, as certain noble Lords have indicated, that there has been a 1425 measure of success, but it is slow and there is an imperative necessity to deal with the situation along the lines stated in the White Paper on Prices and Incomes Standstill. The White Paper states that the country needs a breathing space in which productivity can catch up the excessive increase in incomes. I would emphasise that this is but a temporary phase. The economic future will depend on the capacity to make good use of the time to pursue a constructive policy for productivity, prices and incomes and to make certain it grows in effectiveness. I think that is the whole kernel of the discussion to-night.
None of us could possibly like any freeze of incomes, or indeed of prices, if we are personally involved. We can look upon this only as giving a pause, giving an opportunity, temporary it may be, and it is up to the community and the Government to make sure that the time is exploited to the full. The measures we have under discussion do not provide a permanent remedy. That permanent remedy can lie only in increased productivity and I believe, as I think the noble Lord, Lord Pargiter, mentioned, that there is a great deal of misunderstanding about what productivity really means. When demand justifies, it is possible to see a violent increase in the through-put of factories regardless of the costs involved, if the management has no restriction upon the ability to increase the price. That is not increased productivity in actual terms. We have to consider increased productivity as ability to produce an article or a service at lower real costs than previously. The cost of production in terms of capital and labour is a vital factor in our productivity problem to-day.
The noble Lord, Lord Redmayne, who is not at present in the Chamber, referred to over-employment. He seemed to imply that full employment was, or had been, a restrictive factor in the development of this country; and there are some people who quite sincerely blame full employment as being responsible for industrial lethargy. Full employment needs accurate definition, and I believe it is a sad reflection on the intelligence of the community if we believe that an increase in the number of people rendered unemployed will add to our production. It may be true that labour has enjoyed reasonably full engagement, 1426 but the nation has not had the advantage of the full employment of its labour force. This has not been entirely the responsibility of labour itself. Labour does not hire itself. It is hired. One of the great difficulties in industry to-day is the hoarding of labour. That is one of the factors which makes for under-employment of people on the payroll.
I agree that there is need for a shakeout to achieve more effective deployment, but if unemployment is considered as a whip, I can assure your Lordships that it is an illusion. If there are any to-day who believe that the sight of people waiting at the factory gates will stimulate productivity they are making a great mistake. It can only add to the increasing reluctance on the part of labour to accept labour-saving equipment. This is something which has to be understood, because time and time again there is the implication that we can get ourselves out of this difficulty regarding increasing productivity by providing the weapon of a certain amount of unemployment that will cause people to have less sense of security.
The months ahead should be used in identifying and dealing with some of the long-term problems which have led to the present difficulties, and we have a chance of doing this during this period of six or twelve months. This is the greatest virtue, in myopinion, of this pause or standstill—call it what you will.
The noble Earl, Lord Selkirk, paid a tribute to the work of the Prices and Incomes Board and it has done good work in the short term. It has been limited by the field it has been able to cover, but its greatest contribution over past months has been the consideration of long-term problems that are fundamental to productivity. The Board has produced eighteen reports and these have exposed a number of obstacles to increased efficiency and have suggested remedies.
With the permission of the House, I will try for a few moments to describe a few of the basic problems which in my opinion require to be solved, otherwise this lack of productivity will be a constant difficulty. The tragedy is that somany people believe, when we ask for more productivity, that we merely have to get people to work harder. That is 1427 not the case at all. In some of our most inefficient establishments, we can see people working like beavers, but they are not making any great contribution towards industrial productivity. We have found deficiencies not only in private business but in nationalised industries, too, such as investment on the basis of faulty demand forecasts and without proper assessment of likely rate of return. We have seen a failure to make allowance for changes in competition and the proper availability of manpower. We have seen in industry after industry reluctance to use operational research and other modern managerial techniques. As time goes on such industries are completely unaware of the need for examining their own condition and for effecting improvement in their techniques.
We have seen, too, the maintenance of obsolete lines of demarcation by the trade unions and the failure on the part of employers to adjust manning practices to new techniques. Another serious obstacle to improving productivity is the archaic wage structures which have impeded the more effective use of men and capital assets and whose effect is to check the possibility of more work in fewer hours. A strange thing is that most of the wage bargaining in the past completely ignored the question of productivity.
I believe that progressively over past years comparability has been one of the most significant factors making for inflation. It does not bring about the equity that those who are advocating comparability would hope to secure. We have seen the disregard in some industries by management and unions of the consequences of negotiated pay rises on both prices of the commodity and the wages that are paid in other industries; and we have seen a complete disregard of public interest or the consumer. Yet I have recognised over the past few months, both on the part of the trade unions and employers, an increasing recognition of that significance, taking into account the national interest and the consumer. I believe such changes of mind and attitude have been stimulated by the incomes policy pursued by the Government over the past months. It is one of the most outstanding contributions that that policy has made.
1428 These deficiencies that I have attempted to express are but a few of many that have been exposed, and they have been exposed after a detailed inquiry into a relatively small area of British industry. But they give some idea of the size of the problem. These problems that have been discussed by the Board are real symptoms of the malady that besets British industry. I believe that the need to continue the investigation is not lessened by the standstill, but increased by the country's economic condition.
