HL Deb 23 January 1979 vol 397 cc1322-6

2.46 p.m.

Lord BOYD-CARPENTER

My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.

The Question was as follows:

To ask Her Majesty's Government what measures were applied against the Ford Motor Company in respect of its alleged breach of the Government's pay guidelines; whether those measures have now been withdrawn; for how long they operated; whether any increase in public expenditure resulted from these measures; and what damage the Government think they did to the company.

The MINISTER of STATE, PRIVY COUNCIL OFFICE (Baroness Birk)

My Lords, discretionary action against the Ford Motor Company lasted from 28th November 1978 until 14th December 1978. During that period, the Government indicated that the company's breach of the pay policy would be taken into account when placing contracts and granting discretionary financial assistance. No additional public expenditure was involved; nor are the Government aware of any damage to the company.

Lord BOYD-CARPENTER

My Lords, does not this disastrous episode confirm the unwisdom of the policy then and still being applied by the Government in seeking to support their wages policy by exerting pressure on employers while leaving the trade unions not only free from any pressure but free to apply their own pressures on employers, with the aid of massive legal immunities?

Baroness BIRK

My Lords, I think that the noble Lord is wrong about every point. First, although the effect of having to give up the power of sanctions through the vote in Parliament does not mean that they are illegal, I believe that it has made it that much harder for the Government to hold the line on wage demands. I agree that to resist inflationary pay claims can be costly, but so is giving in to them. Here, the national interest has to be the over-riding interest. Although it was never envisaged that it would be possible to hold all wage claims to 5 per cent.—flexibility was always ensured by productivity deals, and now the Prime Minister has announced the increase for lower paid workers—nevertheless, it was, and still is, an important bench mark in order to prevent inflation from getting absolutely out of bounds.

Lord BOYD-CARPENTER

My Lords, is the noble Baroness really arguing that the Government's action in the case referred to in this Question in applying pressure to the Ford Motor Company, which resulted in a disastrous nine-week strike costing that company hundreds of millions of pounds and resulting also in a very substantial cost to the national balance of payments, followed by a settlement at a higher level than could have been obtained at the beginning, is not an indication that this policy, so far from being in the national interest, is disastrously against it?

Baroness BIRK

My Lords, as against that, a great many pay claims have been settled at around the 5 per cent. mark, and certainly not in double figures. To pick out one company which would be giving the lead and making a breach in the whole of the pay policy seems to me not to follow the argument at all. If the Government had not stood by what they said about sanctions.—and they have done this in the past in the case of a number of other firms—there would have been no way in which to hold the inflation line. Parliament, in its non-wisdom in another place, decided to stop the Government from doing this. I think that this was very unfortunate and I believe that it is adding to our inflationary situation.

Lord BOYD-CARPENTER

My Lords, but as the outcome is actually—

Several noble Lords

Order, order!

Lord PAGET of NORTHAMPTON

My Lords, does not the phrase "disastrous incident" well describe the folly of the Opposition in disarming the Government at a critical moment in the battle against inflation, and is there no point at which the consequences teach the Opposition their folly?

Baroness BIRK

My Lords, my noble friend is absolutely right.

Lord BOYD-CARPENTER

My Lords, as the outcome of the Government's action, while this weapon to which her noble friend has referred was available, was a settlement higher than could otherwise have been achieved, can the noble Baroness say how that has helped to check inflation?

Baroness BIRK

My Lords, first of all, we do not know whether it would have been higher or not in the end. I still repeat that it was giving a lead to many other companies, and it also meant that many other companies could not possibly afford to meet what Ford itself was offering at the time. I do not think we are having a debate on sanctions this afternoon, but for all those reasons and a number of others it was extremely unfortunate. I should have thought it was an episode about which noble Lords opposite should keep a little quieter.

Lord BRUCE of DONINGTON

My Lords, is my noble friend aware that there is a small, powerful minority in the country that wants disciplines applied over a wide field—disciplines to which it is not prepared to subject itself!

Baroness BIRK

My Lords, my noble friend is absolutely right.

Lord CARR of HADLEY

My Lords, if pressure on employers is in fact such a vital element in the Government's anti-inflation policy, why did the Minister responsible voluntarily withdraw from action on the Price Commission Report on the road haulage industry?

Baroness BIRK

My Lords, that is really an entirely different question. In any case, there will be before the House, shortly, I trust, a Prices Bill, and noble Lords will have plenty of opportunity to go into the past, the present and the future.

Lord BYERS

My Lords, would the noble Baroness agree that the Prices Bill is irrelevant, and that what has been said this afternoon underlines the need for a statutory incomes policy?

Baroness BIRK

My Lords, I am afraid the question is irrelevant because of the very strict terms in which the noble Lord, Lord Boyd-Carpenter, put down the original Question. We are ranging very widely.

Viscount TRENCHARD

My Lords, would the noble Baroness let the House know what kind of cost the Government expected the Ford Motor Company to accept in supporting its policy? It is reported that the cost was over £200 million. Would the noble Baroness say whether the Government feel that that is going to encourage Ford to continue investment in this country, and would she comment on the fact that perhaps Ford would have been able to stand up to the strike better if there had been a liability on the union for breaking a contract one month before it ended?

Baroness BIRK

My Lords, I do not think it serves any purpose to go back into all the historical details. I think the main point still is that when you are trying to keep down inflation, as the Government are trying to, responsibility rests on both employers and employees, and one cannot say that either side has on the whole behaved very well over the whole thing. But it is no good noble Lords opposite blaming the employees and at the same time treating the employers who have made breaches in the policy as though they were saints.

Lord ORR-EWING

My Lords, would the noble Baroness tell the House how much loss was expected? She said there was no damage to the company. How can she make that statement when the company has lost £250 million, when the company has lost nine weeks production, and the country also has lost? The only reputation that has been utterly destroyed is that of Mr. Moss Evans. The company and the country must wish that the Government had put rather more pressure on him to restrain this outrageously inflationary settlement.

Baroness BIRK

My Lords, if the noble Lord will turn to the Question tabled by the noble Lord, Lord Boyd-Carpenter, he will see that it asked how long the sanctions were operated, whether there was any increase in public spending, and what damage the Government think they did to the company. I have answered that. We are not aware of any damage to the company because the whole thing only lasted two weeks.

Lord ORR-EWING

My Lords, it lasted nine weeks.

The LORD PRIVY SEAL (Lord Peart)

My Lords, I think we should move to the next Question.