COLLECTIVE BARGAINING

HL Deb 10 April 1978 vol 390 cc357-442

4.24 p.m.

Debate resumed.

Lord COOPER of STOCKTON HEATH

My Lords, in resuming the debate on the Motion before us, may I first of all express our indebtedness, as other speakers have done, to the noble Viscount, Lord Trenchard, for giving us the opportunity of looking at this matter in a different setting. I would also, with sadness, add my voice to those of the three previous speakers in regretting the loss of Lord Douglass of Cleveland, who was head of the steel workers' union for many years and had an excellent and peaceful record of industrial negotiations with the steel companies. Even on retirement, he worked very hard indeed with groups of people—there are many in this country—concerned with doing all they can to improve industrial relations.

I should like to take up a point made by the noble Lord, Lord Rochester, in regard to training. I entirely agree with what he said, but I should not like him to think that there are not some very good training schools. In fact it was one of my prides and joys to introduce the first one in my union. Now we have two full-time schools which will accommodate about 80 persons full-time. That is a very good step, and it is needed with the developments and complications of industry. A trade union official's job today is very difficult indeed and he needs a very high level of training to assist him.

In approaching this Motion, I am looking for improvements and trying to pinpoint where improvement is possible; I do not wish to be partisan nor to express partisan criticism. I regret two of the points that were made by the noble Viscount, Lord Trenchard, which I felt were unfortunate. He referred to America, not in glowing terms, but in comparison with our own record. I could not help but reflect that they have just finished with a three months' miners' strike. That is something which we could not stand and it illustrates something I shall refer to later. It is very difficult comparing nation with nation.

The noble Viscount also referred to the close links of trade unions with politics, by which, I suppose, he meant with the Labour Party. This was regrettable because I do not think it is too material these days. It is an historic association going back to the turn of the century, and at the turn of the century trade unions found out, very naturally, that all their endeavours came up against a blank wall so far as Parliament was concerned. Parliament had a very great influence and so the unions started to look round to see what they could do about Parliament. Strange to say—this is very interesting—they formed a Lib-Lab pact with the Liberals. In the 1906 Elections there were Lib-Lab candidates; and so that is how they set about it. We do not want to discuss political philosophy today, but for something like 50 or 60 years I have known that in the constitution of the Labour Party you have that phrase which every good Labour man should learn: the aim of the Party is to secure for the worker by hand or by brain the full fruits of his labour and the most equitable distribution thereof". Of course you might find that in the rule books of the unions, or words to that effect; so there was a common sympathy between the trade unions and the Labour Party. But, in this day and age, with all its complications, the trade union movement, expressed through the TUC, does not discriminate between the Labour Party and the Conservative Party. That is on record. The Conservative Party did ask that they should be allowed to meet with the TUC, just as the Government were doing, and we gave that assurance. Again, of course, it would not profit anyone to go through with the experience of discussing with a Labour Government and discussing with a Conservative Government because it was sometimes possible, because of political philosophy, to see eye to eye with the Labour Party but not with the Conservative Party.

Let us now look at this Motion. It has been rightly said that industrial relations is a never-ending study—

Lord CARR of HADLEY

My Lords, before the noble Lord leaves his reflections upon history, will he allow me to remind him, just to get the record complete, that it was actually a Tory Home Secretary in Disraeli's Government, Mr. Cross, who was invited by the TUC to attend a TUC Congress to receive their grateful thanks for the legislation which really put the trade unions on their feet in this country?

Lord COOPER of STOCKTON HEATH

My Lords, we should not start another debate on this. But I must say that, since the turn of the century, the Conservatives have learned a lot. Let me speak to the Motion. I was saying that industrial relations is a never-ending study, and it is also a very wide field of study with a variety of approaches Today, we are invited to take notice of. the great differences between the structure of and atmosphere surrounding the system of collective bargaining in this country and that of our competitors". My broad reaction to this Motion is that good industrial relations cannot be borrowed or imported. They can be achieved only by great patience, particularly by those involved in the art of negotiation at all levels, who accept that the purpose of negotiation is to reach agreement. It is important to appreciate that trade union structures and the atmosphere surrounding collective bargaining depend to a great extent on the environment in which they operate. I think that it is worth looking for a moment at a few examples of this.

The emergence of effective shop-floor bargaining is a reaction to the development of highly concentrated industry. Where continuous-line production exists, it does not require a wizard to recognise the newly created power placed in the hands of the local negotiator, the shop steward. A similar development of power in local hands occurs when a large industry depends for its components on a small but highly concentrated factory. My point here is that industry has become highly concentrated, and this has been done very deliberately. Today, there are, of course, people who are asking—I think that even the Swedes are asking—whether it would be better to have smaller units, because of the personal contact and so on. The noble Lord, Lord Rochester, has mentioned his company, which shall be nameless, but I must say that it has an excellent industrial relations record although it is a very large company. That has been achieved by dint of breaking down and keeping a group situation, where supervision is very close to the man on the shop floor.

Another example of trade unions being affected by environment is West Germany, which has already been referred to. After being destroyed by Hitler and by total defeat in war, a new trade union movement was established in Germany. This was created by the occupying Powers on a structure built upon British and American blueprints, so that they had a complete trade union movement created for them. The late Vic Feather, who was a Member of this House for a short while, spent a great deal of time in Germany helping to create the new trade unions. It goes without saying that, if you are starting from scratch again, you know of the mistakes which you made earlier, so you avoid them and get a better result.

To take the Scandinavian countries—and these are very sweeping and general comments—they had their industrial revolution much later than ours and they benefited from our early experiences. The United States, which has been mentioned several times, took a sudden leap forward in growth as a result of the New Deal legislation in the 'thirties. 1 think that the industrial legislation dated from the beginning of 1935, and that resulted in the provision of an elaborate legal framework in which American unions operate.

In this consideration let us not forget the situation in Communist countries where, notionally, the unions are strong, with 99 per cent. membership, but are, in effect, agencies of the State. This subject would take us into the realms of political philosophy, but these unions are quite different from those that we know. Recently, we had discussions in this House when apprehension was expressed about competition from Communist countries, so that these countries are competitive just as are others in Europe, of which mention has been made. So much for differences in the varying social, political and economic factors.

In considering the structure of British trade unions, it must be remembered that Britain's is the oldest trade union movement in the world. In fact, in my earlier days, when speaking to trade union classes, I used to say that the British trade union movement is like Topsy—it grew up. We are suffering from age, and it is very difficult to adapt oneself to change, although, having regard to all the circumstances, we do a good job. "In its over 200 years of existence, the movement has undergone many changes, particularly as a reaction to the attitude of Governments. At times the movement has been treated as an illegal conspiracy. Of recent years it has been treated as a partner of Government, almost as an arm of the State. I suggest that in these changing surroundings the British trade union movement has adapted itself very well.

In studying our own movement, we should have regard to recent official studies and, of course, I have in mind, in particular, the Report of the Royal Commission on Trade Unions and Employers' Associations which sat from 1965 and reported three years later. Their report is, of course, more popularly known as the Donovan Report, after the name of its chairman. The fundamental, though simple, finding of the Commission was that our industrial relations consisted of two systems, the formal and the informal. They pointed out that the formal system, to which they referred, consisted of the national institutions which took part in national negotiations; the informal system consisted of the parties negotiating at local level. Negotiations and settlements at local level are very often not set out in written agreements, but are more significant to the grass roots than national settlements.

They found that, in many ways, those two systems were at odds with each other. They recommended restricting national negotiations to national rates and conditions, leaving all matters of local significance to local factory and workshop negotiations. Clearly, in the light of their recommendations, it was necessary to improve local negotiating machinery, so they placed the main responsibility on the employers by recommending that boards of companies should review industrial relations within their undertakings, with six objectives in view. I shall refer to these objectives very briefly, because they give the picture and the pattern for improved industrial relations.

These were, first, to develop comprehensive collective bargaining machinery secondly, to develop joint procedures for rapid and equitable settlement of grievances in a manner consistent with the relative collective agreements; thirdly, to conclude agreements regulating the position of shop stewards; fourthly, to conclude agreements covering the handling of redundancies; fifthly, to adopt effective rules and procedures governing disciplinary matters and, sixthly, to ensure regular joint discussion of measures to promote safety at work.

The report also went on to say that to assist the process of collective bargaining, companies should welcome the exercise by employees of their right to join trade unions. All of this development might be described as formalising the informal. They further suggested that once these local procedures were established and effective— we have had the point made to us by the noble Lord, Lord Rochester, that none of these procedures will work unless attitudes are right—the development of these procedures could also develop attitudes. Therefore, they recommended that once these procedures were functioning, the two parties should accept a peace obligation; namely, to include in their procedure agreements provision for conciliation and arbitration before resorting to strike action. No doubt since Donovan progress in this direction has taken place, but I believe that there is much more to do.

I was pleased to note the recent comments of Mr. Jack Jones on the subject of conciliation and arbitration. It is the case that when a trade union official retires he feels free to speak perhaps more freely than when he is in office. These comments were made by Mr. Jack Jones when he gave the Richard Dimbleby Lecture last December. He spoke about industrial relations and came to the conclusion to which I have come and which is the main point of my contribution today: that it is conciliation and arbitration which gives us the best immediate chance of improving industrial relations. Mr. Jack Jones took the view that there is a need for better industrial relations and, where good industrial relations exist—the same point of atmosphere and attitude—for using conciliation and arbitration. Mr. Jones pointed out that to make these procedures work there is a need for confidence on the part of the workers and that to use the procedures effectively they are required to be made available easily and speedily. As I have said, in my view it is in this direction that better industrial relations lie.

As a demonstration of what 1 am saying, I think it should be mentioned that I am not unmindful of the splendid achievements of the Advisory Conciliation and Arbitration Service. This Service should be given every encouragement. Of some 3,000 disputes referred to the Service in 1976, three-quarters were resolved to the satisfaction of both parties, while less than one-quarter resulted in a stoppage of work. I believe that a greater use of conciliation and arbitration by voluntary agreement will improve industrial relations more than anything else.

In the Motion before us we are asked to take note of collective bargaining in competitor countries. In my remarks I have suggested ways in which we can help ourselves by reforming collective bargaining, mainly by shifting the responsibility, where appropriate, of negotiation from the centre to the grass roots. Throughout my comments I have restricted my suggestions to development on a voluntary basis by the two parties to the negotiations. I have not suggested development by legislation. That is not to say that the Government do not have an important and essential part to play. The Government must be involved. Their role, in my opinion, is to encourage at every opportunity steps towards the greater use of conciliation and arbitration.

This country cannot afford crippling strikes of the type which so frequently threaten this country. The alternative is soundly based conciliation and arbitration procedures. Such procedures can contribute to improved industrial relations, to better collective bargaining and to a wider extension of industrial peace.

4.55 p.m.

Viscount WATKINSON

My Lords, I should like to follow the noble Lord, Lord Cooper of Stockton Heath, by paying a tribute to a very old friend of mine, Harry Douglass. May I now congratulate the noble Viscount, Lord Trenchard, who initiated this debate. I hope that he will forgive me—although I suspect that the noble Lord, Lord Cooper of Stockton Heath, might agree with me—if I say that what other countries do is interesting but not necessarily relevant to our problems. It certainly shows the need to reform our procedures but not necessarily the means.

In this debate, I think we have all agreed that our systems of pay bargaining perhaps owe more to the circumstances surrounding the Tolpuddle Martyrs than they do to the circumstances of today, but we are stuck with this long, historical background of both myth and fact and we have to live with it. Therefore, the solution, in my view, must be our own. However, I do not want that to mean—I very strongly support the noble Viscount, Lord Trenchard, in this view—that we can merely shrug the matter off and say that nothing needs to be done.

One cannot be President of the CBI for a time, as I was, and not know—perhaps the noble Lord, Lord Cooper of Stockton Heath, will not be quite so happy about this—that it is this endless wrangle, on the shop floor and elsewhere, about pay that has been the main factor barring Britain from industrial success in the last decade or so. It is while this largely unproductive wrangle has gone on that, as other noble Lords have said, we have slipped down the European league until we are nudging Italy for bottom place in productivity, effective use of capital or almost anything else that one likes to mention.

Yet it is not my purpose this afternoon to say much about the past; usually it does not help our consideration of the future. I should like merely to leave the matter, as I see it, by saying that in the past there have been major faults of commission and omission on all sides. Now, as the noble Viscount, Lord Trenchard, has said, North Sea oil has given us a short breathing space, or perhaps one might more fairly say, an undeserved chance to do better.

Where should we look for reform and progress? Not, I personally believe, in a kind of happy new consideration by either managers or trade union leaders of the whole system. We must realise that, whether we like it or whether we do not, before this summer is out we shall embark on the next round of pay negotiations. This situation has to be faced and something has to be done. I should like to say that that "something", in my view, does not lie in an immediate return to the ritual dance of free collective bargaining not, at least, as it has been known in the past.

Have we really forgotten what an inflation rate of 30 per cent. nearly did to us? It was largely a product of pay and prices bidding one another up. Perhaps we have at least learned how dangerous the pay and prices spiral can be and how dangerous to a country like our own that still is economically weak and has much to do can be one large union bidding against another and winning leap-frogging price increases. Yet I hope we learned something in those bitter years of difficult pay negotiations, of difficult pay policy and of raging inflation. Perhaps, therefore, this is a moment when there is a real chance to do something about it.

What can we do about it? That is the question to which I propose to devote my few remarks. As I said before, I am afraid that it is no use spending much time upon interesting hypotheses about what we could do, might do or should do. The fact is that the Government of the country, whatever Party is in power, will have to do something before the summer months are out and, as the largest single employer in this nation, will have to put their cards pretty firmly on the table. Therefore, these decisions have to be taken.

What should be done about them? Perhaps the noble Lord, Lord Cooper of Stockton Heath, and I will be in agreement when I say that, after the stresses and strains of legal pay policies, voluntary pay policies and all the rest, there ought surely to be a better way. What is it? The first thing we have to realise is that whatever the Budget does or does not do tomorrow, the problem remains. We must get our inflation down further—we are still not adequately competitive—and we must get our earnings up because, as the noble Viscount, Lord Trenchard, rightly said, we are the hewer of wood and drawer of water in Europe today; we are not the top nation in earnings or efficiency or almost anything else.

The first point I want to make is perhaps a rather surprising one because, regarding the plan which we have to consider—and I think it is a plan where we shall have to institutionalise more than we have done the processes of pay determination, and thus of collective bargaining—I want to say as firmly as I can that I believe Parliament must be much more firmly involved in this process. The pay problem really must not be left to urgent, late night, last minute decisions in smoke-filled back rooms, whether they are at No. 10 or at No. 11 or anywhere else. Therefore, the issue must be more freely debated, and for that we owe a great debt of thanks to the noble Viscount who raised this issue. There must be a more national view and a more national consensus on what should or should not be done; and this means, as I have said, that to some extent the whole situation must be more institutionalised.

We have to start at the grass roots, and here the essential is the provision by each employer to each of his employees of all the facts surrounding his or her job. Whether we call this "participation" or "consultation" does not seem to matter very much. What matters is that each company, large or small, accepts its responsibility to tell the facts of job security, company progress, capital investment, and all the rest, in understandable terms, to its own employees. Much progress has been made on this; more must be made, and the progress made by the leading firms in this connection must be followed by others. We have to start there, and one of the tragedies of Bullock was that it obscured this necessary requirement on which future pay policy has to be based.

I must say again that before long, when we have the Budget out of the way, we must get a feeling of what this country can afford to add to its pay bill in the year 1979. I believe there is some merit in the CBI proposal for some kind of independent look at this question. Heaven knows! in this country we have perhaps the most highly developed—what shall I call it?—system of national pulse-takers. They exist in the universities and everywhere else, and I think they do their job very well. Why should they not be asked, either individually or severally, or in the person of one or two of their representatives, to come up with views on what should be the addition to the national pay bill in the next 12 months? I see nothing wrong with that. Some may say that we are going back to something called the "three wise men" or "guiding lights", which the noble Lord, Lord Cooper, remembers, as I do, and which were not notably successful. But somehow we must find a solution, and I think that at least this proposal should be looked at again.

If such a recommendation were made, then in my view—and again this is no doubt controversial—it should be made to the National Economic Development Council. Although this would be new medicine for them, and perhaps a little painful, it should there be debated in front of the trade union representatives, the representatives of industry, the representatives of nationalised industry, the Government and all the rest. We must get some kind of agreement on where we start and on what the general parameters have to be.

