§ 2.54 p.m.
§ Viscount TRENCHARDrose to call attention to the great differences between the structure of and atmosphere surrounding the system of collective bargaining in this country and that of our competitors abroad; and to move for Papers. The noble Viscount said: My Lords, in rising to move the Motion standing in my name on the Order Paper I feel that many would first like me to echo their thoughts of sorrow at the death last week of Lord Douglass of Cleveland.
Several noble Lords: Hear, hear!
§ Viscount TRENCHARDMy Lords, I did not know him well personally as his industry was, as it were, at the opposite end of industry from my sphere, but I met him and I knew of him as a man of greatness, dedication and, above all, of moderate opinions to try to improve industrial efficiency in this country. 1 had hoped that he would have been taking part in this debate. It is our loss that he will no longer be able to give us his great wisdom.
I note, with some relief, the list of extremely distinguished speakers who are to follow me, and I believe that they will compensate for my lack of Parliamentary experience and will raise the level of this debate to the standard to which your Lordships are accustomed. My lack of experience has been due partly to my having been a fairly full-time manager in industry for the past 30 years. During those years I personally have had to perform trade union negotiations; I have had the nerve-racking experience of 325 industrial disputes and strikes, and I have had experience of those matters in other countries in Europe and North America. I have been responsible for companies in the same industries in different countries and for managers of many nationalities, and I have moved them from country to country, listening to their comparisons in addition to making my own. One's personal experience is inevitably limited to a narrow segment of industry, but from talking to many other industrialists in recent years I feel that the views that I shall be expressing today are widely held, even if not quite so widely expressed. I hope that the House will feel that this Motion follows well the debates in February introduced by my noble friend Lord Selsdon and by the noble Lord, Lord McCarthy.
I do not think that anyone will argue any longer that we have declined disastrously as a manufacturing country. Every survey, every report and every comparison shows it. The result is that, while our wage levels were, in 1950, in real terms above those of any other EEC country, we are now down to half in most cases, and even less in some. North Sea oil may give us a breathing space, but it will not give us more than that. I believe that the most important area for reform of British industry is to regain competitive efficiency in collective bargaining, industrial relations and trade union affairs. There are larger differences in those areas between us and competitor countries than there are in any other aspects of industrial performance. I do not think that simply because of my personal experience; I believe that it is self-evident that this area is the nation's Achilles heel. It is self-evident because British performance in many other areas since the War has been good and competitive, with productivity records even above those on the Continent. 1 refer to agriculture, to the City, to many of the service industries, to much of the retail industry and even to some parts of manufacturing industry.
The trouble and the lack of productivity lies mainly in the large labour employment areas of industry. Without the good performance of the sectors that I have mentioned, our standard of living, relative to those other countries, would have fallen lower still. The areas of 326 manufacturing industry which are successful tend to be those where smaller numbers are employed, at least per site. One must also note that many British owned and British managed enterprises abroad, in this case including even fairly large-scale ones, have been successful. Therefore, I believe that it is impossible not to conclude that this area is, indeed, the key area and, further, that there is no more wrong with British businessmen, investors and managers than there is with those of other countries. Of course, we must always struggle to improve, and there is plenty of room for improvement. But qualities will vary in all countries.
Why then are we uncompetitive, with such appalling productivity records in our large factories? I believe that it is probably because we had the Industrial Revolution first, ran into the problems of scale first, and made the most mistakes. Since then we have allowed to evolve the biggest mess verging on a degree of anarchy, mainly in those big factories: cotton, steel, the mines, shipbuilding, the docks and motor cars, and there are still other large ducks which are not yet lame. The sturdy individualistic British spirit was perhaps bound to react more fiercely to some of the more inhuman aspects of mass production. Tragic emotional struggles have been remembered and, indeed, have been handed down from heart to heart for far too long, as they have been in a totally different context in Northern Ireland.
Some may feel that the problem is simpler, and that good as British performance is in the areas that I have mentioned, our management is somehow incapable of motivating and communicating with very large numbers of employees. Not only have I seen them do it abroad but I doubt whether the experience of this nation at war would give any backing to that belief. Therefore, I believe that it is not coincidental that one also finds that there are greater differences between industry in this country and in others in the atmosphere surrounding collective bargaining and industrial relations.
I do not mean to suggest that there are not problems abroad—even the same problems—but the degree to which they suffer them is less, the disease is less virulent and for some reason or other we are extremely reluctant to try the cures
327 which some of those countries use. What are these differences? I shall emphasise Germany, the United States of America and Japan. However, I think that all successful competitor countries tend to accept the need to make the cake first before arguing about its division.
In Germany, with only 16 unions, participation for the profitable success of each operation is cemented through the legally-backed works council structure. I believe that the devastation of the German economy in the war also played a major part by ensuring that the whole population realised the need to remake the cake. In the USA there is no legal requirement for participaiton and no real movement to get one. It seems that the history of the enormous growth of that country, and of enterprises within it, over the last 100 years puts across the same point; namely, that cakes are of variable size, can be greatly enlarged and need to be baked before eating. In Japan lifetime employment by one enterprise as a custom and one union per enterprise effectively secure the same kind of atmosphere.
