HL Deb 21 July 1981 vol 423 cc138-40

2.53 p.m.

Viscount Hanworth

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 whether they accept that the market place cannot by itself in the long run control excessive wage demands particularly in nationalised industries and what research is being made into alternative policies.

The Minister of State, Treasury (Lord Cockfield)

My Lords, it is important that the market disciplines which apply in the private sector should, so far as possible, be reproduced in the public sector. We aim to do this as appropriate by privatisation, by a reduction in the monopoly powers of public enterprises and through cash limits and external financing limits. It is, moreover, essential that those responsible for negotiating pay levels, whether in the public or the private sector, should realise the effects of what they do on the levels of output and unemployment.

Viscount Hanworth

My Lords, while thanking the noble Lord for that reply does he realise that he has not really answered the Question? Might it not appear that his planning and research department is suffering from rigor mortis? Does he not think that an injection of formalin might at least prevent the body from decaying any further?

Lord Cockfield

My Lords, I am most interested in the noble Lord's views on matters of medicine, but so far as the substance of his question is concerned, contrary to what he implies there are already favourable indications that market forces are effective in the private sector. The level of pay settlements in the present pay round is running at less than one-half of what it was in the previous pay round and we look forward to further reductions in the coming pay round.

Viscount Hanworth

My Lords, I really must come back once more to the noble Lord. If he will read the Question he will see that I do not ask what is happening at the moment. I am asking about the future if this Government are successful and get back into office.

Lord Cockfield

My Lords, I am well aware of the fact that the party to which the noble Viscount now owes his allegiance are advocates of an incomes policy. This is no doubt the issue to which his Question is really directed. However, the noble Viscount needs to ask himself two questions. First, why does he assume that he will be successful in applying an incomes policy when every other party over the last 30 years has failed to do so? Secondly, why does he assume that the trade unions will co-operate with him in such a policy when they have refused to co-operate with other parties and have publicly said so?

Lord Robbins

My Lords, the Minister has alluded to the public sector. May I ask him whether his attention has been drawn to the most remarkable article by Professor James Meade, a Nobel prizewinner, in the volume dedicated to the memory of Anthony Crosland concerning the instructions, which are novel, which should be given to arbitration tribunals in that sector?

Lord Cockfield

My Lords, I am aware of the article to which the noble Lord refers. I am also aware of the views of Professor James Meade. His proposals, however, suffer from the defect that all incomes policies suffer from; namely, the virtual impossibility of enforcing them.

Lord Strabolgi

My Lords, may I ask the noble Lord what are the Government's criteria for privatisation?

Lord Cockfield

Yes, my Lords. The Government's criterion is the national interest.

Lord Rochester

My Lords, would not the Government be prudent in their own interest to make contingency plans for a pay policy that is more flexible than the total freeze which they may otherwise eventually be forced to impose?

Lord Cockfield

My Lords, we do not accept the noble Lord's view that a total freeze is a possibility. We believe that realism is coming back into pay bargaining. We believe that the present policy will permit a degree of flexibility that is not possible under a pay policy. We believe also that our present policy will avoid the kind of trauma that are associated with the break-up of an incomes policy.

Lord Pargiter

My Lords, would not the noble Lord agree that the present incomes policy, coupled with unemployment, is the means by which wage restraint is being exercised at present? And is it the intention of the Government to continue along those lines?

Lord Cockfield

My Lords, I do not agree with either part of the noble Lord's supplementary question. The Government do not operate an incomes policy. Secondly, as we have made clear on many an occasion, the real cause of the present level of unemployment, which is a tragedy, of course, for the people concerned and a great waste of national resources—something which cannot possibly be denied—is the growing uncompetitiveness of British industry over a long period of time, a situation which has been much exacerbated by the present world recession.

Lord Mackie of Benshie

My Lords, would not the noble Lord agree that the Government, who were widely based and widely supported in the country, might have a very good chance of getting the cooperation needed to work an incomes policy?

Lord Cockfield

My Lords, the present Government are widely supported in the country. They secured a large majority in 1979 and they will secure a large majority when the next General Election comes.

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