I want to reiterate, particularly to those who say that this is just the corporate state at work, that Parliament must be more closely associated with this process. To prove that at least I am not talking about things which I have not tried to do, there is a letter on the file of the present Committee on Procedure written formally by me as President of the CBI and carrying the support of the CBI, saying that so far as CBI matters are concerned we should like to see a strong Select Committee of the other place, and possibly this House, with the right to overview the work of NEDC, to send for people and papers, and thus to keep Parliament closely associated with w hat the National Economic Development Council does. Subject to that Parliamentary link, in my view the next stage in our pay determination has to be, as I have said, debate and agreement between the Government and the parties concerned —which to some extent now includes consumer interests—as to what the general parameters ought to be.

That agreement could be reached. In a way, as the noble Lord, Lord Cooper, knows very well, it was so reached in this current year of pay. There was the normal argument, a certain amount of protestation and perhaps rather too many late night meetings at No. 11, but none the less, in the end, there was a fairly general agreement that we should aim for 10 per cent. The CBI reported yesterday that most pay agreements known to us are still around 10 per cent., and those that are not are only a little above it. So we have done it once and now I am saying we must do it again. Therefore there has to be agreement between the Government, the CBI, the TUC and Parliament on a pay figure for 1979; and this should be follow ed by enough public debate to fix firmly in the minds of all concerned the arguments, the solution and the figure.

Now we have to go on. I do not see how any Government, whether it be Labour or Conservative, can possibly avoid their responsibilities as the largest employer in the State, or, where they are not the employer, as the paymaster. Therefore, in the end, the Government will have to name a figure; and they had then better stick to it, much the same as has happened this year. I do not myself disagree that in sticking to it they will have to do what they can to persuade the private enterprise sector to stick to it too. The only point I would make here is that, as recent events have shown, it might be much wiser for the Government to try to carry the CBI with them rather than to have a great argument with the CBI as to whether what they were doing was right or wrong. There was a lapse in consultation but, subject to that, I do not disagree that the Government have first to make their own decision quite clear, that they do not think it right to pay more than x; and they then have to try to get the private enterprise sector to support them as best they may.

But that is not really the main point. Probably that increment is bound to be relatively small in the kind of circumstances in which we find ourselves. Then there should be a united effort. While this is hardly a subject for this debate, I would hope that your Lordships' House will debate this issue because I believe it is the real crux of our future. Having settled basic pay there should then be the maximum effort made to get the largest possible earned supplement in terms of self-financing productivity deals, greater efficiency, better use of capital resources and all the rest; and that should go forward as the main objective in the year's round of how to do it and how to get on with it.

I accept that in such proposals lies a fundamental change in trade union attitudes. It was a very old friend of mine, the late Lord Feather, who, I think I am correct in quoting, is on the record as saying that, looking ahead, perhaps trade unions would become more like management consultants and less like the old-fashioned concept of a trade union. I believe that to be right and I believe that, looking ahead, if the union is to do a good job for its members in the long term, it has to worry much more about management consultancy and much less about crude industrial obstruction. There is no doubt in my view that, if it wants to do the best long-term deal for its members, this is the sort of approach it must make.

This, therefore, brings unions right into the middle of the debates on the better use of capital, how to get better self-financing productivity deals, and all the rest. I am not saying for a moment that the unions do not show interest in this and are not to some extent involved. But I should like to go back to Lord Trenchard's remarks when he said it is up to the unions to call and name their reform. Well, I hope that one of the things the unions might do is to show a much greater interest, and formal interest, in a very simple statement, that the more a man earns for which he has honestly worked the better for him, the better for his union and the better for the nation.

So my proposal— and it is only mine; I am not speaking for the CBI or for anyone else—is that you have to instittionalise the first rounds, you have to establish some kind of figure. If this could be helped by an independent examination of the nation's circumstances then that should be done, and certainly I think it should be considered. Then the issue has to be debated in NEDC, and Parliament has to have a better link with NEDC so that Parliament, too, has a chance to pronounce on these matters and take an interest in them. I think it would have to be done through a Select Committee; possibly, I would hope, a new Select Committee, not just a sub-committee of the Estimates Committee or anything of that kind. There are many difficulties in that sort of proposal. I am well aware that if I were still a member of the NEDC and I raised this at the next meeting, I should not perhaps find wild acceptance from the trade union members or from the Treasury, or perhaps from anyone else. But we have got to make an effort to do better, and we have got to face the fact that at the moment, compared to our main competitors, we are still really very bad.

Take one example, the motorcar industry. The figures are available for anybody who wants them. Of men working on identical machinery in West Germany and Britain, the difference in the output per man in the number of cars they produce, as we all know, is absolutely disastrous. The comparison with the Japanese is worse still, but I do not take that as a fair comparison because I personally do not regard the Japanese as a proper democratic industrial society, and I do not regard Japanse unions as a very desirable form of union; so I am not using that comparison, But I do not think there is much wrong with the West German system of trade unions; and if you compare the British car industry with the West German car industry, it is depressing and shaming for all of us to see the difference in output on the same machines from West German trade unionists as compared with British trade unionists. We have got to do something.

The points I have made are at least matters which could be progressed in this next year of pay round, which, I have said before and I say again, is upon us in the summer whether we like it or not. I hope my old colleagues in the CBI will proceed with their proposals, which are not perhaps entirely dissimilar to those I have announced this afternoon. As a member of the CBI council I will do my best to support them. I hope the trade unions—and I really mean this, if I may say this to the noble Lord, Lord Cooper—will be willing at least to think about this. In the meetings which they have with the CBI, which I hope remain secret and unscripted. as they were in my day, we could make a start on seeing whether we could make this new approach and get out of the way the one single issue which I think is still stopping us from taking our rightful place in the industrial world.

5.13 p.m.

Lord GEORGE-BROWN

My Lords, may I, too, begin with a tribute to a departed colleague, Harry Douglass, a great friend to many of us, who played a very outstanding role in the attempted resolution in earlier days of the very issue we are discussing today. As a matter of fact, Lord Cooper was not far from the truth in that first half-statement he made, which he hastily withdrew, when he referred to Harry Douglass running his union. It is, of course, true that Harry belonged to a generation of trade union leaders who had a different concept of leadership of trade unions from that which holds the field today, and it may well be that part of our trouble is, as I shall try to suggest later on, wrapped up in that. It might not be a bad idea if our modern trade union leaders looked a little more at the concept of leadership for which Harry, with Lord Carron and others, so obviously stood.

I want to follow very largely what has just been said by the noble Viscount Lord Watkinson, and perhaps emphasise a little more—as reflects the difference in make-up between the two of us—some of the points he made. I think that Lord Carr, who spoke for the Government Front Bench

A noble Lord: Opposition.

Lord GEORGE-BROWN

who spoke for the Opposition Front Bench—do not tempt me—could not have stated the problem more wrongly. He, of course, was in complete conflict with Lord Watkinson, and here I declare myself wholly on the side of the Benches below the Gangway. A phrase I noted from Lord Carr was that he wanted to "get the Government out of our hair". He based on that an argument for the employers and their employees to be allowed to get on with the job of building free collective bargaining.

Lord CARR of HADLEY

My Lords, I apologise for asking the noble Lord to give way. I want to be quite clear. If I did not make it clear, I should like to. I thought I did. What I meant was, out of our hair in the detailed fixing of levels. That is what I meant; I think that is what I said.

Lord GEORGE-BROWN

Yes, my Lords, but then when we had a little difference of opinion between the noble Lord and the noble Lord, Lord Brown -who is responsible for my hyphen, for which I have hardly ever forgiven him-it became, I thought, very clear in the answers that Lord Carr gave to Lord Brown that in fact the detailed discussion here meant the whole discussion of the matter. Anyway, what I want to say will stand up without me pressing that point. If the noble Lord, Lord Carr, says that I have misinterpreted him, I certainly withdraw.

It is my view, and I think the view of many of us, that we are long past the day when either trade unionists or employers should be thinking of negotiations in the industrial field which do not in all their major policy decisions involve the Government. This is not nowadays a private war, a private argument, a private area for employers and employed. There is, of course, a third partner in this, which is the rest of us, and indeed the employees and their families themselves when considered as consumers and as taxpayers and as price payers. So any suggestion that we should try to get back to a situation where we are allowed to do it for ourselves must be pushed away. I think that perhaps the best thing that we can say to trade union leaders, to trade unionists generally, to the CBI and to manufacturers generally is that this repeated catch-phrase of free collective bargaining is a myth. It is a misnomer. It will mislead us and is misleading us into terrible disasters.

I was very interested the other night, as no doubt other people were, to watch the first television interview of Jack Jones' successor at the Transport and General Workers' Union, my own union. It interested me that Moss Evans spent a lot of time establishing that his priority was to get back to free collective bargaining, and he mentioned not at all as a priority of any kind the questions of productivity, of what the bargaining was to achieve and of how it was to be paid for.

Free collective bargaining in the sense in which it is so often used, certainly by some of my colleagues in the trade union movement, really means "catch as catch can". It really is putting the emphasis again on muscle—seeing who has enough strength to be able to produce a blackmailing situation where the case must be conceded whatever its morality and whatever its effect upon others. Of course, we all keep harping back to how the trade unions grew, why the Labour Party was born and so on. It puzzles me that in the Socialist movement we should almost be becoming the only non-thinkers. We are almost becoming the real Conservatives.

Whatever was done in 1890 we are almost, by definition, determined to make sure is never changed. In fact, the whole situation has changed even since I began as a full-time trade union official. We do not need muscle now in the sense of vast numbers. We do not need muscle in the sense of being a great octopus of a union. In fact, in modern technology the capacity to pull one fuse wire can negate all the muscle of all the others. Free collective bargaining, if it means what the words ought to mean, puts all power in the hands of small groups who happen to be properly placed.

Of course, the one thing that nobody likes to mention—and perhaps one venturesome soul on these Benches ought to slip it in—is that the one body in this country which has learnt that lesson is the Communists and the general extreme Left. Do not let us ignore the fact, even if we do not mention it in great detail, that Mr. Ramelson and the Communist Party industrial leadership have been very busy putting their people in the right places during the decade which has passed since they decided that they could never win political power through the ballot box. They have learnt the new technology and the new situation for muscle.

I also think that the free collective bargaining process, even if it were ever possible, can be and is distorted by the operation nowadays of the closed shop meaning the enforced closed shop, meaning the ability to deny the right to earn a living to any dissentients within the trade union movement. I do not want to go into the arguments because they will lead me astray from other matters, but I was a little sorry at the way in which I thought the noble Lord, Lord Carr of Hadley, seemed to assume that the closed shop, in the form of total imposition, is still with us.

I have always said that in my view free collective bargaining cannot be encouraged. We cannot return to unfettered free collective bargaining because it ignores the interests of the consumers. I also want to emphasise that I think it continually puts the emphasis upon industrial conflict. It assumes, or at least it always seems to me to assume, whether people realise it or not, that the two sides of industry arc getting together to fight over something. We call it collective bargaining: it is really authorised collision.

One of the things that we must get away from—and if there is one explanation which holds more weight than another as regards the differences between the situation on the Continent and here, it is that they have got away from it—is the idea that there is something that we must always fight over. The noble Lord, Lord Carr, or the noble Lord, Lord Rochester, referred to the matter of the distribution of the cake before we have decided the size of the cake.

On the Continent it is natural for members of trade unions to want two houses. In the Scandinavian countries and the Low Countries they have a cabin or a house on the lake or in the mountains. However, here it is still, I am sorry to say, rather the habit to denounce anybody who has two houses. People say: "Take one away from him". They do not say: "Let us so get the size of the cake that we can have enough to get another one also". There is a completely different attitude. r think that the business of free collective bargaining in the sense in which it is normally meant, enshrines that attitude.

I agree with the noble Viscount, Lord Watkinson, about the question of the Government. The Government have interests much wider than holding the ring within which the contestants can fight. The Government are part of the process, and a very important part, establishing what the noble Viscount, Lord Watkinson, called the parameters within which it must all take place. The day of the planned economy is here. Planning the economy means trying to forecast the size of the resources, planning the priorities to apply in the use of those resources and planning the distribution. In the whole of this situation incomes cannot be dealt with in isolation.

I remain an economic and industrial planner. Personal incomes, whether wages, salaries or in any other form, are part of the distribution of the cake. The Government are concerned with all sorts of other matters that come out of the same cake. The hospitals, the schools, all the social spending and all the infrastructure are part of the same argument about how we distinguish. I shall come to the steps that I think need to be taken. However, I want to establish as firmly as I can in support of what I thought the noble Viscount, Lord Watkinson, was saying, that we cannot simply aim for a situation in which we get the Government out of our hair and let the employers and employed argue about incomes. Incomes relate to prices. We know that if we have learnt nothing else over the past few years. Moreover, incomes and prices must relate to productivity.

One of the problems about Government interference is not, in my view, the fact of Government interference over the past few years but the fact that Governments have become recognised or thought of as the body which tried to hold down what people could otherwise have done for themselves. Our aim must be to get industry, and the population in general, thinking in terms of rising productivity, financing and providing the wherewithal for rising standards. I do not know how we do this, except by continually saying it, but we do not start by fixing the maximum level. The level is whatever your output will justify. We are as bad as we are in terms of earnings in this country compared with out Continental colleagues, because we are as bad as we are in terms of output and productivity in relation to our Continental colleagues.

Therefore, I want to see—as I think the noble Lord was arguing for—a return to the view that we must at the beginning of each period try to establish between Government and industry, after the "pulse takers" as they have been called have advised, a plan for output. I wholly agree with using the NEDC as the place where the argument is held. Perhaps the noble Lord will forgive me for reminding him—it should not be such nasty medicine for him—that that was done in 1965, right through to the middle of 1966, and having got used to it then, the Government themselves retreated.

As a result of doing that, we could give to industry the level of distribution in broad terms that any given level of productivity would sustain. We should then have a basis for establishing what we think productivity can sensibly be aimed at in the coming period, whether it be this year or the five-year period. Then we can set them to negotiating what they want to do within that time, after the Government themselves have decided what can be allocated for social distribution, defence and the infrastructure. What is left is industrial personal income. Unless we do it that way—rather than simply try to return to free collective bargaining carried out in a better way—we ignore the position of tax.

I believe that much of our recent industrial disturbance stems from the fact that the man is thinking of his take-home pay and everyone else is thinking of his gross pay. When the tax rises too much, either he thinks how he can "holiday", as he calls it—which includes strikes—and thus get it back from the Chancellor of the Exchequer in the form of a tax rebate, or he thinks in terms of where he should stop his effort so that he does not contribute any more. I think that that, as much as a genuine industrial dispute with the boss, is at the bottom of many of our strikes. But if you want to have a strike for that reason, you can always think up a decent industrial argument for one. Thus what the Government take in tax must be fixed in our minds at the same time as we try to encourage the fellow about his "take", so that he gives rather more productivity.

Therefore, my conclusion remains that we should return to thinking in terms of a planned economy and of returning to a national plan, with its individual regional and industrial sectors, which would enable us to state our economic and social priorities, so that trade union leaders, the CBI, Government Ministers and ourselves will continue to emphasise all the time that it is productivity which will determine the rewards, as it will determine the costs, and that we are aiming virtually for any figure you like to mention. The higher we can push output per machine, per man, per hour, clearly the higher the distribution can be in addition to the priority take which, as I have said, would be the social wage, the industrial infrastructure, defence and other things.

That is how it is done in parts of the Continent. There is a machinery for fixing the size of the national cake which they are aiming for, guided by their best estimates of the resources that will be available. Within that are determined industrial priorities. Once that has been decided with the aid of the NEDC, or however it is decided, it can then be handed to industry. Then individual industries, having been given their share of the resources as well as everything else, can decide how they want to divide their share within their industry. There I agree with the noble Lord, Lord Carr of Hadley—and perhaps this was the difference, with the distinction, which he sought to make earlier. At that point the Government do not need to hold their hands.

When a decision has been made between the two sides at industrial level, a decision can be made within their decision at plant level. Again, we do not want Government holding their hands at plant level unless they are having difficulties, in which case arbitration and conciliation can take place. Plant bargaining has thus been included, which is something that fellows must have—they will not accept decisions without having something to bargain about at plant level. You can have plant bargaining within the industrial decisions, which are themselves within the national decisions, which are themselves related to Government policy.

It follows from all this that, with respect to my present generation, I believe that trade unions are wrong to go for a free-for-all. There is no such thing. Nor in the end will they accept the consequences of a free-for-all; their members will not accept them. They must also attend to their own controls, which refers back to what I said about Harry Douglass, and to their own leadership problems. There has been a takeover on the factory floor. Jack Jones tried to explain it in his final television interview, just as Moss Evans tried to explain it in his first. Let us face it: much of that takeover is not an extension of democracy, as Jack said it was; much of it is because other motivated people have filled a vacuum in leadership because leadership has greatly abdicated its responsibilities.

