Speeches, Interviews & Other Statements

Complete list of 8,000+ Thatcher statements & texts of many of them

1966 Oct 25 Tu
Margaret Thatcher

HC S [Prices and Incomes]

Document type: Speeches, interviews, etc.
Document kind: House of Commons Speech
Venue: House of Commons
Source: Hansard HC [734/944-56]
Journalist: -
Editorial comments: 2113-2149.
Importance ranking: Major
Word count: 4498
Themes: Parliament, Industry, Monetary policy, Pay, Health policy, Local government finance, Trade unions
[column 944]

9.13. p.m.

Mrs. Margaret Thatcher (Finchley)

The seriousness of the Order makes this one of the most important debates we have had in Parliament. It has been alleged that we on this side of the House are making blandishments towards the trade unions. Let me make our position quite clear. The powers contained in the Order invoke principles which go far wider than even the trade unions and it is to those principles that we mainly direct our attention.

My right hon. Friend the Member for Enfield, West (Mr. Iain Macleod) drew attention to one of them at the very beginning of the debate, and it is the subject of one of the Orders which we are debating, namely, the fact that the very day the Bill became an Act the whole of Schedule 2 was taken out and replaced by another Schedule without any reference back whatsoever to Parliament. Moreover, that Schedule had been the subject of extensive discussion in debates in Committee and many attempts had been made to amend it. All of those were rejected, but then a number of the arguments were impliedly accepted because the entire Schedule was removed.

This is no way to treat Parliament. It is quite the wrong way in a Bill which contains the far-reaching powers which this one does. One of the side-effects of replacing that Schedule has already been mentioned. But it is difficult to see precisely what that side effect is. The new Schedule has some comments and restrictions on dividends which the old one did not have, and I think that this is what has led to the confusion about the position over dividends. The old Schedule made very little reference to dividends, [column 945]except to say that dealing with them would be left to fiscal policies, and that as profits were falling away dividends were not expected to rise.

The new Schedule is very much stricter in its approach, and I can understand why some confusion has arisen as to whether or not there is power to control dividends. I do not believe that there is, but in the absence of power the Government are using some extraordinarily autocratic language. For example, the Schedule says:

“Nevertheless all company distributions, including dividends paid by companies, are subject to the standstill and should not be increased during the twelve-month period, …”

It adds:

“If there are any cases which, in a company's view, make exemption from the standstill imperative, the company will be expected to inform the Government of the circumstances, in order that the justification may be examined.”

This is what was put into the Act without any reference back to Parliament. It may well be that in the approaches which the Treasury is now making concerning the odd dividend which is in excess of that paid last year, it is using the new Schedule, and pointing out that if the company did not comply with the Government's wishes the matter could be referred to the Prices and Incomes Board, with the inevitable 30-day reference and possibly a three months' standstill. Whether or not one agrees with increasing dividends, it is wrong that such a power should be uncertain and imported into an Act in that way.

I now turn to the subject of price control, which has been raised by many hon. Members. The voluntary freeze has had far more success in holding down prices than in holding down incomes, and this very success has often endangered the balance of payments, because there has been excess money which has, as my right hon. Friend the Member for Flint, West (Mr. Birch) has often said, sucked in extra imports. It is important to note that the voluntary effort has had this considerable success in holding down prices, even though most of the increased costs have been directly imposed by the Government.

It sticks in one's gullet that when the Government impose costs they should then indicate to people that they should report increased prices to them. It is as [column 946]if the Government are trying to escape responsibility for having been the cause of the increased costs. When Michael Stewartthe First Secretary appealed to housewives to report increased prices I am sure that most of them thought that they were not asked merely to report unjustified increases. They have been reporting any increases and thinking that the First Secretary would put the prices down, when, in fact, he and the Government have been the cause of putting them up.

My hon. Friend the Member for Harwich (Mr. Ridsdale) mentioned rates. In the guidance which the Government have given to the C.B.I., and which has been sent out to all members of the C.B.I., increases in rates are not allowed to count towards increased prices. They are not one of the defences for having to put up prices. This is wrong, for rates are just as much a form of taxes as central Government taxes. If prices are too high, the Government can draw public opinion's notice to them. On the one occasion when there has been a reduction in prices this is exactly what occurred, and no far-reaching Part IV powers were needed.

