Electrical Contracting Industry (Pay Settlement) (Hansard, 27 February 1978)

§ 1978 Mr. Healey

This matter has already been raised with me by the right hon. and learned Member for Surrey, East (Sir G. Howe). The following is the text of the correspondence:

From:—The Right Hon. Sir Geoffrey Howe, QC MP.

House of Commons

London SWIA 0AA.

16th February

Dear Denis,

You will remember that, in course of Monday's Debate on Pay Policy and Government Sanctions (Hansard column 40), I quoted from a letter written by one electrical contractor, W. T. Parker, to his employees about the possible effect of the sanctions which were then being threatened against members of the Electrical Contractors' Association.

I went on to ask for answers to two specific questions, neither of which was answered by any Government spokesman during the rest of the Debate.

The first question was whether the Government intended, as part of their sanctions and blacklisting campaign, to withdraw tax exemption certificates (714 certificates) from contractors in the construction industry whom the Government decided were in so-called breach of the so-called pay limit which the Government is now enforcing so rigidly. I am sure you will understand the fundamental importance of this question, since it would certainly be a new departure if any aspect of the tax collection system was to be used for this kind of purpose.

78W

The other question was whether the firm of Holliday Hall is now entirely free to pay its employees in line with the agreement made on its behalf by the Electrical Contractors' Association and will not be subject to any withdrawal or threatened withdrawal of subsequent Government contracts. This seems clearly to follow from the statement made by the Attorney General in the Court of Appeal.

If that particular firm is free to act in that way, am I right in assuming that every member of the Electrical Contractors' Association is and will be free from the threat of any future withholding of Government contracts?

I am sure you will understand the practical importance of this question. It would be quite wrong for members of the Electrical Contractors' Association to be left in any doubt about their position. And it is even more important to know whether the Government really does intend to use the tax collection system in the way of which I have complained. For these reasons, it is particularly regrettable that none of the questions which I have posed was anwered in course of Monday's Debate.

In view of the wide public interest in these matters, I am, of course, releasing a copy of this letter to the press.

Yours,

Geoffrey.

The Right Hon. Denis Healey M.B.E., M.P

The Chancellor of the Exchequer.

Treasury Chambers, Parliament Street, SWIP 3AG

01–233 3000

21st February,

Dear Geoffrey,

You wrote to me on 16th February asking for specific answers to two questions you raised in last Monday's Debate on pay policy and Government sanctions.

As regards your first question, there is no truth whatever in the suggestion that tax certificates will be withdrawn from contractors in the construction industry because they do not observe the pay guidelines.

Your second question concerned the position of Holliday Hall and other members of the Electrical Contractors Association. The Attorney General's statement to the Court of Appeal made it clear that it is not the Government's intention to apply pressure on employers to break contracts. That would be unlawful and would not achieve the Government's objective, since legal action could be taken to require the honouring of the contract. But the Attorney General also made it clear and confirmed in the Debate on Monday, that there is a complete difference between threatening that which is unlawful and giving a warning that one will do something which is completely lawful. The latter is the case so far as members of the Electrical Contractors Association are concerned. Holliday Hall and other companies in a similar position are completely free to honour the contracts of employment they have with their workers.

It may be clearer to you if I explain the factual situation. The settlement agreed between 79W the two sides of the industry provides for increases in remuneration within the guidelines and also for self-financing productivity arrangements. which if adopted by an employer, would provide additional remuneration for his employees; that additional remuneration would not count in estimating the total increases for guideline purposes. Since, however, some contractors in the industry would not be in a position to provide such arrangements, the settlement made provision also for "lieu bonuses"; those lieu bonuses would count in estimating the total increases for guideline purposes.

It follows that the question whether the guidelines for the industry will or will not be adhered to cannot be determined until experience shows to what extent the self-financing productivity arrangements are implemented and to what extent lieu bonuses are paid. The Department of Employment will keep the position under review and if it turns out that the industry is not keeping within the guidelines, it will be requested to renegotiate the settlement in order to bring it within the guidelines. In this connection I should remind you that. as the Attorney General explained in the Court of Appeal, the Department made no objection to the settlement on the specific assurance that it fell within the guidelines. I cannot, of course, anticipate what action the Government might decide to take if renegotiation was requested but did not in the event take place.

Since you published your letter to me, I am releasing to the press a copy of the text of this reply.

Denis Healey

The right hon. Sir Geoffrey Howe, QC, MP.