There is less legal immunity for trade unions abroad. We have been repealing legislation and, to a degree, excluding trade unions from legislation while other countries—particularly Germany and the USA—have been enacting. In virtually every country except Britain, agreements are enforceable and trade union leaders have to check that their members are prepared to honour an agreement—and their members have to say so—before they sign it. otherwise they put their funds at risk.
Membership of trade unions is much more voluntary, and more truly voluntary. The importance of this is that the leaders, who generally want to keep their eyes on what the mass of their members want, have to do so rather than being diverted by a militant, controlling and often politically-orientated minority. In the German case, the closed shop is outlawed. In the American case, it is not legal, but post-entry shops are allowed in most States. But the procedure for unscrambling such a shop is clear, relatively easy and democratic. Political ties for trade unions are forbidden in Germany and are less rigid in other countries. We would 328 make more progress in the efficiency of industry if we could stop it being a political battleground.
The deduction of union dues from pay packets is not common elsewhere, and where it takes place regular safeguards—better than ours—are, on the whole, provided. Controls on, even the outlawing of, political strikes, sympathy strikes, and strikes before procedures for settling disputes have been tried, are common. Controls on picketing tend to be greater. Procedures for democratic elections and for ballots before strikes are meticulously laid down, just as we meticulously lay them down for Parliamentary or local government elections. No one seems to have our particular system involving tax rebates, supplementary benefits and other factors which enable, at least in certain months of the year, long strikes to continue with relatively less hardship to those taking part than is the case in other countries. There are many other devices; arbitration is used to a greater extent in many countries.
Have we, perhaps, been over-compensating since we made those mistakes in the Industrial Revolution? Have we done this in Acts of the last century and of this? We were repealing our 1927 Industrial Disputes Act in 1946—at the moment when Germany, with its amalgam of laws and structure in the new Constitution after the War, and the United States of America, with the Taft-Hartley Act, were steaming in the opposite direction. We have also excluded trade unions from all-important provisions of the monopolies and restrictive practices legislation. These Acts apply more and more to those on the other side of the collective bargaining table.
I am sure that many noble Lords may feel that law is counter-productive in this area. Indeed, the urgency of our situation is such that, if a consensus for a code of practice could be reached and if reform could be brought about without much legal change, it would be very good indeed. However, I am not one who subscribes to the view that law spoils atmosphere. I also note the quite frequent recourse to law and suggested recourse to law when it is a question of furthering the interests of employees and of trade unions. However, while it takes time for new law to become established, if it is good law I believe 329 that it can condition atmosphere for the better. I believe that it is doubtful whether the number of transactions which are carried out in the City of London on the telephone could be so reliably carried out if there was not a law of contract in the background.
In quite a different context, 1 believe that if there were no law against robbery the number of thieves would probably increase. At any rate, I believe that we need most urgently a reform of our collective bargaining system to bring it in line with successful countries of the 20th century. Re-reading the Donovan Commission's Report, I believe that today they would agree. They recommended much reform and left many questions open for the future as that reform got under way. I, however, feel that they studied too little the systems in competitor countries.
I believe that the only theoretical alternative to reform in the current British framework is the continuation of an incomes policy. I believe that that involves continuation of the rÔle of the trade union leaders as the Government's henchmen to keep down their members' pay. I doubt if the phrase "flexible incomes policy" is a reality. I believe it is probably a contradiction in terms. No central body or bodies, I believe, can put all the factors required by a dynamic growth economy into a central formula. Even social justice is a matter of many opinions. I doubt whether we can ever sufficiently improve our productivity records, notwithstanding the efforts being made today, under an incomes policy of a kind, on the basis of an incomes policy. The stresses and distortions get larger with time and in each new phase—and, ironically, the injustices done to the weaker bargaining areas seem in practice to get worse under an incomes policy.
I believe that a Government incomes policy is a device reluctantly applied because the collective bargaining position is unbalanced, and the logical remedy would be to balance the bargaining position. Is it a pipe-dream to suggest that the trade union leaders might themselves initiate reform and discuss it with the other parts of industry? There are considerable advantages which would accrue to the trade union movement if they were to initiate such reform. I believe that it is perfectly possible to double the real wages 330 of their members in little more than a decade if we put our productivity records right. I believe that we can eliminate the shameful level of unemployment which we have today. I say this because with our current wage levels at half those of our competitors, and with North Sea oil and gas at our back, there is no reason why we cannot recover the large shares of world markets which we have lost. We have only to be as efficient in the large labour employment industries as we are in the agricultural, service, retail and small manufacturing sectors, to cut through world competition.