I have already spoken about the consumer and the taxpayer. Finally, I should like to agree with the remarks made by the noble Viscount, Lord Watkinson. We—at any rate to our satisfaction—buried Bullock some months ago. I think that he is probably pretty safely buried. I believe that during that debate I also followed the noble Lord, Lord Rochester; one of the things I said was that having buried Bullock, we must not let the matter rest. In fact, that is what we have done; we have made no advance. If we want plant bargaining, plant discussion and to involve everyone, we must make some progress towards "participation"—I like that word because it means so much more than "consultation". We must make faster progress to involve the fellows in the plants in the taking of decisions, and not merely tell them how we take such decisions or on what basis. Because it involves taking responsibilities, this would disqualify much of the rather unhappy leadership which has grown in the plants. I have seen this happen in Sweden, Holland and Germany. Contrary to what is said, fellows like taking responsibility and like having the knowledge and authority that goes with it. Once they have the responsibility, they like ensuring that decisions are adhered to by the fellows for whom they have spoken.

I do not think that I have added much, but I have tried to pinpoint a little more where I think we must be quite open and honest with industry. This involves the whole nation and, therefore, it must involve the Government. It is no use starting another year saying: "We want 10", and ending up with 14, or: "We want four", and ending up with eight or nine. We must have some basis on which to fix any figure. It must take into account all the different ways in which we spend our income.

5.39 p.m.

Viscount CALDECOTE

My Lords, I should like to join with other noble Lords in thanking the noble Viscount, Lord Trenchard, for so ably introducing the debate on this important subject. I agree with almost everything that he has said. Despite much talk about other problems in industry—including, for instance, lack of investment—industrial relations and pay determination are still the Archilles' heel of our industrial regeneration.

For reasons that have been so clearly set out by the noble Viscount, the fact is that conditions for collective bargaining and attitudes in Britain make it more difficult to achieve constructive settlements on pay and methods of working. That affects our productivity as well as our efficiency and our overall competitiveness and, to a major extent, is to the detriment of everyone in Britain. I listened—as I always do—with great interest and respect to the noble Lord, Lord Cooper of Stockton Heath, and agreed with much of what he said, especially with his emphasis on the importance and value of local bargaining. But he seemed to me to accept in the first place that we are at a disadvantage compared to other people, other countries, due to our history, and, further, that little can be done about it. It seems to me that we have to be much less complacent than that and much more dynamic.

The noble Viscount, Lord Trenchard, has covered the points of this debate so well that I want only to try to amplify three points relating particularly to the important engineering industry in which my experience lies. First, I should like to make a few more detailed comparisons between the British and German industrial scene, for I think there is much we can learn. Secondly, I should like to emphasise again the urgent need for more flexibility in negotiations so that we can improve pay differentials for skills. Thirdly, I should like to make one or two suggestions for the future in both the short and long term.

A major contrast with most other European countries is the multiplicity of unions, as everybody knows, in the United Kingdom. For instance, in our engineering industry we have at least seven main unions and many more small ones. In my own company, just one part of the engineering industry in which we employ some 24,000 people in Britain, we have formal recognition agreements with no fewer than 11 trade unions and many other subsidiary ones, whereas in the engineering industry of the Federal Republic of Germany there is one major union, IGM, with which employers negotiate.

As a result the union concentrates on the genuine needs of its members, which are seen to be closely related to the circumstances of the industry, rather than devoting so much effort, as happens here, to inter-union rivalry. Although there is much personal good will between trade union leaders and managers, the competition between the unions has also made technological change in our industry much more difficult, and the delay in achieving innovation has inevitably been really harmful to the engineering industry. That sad story will be all too familiar to any of your Lordships who have worked in the shipbuilding industry, as I once did.

On the other hand, on the brighter side, we must not forget the achievements of the joint industrial councils, on which the main unions of an industry sector are represented. Where these have been established, as has happened in the electric cable-making industry since 1919, there is virtually no inter-union conflict and negotiations are conducted in a much more constructive way. Disputes not settled locally are referred to the JIC. If there is failure to agree there, and it very seldom happens, that is followed by arbitration, the outcome of which is accepted by all the parties involved. It is a happy and constructive situation. I wish it could be followed by more industries, for it gets much closer to the effect of one union, as exists in the German engineering industry.

Other problems stemming from the British situation are the plethora of bargaining units within plants and companies and the resultant extra time and diversion of effort, as other noble Lords have pointed out, for managers involved in negotiations, not only on pay but also on methods of working, technological change, and the like. On the employers' side, too, there are also important differences in Germany. There is a stronger feeling of common identity and interest between employers, and the German Employers Federation finds it much easier to achieve solidarity and a common approach to industrial problems. The noble Lord, Lord Cooper, referred to the connections between the trade unions and the Labour Party. Alas!, the historical fact that the Labour Party in Britain came into being as the political wing of the trade union movement, and relied to a large measure for its support upon the trade unions, does not help to achieve the best climate in which industrial negotiations should take place.

It is unfortunate, too, that our determination to uphold the rule of law in Britain seems to have declined over the past 10 years, whereas in Germany both employers and unions have a deep respect for the law. There neither side is in the least willing to come in conflict with it. This causes unions to avoid entanglements with such illegal arrangements, under German law, as the closed shop or wildcat strikes. It also restricts disputes to industrial rather than political matters, and ensures that while official strikes and lockouts are legal, as we can see at the moment, their use is confined to rare occasions and they remain for both sides weapons of last resort. Too often, as we can all see, industrial action in Britain is threatened or taken before any worthwhile negotiations have taken place, and interruptions to production occur before agreed procedures have been exhausted.

There is an important example of the very different and more responsible attitude to strikes which exists in most European countries, and that is to be found in the official booklet of IGM, the German engineering industry trade union, where the following paragraphs appear: Because a strike is a weapon to be used only in extreme circumstances, and because a strike in the metal industry may have particularly far-reaching effects on the economy as a whole, the IGM constitution creates the following safety measures regarding work stoppage:

1. (i)Each strike must be approved by the Executive Council.
2. (ii) Such consent can only be given if a minimum 75 per cent. of the organised workers involved have voted in favour of a strike in a secret ballot, which first has to be approved by the Executive Council.
3. (iii) if negotiations or other circumstances change the situation during a strike, the Executive Council may only continue the strike if at least 75 per cent. of the workers organised by the Trade Union concerned vote to do so in a secret ballot.".

That booklet was published in 1974, and so far as I know there has been no change in it. Indeed the fact is—I checked this morning—that in the two current very difficult disputes in the German engineering industry, the trade union did get a 75 per cent. vote in a secret ballot, but their record stands. The average over the last 10 years for days lost per employee in German industry is less than one-tenth of the days lost in this country over the same period. How wonderful it would be if British trade unions could literally take a leaf out of that German book! Surely we ought to make another major effort to improve the environment in which negotiations take place in this country, to change some of our practices and to reduce the disadvantages which are now diverting so much effort into destructive conflict.

There is little doubt that the great majority of the British people, including trade unionists, would like to see this happen. The first step therefore is to discover the real reasons why virtually nothing is being done to change the present unsatisfactory situation, and to put the searchlight of public opinion on the reasons. The symptoms of the so-called "English disease" have been endlessly discussed, and the diagnosis shows quite clearly at least how some improvements could be made, but the patient seems completely unwilling to undergo the necessary treatment to effect a cure.

I turn to my second point. One of the most pressing and difficult problems here in Britain is the need to improve differentials for skill and to reward people fairly for responsibility, enterprise and hard work. Although the overall level of unemployment is unacceptably high here, there is still an almost universal shortage of skilled people, certainly in the engineering industry and probably elsewhere as well. Already some plant—perhaps much plant—is inadequately maintained, or used less efficiently than it should be due to the lack of skilled fitters, electricians, toolmakers, and machine setters. If this is the case now, how much worse will the situation be when the economy picks up and there is greater demand for our products? Unless we ensure an adequate supply of skilled people that demand will simply be met by massive imports, and to the extent that the demand remains unsatisfied inflationary pressures will rapidy build up again due to the shortage of goods.

The unpalatable fact is that over the last 10 years when the balance of power between negotiators has moved sharply in favour of the big trade unions, neither collective bargaining without guidelines nor a strictly-applied incomes policy has enabled us to reward skill adequately while avoiding inflationary pay settlements. As my noble friend Lord Watkinson said, there is a most urgent need to tackle this problem without delay. The hour is already late. There are fewer than four months until August 1st, when the present arrangements come to an end. Although the solution is in the interests of everybody, not least of the unskilled, who would be the first to benefit from the better prospects of employment, we seem to have made virtually no progress.

What can we do? Most of the difficulties and disadvantages under which we labour require changed attitudes and other longer-term remedies. But the issue of differentials is too urgent to wait for them to become effective. I have come to the conclusion that, at least in the engineering industry, we shall not make progress in improving our efficiency and expanding the economy unless we can have the flexibility that is needed in pay negotiations to improve differentials for skill, enterprise and hard work, and to remove anomalies from pay structures.

It will still be important to attempt to reach agreement on what overall increase in pay can be afforded—and it will not be much—or, in the absence of agreement, for the Government to state its conclusions. But, if we are to have the required flexibility, it will not be possible to define permissible limits for increases as a basis for applying sanctions of any kind for breaking them, although it would be highly desirable to maintain the principle of the 12-month rule between pay settlements. In such conditions, if we are to avoid a return to rapid inflation and even greater unemployment than we have now, we shall have to rely on the good sense and the determination of the negotiators to achieve settlements based on ability to pay, backed up by a strict control of the money supply, and cash limits in the non-productive public sector.

I fully recognise the gravity of that proposal. I fully recognise that this is tantamount to having no effective incomes policy and that there is a serious risk of inflationary pay settlements and interruptions to production if the militants have their way. That is why, so far, I have been strongly in favour of a con tinuing incomes policy. But I have reluctantly come to the conclusion—and here I think I disagree with the noble Viscount, Lord Trenchard—that the balance of advantage now lies in the direction of greater flexibility in the immediate future.

A decision needs to be taken very soon so that we can spend the time left before 1st August in putting over the huge damage and the misery which will result if this return to greater freedom in negotiations is abused, and the enormous advantages to all if it is used responsibly. As my noble friend Lord Watkinson indicated, we must look beyond the next few months to more fundamental changes in the way we determine what we pay ourselves. At the national level, the paramount need is to find a way of agreeing the overall increase —if any—in pay which can be afforded each year. The CBI have already put forward important proposals in their document The Future of Pay Determination. That analyses the inherent weaknesses of the present system and outlines proposals which would lead to pay negotiations taking place in a much better atmosphere and with a much greater knowledge of the options open to us. The proposals include a central mechanism to provide economic analysis and indicate the various options. I should like to support most strongly the suggestion put forward by my noble friend Lord Watkinson that a new Select Committee should play a very big part in this.

If we are to restore respect for Parliament and the rule of law, then Parliament must be closely involved in determining this fundamental issue. The appointment of a Parliamentary Select Committee would he a sensible way to proceed—and it is certainly worth very serious consideration. That Committee would have to have adequate resources to do its job. It would take evidence in public from various bodies, including the Government, the Opposition, the CBI, the TUC and any independent experts whom it wished to consult. It could produce a report each year, perhaps some time early in November, which would form the basis for the pay determinations the following year and perhaps also for the White Paper on Public Expenditure.

However, although Parliament and other national organisations have a very important contribution to make to all this, in the end, good industrial relations depend on people and how they get on with each other in companies and factories all over the country. There, too, we need to seek for long-term solutions rather than short-term gains of one sector against another. We must, as the noble Lord, Lord George-Brown said, tell everyone the true facts of industrial and economic life all the time, and not just when we are negotiating with them. All employees must be involved in the plans, progress and problems of their own companies and in the decision-making process whenever they can make constructive contributions. Whenever several trade unions are involved in negotiations, we must make every effort to get them round the same table so that we can have one comprehensive settlement, as could so readily be achieved in the German conditions. We also need to achieve a much better understanding among all employees of the agreed procedures for settling disputes and to ensure that management and unions work closely together to maintain discipline for using and exhausting these procedures before production is interrupted.

In all this, managers at every level have to take the initiative, so they, too, must be fully informed about their companies' policies and plans. But little will be achieved unless the directors and the board of the company arc fully behind those proposals and see them implemented. Many responsible trade union leaders make major contributions to better relations and constructive settlements, but a heavy burden of responsibility rests on management. It is hard, relentless work, adding greatly to the daily pressures of the job, and it is a tribute to the patience and determination of British managers that so much is achieved in the present difficult and restrictive conditions—conditions which I believe have been imposed upon them very largely by impractical idealists and vote-seeking politicians. There is so much to do and it is high time that the job was made less difficult by improving the environment in which negotiations take place. But it will be a long job and the sooner we get down to tackling it in earnest, the better.

5.59 p.m.

Viscount AMORY

I am sure that we all wish to express our gratitude to my noble friend Lord Trenchard for giving us the opportunity of this debate. His wide and distinguished experience, with responsibility for similar operations in different countries, makes him so well placed to make valid comparisons. What he said I found most interesting, as indeed I did with regard to what my noble friend Lord Caldecote has just said.

To begin with, may I join with those who have expressed our deep sense of loss at the death of Lord Douglass of Cleveland. His wisdom and long experience made his advice extremely valuable, and we shall miss him greatly. I fear that there is no dispute that our current national performance is deplorable. Cases in which industrial relations are really intolerable are, I believe, confined to a few important industries. The trouble in general is not bitterness but apathy, lethargy and a lack of purposeful co-operation. These defects, I fear, run generally below the surface throughout British industry. Even when relations are easy and unstrained, as they often are, the record of productivity is often far from impressive.

It looks as if we have not yet taken the urgency of the essential lessons to heart. In that, as in everything else he said, I agree with my noble friend Lord Watkinson. The biggest single need for British industry—and it really is an urgent need—is for an increase in competitive efficiency and the recreation of a spirit of entrepreneurial zest and dynamism. However, I do not intend today to speak much about this immensely important problem of overmanning and low productivity. I hope that before long there may be another opportunity in your Lordships' House for a further debate on that subject, the urgency of which I thought was well summarised in the leading article in The Times last Saturday.

I agree with my noble friend Lord Trenchard, that the performance of small units of production is generally far better, and the general attitude of responsibility far higher, than the larger. The fact that agriculture has such a good record is surely due to a combination of two things: the fact that the work is generally of a satisfying nature and also the intimacy and the personal nature of relations between employer and employee. My experience of relatively small family businesses confirms that in factories of 200 or 300 there need be no difficulty in maintaining a satisfactory spirit of cooperation. Loyalty to a small company or group seems easier to feel than to a large impersonal organisation. The trouble is that in some industries large production units seem to be technically necessary. I thought Prince Charles was surely right when he said recently that greater efforts must be made to increase the interest of jobs to the individuals performing them. I entirely agree.

Coming more directly to collective bargaining, I do not believe that absolutely uninfluenced collective bargaining is going to be feasible under conditions of actual or threatening inflation. Some kind of incomes policy is going to be essential, and I agree with what my noble friend Lord Watkinson said about that. In any case, the Government must have one in relation to their own employees and those of the nationalised industries. Such an incomes policy, however, must not amount to a rigidly applied figure either in terms of cash or of percentage. That is too damaging to incentive and to differentials.

That is the rub—what should it be? I believe that action is essential on two levels. At the national level the need is for some generally accepted assessment of the sum which can be in the aggregate made available for increases in any year without disastrous results to our national economy through inflation. Such a figure must he authoritively worked out and accepted by public opinion. Perhaps that is as far as a formal incomes policy can go. There should be two levels—a higher level and a lower level. At the lower there should be no attempt by the Government themselves to lay down a single rigid central formula; there should be room for much collective bargaining against the background of what in the aggregate is available. In that sector of the field of bargaining, I believe that the principle of genuine arbitration—people often talk about arbitration and conciliation, but the two things, of course, are entirely different—should have room to play a part. Also, I believe that works councils should have an important part to play.

Would it not be good if the NEDC could be strengthened as being the best forum in which to seek general acceptance of the limitation or scope at the higher level? Would it not be a good thing to set up some small body—this is not a new idea as my noble friend Lord Thorneycroft knows—of economists or others to advise the Government and the NEDC what this annual allocation of resources should be? The Three Wise Men instituted by my noble friend Lord Thorneycroft about 20 years ago was essentially the right idea, but that idea was killed by the trade unions who would not have anything to do with it.

Is it too much to hope that one day there might be one economic staff jointly controlled by the CBI and the TUC, which might provide both bodies with relevant factual economic intelligence perhaps through the NEDC. I remember, when I was Minister of Agriculture, how helpful we found it when the staffs of the Ministry and the NFU found it possible to present jointly agreed economic facts which could be accepted by both sides.

As regards the trade unions, I do not want to allege for a moment that the current faults are all on the side of the trade unions. The standard of management obviously varies enormously in skill and enterprise. One sad thing is that entrepreneurial skills seem with the managerial revolution to have become much scarcer than they used to be. I think a valid criticism of some managements is that they still do not give employees as much information as to the prospects and fortunes of a company, or as much responsibility, as they might.