Above all, in conclusion, I would add that in the months and in the years that lie ahead there is need for a greater degree of co-operation within industry. In spite of some of the comments that have been made from the Benches opposite, I think there is going to be an increasing recognition, on the part of the general public and all involved in this squeeze, of the necessity for acceptance: and I am delighted to read on the tape to-night that the doctors have accepted the freeze. That I think is significant and indicative of the reaction of responsible people, trade unionists and management.
Let us make no mistake. No one on this side of the House, or anywhere else, refuses to recognise that there may be considerable hardship in the operation of this freeze, and that there may be inequity. But the alternative, in my opinion, would lead to far greater inequity, and, in addition to inequity, would lead to a rapid deterioration in our economic state. Therefore, although the circumstances that have created the need for the freeze are not of the character in which anyone finds satisfaction, no matter on what side of the House they may be, at least one can find consolation in the fact that there is to-day a recognition of the problem and the courage and the strength to tackle it.
§ 9.18 p.m.
§ LORD DRUMALBYN
My Lords, this has been a debate conducted in an even temper and in most unusual circumstances. We are debating to-day a Motion to take note of the prices and incomes policy of Her Majesty's Government, and we are in effect debating what my noble friend Lord Erroll of Hale has described as a White Bill; that is, we are in effect giving a Second 1429 Reading to specific proposals being made by the Government. We are examining these proposals. When we do that there are three broad questions to be considered: what is the situation with which the proposals are intended to deal; what does the Bill mean; and how will it work?
May I in a few words to start with say what the situation with which we have to deal is? In my view, there is a national crisis, but not, I think, an international crisis, as there was in 1931. There has been a severe loss of confidence in the ability and will of Great Britain under its present leadership to put her finances and economy in order and to pay her way in the world. And why? First of all, there was the seamen's strike, the handling of the seamen's strike, and the resultant loss of export, together with fears abroad of further strikes from time to time in the future, with no means of stopping them. Secondly, there was the plain fact that not only was the norm for increases of money incomes—that is, the forecast of what the economy would bear by way of average increase of money incomes per head—fixed far too high; not only was it treated as a minimum instead of as an average; on occasion it was even regarded as derisory, with the result last year that earnings rose well over three times as fast as production and have continued to rise at a considerable pace, while the index of industrial production actually showed a decline in each of the last two months recorded in the Board of Trade Journal (April and May).
So the general picture is this: exports adversely affected by the seamen's strike; imports rising; earnings rising; prices rising; national savings last year well down below the 1965 level, and despite new offers, not doing very well; production falling and investment slackening. That, I think, is the situation with which we have to deal, and in those circumstances one can hardly blame our foreign creditors for having doubts about current British economic policy.
Something obviously must be done. Something has been done, and our creditors have audibly sighed a sigh of relief because of it. But what has been done? The Government have taken some financial and fiscal measures and they have 1430 produced a temporary incomes policy on top of a permanent one. Now we are told that the position into which the Government have got us is such that it is the duty of all of us to support this policy. That may be so. The noble Lord, Lord Collison, said in effect that the Opposition has the right to criticise but it must bear in mind the interest of the country, and I would not disagree at all with what he said. The noble Lord, Lord Citrine, did not quite share his view. But before we do support this policy at least we are entitled to ask what it means and whether or not it will work.
The noble Lord, Lord Shepherd, went into considerable detail—and we are much obliged to him—in explaining what the policy (that is to say, the two policies: the permanent policy and the temporary one) is intended to mean. If I may say so—and this is not a criticism—one had the feeling in listening to him that the speech about the permanent policy had been written before the speech on the temporary policy had been thought of.
§ LORD SHEPHERD
My Lords, I do not think the noble Lord is quite right. The noble Lord did not say that at least Part I is permanent; Part II will be a permanent feature of the Bill though it will not come into operation—therefore one speaks in those terms; Part IV is of a temporary nature—therefore one speaks in those terms. I think the noble Lord's criticism is quite unwarranted.
§ LORD DRUMALBYN
I am sorry to have got under the skin of the noble Lord, Lord Shepherd, so easily; he does not jump up quite so quickly as that in the ordinary way.
My Lords, first the Government have gone ahead with what must be regarded as their long-term policy as set out in the original Bill, and, secondly, the Government have called for a complete standstill on prices and incomes, but we are told by the Prime Minister (and this has been quoted by the noble Lord, Lord Wade, and indeed has been quoted twice) that it is not the Government's intention to introduce elaborate statutory controls over incomes and prices. Then later,within the main field of collective bargaining we shall in the first instance use only voluntary action.1431 That statement gives rise to certain questions, and to ensure that we get them answered (although some of them have been asked before) I shall put them again.
First of all, does this mean that the Government do not intend to bring into effect either Part II or Part IV of what is politely called a "Paper"—that is, the Prices and Incomes Bill as it is likely to reach this House—before the Recess? Secondly, do the Government intend to bring in during the Recess an Order under Clause 6 of the Paper enabling them to make Orders applying the requirements as to notification of increases and the limited standstill Orders under Part II? Thirdly, do the Government intend also to bring in during the Recess an Order under Clause 25 to enable them to make Orders restricting increases in prices or incomes under Part IV? I appreciate that the Government could not very well bring in an Order under Part II before the Recess, because an Order under Part II can be made only after the First Secretary has consulted with such organisations or bodies as he thinks fit. So I think that is out. But they might, of course, introduce Part IV. From the way in which the noble Lord, Lord Shepherd, phrased his last remark, I rather got the impression that this might be the intention of the Government. I think he said it was not intended to introduce the permanent policy at the present time but it was intended to introduce the temporary one. I may have misinterpreted him, but this is what he seemed to me to say then.