If the fears of employers were removed that major investments would not pay off in the current bargaining position, or that current participation schemes would be used as a means to obtain worker control therein, efficiency would be boosted further and we would get nearer to that target of doubling real wages. I do not believe at the moment that the image of the trade union movement to the public is very good, and according to opinion polls it seems to be declining. I believe that it would be enormously improved if the trade unions took a lead in major reform. I believe that most trade union leaders would like to see a return to free collective bargaining, or at least much freer collective bargaining, and I believe that an initiation of reform would make that possible.
I do not believe that monetary control and cash limits for the nationalised industries are, on their own, sufficient to enable the return to free collective bargaining in the British situation. Inflation would be quite certain to result again. The alternative before a British firm faced with an inflationary claim is to suffer great and sometimes quite unsustainable losses by refusing to grant it, or to risk a small loss of volume through increasing prices after granting it. In the big muscle areas they will grant such claims. If the money supply is kept fixed it will be the weaker elements of the population who will suffer. Firms which have a high indebtedness at a moment in time —often small ones—will find interest rates soaring as a greater share of a fixed money supply would be taken by the strong bargaining areas. It is in these areas that the standards of living would fall and unemployment would 331 rise. Eventually, of course, the big muscle areas would suffer too, but long before that time I think that any Government would be faced with the need to reimpose an incomes policy, or to print more money.
I do not think that we can rely on trade unions showing moderation to avoid inflation under free collective bargaining. I do not say this because there are not many moderate leaders and responsible leaders, nor indeed because of their difficulties in controlling some of their militant members at shop steward level, but rather more because I think we all in this world always think that our particular case for more is better than the other chap's!
I fear that your Lordships even now may be thinking that we could avoid major reform if our management was better in these large employment areas. I have said on a previous occasion that it takes a good and determined manager in an atmosphere of good industrial relations to spare even 15 per cent. of his time from routine duties. It is this 15 per cent. that can move an organisation forward and improve efficiency. If the whole of this time, and more, is taken up with negotiation with many unions at many levels on every management action, the organisation will tend to move backwards and even routine duties will get left undone, and we shall complain that management is poor. In my experience, the pressures on our management in our big factories in this country compared with others are unique and can become unsustainable.
Another belief is that we should get out of the large employment industries, and that "small is beautiful". I have not the time to spell out my feelings on this, but they could be summarised by saying that the big factories and the big employment areas are too large a part of our economy, and that I doubt whether we would continue to be successful in some of the small and beautiful areas if we are not successful and strong in industries such as basic steel and volume motor cars. I ask today, therefore, whether trade union leaders will consider putting together a package of reforms, not copying any one country but paralleling the kind of balanced situation that exists abroad. I do this because I believe that 332 the choice before trade union leaders is a choice which will decide, certainly after oil runs out, whether this nation continues to sink downwards into oblivion as an industrial Power—and some would say that it is almost too late—or whether we double our standard of living in a remarkably short time.
The choice that I believe is the right one is, I recognise, a very difficult one for them because it will undoubtedly involve curtailing some of the factory floor bargaining power--not their bargaining power but the factory floor bargaining power. But does not the alternative before long really mean that trade union leaders must permanently accept the rÔle of distributing inadequate wages in an increasingly poverty-ridden corporate State? This, I believe, is the inheritance that they could leave to their successors, but I hope and believe that they will rise to this enormous challenge and join in a determined effort to reach the not impractical target of doubling the standard of living of their members in little more than a decade. My Lords, I beg to move for Papers.
§ 3.20 p.m.
§ Lord CARR of HADLEYMy Lords, before I say anything else, I should like to associate myself with what my noble friend Lord Trenchard said about our sadness at the death of Lord Douglass of Cleveland. I first had the privilege of meeting him, I suppose, twenty years ago, not meeting him as often as I should have liked, but sometimes joining with him on work on a particular project: so I know as well as many what he has given to this country and how much we shall miss him.
I am sure that we are all grateful to my noble friend Lord Trenchard for raising this debate today; first, because of the opportunity it gives us to discuss what I am sure no one can deny is a subject of major importance both to the economic efficiency of Britain and also to the cohesion of our society and the satisfaction and sense of purpose which employees at all levels can find in their working lives. Secondly, we are grateful to him because, very much in the traditions of your Lordships' House, he has spoken to us as a professional and as a man who has had long experience of practical responsibility in conducting collective 333 bargaining both in Britain and in other countries. Therefore, we are listening to actual experience and not to either political doctrine or academic theory, and we must give it all the more weight because of that.
My noble friend said he believed that the most important area in British industry was the regaining of our competitive efficiency in the area of collective bargaining, trade union affairs and industrial relations. I agree with that because I believe that many of the other vital reforms needed will not, in practice, be successfully tackled until we have put our industrial relations upon a more orderly and constructive footing. Not all will agree with the absolute primacy which my noble friend gives to industrial relations in general and collective bargaining in particular. But even those who would not give it the absolute priority that he does would, I am sure, agree that it is a very important area indeed.
