Pay Agreements (Hansard, 26 July 1999)

§ The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Sainsbury of Turville)
My Lords, the question of whether pay agreements are arranged on an annual basis or over some other period is a matter for employers and employees to determine in the light of their particular circumstances.

§ Lord Brooke of Alverthorpe
My Lords, I thank my noble friend for his reply, although at this stage it is not too encouraging. Does he agree that some of the pay settlements reached in the private sector spanning two or three years have been good both in terms of improved productivity and the generation of greater stability for all concerned? When will the Government make a start with similar models in their own area of competence—especially as they have now introduced public service agreements spanning three years?

§ Lord Sainsbury of Turville
My Lords, there are a considerable number of pay deals in the private sector spanning a number of years; for example, those made by the Ford Motor Company, Rover Group, Blue Circle and British Energy, to name but a few. However, it should be understood that some 90 per cent of all settlements are struck for one year. A number of settlements—about 5 per cent, according to CBI figures—are for less than one year. It is not for the 1282 Government to say whether those deals have been good for the companies involved. It is for companies and employees to make their own specific pay arrangements. The Government's Comprehensive Spending Review makes it possible for pay to be managed over a longer period than one year by providing greater certainty over levels of funding. That is the role that the Government should play.

§ Lord Marsh
My Lords, will the Minister accept that many people will be deeply relieved by his Answer? Does he agree that this country's history of experiments, by both parties, to intervene in collective bargaining has been a fairly universal and consistent disaster?

§ Lord Sainsbury of Turville
My Lords, the thrust of my Answer was on those lines. We have no desire to become involved in specifying the length of any deal. That is for people to decide in the specific circumstances of their industry. There may, of course, be cases where it is entirely appropriate and may lead to higher productivity and better performance. However, that is for companies and employees to decide for themselves.

§ Lord McCarthy
My Lords, does my noble friend really ask us to believe that negotiations in the public sector, particularly the Civil Service, are between the employer and unions, as though the Government were not the employer? Is it not well known that the arguments that go on every year because the Treasury tries to get a settlement that is below RPI poison industrial relations in the public sector and are the main reason why, as the Prime Minister says, productivity cannot be increased in the public sector?

§ Lord Sainsbury of Turville
My Lords, clearly one aspect of this problem is the total sum of money available for pay deals. That is a matter which the Government will lay down and have a great interest in, but within those parameters the decision must continue to be that of the employer and employee.

§ Lord Mackay of Ardbrecknish
My Lords, at the risk of embarrassing the Minister just prior to a reshuffle, is he aware that we on this side warmly welcome his initial Answer and his response to the noble Lord, Lord Marsh? Can he go further and assure the House that the Government have absolutely no intention to interfere in pay bargaining in any part of the private sector, and that the only area in which the Government have an interest in pay bargaining is the public sector where they are the employer?

§ Lord Sainsbury of Turville
My Lords, I thought that it was absolutely clear from my Answer that we had no intention to intervene; and that will continue to be our policy. I am not embarrassed to be congratulated by the noble Lord. Coming from the noble Lord, that is a great pleasure.

§ Lord Murray of Epping Forest
My Lords, while not dissenting from the Minister's proposition that employers and trade unions should be left to settle their 1283 own affairs, does his reply to the noble Lord, Lord Marsh, suggest that he has completely forgotten that there are exceptions? Does he agree that between 1974 and 1979 concerted action by the government, CBI and TUC played a significant part in reducing the level of inflation in this country from 28 per cent—part of which was due to the previous Conservative government—to about 8 per cent? Does my noble friend agree that in some circumstances it has a part to play?

§ Lord Sainsbury of Turville
My Lords, I am happy to answer questions about the current policy of the Government. I have never felt very comfortable about re-fighting past battles. I am perfectly prepared to accept that there may have been some cases where such action was successful and others where it was not. However, as of today we do not see that as being advantageous.