May I ask whether it is the intention of the Government to start such consultations immediately the Bill becomes law? If so, are we likely to see draft Orders under Parts II and IV laid in late September so that Parliament can approve them when they resume on October 18? The noble Viscount, Lord Simon, as I understood it, thought this would be the right course, that powers should be taken immediately under Clause 6 and under Clause 25 so that Orders could be made as and when necessary.
§ VISCOUNT SIMON
My Lords, if I may intervene, I think I went further. I agreed with the noble Lord, Lord Kahn, that the Orders ought to be made at once, not at the end of September.
§ LORD DRUMALBYN
I was pointing out that, as the Bill is at present drafted, that would not be possible, and therefore I had assumed, so far as Part II is concerned, that the Government did not intend to do that, because they would first have to consult both sides of industry after the Bill became law.
May I also ask whether my noble friend Lord Windlesham was right in drawing attention to the difference between the wording as regards prices and collective bargaining? He pointed out that it was only within the main field of collective bargaining that the Prime Minister said that we shall in the first instance use voluntary action, and this leaves it to be deduced that they shall, or may, introduce an Order to deal with prices. I must ask, therefore, what significance are we to attach to the fact that the Prime Minister confined his intention to rely on voluntary action in the first instance to the main field of collective bargaining? Perhaps I should also ask: What about the rest of the field?
I come then to the second broad set of questions. Will the incomes policy work? This is something about which a great many of your Lordships have spoken to-day. It is quite clear that the policy as pursued so far has not been effective in keeping prices, still less earnings, in line with increases in production. To start with the Government have been proved wrong, as my noble friend Lord Erroll of Hale pointed out, in the choice of norm, 3 to 3½ per cent. Now the norm is to be zero. As my noble friend said, Schedule 2 will accordingly need some attention in Committee. That in itself, I would point out, involves a change in the definition of "norm" coming in paragraph 11 of Schedule 2:the average rate of anual increase in money incomes consistent with stability in the general level of prices".If there were to be any increase at all in incomes there would have to be some compensating decrease for the norm so defined to be maintained at nought. That could come, for example, from less overtime or more unemployment, if the quantum that is to give the average is to be maintained at zero.
The White Paper admits that some incomes will increase automatically, for example, where workers on piece-work produce more, where salesmen sell more 1433 on commission, where overtime is unavoidable, where there are profit-sharing schemes and, in spite of all the efforts of the Government to prevent it, the firm makes an actual profit; but there of course the extra profits are to be shared by the employees but not, as I understand it, by the shareholders in extra dividends. It is a matter for consideration whether that is fair or not.
What, may I ask, is to happen about those wages which are tied to the cost-of-living index or some other index? I hope the noble Earl will be able to answer that. If they are tied by custom or agreement, what happens? Are those increases also overridden, and, if so, what happens at the end of the period? Are they allowed to catch up? Of course, the question may answer itself, because the cost of living may not go up, and no doubt that is one of the objects of the Government; but, on the other hand, one cannot be sure of that. That is not entirely within the control of the Government.
Secondly, a great deal has been said in this debate about productivity agreements. Will productivity agreements resulting in extra earnings be allowed? Will people be allowed to profit from them? It is not only a question of their being negotiated but will people be allowed to profit from them during the period? What is the Government's attitude to that? I am surprised that the White Paper does not make it clear one way or the other whether such extra earnings will also not only be accepted but encouraged. I wonder whether they are frightened that, if someone gets more for higher productivity, someone else may demand more to keep even with him without higher production. Possibly the Government intend to turn a blind eye to that. I think this is a most important question upon which the Government must give an answer today.
The Government have now gone all selective—selective employment tax, selective investment grant, selective orders telling people or industries or localities not to increase prices or incomes. What is the use of offering encouragements to modernise, to invest in new plant and equipment and apply new methods, if there is to be no incentive to make reductions in manpower that the investments should render possible?
Something has been said about existing contracts. I hope the Government do not 1434 underestimate the effect, in these days when contracts are all too little observed—there has been a change in the attitude to contracts—of the Government overriding contracts. One must always point this out to the Government. We know that on occasions there is an overriding public interest, but I think we should always think most carefully before allowing a contract to be overriden. The Government may claim that they may permit increases in incomes resulting from productivity agreements. I was most interested to hear the speech of the noble Viscount, Lord Younger of Leckie, as well as the speech of the noble Lord, Lord Byers, both of which made a great impression on the House. But the Government's failure, as I say, to make this clear in the White Paper is really an indication of their outlook. Whenever things go wrong when they are in power they try to blow a clarion call, "Backs to the wall; equal misery for all". They really do sound the wrong note—and they sound the wrong note wrong, which is worse.
It is not tenseness and self-imposed misery the British people want when we are in a jam. We do not want to punish ourselves; we want to extricate ourselves. It was not tenseness and self-imposed misery that enabled us to win the last war. We laughed and we sang ourselves to victory because we had confidence in ourselves and faith in our leaders. At the moment we have lost the first because we have lost the second. It cannot be right to call for extra effort without rewarding those who make it. This is the prescription to induce listlessness, lack of effort—"Leave it to you, Bill".