The First Secretary of State will remember that, when a 2d. in the £ surcharge on fruit and vegetables was mooted, the effect of public opinion was enough to reduce that surcharge down to 1d. It did not need the powers the right hon. Gentleman is asking for today. It was done without them.

On the general question, “Can prices be controlled?” , whenever this is put as a straight question to the Government or to one of their spokesmen the answer is always to sidestep it. It is sidestepped for the very good reason that the real answer is, “No” . There cannot be a complete system of price control in any economy. The reasons are not far to seek. It is so easy to have new products. New products are coming on the market all the time. There is a wide range of goods on which it is impossible to control prices.

Clothes account for quite a large proportion of the average family's expenditure. I defy Douglas Jaythe President of the Board of Trade or even the First Secretary of State to put a price control order on costs from July over to January. For a start, fashions have changed. One cannot control the price of a garment which [column 947]has a mini skirt in July, but a skirt four inches below the knee in January. I doubt very much that the President of the Board of Trade would even notice the difference. I think that he is, perhaps, rather more interested in the other type of figure, the sort one finds in statistics in books, though I would not necessarily apply that comment to other members of the Government.

There cannot be a system of complete price control. My contention here is that one can do exactly what one wants by applying the force of public opinion to increases which are regarded as unwarranted. There is no need for extra powers, powers of the kind which the Government now intend to take.

The Government have already laid an Order to deal with laundry and dry cleaning charges. It is very strange that this should be their first selection. Iain MacleodMy right hon. Friend the Member for Enfield, West mentioned the 300 complaints that had been received. That is a comparatively small proportion. Considering that there are 5 million laundry bundles each week and that over 50 million single articles laundered, I should have thought that 300 complaints was a very small proportion indeed. But there is another point about the Order. The laundries have gone along with the Government in all the co-operation which has been required of them. They have been to the National Board for Prices and Incomes, which held that an increase of 4 to 4½ per cent. was warranted because of the Selective Employment Tax. They then discussed with the President of the Board of Trade the implications of that Report. Yet, having co-operated as they were required to do, they are the first to have an Order upon them.

My information, which comes from the Daily Telegraph, is that of the complaints examined many have already been found to be unjustified. Against this background, it is very difficult to resist the interpretation that what the First Secretary of State wanted was a sort of quid pro quo: if he make an Order or thinks of giving notice with regard to earnings, he must do something and make one with regard to prices. We do not accept that as a valid reason at all.

I turn from that subject to what is, perhaps, the nub of the powers, those relat[column 948]ing to earnings. One of the reasons why the freeze has been comparatively successful to date is that most people, or, rather, many people think that it is already absolute and there can be no increases whatever. This, of course, is nonsense. There is nothing illegal in putting up wages or salaries now. The employer is free to give a rise. The employee is free to ask for one.

A good deal of nonsense has been talked about loyalties and about selfishness in connection with the powers which the Government propose to invoke.

There is a very real conflict of loyalties here. Those who want to co-operate with the Government also have a primary duty and obligation to those whom they employ. I know that those who are primarily concerned with the debate today on the Government Front Bench may not have had a great deal of experience of working in industrial concerns, but there is, as hon. Members on both sides have said, a very real mutual respect and trust which has to exist if any business is to flourish.

The respect exists both ways. It is the respect of the managers and employers for the workers and vice versa. One often hears it said, “He would never let me down.” That is the kind of faith that can be built up in small and medium and, indeed, large organisations.

What happens when the Government try to persuade people to break their contract? There is nothing wrong, in an employer keeping an agreement indeed I would say that it is his first duty, towards his employees. I reject entirely the Government's definition of the public interest. The public interest is a very easy excuse to use in support of anything, particularly if one has not got a better excuse and if one does not really analyse exactly what is meant.

I notice that Sir E. Jonesthe Attorney-General had some comments to make about this on the Report stage of the Prices and Incomes Act. I will read his comments, but I utterly reject them:

“… the compulsory powers will be introduced only if there is evidence that certain elements in the community have fallen short of their public duty and have chosen, by an attitude of recalcitrance, to challenge the policy which the Government feel is in the best interests of the nation at this time.” —[Official Report, 9th August, 1966; Vol. 733, c. 1439.]

