HL Deb 22 March 1967 vol 281 cc763-8

3.50 p.m.

LORD SHEPHERD

My Lords, I think that it would be for the convenience of the House if, with your Lordships' permission, I were to repeat a Statement that has just been made by my right honourable friend the First Secretary in another place. The Statement is as follows:

"The Government has been considering in consultation with representatives of management and trade unions the lines on which the prices and incomes policy should develop after the end of June. I am laying before the House this afternoon a White Paper summarising our views on this question, copies of which may now be found in the Printed Paper Office. But the House will wish to have a brief indication of the main points in it.

The essence of a prices and incomes policy is that growth of money incomes should be related to growth of real wealth, and that movements of prices should give adequate return to producers while ensuring that consumers and workers share in the benefits resulting from improved methods of production. The value of such a policy is that it can give everyone in all walks of life and every place of work a clear interest in increased efficiency; and that it can so safeguard our balance of payments as to make possible sustained economic growth and a high level of employment. In the last six months of last year the policy took the form of standstill; at present it takes the form of severe restraint. These forms are a temporary product of necessity. As growth proceeds, prices and incomes policy can become less restrictive till it reaches its full stature as one of the instruments for ensuring that wealth is more efficiently produced and more justly shared. We have yet to reach that stage; but after the middle of this year it will be right to have more flexible arrangements than those now in force.

On the prices side, the Government attach great importance to continued efforts to restrain price increases and to encourage price reductions. The criteria which should govern price behaviour will be those laid down in the White Paper of April, 1965 (Cmnd. 2639), which were agreed between Government, management and unions. A necessary part of prices policy is that the voluntary arrangements for early warning of proposed increases should continue to apply and where appropriate we will be discussing development of the arrangements with the C.B.I. and interested trade associations.

On the incomes side it would be inappropriate in our present economic circumstances to reintroduce a positive norm on the lines of the annual norm of 3–3½ per cent. which prevailed up to July, 1966. In the 12 months beginning on July 1 next we do not think any group of workers ought to expect to receive an increase in pay simply and solely as a result of the passage of time. Any proposed increase ought to be justified against specific criteria. As in the case of prices, these will be the less restrictive criteria which were laid down in the White Paper of April, 1965. The White Paper which I am presenting this afternoon also draws attention to certain additional considerations which need to be taken into account.

The continuation and development of the voluntary early warning arrangements for pay are of great importance. We welcome the decision of the T.U.C. to strengthen its own arrangements for securing notification and vetting of pay claims. A successful prices and incomes policy depends on a wide measure of agreement between Government, management and unions. It is our intention to encourage the voluntary operation of the policy, and in this context we attach great importance to the role of the C.B.I. and the T.U.C.

As the House is aware, Part IV of the Prices and Incomes Act will expire on August 11, 1967. The Government's objective is to achieve a return to full reliance on a voluntary operation of the policy as quickly as possible. On the matter of reserve powers the Government are consulting further with the C.B.I. and T.U.C. and I shall make a further statement after Easter.

I do not underestimate the problems of achieving an effective policy for productivity, prices and incomes, but I believe that the whole nation now recognises the need for such a policy and will not be content to return to a so-called "free-for-all" which is in fact injurious to all, and strikes its hardest blows at those who are least able to defend themselves."

My Lords, that is the end of the Statement.

3.55 p.m.

LORD HARLECH

My Lords, I am sure we are grateful to the noble Lord for repeating this Statement that has been made by the First Secretary in another place, and we shall, of course, study with the greatest interest the White Paper that has become available this afternoon. But it seems to me that the only comment one can make on this Statement of so-called policy is that it is a Statement of non-policy. We are referred back in the Statement on both prices and incomes to a White Paper of April, 1965 (I have just refreshed my memory of it), which amounts to little more than a series of pious aspirations, and which did nothing to enable the Government to avoid a serious crisis last year. Are we to understand that the Government have learnt nothing since April, 1965?

More particularly, are we to understand from the verbiage contained in this Statement that the absence of a positive norm means, in simple language, that for the 12 months beginning in July this year the norm is to be zero? And, in turn, does this mean that for the same period the Government estimate that there will be no measurable increase in gross national product in this country? If this is really the case it means that at the end of nearly four years of Socialist rule this will be the sum total of their efforts.