I am not saying that an incomes policy is not required. There is a large measure of agreement in all Parties on the need for one. As Mr. Harold Macmillan said on July 26, 1962, in perhaps what is the most classic exposition on this matter:If the nation as a whole pays itself in increased wanes, salaries and dividends more than is justified by increasing production"—I heard an echo of that from the noble Lord, Lord Collison—it is surely accepted that costs will rise and exports fall …An incomes policy is therefore necessary as a permanent feature of our economic life."—[OFIICIAL REPORT, Commons, Vol. 663, col. 1756.]1435 But he went on to say, in col. 1758:In a free society an incomes policy cannot, in my view at any rate, be imposed; and if it is to be a permanent feature and not a temporary thing in a difficult crisis, as I believe it must be if we are to achieve our four objectives"—that is, full employment, steady prices, a strong currency and growth—then it must be regarded both as necessary and as fair.…A temporary measure must necessarily be somewhat rigid and somewhat unfair."In other words, an incomes policy can work only in the right framework of law and economic policy.
The first thing was to set up a body which would givean impartial and authoritative view on the more important or difficult pay questions".That was the National Incomes Commission. The Labour Opposition at that time thought that it was wrong for it to limit the scope of such a body to incomes. "Incomes" was a very wide connotation, including dividends, but the Labour Party thought that it should also consider prices. Of course, there is no reason why such a body should not also look at prices and spotlight what seems to it to be unjustified increases, provided always that it is understood and accepted that prices and incomes are different, must be treated differently, and need not always march in step.
We have to-day had the benefit of the advice of the noble Lord, Lord Peddie, who is a member of the Prices and Incomes Board; and I would pay tribute to the work that they have been doing. But surely one of the great fallacies of our time is that a nation has a right to a given standard of living, or even to a continuously rising standard of living. It has no such right unless it earns it. But it should be able to earn it if the economy is properly managed. The noble Lord, Lord Williamson, in an excellent speech, thought we should be thankful that we were not getting a cut; that we should be quite content with that. I think we must recognise, in the ups and downs of life, that there may be times when our standard of living is not advancing, although on the whole it will go gradually forward. I was glad that the noble Lord, Lord Shepherd, in his 1436 speech last Thursday [col. 920] recognised thatsimilarity of treatment for incomes and prices is impossible".And the White Paper acknowledges in paragraph 4 that even in a period of standstill, some prices may have to be raisedbecause of marked increases which cannot be absorbed in costs of imported materials, or which arise from changes in supply for seasonal or other reasons or which are due to action by the Government, such as increased taxation".Apart from this, incomes and prices are treated almost identically. Can this be right? Of course restraint should be exercised over prices, but the proper way to deal with prices is for the Government to ensure that what people have got to spend and what is there to buy are kept in balance. Leaving out of account excessive Government spending abroad, it is precisely because people have more to spend than there is to buy that there is inflation, which has got worse because what people have to spend is growing faster than what there is to buy. A ban on increases in incomes will halt the continuing growth in the gap, but will not close it. Nor are the comparatively small fiscal and hire-purchase restraints which have been imposed of themselves likely to close it. Equally, a ban on justifiable increases in prices merely maintains the gap.
That is why the provisions in the Bill are wrong in principle. If a supplier feels he must increase prices, then once an order affecting them is made he will have to give notice of his intention to the Minister. Under Part II the Minister would have thirty days in which either to consent or refer the case to the Prices and Incomes Board, in which case the supplier would have to wait another period—I am not certain whether it would be two or three months. Under Part IV he could not increase his prices until the Minister gave his consent. All this time he would be losing money. The Minister might not give his consent, even though he was losing money. He might decide that it was in the public interest that the prices should be increased all the same. Surely it cannot be in the public interest that firms or undertakings should not be able to pay their way, any more than that the nation 1437 as a whole should not be able to pay its way. In my view, there should be a positive duty laid on the Minister to give his consent to ensure that efficient firms should be enabled to pay their way, and certainly should not be forced to operate at a loss or even forced out of business in the alleged public interest.
§ LORD SHEPHERD
My Lords, may I ask the noble Lord this question? I gather he agrees that incomes should be investigated by some Board. Am I to take it, however, that he does not think this should apply to prices? Is that what he means?
§ LORD DRUMALBYN
What I have said is that I think it is perfectly right that cases of this kind should be referred to the Board and that the Board should have an opportunity of examining them. What I am questioning at the present time is whether prices should be treated in exactly the same way as incomes, so far as the delay and the permanent policy are concerned. The delay of three or four months may be very damaging indeed to a business; whereas, of course, to an employee or a wage-earner it is merely a postponement of higher earnings.
§ LORD SHEPHERD
But the noble Lord would agree that the period required under the Bill for an inquiry is three months. I should have thought he would agree, with his experience of business, that most firms would certainly know at that stage that an increase in their prices had become necessary.
§ LORD DRUMALBYN
I am not quite sure what the noble Lord means. The point is that the firm has to make up its mind that an increase in price cannot be postponed any longer, but at that point it has to refer the question to the Government and it has to be postponed longer. That is the point at issue.