I thought that the opinion my noble friend Lord Trenchard gave that British businessmen with responsibilities overseas seem to be able to put up as good a performance as their foreign colleagues was interesting. When one examines many industrial stoppages, one finds that the dispute is not of the kind of old-fashioned battle between employer and employees but a strike in which the public is the real sufferer. Another kind of dispute, generally I believe unofficial action, is the exercise of local power by groups of employees who know that the effect of the stoppage will be so expensive to the company concerned that it will almost certainly accept the less intolerable alternative of bowing to the pressures.

When trade unions seek to increase employment by maintaining uneconomic manning levels, the effect is counterproductive by raising costs to uncompetitive levels and so actively increasing unemployment. In the same way, when legislation designed to protect employment has the unintended effect of causing small employers in particular to shy away from adding to their manpower commitments, for fear of the high cost of compensation if the extra business obtainable proves only temporary it has a counter-productive effect.

I fear that, when the economic history of the past 30 years comes to be written, it will be said that the trade unions, while they have often shown a commendable degree of restraint by not exercising their full power, have seldom effectively served the best interests of their members by positively encouraging higher real output per man, the best long-term service they could have rendered their members. The Trines leading article to which I referred said: Higher real wages per man can be secured only by higher real output per man. The trade unions themselves cannot perform any useful function for their members if they cannot help their members to raise productivity". A higher level of new investment in British industry will never come about until management and unions join together in common action to ensure that the new investment results in increased competitive efficiency. That simply must be the common target. Old hatchets must be buried, together with outdated habits of thought and misdirected loyalties stemming from a past which no longer exists, and I thought that was one of the messages which the noble Lord, Lord Cooper of Stockton Heath, gave in his temperate and responsible speech.

In practical terms, we must have policies jointly worked out by the CBI and TUC to start with, and backed by public opinion, to ensure that our besetting national weakness of low productivity is steadily replaced by a level at least in line with our international competitors. If it is maintained that that is pie in the sky, we must realise that anything less will be a certain recipe for higher unemployment and a lower standard of living.

6.13 p.m.

Lord BROWN

My Lords, the House must be grateful to the noble Viscount, Lord Trenchard, particularly because he introduced the whole subject to us in strictly non-political terms. That has led to many speeches, notably from the noble Lord, Lord Carr of Hadley, the noble Viscount, Lord Watkinson, and my noble friend Lord Cooper of Stockton Heath, in similarly non-political terms. Having said that, I wish to take up one point where I think Lord Trenchard was at fault. He referred to the experience of British managers managing companies overseas and he wrongly deduced from that that there was nothing much wrong with British managers.

I suggest that it would be disastrous if we became complacent. When we have a situation in industry which is as bad as it is today, It must be hard to eliminate anybody from blame. Something which T do not think obtrudes itself enough into our thinking is the fact that the greatest single variable in any company is the calibre of its chief executive, and, if we want to start having better participation, better cooperation, better industrial relationships, higher investment and greater productivity we have not a hope in hell of getting it unless he backs it.

Viscount TRENCHARD

My Lords, I said that we must always make every effort to improve management standards and that these varied in every country. However, in the comparison I made, I actually said that there was no more wrong with them—and I used the words that way round—than with those of other countries. I have seen strong and weak points in management. At present, we have the best management available and we must work on it. I certainly did not mean to imply that we should stop working on it flat out all the time.

Lord BROWN

My Lords, my view—intuititively, but based on a great deal of contact—is that one-third of our chief executives are probably better than anybody else; that one-third of them get by; and that the other third of them should not be there. I shall not give my evidence for that because I have a speech to make. I suggest that we must think most seriously about this issue. One reason why I think one-third of them should not be there is because I do not think many boards of non-executive directors are doing their job competently in assessing those people and removing them when they are not competent. I shall be moving an Amendment to the Companies Bill which will shortly be coming before your Lordships' House to prevent chief executives—managing directors —from being chairmen also because 1 think that is one of the faults which leads to the situation that I have described. I shall leave the subject there.

Perhaps I may refer in passing to two great figures of the past. The first was Alfred Mond, who later became Lord Melchett, whose pronouncements in 1925 on this whole business of industrial relations, which I remember him making, were, I am afraid, sneered at by most of British industry and were certainly not followed. Yet, in one of our greatest companies, ICI, he laid the foundations for the sort of relationships that have endured to this day. The other was Seebohm Rowntree, to whom I remember talking very late in his life, in fact just before he died, at a meeting of the British Institute of Management. He was relating the things he had done years before in what he called the "cocoa factory", things done in advance of what the British Institute of Management stood for at the time he was talking. If we had followed the ideas of men such as that years ago we might not be in the trouble we are in today.

I wish to take up two points made by Lord Carr. First, he laid considerable stress on the alleviation of our difficulties which might flow from having less unions in this country: he was referring to the German situation where they have one union per industry and so on. I doubt whether that sort of solution would yield us much benefit. When one recalls the British Leyland toolmakers' strike, the Lucas toolmakers' strike and the British aircraft industry maintenance workers' strike, they were all striking to achieve the right to bargain separately from their colleagues in the same union. Thus, I do not think all belonging to the same union would prevent people from having inter-occupational fights. I am not saying it would not be a good thing to have less unions; simply that to pin any hopes to that might result in great effort being made to get fewer unions and then finding we are really very little better off.

Lord CARR of HADLEY

I seem to have been worse than usual today at making myself clear, my Lords. I thought I said—I certainly meant to say—that this was a fact of life with which we in this country had to live and that we should concentrate on learning to live with it rather than searching to get down to a few unions, something which I do not think is attainable, even if desirable.

Lord BROWN

My Lords, I am sorry if I misunderstood the noble Lord. I thought he was saying, as so many are saying—one hears it throughout industry— "If we had one union per company, everything would be all right". I apologise to him if I misunderstood his argument. However, Lord Carr went on to refer to the number of working days lost through strikes in 1977, but I would point out to him that that was not by any means the worst year.

Lord CARR of HADLEY

That was not my point, my Lords.

Lord BROWN

My Lords, I got the impression the noble Lord thought it was a very bad year. In fact, many years have been worse: in 1970, 11 million days were lost; in 1971, 14 million days were lost; and in 1972, 24 million was the figure.

Lord CARR of HADLEY

My Lords, I was referring to numbers of strikes and I was particularly differentiating, as the late Ray Gunter did so often, between numbers of strikes and total hours lost. It is the number of strikes which is particularly bad in Britain, and, in terms of numbers, 1977 was a very bad year.

Lord BROWN

I always think that the number of days lost is the real, basic criterion of the damage done to our economy—but never mind. I found myself, a little to my surprise, in a much greater measure of agreement with the words of the noble Viscount, Lord Watkinson, than I expected, and with the words of the noble Lord, Lord George-Brown. I notice that they are both missing now—

A noble Lord: Lord George-Brown is here now.

Lord BROWN

Good, my hyphenated friend. I must say that I wrote to him when he became a peer, and I said, "George, either you take a hyphen, or I do". I wish now that I had got the hyphen instead of him, because he would get all my mail instead of me getting all his.

There has been much talk this afternoon about collective bargaining, and I bow to the words of wisdom spoken by the noble Lord, Lord George-Brown. But I want to say a few words about this. If you take literally the phrase "collective bargaining"—I am ignoring the word "free"; I don't know what it means in this context—you would expect it to mean that collective bargaining at national level would be all the trade unions getting together to negotiate perhaps with the Government. You would expect it to relate to inside a company, with all the different occupations and unions getting together to bargain with the employer.

I fear that, by the use of the term, the TUC means something very different indeed, something which lay within the expectations of the noble Lord, Lord George-Brown. I fear that it means fragmented bargaining, with everybody having the right to bargain on behalf of those represented, regardless of the effect or the result of their bargains on others. In other words, back to industrial chaos.

The strange thing is that the TUC refers to "going back" to collective bargaining, whereas I think that the last three years have shown an example of the TUC indulging in collective bargaining at national level: the members have got together and they have agreed by a majority to accept certain limits on pay claims, and this, to me, is collective bargaining. I think that, in terms of the words they are using, they have got this the wrong way round.

When it comes to the employers, you find that their attitude to collective bargaining is equivocal. I do not think that anybody knows precisely what they mean when they use these words. Some may mean fragmented bargaining, some may mean collective bargaining. It is anybody's word to describe any situation which happens to be present in their mind at a given moment of time. I believe that we must get this right. Collective bargaining should mean getting together.

I want to say a few words about this. If the representatives of a series of unions, or a series of departments, or levels of staff in a company, get together, collectively bargaining with the employer, there are preconditions which make it possible. Without these preconditions, collective bargaining of a real kind cannot emerge because, if the representative of one union goes into such a situation with the prospect, or the possibility, of being out-voted by a majority of others then he is abdicating his position as a representative. He will be forced to go back to those he represents and say, Well, I'm sorry, chaps, I've lost out for you. All the rest are getting something. but you are getting nothing". The alternative situation would be that those he represented would fail to agree about the bargaining he had made on their behalf, and would go on strike or choose whatever action they liked.

There is, therefore, a pre-condition of collective bargaining; that is, that every representative and the employer with whom the representatives are negotiating should have the right to veto, so they must come to agreement. It is not so idealistic as it sounds. British Rail have collective bargaining at three levels with the right of veto encompassed in it. The bargaining of 14 unions at Ford, until recently led by Moss Evans, is based on the use of the veto, so they know that every union has agreed whatever proposition it has received, or is putting up to management, before it is put up. It is committed and it has the right to defend those whom it represents.

The whole principle has been acknowledged internationally in the unanimous voting rule of the EEC, which has been debated in this House. The EEC could not exist without it. It is not in the Treaty of Rome, but it has been developed since, because no country could continue to be a member of the EEC if it always stood in danger of having imposed upon it by a majority of other nations some piece of legislation which is wholly inimical to it.

Any situation where there are a number of nations or a number of unions bargaining in the interests of their own members involves the use of veto. We have to face this, but I think it is the last thing that most employers will face. I have talked for 20 years about the need for this principle to be adopted. You can call it the right of veto, or the unanimous vote in council; the expressions mean the same thing. But few employers would agree to such a measure, although in fact they are faced with precisely the situation that any one representative of some key occupation in their employment can stop them doing something and can bring the firm to a halt.

We have to institutionalise this situation. The noble Viscount, Lord Watkinson, talked about institutionalisation. I was very glad to hear him use the term. We must get our institutions right. They are not right now. If you look through history you will find that nations get in trouble because their institutions get out of date. One of the ways of keeping out of trouble as a nation, as a company or as a trade union is to see that the institutions—the constitution—are in line with the circumstances in which you have to exist.

So much for collective bargaining. Now I want to do some really basic thinking. I want to put up three propositions, and they are all, in a sense, about differentials. When one gets down to the last analysis and faces the fact, all the squabbles about wages and earnings differentials of all kinds and about entitlements—a broader expression than "wages"—are really about the relationship between what one group and another group gets; it is all a question of relativities. If you want to change the pattern of differentials, there is a principle to be observed. It is that you must get the agreement not only of those who benefit by that change, but also of all those who do not benefit, because, if you do not get the agreement of all those who do not benefit, then they and the others will all jump onto the same bandwagon and claim the same as whoever benefited. In no time, you are back at the status quo, or in an even worse position. Then the original payment of some increment that takes the group in question level with the others or puts them in front of those others starts the battle all over again.

Every industrial manager knows all about this. It is called leap-frogging. The one way you can get around it is by not shifting the pattern of differentials until all those involved in that pattern are agreed. We must begin thinking in terms of the basic principle like this. It means unanimous agreement about changes in differential patterns, and no movement until you get it.

I turn to the second matter to which I want to draw attention. If one thinks of the unions as being the custodians of the interests of many of the employees in this country—and, indeed, in a sense, of nearly all of them, because many, though they are not members of unions, have their fate settled by the unions because their pattern of wages follows those come to by the TUC—when one realises that their activities and their use of power will dictate the standard of living of the consumers of this country, then one asks the question: "Who is to look after the interests of the consumers of this country"? I do not think one gets the answer that it is the employers. How can they? They have not the power to defend the standard of living of the consumer against the very powerful activities of the trade unions. It is the Government; and here I go along with Lord George-Brown and Lord Watkinson—and it is a very happy situation to see them agreeing on this point. The Government cannot escape the decision as to how much can be added to the national wage bill year by year.

We had this in operation for three years under the Heath Government. Unfortunately, owing to the fact that they did not recognise the quite different position of coalminers—and they should have done so—it broke down, but there were three years of it which largely succeeded, apart from the coalminers' strike. Then, we have had three years of it under Labour, which have largely succeeded. Are we going to desert it next year to the clarion call for free collective bargaining, whatever that means, and go back to industrial chaos? No, we cannot do it. It is the Government's job to defend the interests of the consumer and the economy, and the unions' job to look after the interests of those in occupation as employees. I do not think we can escape that basic statement of the position. I am very grateful to the noble Viscount, Lord Trenchard, for saying that he did not believe in the use of monetary policy as a means of coping with a situation where free bargaining would break out again.

Viscount TRENCHARD

My Lords, I believe that a sensible monetary policy is an important factor—indeed, an essential factor—which has been lacking in the past, but it is not alone sufficient to contain the factors in free collective bargaining.

Lord BROWN

My Lords, that is exactly what I understood the noble Viscount to say, and I am very glad he said it because I think Milton Friedman, in his sayings, is an extremely dangerous and really rather stupid man. I do not know how many of your Lordships saw him on "the box" the other night in the discussion about what is to be done with the national gold brick arising from the North Sea situation—I am sorry to mix my metaphors—but his specific was to give every citizen of the country a bonus payment of £5,000 and let him spend it; that this was the right way to go about spending this great inheritance that we have in the North Sea. He is a very stupid and foolish man, taking his theories to the extreme.

The last underlying point I want to make concerns the power position of the unions, which is now enormous in this country. If we went back to the early part of the last century we could note, through the eyes of historians like Trevelyan and others, that various citizens of this country in our cities had no representation in Parliament whatsoever, and they were showing their growing power by the formation of political unions and by creating chaos of a sort which we have not known since. Governments, in both Houses, largely led by the aristocrats of this country, showed enormous wisdom in realising that, distasteful as it was to them, they would have to bring these power groups within the ambit of the Constitution by extending the franchise to them. This they did through successive Reform Acts: in 1832, in 1867 led by Disraeli, and by later Acts. They extended the basis of Government because they faced the fact that citizens had power, and either they were included in the Constitution or they would go on disrupting the nation.

Today we are faced again with a not dissimilar situation: a situation in which all citizens have the right to take part, however indirectly, through the use of their votes, in the legislature, but in their occupational roles they have no such right, and they express their power in their occupational roles through unions. The day is coming, sooner or later, when we are going to have a great constitutional change which will create something like a sub-Parliament, in an advisory role to the main Parliaments, composed of representatives of those in occupational roles. These are things that 1 think we must think about in principle, not because they are going to happen in the next two, three or four years but because, unless we have these basic things in mind, then the attempts which we make to solve the problems we face will not take these basic things into account and to that extent they will prove faulty. I have in mind for next year or the year following a situation in which the Government should decide the amount by which the national wage bill can increase; and I should very much like them to work out that figure, as to how much it should increase, through some sort of institution such as that described by the noble Viscount, Lord Watkinson, with the CBI and NEDO all taking part in deciding what it should be but the Government making the decision as to the ultimate figure.

This overall Government policy of saying 6 per cent. or 10 per cent., or whatever it may be, produces rigidity in differentials, and this is the problem which has not been overcome. How should it be overcome? I think it should be overcome by the Government saying to the TUC, as the best available body, "Here it is, 10 per cent. We give you the authority to differentiate this 10 per cent. if you can agree how to do it. It may be that you will give some great industries more than others, but we will back your decision if you are prepared to differentiate it". Then, in turn, when every company receives its TUC-decided share, the Government should say, as was the case during the last phase of the plan of the Heath Government, "If you, the representatives of all strata and groups in that firm, and of management, can agree to differentiate your share, as decided by the TUC, you have authority to differentiate it, so that it gives flexibility".

Now I think I know what would happen if the Government said this. I do not think the TUC would be able to agree on any degree of differentiation in the first year or two; but when all the squabbles broke out about the rigidity of the Government's pay policy they would be able to turn to the TUC and say, "You have had the authority to differentiate it, and you are the only body that can do so". Governments cannot say that the coal miners shall get this, the engineering industries shall get that and the teachers shall get the other, because differentials must be decided on a relatively unanimous basis by those whom they affect, which is the point I made earlier. So that, although I do not think that the TUC, given such authority, would exercise it to begin with, I think they might be driven eventually to realise that that is the only place where flexibility about differentials can be initiated. I am sorry to have kept your Lordships for so long.