[column 949]

It would be bad enough if any right hon. or hon. Member said that but for the learned Attorney-General to insinuate that we cannot even challenge the policy and that when the Government tell us that something is in the public interest we must accept it, is something that I never expected to hear in this House. I reject this attitude utterly. It is more in the public interest that an employer should keep his agreements with his employees than that he should break those agreements.

Mr. Roy Roebuck (Harrow, East)

Is the hon. Lady familiar with the play, “The Merchant of Venice” , in which someone insisted on a contract to get a pound of flesh, but the blood ran out of the body?

Mrs. Thatcher

I do not think that that is a relevant or helpful interjection. I believe that it is more important and in the public interest to keep faith with those who keep faith with one. It represents a far better attitude for the future.

One must remember that companies and enterprise will go on producing goods both for the home market and for export long after those who are putting forward this Order have left the Government Front Bench. These things will go on for a very long time. One must consider the effect of what the Government are directing employers to do now on the whole of the future of labour relations. Labour relations would in future be far better if employers insisted on keeping their agreements than if they break them. If the Government had had their way, the Acrow agreement would have been broken. It seems strange that R. Gunterthe Minister of Labour should go around asking people to return to honesty and thrift while, at the same time, telling them that it would be honest to break their contracts. It is ridiculous.

A number of productivity agreements have already suffered. According to the Financial Times, the firm of J. S. Fryer and Sons, of Bristol, had to unscramble its productivity agreement and reintroduce over-manning because it had to go back on what it had previously agreed. This seems to be quite wrong. Once there is an atmosphere of freeze, and freezing of wages, all sorts of other attitudes are frozen. The whole attitude [column 950]towards progress becomes frozen—none is made—and the whole attitude towards increasing work becomes frozen, and that is the kind of attitude with which we shall have to live for a very long time if companies do what the Government are asking them to do.

A number of reasons and explanations have been offered for the Order. None of them holds water. I refer now to those cases in which there were in existence agreements by which the employee had a right to increased pay before 20th July, but had not in fact been paid it on 20th July. The right hon. Gentleman the Member for Nuneaton (Mr. Cousins) referred to similar agreements in which the right had vested, but the mechanism had not worked to get the pay into the pocket. The Government are invoking fairness in support of their policy, but the position at which they have drawn the line for these agreements is completely and utterly unfair and quite untenable. What they have done is not to consider whether a person had the right and whether the right had been vested, but have drawn the line merely by the accident of whether the administrative arrangements had got the pay to the pocket.

It is quite absurd that one person who had the right to increased pay on 1st July and who got it should be all right under the freeze, but that another person, who had the right for the same week but who did not happen to have been paid, should be prevented from getting that increase, or asked not to have it, for the whole period of six months. If the Government draw the line in that way, they cannot then plead fairness for their policy, because by its very nature and by their own choice their policy has been unfair.

Then it is said that present agreements cannot be honoured because that would create two different classes of people, those who have agreements and those who have not. But by virtue of the Government's policy there are already created two different classes of people. Perhaps one or two examples will make this clear. Doctors' pay stemmed from the Report of the Review Body in April, 1966. That Report proposed increases for doctors in general practice, hospital doctors, hospital dentists and dentists in general practice. It so happens that the dentists in general practice got their increase before 20th [column 951]July and can, therefore, have it, while none of the other three, who were to have their increases by virtue of the same Report, happened to get them. They have been told that they cannot have them for a period of six months and so, by their own policy, the Government have created two classes of people, those whose increases were implemented and those whose were not.

The Government have also created two classes during the period of severe restraint. During the Committee stage of the Bill a number of undertakings were given about what would happen in the period of severe restraint and I hope that no one will try to go back on them as certain other assurances have been gone back on. Again, I refer to those cases in which agreements were in existence and increases were due, but not paid, at the time the Government announced their policy of freeze.

Sir D. FootThe Solicitor-General said that as soon as the standstill period came to an end a contract would have full force and effect as if there had never been a standstill period, so at that stage the worker would not lose anything. All he would lose would be the increase, however it might be calculated, during the standstill period. That means that those who had agreements will go back on 1st January to exactly the same position as they would have been in had there been no standstill, and any criteria which are to operate in the period of severe restraint will not relate to them because of this prior undertaking given by the Solicitor-General and reported in col. 744 of the Official Report of the debate on what is now Section 30 and given quite firmly.

