HL Deb 10 February 1971 vol 315 cc165-72

3.50 p.m.

THE MINISTER WITHOUT PORT-FOLIO (LORD DRUMALBYN)

My Lords, with the leave of the House I should like to repeat a Statement made by my right honourable friend the Secretary of State for Employment in another place. The Statement is as follows.

"The Report of the Court of Inquiry chaired by Lord Wilberforce into the dispute in the electricity supply industry is being published this afternoon. Copies are now available in the Vote Office"— and, in parenthesis, I would add, in the Printed Paper Office of your Lordships' House—

"It makes three main recommendations.

"First, the Court makes recommendations about rates of pay. For all industrial staff other than skilled workers, the Court recommends that the employers' offer of an increase of £2 a week should be accepted as fair and reasonable and should take effect from last September. This recommendation covers around two-thirds of all industrial staff. The Court recommends that this offer should be increased by £35 a year for skilled workers only and that some increase should be made in shift allowances. It also recommends that the employers' offer of one day's additional holiday should be increased to three days. The Court recommends that these improvements over and above the employers' offer should take effect only from December 14 when industrial action ceased.

"Secondly, the Court recommends a speeding up in the introduction of the local incentive bonus schemes provided for under existing agreements dating from 1967. It considers these by far the best way of ensuring an efficient and well-paid labour force, and believes that the present rate of progress is too slow and causes real dissatisfaction amongst unions and employees. As an incentive to both management and employees to make more rapid progress, the Court recommends a scheme of 'lead-in' payments to operate by June 1 for those groups of workers who are not by then covered by bonus schemes. Such a group would be offered a 'lead-in' bonus if a majority of employees in that group formally accepted by majority vote the introduction of a bonus scheme in principle, the carrying out of such work study and work measurement as would first be necessary and the need to run down the number of employees to the point where a bonus scheme could be introduced and bonuses earned. Thereafter each individual worker would be asked to sign a note of acceptance. The 'lead-in' payments would be 20s. a week increasing to 30s. in October, 1971, and to 40s. in January, 1972. They would however stop once a bonus scheme was introduced or such a scheme was rejected. The economies to be achieved are in the Court's view of such a scale that these payments should not add significantly to labour costs.

"Thirdly, the Court found that the action of the Unions in refusing to let the dispute go to arbitration was a breach of their Agreement and the Court deplores this action. The Court also finds that the action taken during the work-to-rule was in many areas in breach of agreements, and that it was wrong for the Union leaders to put the public at risk by a failure to issue more specific instructions to their members. The Court recommends that obligations and responsibilities should be clarified for the future.

"In framing these recommendations the Court considered in particular the productivity record of the industry, including the contribution the Unions and the employees have made, and the bearing of the public and national economic interest. The Court says that it recognises that the country is at present in a dangerous condition of spiralling inflation; and that it should have regard to the dangers of giving this an extra twist. It concludes, however, that set against past and prospective performance in the electricity industry and the special factors relating to this case, the settlement it recommends ought not to intensify inflationary pressures.

*"The employers estimated that their last offer would have increased average earnings by 9.7 per cent. On the same basis the Court's recommendations would represent 10.9 per cent. in the year from September, 1970. The total addition to the wage bill should, however, be substantially less than this with the continuing reduction in the labour force which the Court believes should be accelerated with the more rapid extension of bonus schemes. It is in this way that the Court believes that electricity workers can best—and justifiably—benefit from increased efficiency in the industry.

"The Court makes it clear that its recommendations are related specifically to the circumstances and special factors in the electricity industry, particularly the contribution that the Unions and employees have made and can increasingly make in improving productivity. There is therefore no question of the Court's recommendations being applicable in other industries in different situations. I must reaffirm—as the Court itself accepts—that if inflation is to be brought under control the general level of pay settlements must be reduced as rapidly as

* The last three paragraphs of the Statement were omitted in error by the Minister Without Portfolio, and are recorded by leave of the House. (See c. 235.) possible to a level much closer to the general rise in national productivity.

"I have communicated the Report to the employers and Unions concerned, and I understand they will be discussing it together at an early date. I hope the recommendations in the Report will provide an early settlement."

That, my Lords, concludes the Statement.

LORD CHAMPION

My Lords, we are grateful to the noble Lord, Lord Drumalbyn, for repeating the Statement which has been made in another place. It is a very important Statement and it was a very important Report that caused the Statement to be made. I must say straight away that I welcome the Minister's general acceptance of the Report and his clear recommendation to the parties concerned. I hope that this will have the effect of bringing peace to this industry which will last for some time, so that the public will not again be put at risk of the difficulties we experienced last year.

There are one or two questions that I should like to ask the noble Lord. Can he tell the House whether there has been any indication to the Minister, Mr. Carr, of the union's attitude to the Report? I know that it is a little early, but the Report has undoubtedly been in their hands now for some little time. Can the noble Lord tell the House, in general terms, what was the Court's reply to the terms of reference relating to the national interest? Did the Court accept it as a proper function of a Court of Inquiry that it should have regard to the national interest or did it reply that this was more appropriately a matter for Government and not for such a Court?

Judging by the Statement, and by the figures that are in it and what I have been able to reckon so far, it appears that the Court has made recommendations which total, together with the improvement to be made later this year, some 15½ per cent. That is the figure as it appears to me, but I have not yet had the opportunity of seeing the Report itself. Without wishing to embarrass the Government, may I ask whether the Minister can say whether this sort of increase will be looked upon favourably in connection with the claims of the gas industry? I believe that such claims have been awaiting this Report. Will such a settlement be possible if the likely productivity within that industry is in any way comparable to that which the Court has found in relation to the electricity supply industry?