The feeblest part of the White Paper is in the passages dealing with rents and rates. If rents of local authority houses are held at their present level, rates are bound to increase, if only because some housessubsidised by rates are still being completed and let at subsidised rents. Is it really right that the increased rent bill should fall, in part at least, on those who are not occupying subsidised houses? Is this not a much greater 1438 hardship and far more unjust in a period of standstill on incomes—a period in which many of the incomes of the self-employed will be reduced—than that people with ample means who have been paying too little should pay more? After all, it is partly because a large section of the public are paying too little for rents that there is excess spending power and that our costs of production, burdened by rent subsidies, are higher than they otherwise need be.
It will be said that if prices go up, the pressure to increase wages will become irresistible. No pressure is irresistible if there is the will to resist. Realism and common sense demand that we as a nation must learn that while, normally, incomes should rise faster than prices and so make us better off, at other times prices may rise faster than incomes so that we are temporarily worse off. The brute fact is that there is more spending power than there are resources, if we are to restore our balance of payments. The ways to deal with this are either to reduce the spending power, to increase the supplies, or both.
The point I am trying to make is that by simply freezing the spending power you will not restore the balance; nor will you restore it at all unless production and investment increase. Is it likely that production will increase if you freeze spending power? Is it likely that investment will increase if you freeze prices? Surely the right answer is to reduce the great mass of spending power so as to bring it in balance with supply, and then to give the maximum encouragement to increased production and investment. I quite see that, as incomes have outrun production, a pause may be necessary for action to be taken to prevent them from doing so again—and this is a point which the noble Viscount, Lord Simon,made—but I should feel much happier if the Government gave some indication that they proposed to use the period of standstill in this way: more productivity agreements, as the noble Lord, Lord Byers, said; and plans to ensure that in future incomes are kept in line with productivity.
The noble Lord, Lord Shepherd, himself mentioned negotiating further productivity agreements. How are you going to do that, unless you can give increased results in the form of a pay packet? 1439 What evidence is thereof any intention on the part of the Government to do these things? Admittedly, the Government intend that one result of their measures will be what they call a "shake-out of labour"; that is, more movement of labour, and certainly more transitional unemployment. That should reduce wage drift and make it easier for employers to resist wage demands which are notconsistent with stability in the general level of prices.My Lords, all Parties are committed to the principle of free negotiation on terms and conditions of employment; but how often have we heard the Party opposite in the past lamenting that negotiation is not free if the parties are not on equal terms? At present, employers and the trade unions are not on equal terms: usually the trade unions are in a position of monopoly. Moreover, the agreements they enter into are not enforceable by either side. If the employers do not carry out their side, labour is withdrawn: if the employees do not carry out theirs, there is nothing the employers can do about it. I say urgently to the Government that no incomes policy can possibly succeed until that is put right.
The temporary policy which the Government have announced is bound to operate unfairly. I think we should all accept that, as Mr. Harold Macmillan indicated, if we are driven by Government mismanagement to resort to a temporary, as opposed to a continuing, incomes policy, it is bound to be unfair, because it is bound to be too rigid. The sole justification of such a policy would be that, by the time it was lifted, steps would have been taken to prevent or at least reduce the chances of running into the same situation again, as the noble Earl, Lord Selkirk, said. There is no indication at all that that is likely to happen. Part II of the Bill is likely, in these circumstances, merely to be an irritant, and not a solution. My Lords, our objection to this policy is that at a time when production is stagnating it is likely to intensify that stagnation. If that happens, we shall be driven further and further down the road of restriction, compulsion and national degradation.
§ 9.47 p.m.
§ THE EARL OF LONGFORD
My Lords, we have listened to over a score 1440 of highly interesting speeches, from the fine initial exposition of the noble Lord, Lord Shepherd, to the thoughtful and friendly questionnaire and commentary of the noble Lord who has just sat down. At one moment the noble Lord opposite adopted a slightly gayer note, and urged us to laugh and sing our way to victory. I gather it is the noble Lord's birthday. We congratulate him, and we are ready to laugh and sing with him as long as he does not expect me, at a quarter to ten, to speak for too long, to answer all his points, or to try to answer them and, in addition, to answer most of the points raised by the other twenty speakers. In other words, we shall presumably come back to this subject in some detail next week, and no doubt some of the more intricate points will be dealt with then.
I realise that I may be accused of bias—I hope not, perhaps, on this occasion—but I suggest (it is the accident of the day) that we happen to have to-day listened to some speeches from this side of the House which have helped to maintain the reputation of the House of Lords as a remarkable debating Chamber. I am not going to try to reply in detail to, or to comment in detail on, a speech like that of the noble Lord, Lord Peddie, who has gone, or on the speeches of the noble Lord, Lord Williamson, the noble Lord, Lord Collison, or the noble Lord, Lord Citrine, two of whom have remained; but I think noble Lords opposite will agree that we have been very strongly represented—shall I say?—on this side of the House in this particular debate. I am only sorry to have missed one or two speeches from the other side which I was told were interesting, including one from the noble Baroness, Lady Emmet of Amberley, which I understand was rather barbed. The noble Lady herself told me that she had spoken very frankly, so I gather that it was a fairly sharp oration. I am sorry not to have heard it. I am also sorry I missed the speech of the noble Lord, Lord Redmayne, although I may be able to refer to a point he raised. I am also sorry there was a suggestion made at one time that we—and I suppose that means me particularly—had treated the House with some measure of contempt in bringing forward Business in this way. There may be elements of misunderstanding somewhere there. I hope that no noble Lord would seriously suppose 1441 that I or my noble friend Lord Shepherd would ever treat the House with contempt. I do not propose to say any more on that. I prefer to think that the words used were used in misapprehension of the position.