Lord ROCHESTER

My Lords, before the noble Lord sits down, may I say that I was following his last argument very closely. Would he not agree that there is a case for the employers to be included in his scheme? The employers also have a stake in this problem, and they are in a position, I suggest, to wield some power in the situation, as was evidenced last year, for example, by their reaction to the Bullock proposals. Would the noble Lord not agree that the employers also should be involved in this scheme of pay determination of which he speaks?

Lord BROWN

My Lords, at the company level, Yes, I would agree; hut at national level, No, I would not agree—for this simple reason. If you get the employers involved in differentials at national level you once again buttress the idea, which is a false idea, that when unions wrest a differential increase they are wresting it from the employer; that they are gaining it at the expense of the profits of a company, and so on. I think you have got to keep them out of that situation because they are affected by the size of the addition to the national wage bill but they are not really affected by decisions on differentials as between industries; and if you include them in this situation you are going to recreate the old animosity between employers and unions at that level and it will become a polarised fight between employers and unions. So I would agree at company level, at institutional level, but not at national level.

6.40 p.m.

Lord MOTTISTONE

My Lords, I shall endeavour to be brief. I should like to start by joining in the tributes paid by noble Lords to the late Lord Douglass of Cleveland. It was my pleasure when I first joined this House and occasionally took part in debates of this kind that he should have been doing so, too. The wisdom in his contributions to these debates is something that we shall sadly lack in the future. I should like also to thank my noble friend Lord Trenchard for having put down this Motion. It seems to have inspired a lot of very important and worthwhile speeches. I hope that its conclusions may come somehow towards helping us down the way. My feeling, however, is that the trouble with collective bargaining—and we are directed to compare collective bargaining in this country with that in other countries, in Europe, perhaps—is that it depends on the bargain.

My concern is that the bargain depends on confidence. I believe that in recent years there has been a gradual erosion of confidence as between the different peoples in this country. This does not only mean as between management and unions, to use the well-known phrase, but between the people who are viewing those in authority generally. Those in authority include trade union officials and foremen just as much as managing directors and (shall we say?) lawyers. There has been a rather excessive over-indulgence in the debunking of authority. Maybe this is a healthy thing to happen in a democratic State; maybe it is the penalty we pay for living in a country where we try to have as much freedom as we can for individuals; maybe it is, indeed, good for people belonging to authoritative groupings to be viewed in this way. I would not debate that.

I think the great difference that has come about between now and, say, 20 years ago is that at all times people might say that managers are bad or that trade unionists have got too much power or whatever; but that, more often than not, they would qualify this by saying, "My boss is a jolly good one" or, "My union official that I am dealing with is first-class". This qualification, this admixture of view, the general view of the criticism of authority as a general purpose, and the view of the representative of that authority with which one was dealing oneself, was the thing which made it possible, in the last resort, for confidence between groups of people to be preserved—because they had confidence at the level at which they were working.

Your Lordships might well ask, if this is right, "What is it that has caused this change"? I suggest that the cause of the change is the degree of centralisation which has gradually and imperceptibly increased. It has increased partly because of what I regret I must describe as the baleful influence of some of the policies of the Party of noble Lords opposite. For example, the increasing State control of enterprise about the failings of which the noble Lord, Lord Vaizey, was very clear in his exposition in the debate last Wednesday. I would therefore refer your Lordships to column 211 of the Official Report for 5th April last.

It is partly that; but also it is that the development of improved communications and the development of improved transport systems has caused this in any case to happen generally. For example, whereas perhaps 25 years ago in a particular section of industry you might have 400 companies producing a particular product, now you perhaps have 40. The danger of this centralisation is that its effect is to diminish authority at the working level. That, I believe, is part of the cause of the lack of confidence as between one group and another.

For example, how can a manager who may be very competent, and, indeed, respected, as a person, command the same authority and the same obedience if everybody knows that in the last resort the shop stewards are permitted to bypass him in communicating with the board of directors? This must undermine his authority. I am sure that noble Lords are very well aware of many examples where that happens. It may happen for very good reasons. It may happen—if you like—to keep senior management in the picture in a way that they would not have been before. But the fact is that, whenever you allow somebody who is given a particular responsibility to be short-circuited in a chain of authority, you are diminishing his ability to lead and to manage.

I suggest that this is the fundamental problem which we have got to override. I have quoted the example of a company and I have quoted earlier the baleful effect of State control of enterprise. I suggest that the chairman or senior executive of a nationalised industry also lacks the full authority that he should have; because everybody knows that his decisions are subject to approval by a Minister advised by some senior officials of the Civil Service. The very fact that this happens—even if it very rarely happens—diminishes the authority of this particular person.

I suggest further that this shortcoming is a very serious one, because I think there is enough evidence in this country and others to show that people who are not in any way in a position to suffer for any errors that may be made, cannot get themselves as involved, and, therefore, cannot take the same necessary responsibility for their decisions as can people who are part of the system instead of outside it. I suggest that this whole concept of external control of enterprise is one which needs to be examined very carefully. It does not apply to the large private enterprise business in the same way because those in top authority in those enterprises take the full responsibility for the actions both of themselves and their subordinates. They cannot withdraw from the situation. I suggest that until we can somehow seek to organise ourselves to eliminate this diffusion of authority we shall not have a proper basis in which we can have any bargaining, whether it be collective or otherwise. Not only must this authority be ensured on paper and by rules, it must be seen to be effective in practice.

Unlike other noble Lords, I have not said much about trade unions and their powers. This is not because I do not feel that, in many industries and, indeed, geographically in some parts of the country, such power is not excessive and almost invariably seems to be counter-productive so far as the union membership is concerned. It is because I believe that any organisation or any individual will take to itself or himself as much power as can be grasped within the law. We can only modify that power in businesses by organisation within companies, organisation designed to deal with the power. Maybe we need to examine in the country at large whether the law needs modifying to give a proper balance of power as between organised labour and the rest for us in the kingdom. I suspect that it does but perhaps not as much as some would wish and others could fear.

I conclude by returning to my opening remarks. I believe that it is vital that confidence in our abilities as a people to work together for the common good should be regenerated. We have certainly shown this to he possible as recently as 25 years ago. It is vital not only to this United Kingdom but also to all our friends and allies in the Western World.

6.52 p.m.

Viscount ROCHDALE

My Lords, it has been my loss not to have had the privilege during my career in industry of working with the late Lord Douglass of Cleveland. I should like to join with other noble Lords who paid tribute to his great services during his lifetime in industry and in your Lordships' House. I should also like to express my thanks to my noble friend Lord Trenchard who has really done us a remarkable service this afternoon in introducing this Motion. Quite apart from the fact that he has had massive practical experience of negotiating overseas, it must have involved a considerable amount of thought, research and effort to prepare this debate and to put it forward in such a concise, coherent, and cogent way. It can be a subject that is sensitive, potentially even emotive; but it is a tribute to your Lordships' House today that we have been able to discuss it in a way where emotion does not enter into it at all and where it is being debated entirely objectively. That is the way it should be. I am most grateful to my noble friend.

I agree with him that this debate must on no account be regarded in isolation. It is really just one debate in a very long continuing debate of great importance. My noble friend referred to the earlier debates of my noble friend Lord Selsdon and the noble Lord, Lord McCarthy. They all contributed to this one debate, which, as I see it, is this: How do we as a nation propose to be able to pay our way in the world? It can be put in a few words like that, but it is the most difficult and complex subject, and no doubt there will he many other debates in your Lordships' House in the near future which will approach this subject from different angles. Today we approach it from the angle of pay determination, comparing our methods with those of our main competitors overseas; and bearing in mind, also, that our methods have been evolved over a great number of years

I have spent all my working life in industry, except for the war years. I started life in the wool textile industry and my first job was to sort greasy wool. It was a very humble job but not without interest. As time went on, I was fortunate enough to become associated with a wide variety of other industries, finishing at the heaviest end of the shipbuilding industry. I mention these personal experiences, hope, with due modesty, for one very important reason—at least, I think it is important—and it is this: in this wide variety of industries, textiles, chemicals, steel, shipbuilding and so on, there are a number of common points. No point has stayed with me more than—and this has been apparent in all industry—the supreme importance of the relationship between the shop floor and all levels of management. To emphasise the point that this is a two-way business, I would repeat it by saying between all levels of management and the shop floor.

To the extent that that relationship is open, frank and friendly, the problems—and it is evident to all here today that in this field we are bound to get problems—will be more easily resolved. But to the extent that the relationship is quite different, is aloof, is charged with suspicion, is frigid, those self-same problems, which in the other climate could be soluble, will be increasingly difficult, more intractable and frustrating. In all these problems there is the general context of pay determination and the structure for it, which is the purpose of the debate today.

Before saying a few words about negotiating, I should like to say something about the climate which is so essential for good negotiation. To my mind, the happier of the two climates to which I referred a moment ago is —and other noble Lords have also said this—apparently more easily come by in smaller or medium-sized companies or plants. This alone has a useful lesson to teach us. I have yet to be convinced that that same situation cannot be translated with imagination, skilful planning and decentralisation into the largest companies in the country. I believe it can. I have no doubt whatever Lord Trenchard's own great company has achieved it in this way already, and other great companies have been referred to today in the same way. Of course, in this field of relationships there can never be an end. There can never be an end to that road, especially when one remembers the ever-continuing development in technology and, perhaps even more so, the tremendous growth in national education throughout the country with the consequent and not unexpected growth of expectations.

There is therefore in my mind a need for a continuous campaign of explanation of what is going on within any company or plant, and that campaign of explanation must go on right from the top down to the bottom. To my mind that is what is meant by participation. As I have said on previous occasions in your Lordships' House, I regard participation as an absolute "must", provided that we agree what is meant by that word—and I do not think that there should be much difficulty about that—and provided that it is genuine participation and not mere façade.

We hear a great deal of participation of one kind and another in countries overseas. I wonder how genuine some of that really is? I hope I am not being unfair to them. I see participation in essence as an extension of the true team spirit in which everyone contributes and helps—the team spirit which has been translated in a much more elaborate and sophisticated form from the football field or cricket pitch into industry. This principle must be the same whatever the size of the organisation where it is to be found. But how do we achieve it?

I accept that perhaps some statutory guidelines or framework for participation may be needed but, in my view, that must be minimal and, in so far as anything which is statutory may become mandatory, I would merely remind your Lordships that you cannot legislate for people to participate any more than you can legislate for people to be friends. To use an old adage. you may bring a horse to water but you cannot make him drink. You cannot therefore legislate for participation. Participation must be allowed to evolve throughout a company from the lowest level right up to board level. Perhaps I should just explain at this point why I use the word "evolve". I may be misunderstood, because "evolve" has a connotation which could all too easily mean delay, or dragging one's feet. That is certainly not what I have in mind, because I believe there can be very few companies in this country where some immediate action is not needed, with considerable effort mainly on the part of management but also, I think, on the union side as well.

I should like to say a very brief word on participation at board level. I spoke at some length on this when we debated Bullock and I do not want to repeat myself at all. I realise that it can present a very real problem for worker-directors if they are going to play their full part as directors of the company and at the same time forfeit nothing of the trust placed in them by their fellow-workers or trade union colleagues. To my mind that is their great dilemma. When we debated Bullock, I quoted the case of the company of which I was chairman in Belfast. We had virtually completed two and a half years ago the framework for worker-directors to he appointed. It was a negotiated agreement, and I regret to say that the information I had, only two or three weeks ago, from the present chairman of the company was that they have not yet agreed to be appointed. That only indicates the problem that exists: yet it is a problem that somehow we must get round. To the extent that we do get round it and really have participation from the top to the bottom—and I hope we shall get that to a great and increasing degree—so as to provide a solid foundation for a mutual understanding of each other's problems and intentions based on an understood, acknowledged and common set of facts, the most difficult and sensitive problems, I believe, can be tackled with some hope of proper solution.

So much for the climate, which is absolutely essential if we are going to get the right negotiating system in this country. That brings me to the question of negotiated arrangements. I cannot claim to have, as my noble friend has, practical experience of negotiating in countries overseas, but of course there is an immense amount of literature on the subject. One has talked to many people about it and compared it with what one knows from personal experience of what goes on in this country. It is quite obvious that there are a certain number of aspects of our system which would seem to be most unsatisfactory and at times even chaotic and inherently inflationary. They call for change. In days gone by, employers in this country undoubtedly held the balance of negotiating power. To what extent this power may have been abused from time to time, and perhaps absolutely ruthlessly abused, is not for discussion today. It would be a fruitless effort to try to do so. But over recent years there can be no doubt that the pendulum has shifted right across to the other side, and we want to see whether or not that is satisfactory. My own feeling is that we should all surely aim to try, difficult though it is, to come to a steady and reasonable equilibrium in the case of negotiated power, so that trade unions and managements can objectively and responsibly negotiate across the table, thinking not merely of immediate demands but of their effect on the longer-term future.

I referred a moment ago to the debate initiated by the noble Lord, Lord McCarthy, on the 15th February. I have reread what he said there with great interest and care. There was one point in particular that rather surprised me. I hope I am in order in referring to it although he is not in his seat today. The noble Lord said at column 1464 that he was, ….convinced that most pay explosions in the past…have been rooted in the private sector, not the public sector…". I hesitate to cross swords with the noble Lord, who is such an absolute expert on these matters, but that remark of his surprised me. Of course, I may have misinterpreted what he had intended, but I should have thought that the negotiating power of employers in the private sector is all too often eroded by advances previously made in the public sector

I should like to explain just how I see that. Public sector negotiations are usually at the start of the negotiating year and they relate to industries or departments which are essential to the life of the country. They have therefore the inherent weakness of being subject less to effective financial sanctions. It follows that they are conducted in a setting where an inflationary settlement can all too easily be arrived at, short of there being a tough statutory incomes policy. That may be all right so long as it lasts, but that is surely something which cannot be held to indefinitely. So all in all, the public sector, the largest employer, will set the going rate for all private and public industry during the year. When it comes to negotiating in the private sector, bearing in mind the great variety of circumstances and demands—different trades, different crafts, different responsibilities and so on, even within a single plant—there may well be cases where it is easier, and possbily wiser, for an employer to take the easier line and to say that he will increase prices rather than resist a further wage demand or possible disruptive effort.

I understand that for many of our overseas competitors there is an increasing degree of Government intervention in all these matters. While I would be the last to suggest that we cannot often usefully learn from our competitors overseas, I think that we should be very careful to make sure that we are, in fact, comparing like with like. Equally, we should remember that many of the problems that our competitors overseas are having to deal with today are problems that confronted us 50 years or more ago. To my mind, there are no easy solutions to be borrowed or bought from overseas. Whether we like it or not, we are still pioneers in this field, as we were 50 years ago; and, as I think my noble friend Lord Watkinson and others said, we must continue to paddle our own boat. But that does not mean that we cannot learn from, and take note of, what other people do.

I have already referred to Government intervention in order to encourage participation, but that is, to my mind, quite different from Government intervention in the negotiating sphere. This is one point which needs to be very carefully looked at, because there are two aspects to it. First, there are the Government themselves as an employer, and, secondly, the Government as Government. This raises considerable difficulties, and the latter role needs to be looked at with very great caution if it is not to result in negotiations in industry as a whole, below the Government, being fixed in a rigid position.

It may be that some kind of agreement could be arrived at, perhaps between the Government, the CBI and the TUC, laying down the national cake, the national figure, for the year. Alternatively, there could be some kind of independent body. All kinds of suggestions have been made, to which I shall not refer, but I agree that some guidelines should be laid down within which we could then get back to collective bargaining where both sides are fully aware in advance of the facts and of the constraints, but are otherwise free to negotiate seriously and responsibly, knowing that what is agreed will not later be negatived from above and will also be honoured by the members whom they represent.

If this is not to prove too inflationary certain conditions are absolutely essential, and I should like to mention these in conclusion. These conditions are, by no means, exhaustive and there may be a great many more. The first is that, as I have already said, we must push ahead and develop plans for further participation. freely negotiated, and have greater mutual understanding from the start across the negotiating table, which should improve the climate for negotiations. This means better communications and constant effort. by trade unions and managements alike, in explaining to employees the true facts of economic life on which responsible negotiations will be undertaken on their behalf. This process of explanation must be carried on not merely in times of crisis, when we are on the edge of a precipice, but in good times, in bad times and continuously. To my mind, this is the first absolute essential.

My second condition is that there should be annual guidelines—the question of who produces them would be a matter for discussion—made as unrestrictive as possible, so as to avoid rigidity. Once accepted and recognised, these guidelines must be regarded as being meant to stick. They will include the cake, to which my noble friend referred, which has to be divided out. It must also be accepted that some will stand to gain more of the cake and some will stand to gain less. This is a very difficult but important point.

