HC Deb 04 December 1963 vol 685 cc196-7W
Sir W. Robson Brown

asked the Chancellor of the Exchequer, in view of the fact that the recent settlement in the engineering industry, which exceeded the Government's guiding light of 3 to 4 per cent., was effected in exceptional circumstances, what is his policy, in the light of this settlement, regarding other industries which do not show positive increases in productivity; and, in view of the fact that improved human relations in industry are essential for mutual confidence and increased productivity without inflation, if he will give an assurance that it remains his policy only to refer such cases for examination by outside bodies where there are exceptional circumstances.

Mr. Maudling

I explained in my Budget statement that on the basis of N.E.D.C. calculations 3 to 3½ per cent, was the maximum annual average rate of increase for incomes generally which is consistent with reasonable price stability. In the Government's view those industries that are achieving rapid increases in productivity should pass on a proper share of the benefits of that productivity to the general public in the form of lower prices. Unless they do so, there will be no offset to rising prices in those industries whose productivity is increasing less rapidly and a stable level of prices will not be possible.

One of the main purposes of the N.I.C. is to enable the public and other industries to judge particular settlements in relation to the national interest. It was for this purpose, and not to condemn the settlement in advance, that the Government referred the engineering settlement to the National Incomes Commission. The vast size of the engineering industry means that a settlement of this sort is likely to have a particularly important effect on the economy. Moreover, the wages structure in the industry is a complex one, and it is extremely difficult to assess the significance of the recent settlement for the country as a whole.

For this reason, I am certain that an impartial study of the implications of this settlement for costs and prices, taking into account other recent settlements in the engineering field, will be extremely valuable.