On the other hand, the word "contempt" figured in more speeches than one amongnoble Lords opposite. There was a moment when the noble Lord, Lord Erroll of Hale—though he did it in a charming way and one hardly took in what he said—announced that our measures had earned us the contemptuous indignation of everybody, of practically the whole world. According to him, we had aroused the contemptuous indignation of the whole world. We do not seem to have earned the contempt of President Johnson. I did say "President Johnson"—the noble Lord makes a sort of whistling movement of the face. I can only assure him that President Johnson is the most powerful friend that this country has and we ought to be pleased that President Johnson is so happy about our measures and our leadership. And then the Finance Ministers at the Hague expressed great confidence in what we are doing; so this "contemptuous indignation" does not spread to these eminent foreigners.
However, it may be said that we are hated by our own countrymen. I cannot see any sign of that. The excellent C.B.I. this afternoon came out in support of the standstill on the basis that they would bend every effort to make it work, and work properly. There are qualifications which, no doubt, we must examine carefully; but they are certainly co-operating; and so, of course, are the T.U.C. Now we hear the same thing of the doctors. I am afraid that the "contemptuous indignation" is simply a fabrication of the noble Lord, Lord Erroll of Hale. As a man who is, I think, incapable of feeling that emotion himself, someone must have put him up to it. I do not know who that could be.
Speaking for myself, I should not feel contempt for noble Lords opposite; I feel just pity. I feel pity for them, for their lack of intellectual fibre. We have listened to a great deal of discussion on these matters in two days of debate, on the economic situation and now a long day on this. If anybody asked me after-wards what was the attitude of noble 1442 Lords opposite to the standstill proposal I should not know. I defy anyone coming into this House, any neutral observer, to have any idea of what their position may be. Are they in favour of even a suggestion of a standstill, a kind of exhortation to a standstill? Is that their position? They do not seem inclined to answer. That might be their position. Even that is not clear. I gather—but not beyond all doubt, because they have quibbled away so merrily for so many hours—that they are opposed to the compulsory element in the standstill. I gather that that would seem to be the position.
Therefore we are bound to ask, what would be their alternative? I am not going to pursue them in detail; but broadly what would be the alternative? I hardly think that they would consider exhortation enough. I hesitate to suggest that they would consider a substantial dose of unemployment as a suggested alternative to a statutory incomes policy. This is where I must apologise to the noble Lord, Lord Redmayne, for not hearing his speech. I understand that he argued that a degree of unemployment somewhat larger than that suggested by the noble Lord, Lord Beeching, would be tolerable. If I am mistaken then I will apologise. He was firmly corrected on that point, at any rate, by the noble Lord, Lord Pargiter. I will not pursue it now, except to say that I do not believe that at this day and hour the Conservative Party are prepared to come forward and say that there is no point in a standstill because they could do the job better by means of a heavy dose of unemployment. Therefore we are in the dark about their position, and they have in fact not had the daring, the fibre, to come out in the open and tell us where they stand. So I say I feel pity for the 'wretchedness of their intellectual situation.
§ LORD REDMAYNE
My Lords, would the noble Earl, if he does not accept what I say (which is of very small importance) say on behalf of the Government that he is willing to accept the truth and wisdom of the speech of the noble Lord, Lord Beeching?
§ THE EARL OF LONGFORD
The noble Lord, Lord Beeching, made a very interesting speech, but he is not Moses; 1443 he is not handing down the tablets, and if the noble Lord, Lord Redmayne, asks me whether I am bound to accept what Lord Beeching says on this or any other matter, the answer is" No". I do not expect him to agree with me and I also do not agree with him, and so the answer to the noble Lord, Lord Redmayne is, "No", in spite of the fact that the noble Lord, Lord Beeching made a most interesting speech.
My Lords, it is when we take this great question before us as various speakers have said—as the noble Lord, Lord Drumalbyn, recognised and so did many, or all, of the speakers in different ways—we realise that here is undoubtedly a grave decision before the country. I do not accept the grossly exaggerated account of our economic miseries produced by the noble Lord, Lord Drumalbyn, but let us agree that this is an economic crisis and that large, and it may be controversial, steps have to be taken by any Government worth its salt. What was of special interest to me, and I think would be of interest to our hypothetical neutral observer, is the fact that the great trade union leaders among us were those who came forward to-day and so very clearly said that the standstill on the broad lines of Government policy was right. It is after all—without wishing to annoy noble Lords—these trade union leaders who probably know the working masses of this country better than I do and better than at any rate most noble Lords opposite—I will not say all. That they should be the people who should come out so strongly, knowing what it would actually mean, what the effort of restraint would mean, struck me as a remarkable and memorable feature of to-day.
I am afraid that I missed the speech of the noble Lord, Lord Milford, with whom I was associated when we belonged to the same party. It was not the Communist Party then, and it was not the Conservative Party either; but it was in the old days, before the war, in Oxford shire. I gather that the noble Lord announced that the Government was attacking the trade unions, or words to that effect. Without wishing to be impertinent, may I say that the noble Lord has much the same background as I, and if it came to asking for an opinion about 1444 an attack on the trade unions from me, or from the noble Lord, or the noble Lord, Lord Collison, or the noble Lord, Lord Williamson, I should not choose the noble Lord—or myself.