What I should like first to do is to consider what are the basic purposes of any--not ours, particularly—industrial relations system. They are surely, first, to determine levels of pay, including fringe benefits; secondly, to regulate conditions of work; thirdly, to promote the efficiency of each enterprise. in order to maximise the contribution of each enterprise to the total wealth of the nation; fourthly, to promote a growing sense of purpose and satisfaction which employees at all levels can obtain in their working lives; and fifthly, to make progress in all those objectives with the minimum of industrial strife.
Now, if those are the objectives of an industrial relations system, let us look round the world at other industrial countries and ask ourselves honestly how our present industrial relations practices are in fact serving these purposes, compared with what is being achieved in other countries. The answer, I think, if we are honest, is a rather depressing one.
In terms of real earnings, British employees, who used to be at or near the top of the international league, are now well down the table, and their position is falling lower every year. The same is true of fringe benefits such as holidays or provision for sickness and other benefits. The same is true of hours of work. The same is true of our levels of productivity 334 and therefore of wealth-creation, on which the standard of living of our whole society depends. The same is true of the degree of participation and co-determination enjoyed by British employees at all levels in the enterprises by which they are employed.
The same is unfortunately true of our recent—and I stress recent—record of industrial strife. In 1977 we had more than 2,600 recorded strikes, an average of about 10 new strikes recorded every working day during last year. Those figures do not include the stoppages which a strike in one factory causes elsewhere. This is an appalling figure. Apart from coal mining, it is a figure which is far, far worse than it used to be in the 1950s or for all but the last year or two of the 1960s. It is, in fact, over roughly the last 10 years that this really serious deterioration has occurred. I think that that is something that we ought to take into account. It is really only over the last 10 years that this deterioration has occurred, at least so far as industrial strife is concerned.
Luckily, of course, this is not the whole story of peace in British industry, because many industries and vital services in Britain are not strike-ridden at all. Many have never experienced a strike. Moreover some countries—for example, the United States and Canada, to take just two—suffer more than we do from really big and longlasting strikes. But among the major industrialised nations which are our chief competitors, no country, I believe, has, relative to its size, such a large total number of strikes.
Although most of our strikes may be small ones, they do immense damage because of the instability they cause in the particular enterprises where they occur, and also because of the chain reaction of dislocation which they cause, which spreads up and down the economy among both suppliers and customers at home and abroad. As the late Ray Gunter once said when he was Minister of Labour, the dilemma of British industry is continuous interruption of production lines; no one knows when it will strike next. This means that in many, if not most, of our largest factories and industries, industrial relations in Britain arc perpetually on the boil. There are relatively few and relatively short periods of assured stability and this really does differentiate British industry from the 335 industries of most of our competitor countries, as anybody who has had practical experience in different countries will know.
§ Lord BALOGHWill the noble Lord give way?
§ Lord CARR of HADLEYI shall in just a moment. Therefore, one very damaging result of this, I believe, is that the physical and mental resources of both managers and union officials in many industries in Britain are so exhausted by the demands of putting out fires that, as the noble Lord said in moving this Motion, far too little resource of time and energy is left over for constructive thinking and development. I really do believe that this perpetual ferment of industrial relations, even when it is not showing itself in the form of actual strikes, is a very serious detriment to the prosperity of this country as well as to the well-being and happiness of those who work in industry.
§ Lord BALOGHMy Lords, would the noble Lord not agree with me that his policy was one of the greatest causes of growing militancy? Secondly would he not consider that, given what he has done in legislation between 1970 and 1974, he should be the last person to address us in this way?
§ Lord CARR of HADLEYMy Lords, with due respect to the noble Lord, I would not agree. We could argue, although I do not intend to do so today, about the merits not only of the proposals which my Government—and I in particular, as Secretary of State for Employment—put forward, but also of those put forward in In Place of Strife by the previous Labour Government. We could argue about that, but I think we ought to recognise—and I hope we can seek for agreement rather than difference here—that whether those were right or wrong in their prescription, the policies put forward both by Mr. Wilson's Government in 1969 and by Mr. Heath's Government in 1970, were not the cause of the strife which I have been describing; they were the reaction to it. It was because there had been very serious deterioration compared with our previous good record in the field of industry as a whole, with the single exception of coal mining, that first 336 the Labour Government and then the Conservative Government felt, rightly or wrongly, that that sort of action was necessary. Their prescription may have been wrong, but their identification of an illness which required urgent treatment was, I believe, indisputably right and certainly not the cause of the trouble.
As I have said, that is not the whole story but it is very important. Here, then, is the scale and the nature of our problem compared with other countries, whether you look at levels of real wages, fringe benefits, levels of productivity or levels of employee participation and involvement or the degree of industrial strife. Of course these problems are not wholly caused by industrial relations failures. As the noble Lord said, collective bargaining in industrial relations is not bad in by any means all British industry and fields of employment. And of course it is not the fault solely of the British trade unions, nor indeed of British managers. I believe it is the fault of an old system which served us very well when conditions were different but which we have not been successful in adapting to meet conditions as they have changed so radically, particularly over the last 20 years.