My third condition is that, while certain basic issues may be negotiated at national or industrial level, as many as possible should be negotiated at company or plant level. This, too, I regard as very importtant. It may be that, just as many of our overseas competitors include in their negotiating package many more items than we include, such as thresholds, profit sharing, travel allowances, education expenses and a whole lot more, these should be part of our negotiating package.

My fourth condition is that it should be mutually accepted that the likely fortunes of individual companies must be allowed to influence their own settlements. if I may put it in another way, pay increases, intended to recognise and reward greater efficiency and success, must not become the going rate for lame ducks elsewhere. In other words, the potentially successful company must have freedom to attract, by its terms, the people it really wants, because by that alone will growth come, and growth will be the basis from which investment, which we all want, can follow. My fifth condition is that there should be fewer negotiating units. My sixth and final condition is that there should be a review of what, for want of a better term, I have called the annual negotiating calendar. This is important, if we are to avoid inflationary leapfrogging.

I realise that these goals are exceedingly difficult. I cannot see them working really well if they are imposed. Government may help, but they must be arrived at by consensus in an atmosphere of sincere, enthusiastic participation. They may call—and this could be a delicate point—for some revision of cherished company practices and trade union rule books. They will probably require some transitional arrangements until the present still high rate of inflation is even more under control. But the stakes are very high, success is in everyone's interest and there is no time to waste. While Government may help, I do not think we must necessarily wait for Government to do anything. I am not making a political point, because I say exactly the same whether I am talking about a Conservative Government or a Labour Government. It is up to managements of companies and trade unions to move together, and the quicker they do so the better.

7.19 p.m.

Lord COLLISON

My Lords, I wish to join with others who have paid tribute to my old friend Lord Douglass. I experience a real sense of loss, and the suddenness of his death has contributed to that. I knew him and worked with him for many years. He was with me and other colleagues on the General Council of the TUC. He was also chairman of the TUC's Economic Committee, and his service to the trade union movement and to the country is undoubted. It is a great loss and we shall all miss him.

I should also like to express my thanks to the noble Viscount, Lord Trenchard, for introducing our debate this evening. I apologise for imposing myself upon your Lordships at so late an hour. However, the noble Viscount, Lord Trenchard, will appreciate, by the number of speakers and by the length of some of the speeches, that noble Lords have welcomed the introduction of this subject. No stones have been left unturned and therefore I shall find it difficult to find any more to turn.

However, it is right that from time to time we should study the structure and operation of the trade union movement abroad and make a comparison between what they and what we in this country do, provided that our investigations are purely objective and that, as several noble Lords have said, we do not seek to impose upon our workforce here conditions which may operate well abroad. Therefore it is good that we are having this opportunity to continue that study, although I hope most sincerely that nothing which has been said by any noble Lord in this House today will add fuel to the fire of those who tend to criticise the trade unions. It does not do any good; in fact, it does harm.

I suppose I am one of the least sensitive people to belong to the trade union movement. However, one reacts when one gets the impression that many things which are said are critical of trade unions and of the workers. It takes all sorts to make a world. Certainly in industry there are at least two partners—the employers and the workpeople—and any failure or success which British industry achieves is due to the efforts of both. Therefore, neither the one nor the other ought automatically and with prejudice to be condemned out of hand.

We hear a great deal about the "British disease". I admire the British. I admire what the British people have achieved and accomplished in the past. The things that we have done, stood for and, indeed, fought for ought not to be forgotten. The rather loose, easy and cheap talk that one hears about the "British disease" is to me both annoying and objectionable. The talk always comes around to strikes, and that is what has happened today in this House. The impression is often given that the British workman is strike happy: that he walks off his job at the drop of a hat, that he is entirely irresponsible and, if I may use the word in your Lordships' House, that he is "bloody-minded".

People forget that there is always a cause and a reason for behaviour of all kinds—for good behaviour and, if you like, for bad behaviour—but one has to look for the reasons for such behaviour. I do not want to try to whitewash the problems which we in this country face. However, the fact is that quite recently the International Labour Organisation issued statistics which prompted the Department of Employment to produce in one of their publications a banner headline which read: "Britain among the Best Four". The text explained that only four of the 16 countries for which figures were available—and those countries were Canada, Japan, Sweden and the United Kingdom—lost fewer days in 1976 per 1,000 people employed than in the previous year. It explained also that over the past 10-year period the United Kingdom was about in the middle of the league and was by no means either the worst or the best. We were not at the rear end of the queue.

I was honoured to be a member of the Royal Commission on Trade Unions and Employers' Organisations. That Royal Commission has already been mentioned today in our debate. The Royal Commission also made a study of conditions as they existed at that time. It looked at the statistics over the past 10 years and found that from 1964 to 1966 the best indication as to the favourability or otherwise of industrial relations could well be based on the number of working days lost in relation to the numbers employed, as the Department of Employment accepts from the ILO today. In those days, the Royal Commission went on record as saying: The United Kingdom's recent record has been about average compared with other countries"..

Viscount TRENCHARD

My Lords, I thank the noble Lord, Lord Collison, for allowing me to intervene at this stage on a point which I made to that Royal Commission. The number of days lost by strikes is governed by a natural economic law. No country or company over any length of time can lose more than a certain number of working days. The richer the company, the richer the country, the more the number of days that can be lost. The position that needs to be examined—a point upon which my noble friend Lord Carr of Hadley touched—is the position before a strike. In this connection, all of the managers of companies in this country whom I met when I went from place to place made the point that they are up against the constant threat of strike action and that it is this which makes it so hard to move forward productivity.

Lord COLLISON

My Lords, I understand this argument, and that comment is in fact made in the Royal Commission's report. The argument is well known. I am not suggesting that such criticism, which I consider to be unfair, is thrown by Members of this House at the trade unions and the workpeople of this country. What I am afraid of is that that impression has got about outside, and I hope that nothing which is said in this House will add fuel to that particular fire.

I have already said that I am making no attempt to whitewash the situation. Of course it is not entirely satisfactory. The number of unofficial strikes is still very high, as it was at the time of the Donovan Commission. Indeed, it was because the number of unofficial strikes was high, and getting higher, whereas the number of official strikes was more or less steady in both number and duration, that the Commission came to its main recommendation. The Commission took the view that the traditional system, which provided for negotiation at national or central level on an industry basis, was no longer adequate in an industrial set-up which had resulted in a multitude of shop floor agreements supplementing national agreements which could cover virtually only such questions as annual holidays and other general issues.

The view of the Royal Commission is put very clearly in paragraph 454 of the report, where it says: By far the most important part in remedying the problem of unofficial strikes and other forms of unofficial action will be played by reforming the institutions of whose defects they are a symptom. Unofficial strikes are, above all, the result of the inadequate conduct of industrial relations at company and plant level. They will persist so long as companies pay inadequate attention to their pay structures, and personnel policies and methods of negotiation adopted at the workplace are essential and the trouble will continue so far as they remain in their present chaotic state. The report added: They will persist so long as neither employers nor trade unions are willing adequately to recognise, define and control the part played by shop stewards in our collective bargaining system". "They will continue until the confusion which so often surrounds the exercise by management of its 'rights' has been resolved by the settlement of clear rules and procedures which are accepted as fair and reasonable by all concerned. A number of years have passed since the Commission came to that conclusion. I still hold to it; I think it is still a major problem with us, although I believe—and I have been out of this arena for some time—that progress is being made in the right direction. What I am sure about is that the shop floor arm and all that goes with it in terms of personnel and management, is an essential arm, one which has been under-rated and neglected in the past

Quite apart from the technical advantages that a development towards shop floor negotiation and its understanding and control would mean in terms of better negotiations, it also means something else: it means that the communication between management and workpeople will inevitably be improved, because sitting across the table and negotiating and arguing with people will bring to the knowledge of both workpeople and management all the issues which are causing stress and creating the very problems which cause dissatisfaction. I have said so often before that I am convinced—and my conviction has sprung from what I learned on the Royal Commission—that, above all else, good communications form the real basis for industrial peace, because if conducted with complete openness and with nothing being held back on either side, one can get understanding, whereas without communication and frankness one can only achieve distrust and suspicion. Without knowledge, without understanding, without being told and having the opportunity to discover what are the problems affecting workpeople and management, including money, cash liquidity and all the rest of it, it is so easy and becomes almost commonplace to blame the other side; for workpeople to blame management and management to blame workpeople. That happens almost automatically as a result of prejudice and lack of information. There is irritation; what is considered on the part of management to be constant nagging by work-people and what workpeople consider to be demands made upon them which ought not to be made and which affect their lives. These considerations lead to automatic condemnation on either side and there is far too much of what I call "instant condemnation" which is born of ignorance. What is required is a willingness to he completely open and frank and to put ail the cards on the table. I am sure that the improvement we are all hoping to see in industrial relations will then come about.

On another front, comparisons are often made about trade union structure. For instance, our trade union structure is often criticised because of the multiplicity of trade unions and often—as has happened today—the comparison is made with Germany. The point has already been made by my noble friend Lord Cooper that in fact Hitler did the German industrial sector a great service when he destroyed the trade union movement. I personally knew two people who have since died, who spent the war years in a concentration camp because they would not renege on their basic beliefs. But the effect of that was that, after the war, it was possible to start from scratch and indeed, as my noble friend has said, the British trade union movement, together with the American trade union movement, went into Germany to give advice and help on the reconstruction. The outcome is that they obviously have a more rational system. There are 16 trade unions organised on an industrial basis; it is what is called vertical organisation and it clearly makes things a great deal easier, and it has made it easy in Germany to develop the works council machinery and other sorts of machinery which allow for participation.

I think it is of some interest to your Lordships to know what was the feeling of the Royal Commission on the question of participation. Before I mention that, however, I should like to say this: it is not possible, and it is pure wishful thinking to imagine that, in this country, we can simply knock down all that has grown up over the years. You can refer to it as having grown up like Topsy if you like and point out all the difficulties which emanate from having a number of trade unions in the same industry but you cannot knock down that which has been built up over the years and certainly no one would desire to emulate Hitler and destroy it by legislation, by a stroke of the pen.

What we can do is to work towards amalgamation and rationalisation and, indeed, considerable progress has been made over the years. At the time of the report, we looked at the situation and observed that, at the beginning of the century, there were 1,323 trade unions with a membership of about 2,022,000 workers. Between that time and 1966, the number of unions decreased and the number of workers increased so that, when we were considering this matter, there were 574 unions with a total membership of 10,111,000. That process of amalgamation and rationalisation is still going on. That is the way to go about it. Furthermore, it is a fact that half of all trade unionists in this country are in the nine largest unions and four-fifths of the membership is to be found in the 38 largest unions. So, there again, an automatic rationalisation is taking place.

I return to the question of participation. On the Royal Commission at the time, a majority of members were not able to recommend the appointment of worker-directors. The problem was the question of accountability which the noble Lord has mentioned, but, as a matter of interest, there were three of us—Mr. Woodcock, Professor Kahn-Freund and myself—who took a slightly different view. We thought that, while one could not expect that the introduction of worker-directors would immediately result in dramatic results, it would be worth while to continue the experiment. I still feel as I felt then; that is, that the time will come when worker-directors will become commonplace, and, as we three said then, I repeat now, we did not believe and I do not believe that this problem of workers accountability will prove insuperable. In the light of Bullock that is interesting.

My last word is on incomes policy. The noble Viscount suggested that there were alternatives, either following something of the Continental structure or incomes policy. I am convinced that, whatever we do about improving our structure, incomes policy is a must. I am one who admired very greatly the stand on incomes policy taken by my noble friend Lord George-Brown when he was a Minister. He showed great courage in difficult circumstances. But you know, my Lords, you do not need to be an expert economist to understand that, unless you limit the money in people's pockets, limit income, to what the increase in the national product will stand, you are bound to create inflationary pressure. I believe that lesson has been driven home. I should like to see certain things. I would join with those who would like to see arbitration machinery. I should like to see a wages policy evolving not by compulsion, as has been suggested by some, and tried in the past, but by agreement; that is, an agreement between the three parties concerned, the Government, the employers (the CBI) and the trade union movement. I believe that agreement as to what limitations ought to be imposed could be reached and worked out if one has sufficient confidence in people to accept that.

I have known, known for too long, that the history of the trade union movement is quite strange in a sense; it is a huge success story. Unions when they decided to start were opposed by prejudice born of fear. Trade unionists were abused and there were legal measures taken against them. We in my field had our Tolpuddle Martyrs. But after years of struggle the unions became established, and now, it has been said in other words, the boot is almost on the other foot. I have watched what has happened. Unions who have great strength have achieved good conditions for their people and unions who have not have been left behind.

Therefore, I do not believe in this balance of power theory. I believe that what we have discovered and now know is that self-interest has to be limited. There is an understanding that, if you have power and you press it too far, then you will create problems not only for nearly all the citizens in the country but, in the long run, for yourself, because whatever you do you cannot keep up, and catch up, with inflation. Therefore, there is, I believe, the understanding that the best self-interest, paradoxically, requires that there has to be a limit to that, and you cannot use your sectional powers to the exclusion of all other considerations.

I therefore believe that the future of industrial relations in this country will be good; I am optimistic about that. 1 do not believe those who denigrate the unions and denigrate workpeople. I wish they would not do it. I think it only causes resentment and does no good. But, so far as the considerations of this Motion are concerned, it is a good thing, as I said when I started, to have a look at what is going on abroad. Knowledge is good and in this country we must work with that knowledge, using what we can or need; but we must work towards the creation of an industrial relations system which, in my view, can be, and perhaps is approaching now, the envy of the world.

7.45 p.m.

Lord DIGBY

My Lords, I listened with great interest to the debate between the noble Lord, Lord Carr, and the noble Lord, Lord George-Brown, about the introduction of Government into the process of collective bargaining. As was pointed out by the noble Lord, Lord Brown, this is necessary in order to deal with the interests of the consumer—of the general public. But we have seen all the problems that are caused by Government intervention in this system, desirable though it may be in some ways.

I am wondering whether there is a half-way course which would be to have representatives of consumers attending negotiating tables at company level. There, it is a question of the balance of power, and many people feel that the union power has become too great and that the consumers—the general public—are losing out on that. The union has the ultimate weapon of the strike, the employer has the ultimate weapon of dismissal, which was much used in the last century though it certainly could not be used very much now. What power would this consumer representative have? I suggest that, if public opinion were behind him, he could call for a boycott from consumers of a company who were putting up prices because they were bargaining very weakly. I have no doubt that that would be a most difficult situation, but it would be a way of bringing the various power groups together in a negotiating situation and without too much rigidity.

I do not think many angels have spoken to us tonight, and certainly I would not claim to be one, but I do fear to tread in the steps of so many people who have forgotten more about trade unionism and industrial relations than I shall ever hope to know. But I do so because I believe that it is the atmosphere of collective bargaining that is so fundamental to our way of life.

Lord BROWN

My Lords, surely the noble Lord recognises that the real representative of the consumer is the Government itself?

Lord DIGBY

Yes, my Lords, indeed I realise that, but we have seen the problems Governments get into when they come into direct conflict with different unions, because it is the same Government that is dealing with the miners and everyone else. Of course it should work, but my only query is, does it? The reason I address your Lordships today is that I feel that anything said here which can improve industrial relations by one iota will have more long-term impact than the Budget speech in another place tomorrow. Industrial relations is the fundamental issue on which our prosperity depends.

This House, where so many Members have experienced so much of the hurly-burly of politics, industrial relations and political life, is in a unique position to judge from past failures and to suggest constructive ways forward. I intend to concentrate on only one simple theme—that is, that it is not the forms and the law of industrial relations that matter; but the underlying belief and philosophy of all citizens, whether managers, workers or housewives. The very words that I have used are, I think, a symptom of our philosophy as anyone who believes that managers and housewives are not workers is divorced from reality. However, our present philosophy is an extraordinary mixture of public desire for equality and private belief in "I'm all right Jack" which is producing a low-wage and low-output economy. Why is that so in a country with so much wealth, brains and expertise?

I suggest that the prime reason for our industrial problems is fear. Fear causes men to act irrationally. Fear is felt on the union side because of the exploitation in the Industrial Revolution and the hardships and suffering during the depression of the 1930s. The fear on the management side is that the increase of union power since the war has made it impossible for managers to manage. It is that fear that has caused unions to mount restrictive practices and it is that fear that has produced weak management which has given way to union pressure, very often not on wages but on fringe benefits and restrictive practices. These have reduced productivity to the detriment of all. Sectional fear has stopped us working together for the good of all.