§ THE EARL OF LONGFORD
My Lords, I must apologise to the noble Lord, Lord Milford. I was not in the Chamber when he spoke, but I gather that he was pretty sharp in his criticisms. I must leave him to be replied to by the great trade union leaders.
There were a number of detailed points, very many detailed points, asked at some length, and some will have to be dealt with next week—
§ LORD DRUMALBYN
My Lords, would the noble Earl forgive me for a moment? Will he bear in mind that we are to-day asked to "take note"? We are not asked to make a decision on either side to-day, and it is not for us to say absolutely definitely at this stage what we think, either one way or the other. We have asked the noble Earl a great many questions. If he is not able to answer those questions, he cannot complain if we cannot make up our minds.
§ THE EARL OF LONGFORD
My Lords, I am bound to say that I think that is an extraordinarily feeble intervention, for this reason: that the noble Lord has had plenty of opportunity to make up his mind. There has been a great deal of discussion on this subject already. The questions which he raised were detailed questions. In the last resort, whether we have a standstill policy of this kind or not does not depend on detailed answers to those points, and the noble Lord is perfectly well aware of that, if I may say so. I apologise if I spoke too sharply, but it has been" dished out" to us to a certain amount during the long hours since lunch—
§ THE EARL OF LONGFORD
Oh yes it has, and I must be allowed to reply, to equalise the score in that emotional language that was referred to earlier by one noble Lord. There are some detailed points and I am just coming to one or 1445 two, so I hope the noble Lord, Lord Drumalbyn, is not going to stop me. A question was raised by the noble Lord, Lord Erroll of Hale: and here I am bound to say that I think he has a debating point. I think that after seven or eight hours in the Chamber one must allow that one debating point should be conceded to the noble Lord. I think that his discovery, so to speak, in Schedule 2 of this reference to the 3½ per cent. is something of a score for the noble Lord. It is not final, because we shall find that it is laid down that the Schedule can be adjusted if the figures have to be adjusted. But I am ready to agree with the noble Lord. I myself—speaking entirely for myself—thought that that was something of a dialectic hit for the noble Lord, Lord Erroll of Hale.
The noble Baroness, Lady Wootton of Abinger, made a speech of exceptional penetration. I do not know whether anyone in the House is aware that she has written what I suppose is the best book on wages policy which has appeared in our time. Those who listened to her will feel that her speech was hardly "off the cuff", shall we say?—if ladies wear cuffs. It was, of course, a notable contribution, and I think she will feel that we are, as it were, moving on towards the position which she assumed in her book.
The noble Baroness raised one or two very detailed points, which, with her permission, I will take up with her in correspondence. But I certainly agree with her that if you look at the wages problem as a whole, the issues are much vaster than are involved in a temporary standstill. I think we ought to go back and read her book. Short of that, I would remind the House that Lady Wootton of Abinger was one of those who helped Lord Beveridge write his book Full Employment in a Free Society at the end of the war, at a time when I was holding Lord Beveridge's coat and making his tea. If anyone reads that book, they will realise that Lord Beveridge at the end of the war foresaw many of these problems. He saw that when you had full employment, the question of how you could secure income restraint was quite different.
§ THE EARL OF LONGFORD
May I finish the sentence for the sake of Hansard, and not for my own purpose? If you had full employment, then the problem of an incomes policy had to be tackled in a different way from anything we had seen in the past.
§ LORD REDMAYNE
My Lords, if the noble Earl is so high in praise of Lord Beveridge, why does he quarrel with the figure of the noble Lord, Lord Beeching, of 2 per cent., or even my figure of 2½ 2¾ or 3 per cent.? It seems to me to be wholly inconsistent.
§ THE EARL OF LONGFORD
No, I do not think so. We saw Lord Beveridge for many happy years in this House, and I do not think that one would argue that what was said exactly at the end of the war by Lord Beveridge in his book is necessarily Holy Writ any more than the pronouncements of Lord Beeching to-day. I was trying to indicate that the philosophy worked out by Lord Beveridge, and given a much sharper point by the noble Baroness, Lady Wootton of Abinger, is something we shall have to spend a great deal of time in studying as the years go on.
The noble Lord, Lord Reay, asked questions the other day which were raised in one form or another by other noble Lords—the noble Lord, Lord Byers, of course, and the noble Earl, Lord Swinton, and, from a different angle, by the noble Lord, Lord Kahn. I am referring now to the question of productivity agreements. Here, I thought the noble Lord, Lord Citrine, and later the noble Lord, Lord Williamson, put the whole matter in perspective. Nobody seriously supposes—I am sure noble Lords opposite do not; and they know industry well—that we would cure our present ills and rectify the balance of payments in the next year by new productivity agreements. They are going to take time. I think that was brought out clearly by the noble Lords, Lord Citrine and Lord Williamson. That does not mean that they are not valuable. But if we are taking measures in this rather extreme emergency, one cannot argue that productivity agreements are going to tilt the balance one way or the other.