Then it seems to me that the Post Office management, and the Unions concerned, have been awaiting this Report. Will the Minister now call together the two sides in the Post Office dispute in an endeavour to bring about a settlement of a dispute which is disrupting the business of the country? I believe that ought to be done as soon as possible.

My Lords, we are bound to need a little additional time to study this Report before coming to a final conclusion upon it. In the main, however, it seems to me that this has been a Court of Inquiry—it was pressed for by our side, in the other House and here—that has justified itself and, I am bound to say, has to some extent justified the claims of the electricity unions concerned. I am sorry that I have asked a number of questions, but I think that they are important in this context and I shall be happy to receive replies to them.

LORD WADE

My Lords, may I join in thanking the noble Lord, Lord Drumalbyn for repeating the Statement? I certainly hope that this Report will lead to a settlement. I propose to limit my comments to one question—I think it is one that raises a matter of considerable principle. Does the noble Lord agree that the Court not only acknowledges the value of productivity agreements but also recognises that all those who by the nature of their jobs cannot enter directly into productivity agreements should nevertheless share in the overall benefit?

LORD DRUMALBYN

My Lords, I thank the noble Lord, Lord Champion, for his reception of this Report. I hope he will maintain that reception, in spite of the fact that I am bound to tell him that his estimate of the effect, in terms of proportion of increase in earnings, is rather more than the Court itself considered it to be. The estimate before the Court was that the total cost of this would be an extra 10.9 per cent.

LORD CHAMPION

That is the immediate cost.

LORD DRUMALBYN

Yes, my Lords, 10.9 per cent. is the immediate cost. As to the cost so far as productivity arrangements and incentive bonuses are concerned, these of course are contingent on and very closely tied to—as we believe it quite right to do—individual productivity within groups; and one has to bear in mind that this is not included in the 10.9 per cent. But it is not expected that when any new schemes of this kind are introduced they will materially increase the total electricity bill for wages.

The noble Lord asked whether there has been any indication of the Unions' attitude to the Report. The answer to that is, "Not yet". I do not think they have had it for long enough. He also asked what was the Court's comment on the terms of reference relating to the national interest. I do not think I ought to put a gloss on this, but in Chapter 4 of its Report the Court deals with the questions at issue and says there that it would have taken account of the public interest, of the national interest, whether or not it had been told to do so.

Then the noble Lord asked whether the sort of increase recommended in this case would be looked on favourably for other industries. The Report makes it clear that the Court is relating its recommendations not only to financial interest but also to the specific conditions within the electricity industry itself. It follows, therefore, that the Court recognises that in every industry there may be special considerations that have to be looked at, but it places very great emphasis on the need to have regard to what the Court calls the dangerous situation of spiralling inflation at the present time. I was also asked whether my right honourable friend would call together the two sides of the Post Office. I am sure that the House will recognise that it must always remain entirely within the discretion of the Secretary of State to judge the best moment for doing this kind of thing. Of course he will watch this situation very closely indeed, as he is doing just now, in order to find a suitable moment.

I am bound to say that I did not quite understand the implication of Lord Wade's question, but if what he means is that in considering productivity agreements, those who are negotiating should consider not only those immediately concerned but also the interests of the public at large, I would say that the answer is most certainly, Yes.

LORD WADE

My Lords, would those who do not directly benefit from a productivity agreement but are employees benefit by this incentive bonus or in some other way?

LORD DRUMALBYN

My Lords, none of us has had an opportunity of reading this Report very closely. But in reply to the noble Lord's last question I would say that it seems to be the case that it is possible for all industrial gradings to be covered by the productivity agreements, and the Report does not look beyond them.

LORD CHAMPION

My Lords, the noble Lord rather doubted the figure which I gave. Will he tell us what are the figures in the Report, which starts with the figure he mentioned for the immediate increase, and then the total? Am I not fairly near to it in saying about 15½ per cent. overall?

LORD DRUMALBYN

My Lords, as I said, it is impossible to say what the overall figure would be. I suppose that one could give a figure if one assumed that the productivity and incentive agreements would extend to everybody over a period of time; but, of course, it is not envisaged, even in the Report, that this would be achieved very quickly. In fact, the evidence that was put before the Court (if my memory serves me correctly) is that 50 per cent. of the industrial gradings might be covered by the end of this year.

On the point of what was the actual estimate in the Report, the estimate of 10.9 per cent. is not in the Report, but I am authorised to say that the Court has confirmed that this is the figure that was before them.

LORD ROBBINS

My Lords, may I ask the noble Lord whether he is in a position to reveal to the House at all the grounds on which the Court has asserted that an award of this order of magnitude is not inflationary?

LORD DRUMALBYN

My Lords, the Court has expressed its belief that the award will not add a further twist to inflation.

LORD COOPER OF STOCKTON HEATH

My Lords, would not the noble Lord agree that it is undesirable to take a percentage figure on this recommendation, in view of the fact that the award obviously does different things to different categories? Would it not also be advisable for this Chamber to take note that the Inquiry has chastised the Unions for not going to arbitration? Let us be wise in our turn and accept the findings of the Court, and not start questioning them.

LORD DRUMALBYN

My Lords, I am very grateful for what the noble Lord has said.

LORD BROCKWAY

My Lords, may I ask whether I heard correctly that the unskilled workers are to get no advance beyond the 8 per cent. that was previously suggested? Is it not the case that the first priority to-day should be to raise the living standards of the unskilled workers, many of whom are not receiving a living wage?

LORD DRUMALBYN

My Lords, I understand that the original proposal was that there should be a flat rate increase right across the board. The Court considered that it would not be right to put the skilled craftsman at a disadvantage vis-à-vis the skilled craftsman in other industries, and therefore it was desirable to give them rather more than is given to the unskilled worker.