In discussions with businessmen and politicians at a recent Commonwealth Conference there appeared to be a common thread throughout the white Commonwealth—the United Kingdom, Canada and Australia—which was quite different to that in the United States of America and Germany. That common thread was the lack in those white Commonwealth countries of the acknowledgment that it is essential to ensure a prosperous company in order that the unions may secure the best possible wages and conditions for their men. In other words, philosophy tended to be one of confrontation rather than co-operation and partnership. I hesitate to say this following the noble Lord, Lord Collison, because his members very much realise the advantage and the necessity of ensuring that their employers are prosperous. Indeed, as a result of that realisation, the agricultural industry is probably the most efficient in the country.

The philosophy of conflict built up over generations is not easily dispelled, but a change should he a major objective of Government. It is easy to say that, but I can only suggest two very small lines of thought that might be followed. First, one of the characteristics of the British is loyalty. That loyalty produced the comradeship of war and was a major factor in our survival and victory. However, since the war, national loyalty has been deliberately denounced as chauvinistic and has been replaced by loyalty to smaller groups which, in the industrial situation, means loyalty to the union. In other words, "My country right or wrong" has been changed to, "My union right or wrong". Loyalty can prosper only where there is leadership. How can we expect loyalty when leaders continually emphasise what is wrong and forget the fact that, despite our problems, Britain has probably the nicest and most humane society in the world?

To inspire loyalty there must be something of which people can be proud. That brings me to my second point that we should exploit people's pride in our social and health services. Despite all the criticism of the bureaucratic health service and of the welfare State producing a workshy population, the fact is that people are proud of our social services and a survey has shown that they are prepared to work to maintain them. I believe that we should make the point that the result of increased productivity does not just go into the pockets of private shareholders, but provides the money to pay company taxes which support the social services, money for capital investment in better machinery, money for better pensions and money to pay better wages. If people are proud of working effectively and ashamed of causing disruption, then half the battle is won.

I know that these all sound like very esoteric ideas and people who have great experience have been talking about the practical difficulties, hut I believe that it is the atmosphere in which industrial relations are performed—the actual feelings of the people on the shop floor—that is vital. It is easy to pass laws, but it is very difficult to think years ahead to see to how people's social views may evolve.

I have suggested two lines of approach, but it is up to the Government. If Ministers direct their policies towards effective work—I do not believe that people here do not work hard, but it is very often the case that they do not work effectively —and if we can somehow bring a realisation to ordinary people that good work is fashionable and shoddy work is unacceptable, then a step will have been taken towards easier industrial relations.

7.58 p.m.

Earl DE LA WARR

My Lords, like the noble Viscount, Lord Trenchard, to whom I am extremely grateful for the timeliness of his debate, I am speaking to your Lordships in no way as a politician but as an industrialist. The noble Viscount has, I think, recently retired from active industry, whereas I am still upon the treadmill. However, I think that for about the same period we were engaged in industrial life and, to quite a large extent, in dealing with the unions. The only difference between us is that the noble Viscount has experience of union matters overseas whereas I do not. So it is not with that side of matters that I intend to deal.

I have very strong views about the inequities of the closed shop; the dangers of some of the current theories about worker participation—and I hope that I shall not raise the blood pressure of the noble Lord, Lord Brown—the disincentives to investment that are inherent in recent industrial legislation, particularly the Employment Protection Act, and the absolute need to do what we can to help the unions reform themselves. But, like the noble Viscount, Lord Watkinson, I take the view that we have a very urgent and a very acute task in front of us. Therefore, I shall spend no time in dealing with the sort of reforms which are more likely to take half a decade than half a year to achieve. I shall deal precisely with what I see as the central point in this debate, and what I call "methods for fixing wages". Quite specifically, I do not say "free collective bargaining"; nor do I say "statutory incomes policy". They are, in fact, all methods, but I have found that such phrases are creeping into the political vocabulary, and if we are not careful we shall find them being used as the jargon of the hustings. I do not believe that any noble Lord would welcome that kind of treatment.

The employee's primary interest is his pay rather than the methods of fixing it, and he hopes that it will increase in real terms. The employer's primary interest is the payroll, and he hopes that his increasing payroll will be accompanied by lower unit costs from increased productivity. However, regardless of incomes policy and of trade unions, the fundamental market forces of supply and demand for labour will always operate in the end in fixing pay, just as the laws of supply and demand operate in fixing the price of any commodity. Collective bargaining is merely a mechanism by which trade unions, acting as agents for their members, try to obtain the best price for their members' labour. They do this no matter who the owners of the business are—no matter whether it is the State, the local authority or private enterprise. They argue cost of living; they argue comparability with other companies, which sometimes in jargon terms is known as "Schedule 11"; they argue the company's ability to pay, and many other things.

When inflation went out of control, intervention by the Government appeared to be inevitable—and in my opinion it was—and some bargaining rights had to be shelved. But do not let us deceive ourselves by thinking that Government incomes policies in any way diminished those basic market forces of supply and demand. Beneath the surface they remained as strong as ever. The maximum almost invariably became the minimum. The salaried trade union official was told by his members, "The Government have said that we can have 10 per cent.; now go and see what more you can get out of the company". I assure your Lordships from experience that there have been far more rather than fewer bargaining meetings throughout these last few years.

In theory, when inflation comes right down and is deemed to be under control—if that ever happens— I suppose that we could return to the type of unfettered bargaining which we knew in the past. But we must look at this in the light of realities. The distortions which exist today to the whole concept of a free market for labour are very big. A number of noble Lords have given good examples of this, and I shall not deploy the subject very far. But I would remind noble Lords that much of the labour force is now employed by the public sector, and the percentage is increasing. Would that I could see it coming down, but I am afraid that that is not the case. It seems, too, to be accepted—I know not for how long this may go on—that some private enterprise companies are too big to be allowed to go to the wall.

Lord BROWN

My Lords, the noble Earl has stated his approval of the law of supply and demand for labour, but he has not given his approval to unfettered bargaining. You cannot distinguish between the two, so he is approving and disapproving the same thing. Is that not the case?

Earl DE LA WARR

My Lords, No, I do not think it is. I have stated that the law of supply and demand is an inexorable natural law. I have given no approval or disapproval to it. I have simply said that it is there. Does that satisfy the noble Lord?

Lord BROWN

My Lords, if it is the natural law, presumably the noble Earl wants to let it prevail, but at the same time he disapproves of an outcome of the natural law; that is, unfettered power bargaining. Therefore, he is in an inconsistent argument.

Earl DE LA WARR

My Lords, I am not aware that I have yet given a view about unfettered bargaining.

Lord BROWN

My Lords, I thought I heard the noble Earl say so.

Earl DE LA WARR

My Lords, I think not. For the reasons that I have given, as well as for other reasons, whether it be Government as Government or Government as a big employer, it seems to me that it is in the highest degree probable that pay in all sectors—and I do not approve of splitting this into different sectors because it cannot be done—will partly at least be influenced by the Government. I for one feel no impending sense of doom on this account. I was very interested in the references of the noble Viscount, Lord Watkinson, to NEDC and possibly to a Select Committee. Certainly, they deserve careful study.

I said "partly influenced by Government" because there are certainly very important conditions. We must return to the employer the right to pay for ability, initiative, productivity and responsibility. Only with that can we restore incentives that are needed as a spur to that competitiveness, without which these cannot be any growth in our wealth. Above all, we must—and I am assuming that under any circumstances we shall—give employers the ability properly to reward managers at all levels. This has been one of the most unhealthy aspects of the last year.

One does not have to be an employer to know of the despair among first-line managers when overtaken by the people who work for them and who are earning more by virtue of overtime. The despair—and I make no bones about saying this—is at least as bad as one goes up the scale to top managers whose whole standard of living over the last few years has been reduced very substantially indeed. These things cannot be allowed to continue if we are to restore our position in world markets.

Income tax is a huge subject and one with which I do not attempt to deal. Indeed, I thought that the noble Lord, Lord George-Brown, did a very good job on it. However, I will remind your Lordships that trade unions and employers negotiate in terms of gross pay, and whatever the role of the Government in determining pay we should remember that they alone are able to influence the after-tax position, which is so vital in maintaining differentials and incentives. Just as the underlying law of supply and demand for labour will continue, so I believe that in some form Government regulations will continue. They must be better, they must be more humane, but, above all, they must be more flexible. Finally, let us remember, as the noble Viscount, Lord Watkinson, reminded us that we are disscusing a matter of grave urgency. 1st August is not very far away, and we have little time to find the next solution.

8.11 p.m.

Baroness SEEAR

My Lords, I must first apologise that I was not in my seat when the noble Viscount introduced the subject which is the gist of this debate. Long before I knew that the House was to sit this afternoon, let alone debate this subject, I had made an appointment which I could not break. The best way I can make amends is to be extremely brief at this time of night, so many speeches of such excellent calibre having already been delivered. I have discarded the mental notes I had intended to deliver—if one can deliver mental notes—and I intend simply to make a few marginal jottings on points of great importance that have been made in the debate.

It has been an important, urgent and exciting debate. It is important because within the problems of low productivity and low pay—because today we are, as other noble Lords have said, a very low-paid country—lie the core and the root of many of our other economic, social and political problems. If we could overcome that problem of low productivity and low pay many of the other issues confronting us would fall into position. The debate is urgent because there is little time, as other noble Lords have said, between now and when the decisions have to be made as to what is going to happen when the present pay round conies to an end. There is no position on the fence. We either go back to a situation in which there is no kind of control or we need to have some kind of fourth round, whatever you like to call it, to put in place of what we have at the present time. The distance in time between the middle of April and the 1st August is very short indeed.

It is exciting because it has seemed to me that across Parties on all sides, and on the Cross-Benches, there has been a degree of agreement that is perhaps unexpected, and an ability to put forward proposals which might, put together, really contribute considerably to solving this central and immensely important problem. As I listened I wondered whether perhaps a small Committee of your Lordships' House might get together after this debate and work on some of the points which have been raised, to see whether we could put on paper a proposal to put forward to the Government, dealing in greater detail with the points and working out some of the issues raised which could be used in the discussion which must take place between now and 1st August. There is much common agreement, and many ideas of great importance have been raised.

The marginal notes which I wish to add briefly have to do with collective bargaining and the modification of collective bargaining which must surely take place now. I accept, my Party accepts, that there is an important place for collective bargaining. Of course there is an essential rôle for trade unions and employers in this whole question of the fixing of pay. But we must get out of the way of talking about going back to collective bargaining. We have to go forward to a different kind of collective bargaining in a different context, because we are operating in a different economic and social world. That is the problem that we are up against.

I go along entirely with the view that certainly there are at least three partners, three groups with different rôles to play in the determination of pay in this country. There is the Government with the Governmental rôle, the employers with the employers' rôle, and the trade unions with the trade unions' rôle. We need to think even more clearly than we have done this evening about what those rôles are; what it is appropriate for the Government to do and what it is not appropriate for the Government to do, and similarly for employers and trade unions.

The Government's rôle is twofold. The Government are a very big employer. I do not know whether, in that part of the debate which unfortunately I missed, anything more was said in detail about the rôle of the Government as employer. All I should like to say about it at this time in the evening is that we should not lose sight of the proposals put forward by Mr. David Basnett some months ago about relativities within the public sector, because there is no escaping the fact that the problems of pay in the public sector are of the greatest importance, but are different in nature from the problems of pay in the private sector. They overlap with the problems of pay in the private sector, but they are not the same as the problems of pay in the private sector.

I should like to underline the need for looking again at the proposal put forward by Mr. Basnett, and to see whether more work could be done in that area in looking at the rôle of Government as employer and the particular problems that arise in that context, and the other rôle of Government, the role of Government as the protector of the public interest, and in particular in 1978/79/80 the whole problem of the fight against inflation. I go along entirely with what was said by the noble Viscount, Lord Watkinson, the noble Lord, Lord George-Brown, and the noble Lord, Lord Brown, about the need for some tripartite discussions with expert presentation of what the economy can stand, probably done within the framework of NEDC.

The footnote, the marginal scribble I want to add to that part of the discussion is this: although independent experts disagree on a great many things, there is one thing on which I think they would all agree: that the norms—or whatever you like to call them—that we have had in recent pay policies, and that are seen to be politically acceptable, have all been a great deal too high in terms of controlling inflation. If you really carry out what has been suggested this evening, that tripartite group at NEDC which is going to be confronted with the figures put forward by the experts is going to find, in terms of expected increased productivity, that the kind of figure that they put forward as being acceptable as an increase, with adequate safeguards against inflation, is a great deal lower than people have become accustomed to accept as being appropriate.

Let us be honest about this. The fact is that we did not start with the assumption that everybody was going to get as a minimum 10 per cent. We started this year by saying that average earnings were to come to 10 per cent. A great many of us knew, because in industrial relations a minimum always becomes an average, and the confusion between wage rates and earnings goes on all the time, that we would start with an increase in rates of 10 per cent. and on that we would build the additions. Every time we have these central agreements on norms, they have been exceeded considerably. Let us be blunt about this. This country cannot afford continuing 10 per cent., 11 per cent., 14 per cent. increases in earnings against our present low levels of productivity or against any likely increase in productivity that we are going to get over the next three, four or five years. A 10 per cent. increase halves the value of money in 71/2 years. That is a horrific thought.

There are two points here. We must face the fact that, if we are going to have this central discussion and agreement, it is going to be round figures which will seem quite shocking to a considerable number of people, because we shall not get our experts—at least I believe that we shall not—to fudge those figures. They will give us the kind of answers that people say do not meet their expectations. But this is implicit in what we are saying here tonight. I suggest it is very important that we should stick to this, that we should have this discussion and that the figures should be at an honest and realistic level. I believe that we could get this accepted, if not immediately, by the trade union leaders, the employers —who may find that they are today a little behind the rank and file—and by the rank and file. This is where it matters, provided that we take the necessary steps.

I think, as the noble Lord, Lord Shepherd, said about 18 months ago, that sometime in the summer of 1975 the British people looked over the abyss and drew back. i believe that at that time they realised what inflation really could mean. We did not have to go through the horrific experiences of the Germans to realise what inflation can mean. I believe that we must make an all-out effort while the discussions in Neddy are going on, and afterwards, to explain, through television and all the media of communications that are now at our disposal, what the relationship is between given pay increases and prices, what it means to people's savings, and what it means to pensioners. We must get those points over with an intensity of effort that we have not yet begun to put into communicating with the public.

Lord Collison talked about communications—not only communications between trade unions and employers but communications with the general public, too. At the end of the day, the trade unions depend on the knowledge and support of the rank and file. The whole movement in the country has been to go more to ordinary people in their own homes. There is plenty of evidence that when this is done we get increasingly good support. I should like to add the suggestion to the Neddy discussions that we face the fact that it is right to do this. We should face the fact that the information that comes out will at first sight be unacceptable because the figures will be low. We should accompany it by new ways of keeping continuously in touch with the public about what is involved in the figures that are being put forward.

That is the first marginal note that I should like to make. The second is this: I agree very much that, if we can put this figure at a low level, and get it accepted at a low level, we shall also accept that there is still room for increases in pay where these are genuinely earned by increases in productivity, by technical changes, by all those many developments which we need to bring about if we are to alter our position in the productivity league table. This is what can be so well done at the level of the company. We can build up a figure, on top of what has been agreed as being a reasonable minimum, but low figure, because of the great success and greater productivity of the particular company in which one is concerned.

We must work this out. I am not suggesting tonight how it should be done. It was suggested in the Donovan Report. I very much agree with the noble Lord, Lord Donovan, that it is time we brushed the dust off the Donovan Report and looked again at some of the ideas of the report in depth, perhaps, to see where we go from here. This will be one of the items on the agenda, as to what should be done at the industrial level and what should be done at company level.

Surely it is true that these increases, related to productivity, abolishing inefficient practices, and the introduction of new technology, are all things which should be negotiated at company level. This will give the flexibility and the opportunity for genuine collective bargaining about a real change of economic value at the level at which it really matters. Of course, that was what Donovan said.

I would remind you also that Donovan said that this needed to be institutionalised properly. There has been a move towards the plant, but it has not been an institutionalised move. We have not done what Donovan suggested, which was to find ways of drawing really clearly-defined plant agreements and then enforcing them properly. Donovan even suggested—although the committee did not recommend it—that it was thinkable, at least, that we should, in certain cases and in certain circumstances, make those agreements legally enforceable. I do not say that we want to do that, but it was suggested as something that might be done.

We should put effort at the level of the NEDC into taking the public far more into our confidence and educating them far better and keeping them informed all the time. I understand that the Germans do this through their television machine far more effectively than we do. Then, we should look at the proper institutionalisation of plant negotiation, allowing quite considerable increases in return for genuine increases in productivity to be negotiated at the level of the plant. If we did, we should get our flexibility and make adjustments for differentials there. There, after all, is where the new, real wealth comes into being.

