§ 3.36 p.m.
§ The LORD PRIVY SEAL (Lord Peart)My Lords, with the leave of the House I will now repeat a Statement being made in another place in answer to a Private Notice Question on the Ford Pay Settlement. It is as follows:
"The Government have considered the pay settlement reached by the Ford Motor Company with its manual workers and have discussed the settlement in detail with representatives of the company management. In the Government's view the settlement cannot be reconciled with the pay guidelines contained in the White Paper Winning the Battle Against Inflation (Cmnd. 7293). The Government have informed the company of this and have expressed their regret.
"The Government had previously made it clear that, in the event of the company reaching a settlement outside the guidelines, they would need to consider discretionary action against the company. After considering the settlement in the light of all the relevant circumstances, the Government have reluctantly reached the conclusion that such action should be taken. The company has been informed accordingly".
My Lords, that concludes the Statement.
§ Lord CARR of HADLEYMy Lords, I address myself to this subject as someone who has repeatedly gone on the record as believing that a policy to restrain the size of pay increases is an absolutely essential part of any overall policy to control inflation without causing even higher unemployment. I preface my remarks in that way because, feeling as I 1146 do, I regard this action as perhaps even more deplorable than if I took a contrary view, because if we are going to have incomes policies in this country they must not be unconstitutional, unfair, stupid and tyrannical, as this action is.
Against that background, I have four questions for the Leader of the House. First, what is the nature of the discretionary action which the Government are proposing? It seems incredible that, after all this time, all the Government can tell us is that they are going to take discretionary action. What is the nature of that discretionary action? Parliament is entitled to know.
Secondly, how much do the Government estimate this discretionary action will cost the Ford Motor Company? How much do they estimate that the nine weeks strike has cost Fords? Thirdly, do the Government really consider this kind of action to be fair? Let us consider how this came about. The Ford Company offered a pay increase in an attempt, contrary to their own view of their company's, their customers' and their employees' interest, to keep within the Government's pay guidelines. The immediate response of the unions was to call a strike in flagrant breach of an agreement solemnly entered into by the unions less than a year ago. The company then suffered a nine week strike at enormous cost, yet the only people to have sanctions applied against them are the company, not the unions. Is that fair, and can one hope to govern the country on the basis of such gross unfairness?
Fourthly, is it sensible, even in the context of the Government's own policy? If a company, in trying to keep to the Government's guidelines, takes a nine week strike and then, on top of that, very expensive sanctions are applied to it, why not settle straight away and not run the risk of a strike as well? Will not this action encourage employers in future not to keep to the guidelines but to give way to them and at least avoid the damage of a strike?
§ Lord BYERSMy Lords, I think it is well known that we on these Benches believe in a tough pay policy in order to check inflation; but we are extremely worried about the Statement which we have just heard, because we also believe that, if a tough policy is to be fair, it 1147 must surely have statutory backing and not be operated at the whim of the Government's discretion. Surely everybody must be able to know both where they stand within the law and what is to happen to them if they breach the law, rather than if they breach a White Paper or a dictate of the Governent. This gives us on these Benches very deep cause for concern. I ask the Government whether they cannot see that their policy is really the worst of all worlds. It attacks the company when it should be tackling the whole question of the unions who put the company in this position. If the policy succeeds in reducing Ford's turnover, it will undermine any chance of increasing the productivity side of the deal in excess of 5 per cent. It cannot be right; it does not make sense. I should have thought that the only alternative to arbitrary sanctions is a statutory policy approved by Parliament, but I believe that in the meantime the Government ought to take back this matter. We are on a very slippery road indeed.
§ 3.41 p.m.
§ Lord PEARTMy Lords, I should like to reply to the noble Lord, Lord Carr of Hadley, who put four questions. He asked about the nature of the actions which the Government could take. This matter has been considered, and action can be taken. First, purchases under some existing Government contracts may be stopped. I am outlining the possible lines of action. I am not saying that it will be done in this way, but these are the possibilities. Secondly, the Government will take account of the breach of pay policy by Fords in considering the placing of future contracts and the granting of discretionary financial assistance, such as that under Sections 7 and 8 of the Industry Act, relating to loans and grants, temporary employment subsidy, and Section 2—export credits. This could mean that the company does not get future contracts and future discretionary assistance. I cannot say specifically today what the Government will do. This is a matter for consideration, and that is why I cannot say how much the action would cost, which is the point which was raised in the second question.
There is the argument as to whether this is fair. It has been said by the company 1148 that the offer is within the pay guidelines, but the Government believe that we must adhere to the 5 per cent. It is essential to have a firm policy, and I believe that on this the country and the nation will support the Prime Minister and the Government. Noble Lords opposite and their Party have not come to a decision on any alternative. It is all very well criticising the Government's proposals, but I believe that the Opposition are themselves in disarray on the question of pay policy. I think that we are right to have a firm policy, and if we do not succeed in our policy it will be disastrous for the nation. The noble Lord, Lord Byers, is worried about the tough policy. He said that the policy must have statutory backing. The Government are acting legally in this matter. We believe that we must succeed in our policy; otherwise we shall have raging inflation and other serious consequences.