In so far as industrial relations are involved, I want to discuss what we can do to solve these problems so that, once again, Britain's record in all these matters is, as it used to be, among the best. In particular, I want to think a little about what is the role of Government in this process. Of course this is a very controversial area, as the intervention of the noble Lord, Lord Balogh, has already demonstrated, and one which is politically and emotionally highly charged—and no one knows that better than I do. But I hope we can all agree at least with the proposition that in a free society our industrial relations system must be a voluntary one. This does not mean that the Government can keep out of it altogether. "Voluntary" is not by any means the same thing as "private". Indeed, at different times in our history employers and unions in turn have each assumed too readily that the conduct of their own industrial relations was their private affair and that everyone else should keep off the ground. This cannot be so because the efficiency and temper of our industrial relations affect drastically the wellbeing of the whole community, 337 so no Government can be indifferent to what is happening in industrial relations. Every Government, whatever its political Party, must intervene. The question is how and to what extent. As soon as we ask this question we are at once on controversial ground, of which mention has already been made, and I want to steer my way so far as possible away from controversy and towards areas of agreement.
Thus I hope we can all agree at least on two propositions; that is, if we are to have a free and voluntary system of industrial relations, then the State must not direct labour and the State must not get involved in fixing the detailed levels of wages, salaries and fringe benefits, except, of course, for its own employees. Apart from wartime, when the needs of maintaining a free society have temporarily to take second place, the State in Britain has kept safely out of the first of these areas; namely, the direction of labour. But for most of the last 20 years the State has got itself involved to an increasing extent in the second form of intervention; namely, the detailed fixing of levels of wages and salaries outside the field of the State's own employees. I believe that this is both dangerous in terms of democracy and inefficient in economic terms. Despite that, successive Governments of both Parties hare, much against their will and certainly to their grave political discomfort, found such intervention impossible to avoid. Why is this so and how can we escape from it? Why is it that other countries have been able to cope so much more successfully than we have with the problems, for example, of relating wages to productivity and, therefore, of controlling cost inflation without having to resort, if at all —certainly not as much as we have—to a Government-imposed incomes policy of a detailed kind?
As I have said to your Lordships on several previous occasions when discussing this area, I do not believe that our failure to do without incomes policies is because trade union members and their leaders in Britain are any less responsible or less well-informed or less patriotic than trade union leaders and their members in other countries. I do not accept such a suggestion for a moment, nor do I believe that our troubles in this field are because employers in other countries are all that 338 much more enlightened and skilful than they are here. As my noble friend said, from his own experience, he has seen British managers at work in other countries as well as here, and overseas they are perfectly able to achieve results which they are apparently incapable of achieving here.
So I do not blame the employers or the trade unions. I come hack to blaming our system and our failure to adapt it. As I say, I am sure that the basic reason is that systems of collective bargaining in the other countries are much more orderly than they now are in Britain and because in these systems in other countries the threat and the use of strike action is much more frequently held in reserve as an instrument of real last resort, as it once used to be here in Britain.
I agree very much with my noble friend when he says that the Government's incomes policy is therefore a device reluctantly applied because the collective bargaining system has gone wrong. If we want to avoid the use of this device in future, we must reform the collective bargaining system to meet the needs of modern conditions, otherwise I am sure that we shall keep on finding ourselves hack in Government-imposed incomes policies of a detailed kind. At the moment we are in another phase of disengagement. The official policy is described as an orderly return to collective bargaining. But what is the good of a return, orderly or not, to a system which is itself chaotic, because "chaos" is the only word which can be used to describe the state of collective bargaining in some —though not, of course, in all—important parts of British industry.
§ Lord BROWNMy Lords, I am trying to be helpful. The noble Lord has said two or three times that the Government have intervened in a detailed way in wages policies. I wonder whether he could explain a little more what he means by that. The public knows that they have intervened in setting an overall limit, which does not seem to equate with the words, "in a detailed way". I am puzzled by this constant reference to the "detailed intervention". It has not been detailed, has it?
§ Lord CARR of HADLEYMy Lords, if the current Phase 3 of the present 339 Government is not detailed arm-twisting of a pretty strong kind. and arm-twisting over details, including fringe benefits as well as other things, I do not know what it is. With respect, I think that the noble Lord ought to ask many employers. T say this with some diffidence because I know of his own experience in industry. I find it difficult to believe that he can maintain that the present intervention of the Government is not rather detailed and should be even more surprised if he finds many trade unionists who would say that it is not rather detailed.
In any event, let us forget the word "detailed"; it is surely too much—here I return to my main theme—because our basic system is in need of reform, not because British trade union leaders or their members, or British managers, individually and collectively, are particularly perverse or unskilful or anything else compared with their opposite numbers overseas. We are in this trouble because we are trying to operate a system which is no longer right for the circumstances in which we now live. If we want to get the State out of our hair in fixing wages, except for its own employees, and therefore to continue our free and voluntary system, we must set about bringing more reason and order into our methods of collective bargaining.