I do not want to go on any longer. I promised to be short. I have already been 15 minutes. However, these are the points which 1 think we should take on board and work at, because, unless we do these things, the very good ideas that are being put forward may well not get us very much further. It may be—and this is my last word, which I hope will not be misunderstood—that we do need to have some additional legislation in this field. I am the last person who wants to see more law in industrial relations. But, on the other hand, let us get rid of the humbug that we cannot have law in industrial relations. It is humbug. because we have a great deal of such law already. It is also humbug because there is no other sphere of life—whether domestic, international or commercial—in which appropriate law is not laid down to establish and support institutions. I can see no conceivable reason why that field of life which happens to deal with industrial relations should be exempted and should be the one exception to the need to draw ground rules for keeping the peace and, where appropriate, to have them reinforced by some kind of legal standards.

8.28 p.m.

The PARLIAMENTARY UNDERSECRETARY of STATE. DEPARTMENT of the ENVIRONMENT (Baroness Birk)

My Lords, may I start by paying my tribute to my late noble friend, Lord Douglass of Cleveland, and to say how comforting I think it will be to his family to read the tributes which have come from all parts of the House and for which we in the Government who knew him are grateful. I personally was introduced into this House and took my seat on the same day as he did, so I felt a very personal tie with him.

I am grateful to the noble Viscount, Lord Trenchard, for giving us this opportunity to hear so many variations on the theme of collective bargaining. What it has certainly proved, among many other things, is that this is a facet of an enormous subject. I think that I must say to the noble Lord, Lord Digby, that I shall be very surprised if public interest in this matter pushes the Budget off the newspapers and TV tomorrow.

It is true that there is always a temptation, when the United Kingdom's economic performance falls behind, to look at the practices of our competitors and to say, because we see it, that they order things differently and better abroad. This has been expressed tonight by the noble Viscount, Lord Trenchard. I think it is true that international comparisons can be helpful to the analyst, but transplanting is quite a different matter.

I was glad to note that my noble friend Lord Cooper, the noble Lord, Lord Rochester, and the noble Viscount, Lord Rochdale, all took the same view as the Government, who, as the Donovan Commission pointed out in 1968, believe that suggestions that our performance can be improved by the wholesale adoption of overseas industrial relations practices are misconceived. Social conditions, historical tradition and human nature do not lend themselves to the ready transposition of foreign structures of collective bargaining, which, like some wines, are inclined to travel badly. I can think of nothing harder to arrange than the controlled adoption of foreign "atmospheres" (the noble Viscount referred to atmosphere in his Motion). Therefore, when we praise or condemn other nations' practices, we have to look at them in a much more rounded and wider context.

Many noble Lords take the view that, in terms of our competitors' success, our collective bargaining system is lame, anarchic and halting. I do not believe that this is so and my noble friends Lord Cooper and Lord Collison spoke up in a very spirited and informed way on this. It is certainly subject to failures. I would not defend every aspect of it—that would be quite stupid—but I know of no system of human relationships which is not fallible. I agree with my noble friend Lord Collison that the view that Britain is a strike-torn country where conflict and unrest are endemic is largely unjustified.

The truth is that the great majority of firms in this country do not experience any strikes at all. The Department of Employment figures for 1971 to 1975, which contained some particularly bad years for industrial relations, reveal that on average 98 per cent. of plants were strike-free in any one year. Incidentally, the "explosion" referred to by the noble Lord, Lord Carr, was not confined to the United Kingdom. The OECD figures show that, in 17 major countries between 1969 and 1974, 100 per cent. more working days were lost than in the period between 1965 and 1968. I do not say that this makes things much better, but it at least spreads the burden and does not make us unique. It leads one to think that there are international factors as well as national factors concerned with this.

Indeed, as pointed out by my noble friend Lord Brown—I think, we have started dropping the Wilfred now—the highest level of strikes occurred under the last Conservative Administration, and this was largely due to attempts to impose a statutory and legal strait-jacket on collective bargaining in the disastrous Industrial Relations Act of 1971. This was together with a form of incomes policy which was one of confrontation, and which we know ended in the miners' strike and the decision for which the Government went to the country in the Election. That Act demonstrated the terrible error of believing that improvements in industrial relations can be achieved by imposing on our own national traditions new systems copied from other societies. This is what, however well intentioned, the Government of the day was trying to do. In fact I felt that the noble Lord, Lord Carr, showed great courage, and I admire him for intervening and speaking in this debate because I think what happened in those years, and which we are still feeling, is to a considerable degree the aftermath of that.

The great weakness of the Act was not the myth which has been spread—and I must mention this because it is still being spread—that the trade unions wrecked it. It was wrecked because it depended on employers invoking the law, which the great majority avoided doing like the plague. Only the "cowboys" took up the legal cudgels.

The International Labour Office figures covering the mining, manufacturing, construction and transport industries demonstrate that over the last decade our strike record—and I shall not go into details because my noble friend Lord Collison did so—really comes about in the middle. I am not supporting the view that any level of strikes is a good thing, but at least let us not paint ourselves worse than we are. A great deal has been said about the English disease. There is another English disease, that of masochism, which we practise constantly.

Furthermore, strikes are not the only measure of industrial relations failure. Absenteeism is a more serious problem in both West Germany and Sweden than it is here, and it is growing in Japan. The Swedish system, which is so much admired, was accepted only after 40 years of bitter strife, and it is now uncertain how long the years of stability will continue because instability is setting in there. As has been pointed out by several noble Lords, the West German industrial system was imposed on a defeated nation after the last war and a limited number of unions incorporated in the scheme, which, as the noble Viscount, Lord Trenchard, and the noble Viscount, Lord Caldecote, said was largely worked out by Ernest Bevin and our own TUC. Here again, we are dealing with different factors. Similarly, it is doubtful whether the traditions of discipline in the industrial labour force in Japan could have been achieved in our more individualistic and less paternalistic society. I am not sure whether it was the noble Viscount, Lord Rochdale, or the noble Viscount, Lord Watkinson, who echoed my own misgivings about the Japanese trade unions.

Viscount CALDECOTE

My Lords, may I intervene at this point? Would the noble Baroness not agree that it is important to look at our competitors' record. Experience in the Government Statistical Service gives a rather different account of the strike record in Germany and here. In the last decade, 56 days were lost by strikes per 1,000 employees in Germany, whereas the figure in the United Kingdom was 788. Does that not show that there is something to be learned from Germany? I do not think we ought to be too complacent.

Baroness BIRK

My Lords, I am not complacent. As I have not got those figures at my fingertips, I do not propose to argue about them at the moment but I shall write to the noble Viscount about them. Even if on occasion there are more strikes here, it does not follow necessarily that we should imitate or take in what other countries are doing. As has been pointed out, there are fewer strikes in the Soviet Union, but I do not think that means that we find that that is the better way of industrial planning than our own.

This leads me on to another point which many noble Lords have made, particularly the noble Lord, Lord Carr: that there is less irrationality in the conduct of industrial relations; he pointed to the orderliness and efficiency abroad. Yet here we must remember that some of the countries which are admired for their greater mechanical discipline in industrial relations show more extreme and alarming forms of social indiscipline outside the field of industrial relations. I am trying to make the point that we have to compare like with like, and it is very difficult when one is talking about different national characteristics, different cultures and entirely different things.

If the industrial relations scene in Britain is not wholly grim—and I do not consider that even with all the difficulties we have (and we can not be complacent) that it is as grim as it is sometimes painted—why do we manage to convey such a bad image? I believe—and I very seldom say this—that this is partly due to the media. The Royal Commission on the Press, chaired by professor McGregor, now a Member of this House, in 1977 regarded coverage of industrial relations and trade union affairs as a significant weakness in newspapers, and recognised that this reflected a complex set of news values which could not be speedily changed. I have recently come back from the United States where I spoke with our Consul-General in Los Angeles. He said that one of the great problems was that if there was any strike here, such as the firemen's strike, that received headline news there. When he was discussing this with a number of very well-informed people, they had nothing to say about their own coal strike, or the dock strike going on in America at the time. The strike in England was what was catching the news.

Similarly, relatively little attention is paid to conciliation, for which the continued confidence of trade unions and employers is essential. As my noble friend Lord Cooper of Stockton Heath pointed out, ACAS handles about 3,000 cases a year and there are settlements in about 75 per cent. of them, though they seldom make the newspapers; of course they are not so interesting as the cases that "get away". However, it would be foolish to deny that there are real problems. Low productivity in some key industries, especially where units are large, has been mentioned; and I entirely agree with the noble Baroness, Lady Seear, and others, including the noble Viscount, Lord Trenchard, that greater rewards can be obtained only from higher productivity.

Like the noble Viscount, Lord Amory, I am concerned at the damage that is done by restrictive practices. However, once again it is impossible to isolate such cases—and here I agree with Lord Cooper and Lord Collision—from the industrial history in which they are embedded. People tend to cling to antiquated manning practices and their tendency to resist change is greatest when their continued employment seems threatened. When one looks at, say, the North East and realises that the grandparents or parents of the unemployed were also unemployed, it is not surprising that there is a base of insecurity running through a great deal of our industry in particular areas.

There are no magic recipes to overcome this and, as most noble Lords agree, progress must be slow and gradual. But despite the slump and insecurity of the last 10 years, there have been tremendous reductions in manning levels in several major industries; all has not stood completely still. For example, the registered labour force in the docks fell between 1965 and 1975 from 63,000 to 29,000. The Government accept that further changes are necessary if collective bargaining is to function more effectively and companies whose practices are less advanced are to be encouraged to catch up with the leaders in the field. I agree with my noble friend Lord Brown and others who have emphasised the responsibility of management for improving productivity. The trade unions cannot do it alone; they are prepared to work with management, and solutions to problems of work flow or supervision clearly lie very much in managements' hands. The achievement of higher productivity is a joint responsibility for unions and management.

Lord Carr suggested that much can be done to improve collective bargaining by the propagation of agreed codes of practice. I certainly agree with him that such codes can be useful, and there is nothing to stop further agreement on codes if people both subscribe to and use them. ACAS has already put out three extremely helpful codes since 1974, including one on the disclosure of information to trade unions for collective bargaining purposes, and a code on time off for trade union duties and activities which will give better opportunities to trade unionists to acquire appropriate skills and knowledge. This was emphasised by Lord Rochester and Lord Cooper, who described the part he played in his own union. We share their view that it is essential for employee representatives to have training adequate for them to carry out their duties; and in 1976, for the first time, the Government made a grant to the TUC for trade union training; in 1977–78, £650,000 was made available and the grant for the 1978–79 financial year is now under consideration.

I believe the predominant need in the future is to continue the gradual progress we have made towards more communication between management and unions. I was delighted to hear Lord Collison say he believes this to be of supreme importance. That, coming from someone as experienced in the trade union movement as he is, must carry great weight; and Lord Cooper spoke along similar lines. Baroness Seear enlarged this to include communications with the general public in the whole question of pay policy, and this was dealt with by several other speakers. This is such an enormous question that, while it is part of the whole financial and economic scene, I do not think at this hour I could go into it and discuss it in detail.

Poor communication is a particular problem in large units—and Lord Trenchard particularly spoke about large units—where it is so easy for the workforce to feel alienated from the overall purpose of the company. If it is essential to have these large units for financial and technological reasons, we must find ways of making them more human. The noble Viscount rightly spoke of the greater success of smaller units. It is fair to say that one reason surely is that in smaller units people feel very much more part of a coherent group than is the case with a very large unit. However, we know, as noble Lords have pointed out, that it is possible to have large firms where the workers feel themselves involved and where industrial relations are at a much better level than in other comparable firms.

What we need to develop are effective forms of industrial democracy in which people believe. The best companies have already gone some way along this road; they have gone towards industrial democracy and open government within industry. They have shown the advantages of co-operation at the point where decisions are made. However, the worst companies, at the other end of the spectrum, still operate what I can only call industrial Victoriana. The only way towards more stable industrial relations and greater output must lie in changing attitudes, and most noble Lords have commented on this question of attitude. Legal or institutional changes—I am not arguing against all such changes—which are not reflected in people's attitudes are generally sterile or counter-productive; Lord Trenchard referred to this sort of atmosphere. Employers and unions must establish a meaningful dialogue as a basis for mutual trust.

It is absolutely essential that people at work, whether they are part of management or the workforce—I would like to think that we could consider everybody together as part of a joint workforce, though they may be doing a different type of work—should be able to have a say in the decisions which affect their livelihood. Industrial democracy, which in this country has lagged far behind our political democracy, will create a vital sense of involvement, joint interest and common purpose. Shortly we intend to publish a White Paper setting out our proposals for legislation. It is not the Government's intention to impose a legislative straitjacket on industry, but to provide a flexible framework within which employees and employers together can develop participation arrangements tailored to their own needs and circumstances. No statutory cage can possibly take the place of voluntary and co-operative groundwork.

The Report of the Bullock Committee of Inquiry, which played such a valuable role in opening out the debate on this issue, recognised that the move towards industrial democracy is essential and saw that it should be seen against the background of wider social changes. The increasing pursuit of goals other than economic growth, the longing for improvement in the quality of life and for better working conditions, the feeling that the environment must be protected—all these aspirations, many of which are incorporated in an EEC Green Paper, will best be achieved, may only be achieved, if decision-making processes within industrial concerns are given a broader and more democratic base. This is where we must stop dragging our feet. Our political democracy is something which other countries envy. We must find a way to an equivalently mature and equitable form of industrial democracy.

8.50 p.m.

Viscount TRENCHARD

My Lords, I am conscious of the hour, and probably your Lordships' thirst. I am happy that so many eminent people have made such valuable contributions to our debate today. I confess that I was disappointed, and a little surprised, by the start of the noble Baroness's reply. I say that—and think I will deal with the point very quickly —in that I do not think there has been much political speaking in the debate. I have been very conscious of the very sincere efforts of everybody to try constructively to look to the future. I think that I have to put the record straight in relation to my noble friend Lord Carr of Hadley and the Industrial Relations Act. He himself has said that he may well have got the prescription wrong, but he has reminded the Government that the diagnosis was made by the Government Party several years earlier. In fact, the Industrial Relations Act did not bring down the Heath Government. A rigid incomes policy brought down the Heath Government. The miners confronted the rigid incomes policy, not the Industrial Relations Act. The Industrial Relations Act had its critics—

Baroness BIRK

Will the noble Viscount give way? I am afraid that I was speaking very quickly because of the lateness of the hour, but I used the phrase—and I have this written down in the margin of my notes—"plus an incomes policy which led to confrontation". What I was saying was that the Act laid the basis, and then there was the incomes policy. The diagnosis may have been sound; I am not going to argue about that now. But it is one thing to have a diagnosis, and another thing is what you do about it. If I go to a doctor and get a diagnosis I might be poisoned, or I might be made better.

Viscount TRENCHARD

My Lords, without commenting on either of those two results, I would just stick to the point. In my view at least—and it can be a matter of opinions—it was primarily the rigidity of the incomes policy, and I know a number of trade union leaders who were beginning to use parts of the Industrial Relations Act, and were even considering registration.

I am conscious of one major point which was once summed up by a boss of mine when I explained to him that a lot of problems were very long-term problems because they were so serious. He said, "Yes, but they are urgent, and so you had better deal with them within the next six months". We had to, because that part of the enterprise with which I was dealing at the moment would not have survived if we had not. I do not believe that Great Britain Limited can survive long after the breathing space of North Sea oil, unless we find a way of tackling massive problems, which one would normally call long-term, in a very short time.

All else that is debated in this Chamber—of improvement of social services, or of any other desirable features of our life—depends upon our tackling this huge and urgent problem really urgently, and not being defensive about it. I did not at any stage say that we should copy any one country, or even any one measure in other countries, but I spoke from my experience and my study of the differences, which led me to believe that we needed to parallel a more balanced bargaining position than we have in this country today. It is not an accident that our productivity records are half those of our competitors, even where the same firm is involved, as one speaker mentioned today, with the same capital equipment in three countries in Europe. It is almost always in the large employment areas, as the Department of Employment Gazette also shows, that we get the majority of the strikes, although the number of strikes themselves is not the point. It is the position before a strike and, compared to any other country, there are bigger differences in the system and structure surrounding collective bargaining in this country than in any other part of the industrial scene.

On the positive side, I think we have all agreed that everything should be done in a realistic way to try to bring home regularly, and often, what the nation can afford. At national level, therefore, if that is called an incomes policy, the information on what the nation can afford is vital. It is when we try to translate that into the necessary unevennesses, where millions of factors have to be taken into account if the economy is to be a growth economy—when we try to do that translation to the lower level—that we get into trouble. Do we want the economy to be a growth economy? If we do, my Lords, I suggest that we have to think of moving from our current situation to another one.

I may have trespassed on the custom of the House by speaking for a second too long—and I see my Chief Whip looking at me and confirming that fact. I should like to thank the noble Baroness for the second half of her reply (if I may put it that way), and I beg leave to withdraw my Motion for Papers.

Motion for Papers, by leave, withdrawn.