§ Lord LEE of NEWTONMy Lords, I do not for one second support the action which the Ford workers took even before they knew what was the offer of the employers. Nevertheless, is my noble friend aware that one recalls that when last year the Government did not take action against Ford for breaching the ceiling, the noble Lord, Lord Carr of Hadley, was very worried that action had not been taken? Now, apparently, he is very worried because action has been taken. Is my noble friend also aware that when the CBI—and one half, I think it is, of the Tory Party—adhere to the idea of a 5 per cent. limit and then refuse point blank to accept the only way in which the Government can enforce the 5 per cent. limit, they are guilty of sheer hypocrisy of the worst kind?
§ Lord PEARTMy Lords, I am grateful to my noble friend for what he has said. He has had long experience of industry. My noble friend reminded the noble Lord opposite of what was his previous posture. I want to make it clear that, if we are to have a policy which is to succeed, it must be a firm policy. We cannot make exceptions.
§ Lord BOYD-CARPENTERMy Lords, does the noble Lord's reference to Government assistance being reconsidered mean that the Government are reconsidering the massive financial support promised 1149 by them to Fords in respect of the engine factory in South Wales? Secondly, does the noble Lord appreciate that much of the tone of his answer to my noble friend suggests that he takes the view that a good end justifies a throughly bad means?
§ Lord PEARTMy Lords, on the first question put by the noble Lord, which was the most important one, the answer is, No.
§ Lord WIGGMy Lords, is the Minister aware that the whole House and the country will support the Government in taking firm action, but that firm action must mean that the individual institutions know both whether they are infringing the law and what the penalties are to be—and that this must not depend upon the Government's belief or upon the authority of a White Paper? Is the noble Lord aware that when it comes to an incomes policy or a prices policy I will support them with my vote and in any other way open to me, but I will not support them on this issue because this is the start of a very slippery slope indeed? If individuals can be put in peril at the whim of Ministers, without knowing what is the charge or what are the penalties, then that is not the way of a democratic society. If Ministers want a firm policy, they should come to the House of Commons and to this House and spell it out, ask for the authority, and they will get it—but not this way.
§ Lord PEARTMy Lords, I am sorry that my noble friend cannot support me. That is not unusual sometimes, though that is another matter. I respect my noble friend, but I am sorry that he takes that view. He is really questioning the legality of the matter. All I can say—and I repeat—is that the Government remain determined to contain and reduce inflation. I believe that a pay policy is essential and must be backed up by appropriate monetary and fiscal measures. I do not want to go into lengthy subsidiary matters. I thought that the position was obvious to my noble friend, and I am rather disappointed with his attitude.
§ Lord SHINWELLMy Lords, can my noble friend say whether similar action is to be taken against other firms which are alleged to have violated the Government's 1150 decision on the 5 per cent.? That is my first question and I should like to ask another one. The sanctions, or the discretionary action, obviously mean reducing the production of Ford cars, or making financial difficulties for the firm. I should like to know whether this is intended as a deterrent, or whether it is likely to curb the advent of further inflation? Has that been considered by the Government?
§ Lord PEARTYes, my Lords; I say to my noble friend that it has been considered, and there have been other cases which also have to be considered. I cannot give the names, but there are other possibilities. I am sure that my noble friend will agree that the Government's policy is to be firm about this matter. If we do not succeed in containing and reducing inflation, this country will go under, and I hope that the Opposition will be much more constructive.
§ The Earl of ONSLOWMy Lords, can the noble Lord please answer two questions? First, nine weeks on strike, 52 weeks in the year, and 17 per cent. still mean that the persons who have been on strike will receive less than 5 per cent. increase in annual salary over a year. That is the first point. Would he not agree with me on it? Secondly, arising from what the noble Lord, Lord Boyd-Carpenter, said, is the fact that the Government grant for the Bridgend engine works has not been withdrawn totally unconnected with the fact that it is not a million miles away from the Prime Minister's constituency; or am I being unkind?
§ Lord PEARTMy Lords, the contract was made before the introduction of the new counter-inflation clauses in offers of industrial assistance. I am sorry that the noble Lord has given me some statistics. All I can say is that they sound interesting, but I do not think that they are very valid.
§ Lord HANKEYMy Lords, may I invite the Government to be a little more sophisticated? Has not the Ford Company found a most ingenious way to increase productivity, and is that not a very desirable thing to see happen throughout British industry? Are the Government complaining because the total result of about 17 per cent. is too much, or are they against that sort of agreement anyhow?