LORD SHEPHERD

My Lords, may I intervene for a moment? I think that when he has had an opportunity of reading the White Paper—and I fully understand that he has been unable to do so—the noble Lord will regret the words that he has used this afternoon. We have sought since we came into office—and I think those who have any interest in industry will recognise that there has been a great achievement by management, unions and Government—to find an agreed policy. In a free society this takes time. I think it would be utterly irresponsible of anyone to suggest that we have not achieved a very remarkable acceptance by the three partners in industry and in the control of our national economy.

I would ask the noble Lord, and other noble Lords, to read this White Paper very carefully. The noble Lord mentioned the fact that we are suggesting that on the overall question the rise in incomes should be zero. This is correct. When he sees the White Paper he will recognise that there will be increases for some who come within the criteria, and in particular for those who may be involved in true productivity agreements. But if we look at the results when we set the previous norm at 3–3½ per cent., the nation as a whole seemed to believe that that figure was to be the norm for each and every individual worker in the country, when clearly this was not so.

Therefore, what we are seeking is that our workers should recognise that incomes can rise, if they are not to cause difficulties in our balance of payments and general inflation, only with the rise of productivity. In these circumstances, we have set the total figure in the sense of zero norm in order that people will realise that there should not be increases in salaries by right, or simply and solely as a result of the passage of time. There will be increases in salaries and wages, but they should be judged against the criteria in the White Paper.

The Government have learned a great deal, but when I listen to the noble Lord, and particularly his right honourable friend who I believe is the spokesman on Defence in another place, who referred to a prices and incomes policy as "Fascism", I feel that the Opposition have learned nothing.

LORD BYERS

My Lords, may I ask the noble Lord whether he is aware that there are other people in the House who find this Statement somewhat puzzling? Would it be possible to clarify one particular point? The Statement says: We welcome the decision of the T.U.C. to strengthen its own arrangements for securing notification and vetting of pay claims. It goes on to say that it is the intention of the Government: to encourage the voluntary operation of the policy, and in this context we attach great importance to the role of the C.B.I. and the T.U.C. That I think is quite unexceptionable. But where in the Statement is the role of the C.B.I. and the T.U.C. specified?

LORD SHEPHERD

My Lords, the role of the C.B.I. and the T.U.C. is well understood by both these bodies and by the Government. They are seeking to co-operate on the notification of rising prices and encourage, if they can, the reduction of prices and, so far as the T.U.C. are concerned, the notification of increases in incomes. We wish this to continue, and we have no reason to believe that it will not do so. I hope that our discussions with the T.U.C. and the C.B.I. as to further measures which may have to be taken will be continued, and that we shall be able to make a statement shortly after Easter.

LORD BYERS

My Lords, have I perhaps missed the point? Is there any reference in the Statement to the role of the Prices and Incomes Board?

LORD SHEPHERD

My Lords, there is no specific statement, but it is in the White Paper.

LORD ST. HELENS

My Lords, the Minister appeared to rebuke my noble friend and to suggest that he was not making a very responsible comment. May I ask Her Majesty's Government this question? Having clamped down strictly on the spending in the private sector of industry, when are they going to show a little responsibility by clamping down on public expenditure, which is under their control?

LORD SHEPHERD

My Lords, the noble Lord should not abuse the system which is normally followed in your Lordships' House. We are to-day dealing with a Statement on Prices and Incomes. The noble Lord is going very much wider than that, and I certainly do not intend to break the rules by following him.

LORD HARLECH

My Lords, I asked the noble Lord whether, in view of the fact that the norm for the 12 months from July of this year is to be zero, this is an indication that the Government do not expect any measurable increase in the gross national product in the 12 months from July?

LORD SHEPHERD

My Lords, the Government certainly expect that there will be an increase in production, as I think I suggested to the noble Lord, Lord Inglewood, the other day at Question Time. By a nod of his head the noble Lord approved of what I said. There are already signs of increased production. If we take the motor car industry as one of the guide factors, their production is increasing. Therefore from the Government's point of view we have every reason to believe that production over-all throughout the country will increase during this year.

LORD HARLECH

My Lords, is the noble Lord prepared to give an estimate?

LORD SHEPHERD

My Lords, unlike the noble Lord, I do not intend to be as foolish as that.

LORD HARLECH

My Lords, I do not know about being foolish, but the noble Lord was responsible for a National Plan which purported to suggest what the total national product was going to be in 1970.

LORD CARRINGTON

Answer!