I was rather melancholy as I listened to the noble Lord, Lord Byers. He seemed to have misunderstood the development of our policy in a way I had not 1447 expected of him, because I always feel that he is so acute in these discussions. He seemed to feel that we had almost lost our interest in productivity. If that was his feeling—and it was the gist of what he said—it is wildly remote from the truth. I am sure that there was never a Government which made greater conscious efforts to promote productivity than this one; and I am sure that they are being intensified at this moment. My noble friend Lord Shepherd assists at the D.E.A. in a number of ways, and I am sure that he would confirm this. There is no question of our slackening our interest in productivity. So the whole contrast which the noble Lord, Lord Byers, seemed to be drawing between our former interest in productivity and now this negative approach was a complete fantasy to me.
§ LORD BYERS
My Lords, can the noble Earl say how he expects to get increased productivity, quite apart from agreements, while he has a wage freeze? If he will tell me how you can do that, I shall be delighted. Will he also say whether productivity agreements entered into now will have full effect, or whether they have to wait the six-months period? This is a worrying point.
§ TI1E EARL OF LONGFORD
It is, shall I say, a complex point. I do not accept that this standstill will reduce productivity. I am not going to accept that there is this clash between the standstill and productivity. It is a matter of opinion, but I will not accept that from the noble Lord or from anybody else. With regard to productivity agreements, I have been taking some trouble to obtain an official comment on this. The noble Lord may feel that it is all too guarded, but he will not convict me of failing to take the trouble to secure an answer. It is recognised that here is a complex issue—partly for the reason mentioned by the noble Lord, Lord Kahn, that some of these productivity agreements are not as valuable as others. In some cases, as the noble Lord, Lord Kahn. said, the increase in productivity would have taken place anyway, or should have taken place. We certainly are here facing a complex issue. The existing ones will be caught. But the question then arises: what will be the extent of the 1448 postponement? They will be postponed for six months. That will be the nature of the postponement if they have not come into force already.
§ LORD BYERS
My Lords, is the noble Earl saying that at a time of economic crisis we can postpone the benefits of efficiency for six months? I cannot believe it.
§ THE EARL OF LONGFORD
The noble Lord is assuming that there will be benefits. I was trying to explain to the noble Lord that the benefits will not occur within six months. That is the short answer to the noble Lord. Perhaps I might pursue this a little further.
§ VISCOUNT SIMON
This puzzles me, my Lords. The noble Earl just said, I think, that productivity agreements would have to be stayed. I must say that I have read paragraph 18(2) as including most kinds of productivity agreements, because "resulting directly from increased output" I assume to mean increased output per head; and surely the object of productivity is that you do the same amount of work with fewer people or a greater amount of work with the same number of people. Is it not covered by paragraph 18(2) of the White Paper?
§ THE EARL OF LONGFORD
I am informed that they would be stayed for a period of six months. That is according to my information. Then, of course, there follows the period of severe restraint in 1967, and the new criteria will be introduced. But there would be this postponement of these agreements, unless they are in force already, for the period of six months.
However, I want to emphasise that we must face this question with all its many difficulties. The noble Lord, Lord Erroll of Hale, pointed to a number of difficulties, which I have no doubt will be explored when we come to the Bill. Of course there are difficulties. If it were an easy policy we should have adopted it some months ago, it has been adopted in the face of an emergency. It is not a policy we should have opted for originally with enthusiasm. But the question I repeat to the noble Lords is this: if we consider that the growth of incomes must be checked, what is the alternative? 1449 We may say it should be some sort of purely voluntary arrangement, without statutory reserve powers, whether in the case of the long-term plan or in the case of this temporary arrangement which lasts for one year. We could argue for that. But, having gone into that carefully—and here we had the support this afternoon of the trade union leaders—we are convinced it would not work. It would be a sham and would be misleading the country, not to mention our international creditors, to come down and talk about an agreed standstill when we knew it might not work. I would not say that it could not work—that would be a false use of words, because there is a chance that it might work; and therefore I repeat that I hope we shall not have to use the statutory powers.
The noble Viscount, Lord Simon, a great employer, would like to see these powers introduced as quickly as possible, and so would the noble Lord, Lord Kahn; other noble Lords, I suppose, hope they will never be introduced and regret the fact that they are included in the Bill. Ours is the middle position: we hope they will not need to be introduced, but if necessity arises we will not hesitate to introduce them, and I hope nobody will mistake the clearness of our purpose. We were criticised on an earlier occasion—and I hope I shall never come down to this House and complain of criticism—for speaking with two voices. We were told that if only we would speak firmly and clearly to the nation, the nation would respond. Well, I hope we are speaking firmly and clearly now. We are coming forward on the one hand with these far-reaching plans which will produce a far better atmosphere over the whole industrial field in years to come; but—if I may just get the attention of the noble Lord—
§ THE EARL OF LONGFORD
Well, part of it, and it seems to me not the best part of it at the moment, but I do not need the permission of the noble Lord to proceed. If I required permission I should ask for it elsewhere, but I was saying to the noble Lord before he began that little bit of patter that we are determined to make this absolutely clear. We are coming for- 1450 ward with a standstill which will be indispensable in the interests of the balance of payments and, therefore, the survival of our economy. I cannot say too often that we hope we shall not have to use these statutory powers, but if we do use them we shall use them with a clear conscience; and we hope, and I venture to think, that in the end the country, including noble Lords opposite, will be glad that we have done so.
§ On Question, Motion agreed to.