§ Lord PEARTNo, my Lords, it is not aimed at productivity. May I say that the question is whether or not we accept the 15.7 per cent. We are committed to a guideline of 5 per cent. It is as straightforward and simple as that. If the noble Lords wish to break that, I think it would be disastrous.
The Earl of GOWRIEMy Lords, if the Government are committed to a guideline of 5 per cent., as they insistently repeat they are, why did they make a settlement within the National Health Service, as against the Ford Motor Company, of much nearer 15 per cent.?
§ Lord PEARTMy Lords, I think that is a different point altogether.
§ Lord PLANTMy Lords, would not my noble friend the Leader of the House agree that the whole of the country supports the action of the Government? According to the opinion polls, the country has agreed that the Government's fight against inflation is correct and has its full support. I am sure my noble friend would agree that, had the Government done anything else, they would have completely lost their credibility in the eyes of the public; and I am sure that when the next General Election comes it will be found that the public are supporting the Government.
§ Lord PEARTMy Lords, I am grateful for that support from my noble friend. I would only say again that if the Opposition, as they suggest in their questioning, really wish the Government to break these guidelines, they are seeking to break pay policy; and, despite the fact that I know noble Lords will not accept from me what I said previously, I believe that inevitably this would be disastrous, and they know it. I hope that noble Lords opposite will carefully consider what they would put in its place, because up to now they have been very unrealistic about this issue.
§ Lord BYERSMy Lords, perhaps I may ask the noble Lord one question, because I think he may have made a misstatement. He says that the guideline is only 5 per cent. Surely he is not ruling out the element of a self-financing productivity deal. That, surely, is vital for the community.
§ Lord PEARTI accept that, my Lords, but the basic guideline is the 5 per cent. Here we are talking about 15.7 per cent. All I am saying is this—and let us be frank. If the Opposition continue like this—and I am not now including the Liberals in this; they are generally more positive and constructive in their thinking—I think they are endangering the battle against inflation. I can say no more than that. My Lords, I am prepared to answer further questions but we have a major debate to finish. However, I am not going to protect myself since it is a major issue.
§ Lord BYERSMy Lords, perhaps I may ask the noble Lord a further question because, again, it is not clear, and this is very important for future deals. If a company can show that there is something in addition to the 5 per cent. as the result of a genuine productivity deal, it surely cannot be ruled out?
§ Lord PEARTYes, my Lords, I accept that. There is no question about that.
§ Lord ORR-EWINGMy Lords, perhaps the noble Lord would think about this matter and restate it. It is claimed by Fords that they will not put up the price of their products as a result of this settlement. Therefore, this settlement must come from increased productivity. Why is it so wrong that they should do this when in fact the miners took 27 per cent. last year as a result of increased production? What is good for the miners is surely good for the Ford workers.
§ Lord PEARTMy Lords, I have made my position clear over the Ford situation, and I cannot go beyond that. I still assert that this is Government policy and I believe it has to work.
§ Lord CARR of HADLEYMy Lords, may I remind the noble Lord that he did not answer my fourth question, and it has a great bearing on the charge that he has made against the Opposition. I asked whether the position was sensible. I asked him whether, if a company knew that it had to take a nine-week strike to try to maintain Government policy and would then get "clobbered" by sanctions as well, it would not rather give way 1153 straight away and run only the risk of being "clobbered" by sanctions and not have to bear the cost of a strike also.
§ Lord PEARTNo, my Lords, I do not think so. I think it would be wrong to think in terms of this situation spreading over the board. This is a specific thing peculiar to Fords and their action, and I think that what we have done is right.
§ Lord PARGITERMy Lords, may I ask my noble friend how many companies could in fact afford to give 17 per cent. without going bankrupt?
§ Lord PEARTI do not think they will.
§ Viscount ECCLESMy Lords, could the Government give us an assurance now that they are going to stick to the 5 per cent. in the public sector and that if they get into any trouble they will have sanctions against themselves?
§ Lord PEARTMy Lords, that is another matter. As the noble Viscount knows, as Minister with responsibility for the Civil Service I have certain responsibilities in this direction. I am well aware of some of the problems, and will no doubt come to them one day.
§ Lord WIGGMy Lords, does the Minister rule out completely the possibility of coming to Parliament and seeking legal backing for the action that the Government now propose?
§ Lord PEARTMy Lords, there is no question of seeking legal backing.
§ Lord PEARTMy Lords, there is here no breaking of any legality. I mentioned that in reply to an earlier question.
§ Lord LEE of NEWTONMy Lords, is my noble friend aware that, while one does not want to oppose the idea of productivity deals, the fact is that those who benefit most from these are the most crassly inefficient companies which have the most ground to make up?
§ Lord PEARTMy Lords, I am grateful for that. I think noble Lords have given 1154 me a pretty good questioning, and I hope we can now move on.