I end by outlining some of the main areas where I believe this has to be done and I shall suggest tentatively how we should set about trying to do it. First and most important is the multi-union situation in Britain, surely Britain's chief handicap. It is no good, however, just envying Germany with 16 unions, or other countries which have one union per enterprise; this is part of our inheritance. Unions are, or should be, voluntary bodies and they cannot be compelled to merge with each other, although in so far as they do merge, that may be a good thing and some of that has been going on. Basically, though, we have to learn how to live more successfully with this British handicap of multi-unionism. It is a potential and often a real cause of strife, first of all at the union recognition stage.
Inter-union rivalry—if not actual disputes—is never far below the surface in many British factories or industries. And even when recognition problems are 340 peacefully settled, the need to bargain separately with a number of different unions in any single plant is one of the main reasons why industrial relations are so continuously on the boil, and one of the main reasons for those leapfrogging claims which are surely one of the main causes of Britain's failure to keep wage and productivity increases as much in step with each other as has been achieved in other countries. Moreover, the multi-union situation is also the main cause of actual inter-union strikes, to say nothing of demarcation rules which do so much to reduce the efficiency of British industry, particularly where engineering maintenance of production lines is concerned. Thus, living with a multi-union structure is one area which we must tackle.
We must also improve the content and clarity of our collective agreements because they fail in these respects compared with other countries, and this point was of course most strongly urged by the Donovan Royal Commission. Then there is the need to improve the procedures for making sure that the terms of collective agreements are understood, accepted and observed by those to whom they apply, and, in particular for this purpose, to define more clearly how shop stewards are to be responsible and accountable both within their unions and to the employees who elect them. Then, and almost part of the two previous points, is the need to see that each and every collective agreement in Britain contains a proper disputes procedure which should clearly lay down the steps that have to be taken before there is any resort to strike action.
Then, I suggest—again, this is closely related—we need to make greater use in Britain of arbitration in settling what are called disputes over rights. I understand and sympathise with the reluctance of trade unions to accept arbitration in a dispute over interests; that is, when in making a collective agreement there is dispute between the two sides about the basic quantum of the rewards and so on which should go in the agreement. I accept that often that is not a satisfactory matter for arbitration either for the employer or the union, and perhaps particularly for the union. But having said that, it has always seemed to me irresponsible to refuse arbitration and to go instead to strike action when a dispute 341 is not over a basic interest but is over the meaning of a clause or clauses in an agreement to which both parties have agreed and which both have signed. Here, surely, is a field where we must make greater use of arbitration in Britain.
There are three other areas which I will mention very briefly. The first is the need to improve the present practice of mass meetings as a means of validating or otherwise decisions to go on strike or to return to work. The second is the need to define the proper role of picketing and the control of potential intimidation and violence as a result of what are really mass demonstrations and not picketing at all. The third is the need within the ambit of the closed shop to lay down proper safeguards for genuine conscientious objectors. Those are, I believe, some of the main needs, but how do we meet them? As Lord Trenchard pointed out, other industrial countries do so to a large extent by the provisions contained in their comprehensive industrial relations law. I do not want to press this controversial point any further today because, as I said, I am looking for agreement rather than controversy.
Also, I do not want to do it partly because we now have a better and fuller framework of industrial relations law than we ever had prior to 1970, in spite of what I still believe are some major gaps and unfairnesses. The Industrial Relations Act may have been repealed, but surprisingly large parts of it have reappeared on the Statute Book under different names and in guises not as radically altered as some people seem to imagine; but if it helps them to imagine it then I am delighted that they should go on doing so. However, I also want to go in a different way because, in the light of our recent history, I believe we both can and should now proceed rather differently.
I suggest the Government should make it absolutely clear to both unions and employers, preferably to begin with in private, that reform of our collective bargaining system is both necesssary and urgent. But having done that, the Government should then stand back and leave it to employers and unions to think among themselves and put their heads together in order to come up with concrete proposals. Out of this voluntary process, undertaken at the request of Government, I would 342 hope to see coming forward a series of codes of practice covering the sort of problems I have described, and there may be others as well.
Some of these codes of practice would be produced by the TUC, others by the CBI, and others no doubt would have to be joint documents agreed by both the TUC and CBI. These codes of practice, although not legally enforceable, would be public documents endorsed by the TUC or CBI, or both, and possibly also by Parliament itself. They would not create any legal straitjacket but would provide clear lines of guidance of a practical kind, and those who refused to take proper notice of them would be likely, I think, to forfeit the degree of public sympathy and support which in the end is the critical factor in a free society.
Here, then, is a possible way forward which would avoid the heat and controversy of further major industrial relations legislation but which would provide for specific action to tackle acute concrete problems. Perhaps there are better ways of approaching our problems. If so, I should he glad to hear of them. But surely there should at least be wholehearted agreement that changes and improvements there must be of a major kind and as a matter of urgency.
Our system used to work well, better than most, if not all, of the systems used in other countries. It is no longer working well, largely because there have been enormous changes in the conditions, structures and needs of both industrial and non-industrial employment. My theme, therefore, is that we must make changes to adapt to these wholly different conditions and needs. If we do not, the heart of our voluntary system will die. And when I say we must make changes I am not thinking just about the trade unions, although I am certainly thinking about them. I am thinking just as much about employers and I am thinking about Government. I am also thinking of the need to make many more improvements beyond our system of collective bargaining, which is the limited subject of today's debate. But I am convinced that if we could make our system of collective bargaining into a more orderly and stable system of responsible negotiation, we should soon in this country get higher real 343 wages, we should soon get fewer strikes, and we should soon get greater prosperity for the whole of our nation.
§ 3.50 p.m.
§ Lord ROCHESTERMy Lords, first, I should like to associate myself and my noble friends with the remarks that have been made about the sad passing of Lord Douglass of Cleveland. We shall, like others, miss his good sense, his humour, and his willingness always to seek common ground when it could be found.
I should like to join in thanking the noble Viscount, Lord Trenchard, for having initiated this debate on a matter which is of such vital importance to our country's future, and I think that he is particularly to be congratulated on the way in which he has framed his Motion in a factual and a dispassionate manner, so that we are not called upon to concur in any particular view. Because the field to be covered is so vast, I shall be selective and concentrate on a few points which, it seems to me, are of major importance, and on which, for the most part, I think noble Lords in all parts of the House might well agree.
First, in my view, the basic difference between us and our competitors is one of attitude: in many other countries there is a clear and a general recognition that, while conflict is necessary in collective bargaining, it is highly damaging, unless it is subordinated to the need for collaboration in increasing wealth for the benefit of the community as a whole. In Germany, Scandinavia, and the Low Countries the key institution, as the noble Viscount reminded us, is the works council, the organisation through which common interests of employees and management are identified, and ways of furthering those joint interests are discussed. The purpose is to involve not only trade union members but all employees in the success of their company.
Over the years European managements have learned to trust works councils with an enormous amount of information on finance and on investment planning, which is commonly discussed in detail before orders for new equipment are placed. This is not an occasion to make Party points, but I think I should say that the Liberal Party has long advocated the need 344 for the establishment of works councils in all companies above a certain size, and we think that unions have nothing to lose from this. Indeed, in the company for which I used to work, where among weekly paid employees there is a closed shop situation, all the employees on works councils, or works committees as they are called in that particular company, are, in fact, shop stewards, and that applies the whole way up the consultative structure, including the central business and investment committee which has recently been established at the very top.
Whatever the views of trade unions may be about works councils, whatever the structures under which collective bargaining and consultation take place in this country, I suggest that trade union leaders have a special responsibility in encouraging their members to collaborate with management in increasing—as the noble Viscount put it so well—the size of the cake before arguing about how it is to be sliced up. It is only in this way that we shall be able to finance the better educational, health, and social services that we all so earnestly desire to have.
This brines me to the second matter I should like to dwell on for a moment —again, one of attitude—and this time it concerns investment, for it is often said that investment. or the lack of investment, is a fundamental reason for our economic decline. As I have said, European practice is to involve employee representatives in discussing new investment, the return that is expected from it, and the manning standards on which the financial calculations are based. Of course, opposition to the investment plan may then be voiced from its inception, but it is judged better, in Europe, that this should occur while there is still opportunity for the plan to be modified, so that the frustration that occurs so naturally when people are confronted with a fait accompli does not take place, and management thus has to strive to gain commitment before investment decisions are taken. But, once obtained, that commitment is a very powerful argument in favour of the investment.
Such an approach, if it could be practised more widely in this country, would call for just as much change in the attitude of employees and of their representatives, for just as much change in 345 trade unions, as it does in the attitude of management. It involves, in particular, the renunciation of the habit which, though it has often formed the pretext for a so-called productivity bargain, is in practice a disincentive to investment and inimical to improved productivity. We must somehow rid ourselves of the bad, old British custom that new equipment is not worked unless management first make concessions to the employees immediately concerned in the form of increased wages or the provision of sonic other benefit.
In the same way, it is not the general practice in Europe for unions or employees to argue about manning standards before a new plant is in operation. Where there is argument it is likely to be confined to evaluation of the facts by common standards, by commonly accepted measurement techniques in which unions, as well as management, employ their own well-qualified practitioners. Unions are just as keen as management in Western Europe, as I understand it, to ensure that both labour and capital are used to the best effect, and that new equipment is put to work quickly and efficiently. For the employees and their representatives the pay-off comes when, very properly, the financial benefits that thus accrue to the company concerned have to be taken into account in the collective bargaining that follows at a later stage. Would it not help enormously to improve our industrial performance if employers and trade unions in this country, too, could co-operate in seeking to promote this kind of attitude to investment and to manning standards?
I was going to say a word or two about the way in which the unions, particularly in Europe, seem to contrive to settle their disputes, but I think that the noble Lord, Lord Carr of Hadley, has very largely done this for me. All I would say is that, in the light of our experience under both Labour and Conservative Governments during the last 10 years, it seems to me that we should be very careful before we seek, once more, to alter the law, at any rate in the immediate future, in relation to resolving industrial disputes.
However I should very much like to support what I understood the noble Lord, Lord Carr, to say: that it would be helpful if employers, trade unions and, indeed, it 346 seems to me, the Government and Opposition Parties could, apart altogether from this question of how far the law affecting collective bargaining should be altered, join together in pressing for agreed negotiating procedures to be universally established and adhered to, and, in the case of those disputes which involve the terms of existing agreements or their interpretation, for the parties to them invariably to have recourse to and abide by arbitration rather than take industrial action. I have a lot of sympathy with what the noble Lord said in relation to the method; namely, that, in our present situation, this might well best be done through some new or revised code of practice. Is this not one step which we could agree to take in the interests of us all?
Apart from historical causes, which were rightly touched on by the noble Viscount, Lord Trenchard, in my view the main reason why there are these great differences between the atmosphere surrounding collective bargaining here and that abroad is to be found in the huge amounts of time and money that are spent—for example, in Germany and in Scandinavia—on the education and training of management, supervisors and, particularly, employee representatives. I cannot go into detail now—there is not time —but I believe that management and trade unions in this country, too, have a joint interest in seeing that shop stewards, in particular, have at least an elementary training in the basic facts of how a business is run, the effects of alternative uses to which money can be put, the fact (and this has already been mentioned) that only improved productivity will bring higher real wages, and so on.
It may be that trade unions in this country do not themselves dispose of sufficient funds to finance the training of shop stewards on the European scale, but, in my experience, such training is best undertaken jointly by management and trade unions. I know that trade unions have some reservations about this approach. I understand those reservations, though I do not subscribe to them because I think they are based largely on a lack of trust. There are a number of firms in this country which are practising what might be called a participative style of management and which are now giving a lot of information about the business to their employee representatives, often 347 in response to requests for that information. I should like to suggest that a very much stronger lead in this matter should be given from the top, and that discussion of this whole question of education and training should be given a much higher priority by the Government, the CBI and the TUC; for example, on the agenda for meetings of the NEDC.
The last specific point I want to touch on—and I make no apology for this—is what I believe to be the adverse (I think I might fairly say the "adversarial") effect on industrial relations, and therefore on collective bargaining, of our present electoral system compared with those of our European competitors. In this connection, I am not going to beat a Liberal drum but I want to refer your Lordships to a very significant letter, as it seemed to me, which was published in The Times of January 17, by Sir Anthony Bowlby and others like him who hold or have held very senior positions in the field of industrial relations. They included, in particular, a past chairman of the Commission of Industrial Relations and the present Director of The Industrial Society.
In this letter the point was made:
In all European countries trade unions have strong ties with the political parties of the left while employers tend to support parties of the right, but in many of them this does not exacerbate their industrial relations, because the electoral systems of those countries do not polarize their politics. But the present electoral law in the United Kingdom … fosters the existence of two parties only, one of the left and one of the right, and eliminates parties of the centre by radically reducing the value of any vote cast for them.They go on to say:The consequences of this for our industrial relations have been serious. By exaggerating the swing of the vote in general elections the 'first past the post' system has enabled successive governments not supported by a majority of the electorate to make sharp changes in opposite directions in the law concerning industrial relations.These well qualified writers conclude:In the difference between their electoral systems and ours we can see one reason why industrial relations are so much better in Germany, Austria, Scandinavia and Benelux than here, and why informed opinion within the European Commission holds that we must reform our electoral law before we can solve the problem of our industrial relations.I do not for a moment suggest that because, in general, our system of collective 348 bargaining appears to operate less effectively than that of many of our competitors we should immediately seek to transplant their system into our very different environment. We have to start from where we are, and not from where any of us think we ought to be. For example, because Germany does not seem to find it necessary at the moment to have a formal incomes policy, though in 1966 and on several occasions since the German Government have intervened very strongly to influence collective bargaining in that country, it does not, in my view, follow that we should now return to a system of so-called free collective bargaining. For one thing, the Germans are very much better educated in these matters than we are. I understand that the argument at present running between employers and trade unions in Germany is broadly as to whether the new going rate should represent a wages increase of 4 per cent. or 5 per cent., compared with our current 10 per cent.-plus. In my view, what we now very badly need in this country are agreed long-term procedures for the determination of wages and salaries generally; but I do not propose to pursue that subject now.I must end where I began. I believe that this is basically a matter of attitude. I do not believe that attitudes can be changed by legislation or by re-structuring: there needs to be the will. There are, in my view, no short cuts. Change will come only gradually and painfully, through better leadership on the part as much or more of trade unions—and here I very much agree with the first two speakers—as of management. It will come by example, and particularly by long-term education. Speaking for my noble friends, I very much hope that this debate will help in that process of education by bringing nearer the time when there will be agreed action, on some such lines as I have sought to suggest to your Lordships, between the Government, the Opposition Parties and, particularly, between employers and trade unions for the benefit of the country at large.