The learned Solicitor-General was not a member of the Committee, but attended in a very special capacity to give advice to the Committee about the legal effect of provisions. I hope that there is no question whatever of that assurance being revoked.

Mr. Atkinson

One contradiction in the hon. Lady's argument relates to the doctors. The doctors' increases will take place from 1st October. It is not, as she is now pointing out, that the salaries were frozen for six months; they were frozen for three months and the increases start on 1st October and will be paid on 31st [column 952]December, which is a six-month period. But they are back-dated for three months.

Mrs. Thatcher

The hon. Gentleman is reinforcing my argument. From 1st January it will be operated for those who had agreements. My understanding of the doctors' situation is that they were due to have their pay on 1st April, it was frozen for six months, which brings it to 1st October. They did not get it paid on 1st October, and what they are due to receive from then onwards will be paid on 1st January. The same system will operate with anyone who had agreements under which pay was due before 20th July. The increase will be suspended for six months, but at the end of that period it will be accumulated until 1st January and then paid.

Mr. Atkinson

indicated dissent.

Mrs. Thatcher

The hon. Gentleman shakes his head. He had better read what the Solicitor-General said at col. 744. It was a quite firm undertaking.

It is absolutely wrong for the Government to expect or to ask two parties to a contract to break that contract and, in particular, to expect an employer to rat on his employees. We are clearly not alone in this view. It was extremely well put the other day. Let me quote:

“The disagreeable fact is that if the Government or Parliament undermine the sanctity of such contracts, the sense of obligation in regard to contracts in general is bound to deteriorate. It is not simply that if employers are to be asked to repudiate their agreements with employees, the latter can hardly be expected to treat their own agreements, whether collective or otherwise, as invariably binding but that those entering into commercial agreements fear that they too may be exposed to Government interference in their contractual arrangements.”

In other words, the Government are undermining everything with regard to the sanctity of contracts. The words I quoted are from a former Labour Attorney-General, now Lord Shawcross. [Interruption.] That was during a period when a Government did not ask for compulsory powers of this sort. Perhaps they would not be asking for them now if they still had the noble Lord as Attorney-General in the Government.

The Government have received a great deal of co-operation from employers and employees. Any success that they achieve is much more likely to be achieved through the continuance of voluntary [column 953]co-operation rather than through an Order of this kind. Very detailed instructions have been given to the Confederation of British Industry, and it has circulated them. In some cases the instructions have been so pernickety that they are indicative of the kind of bureaucracy that we should get if Part IV were invoked. I think that some of the instructions have gone much too far. For example, employers have been asked not to pay increased pensions during the standstill. [Hon. Members: “Shame.” ] It seems that that goes far beyond anything which can be expected during the period of freeze. Employers have also been told that those companies which exercise their discretion about increments, in other words, those who consider increments every year, should not agree to increases, but that if regular increments are in an agreement, then they can be paid.

The provision which I thought was particularly pernickety was that companies were told by the Government that where the payment of a Christmas or similar bonus had been within the management's discretion it should be regarded as caught by the standstill. This is what the Government were asking for under a voluntary freeze. It was getting as petty-minded as this under a voluntary freeze. The kind of bureaucracy which we shall get under a compulsory freeze is awful to contemplate.

One of our contentions which has been mentioned by a number of hon. Members is that no case has been made out for a compulsory freeze or this Order. If the Government ask for a compulsory freeze, it is up to them to make out the case for it and the case should be established overwhelmingly and beyond all reasonable doubt. We do not have to make the case against it. But no overwhelming case has been established for this freeze.

Even James Callaghanthe Chancellor of the Exchequer, when he was at The Hague on 25th July, said that the pay freeze was not essential to the success of the squeeze, and went on:

“The prices and incomes part of the package should, therefore, be viewed as ‘a bonus on top of it all’. While the Government meant it to succeed, the Chancellor said, ‘We would not be all at sea again if it failed’” .

That was the Chancellor of the Exchequer blurting out the truth outside [column 954]this country. If he does not think that there was a good case for it, how much less should hon. Members opposite back up his present request.

There are one or two other general considerations on Part IV. It is a much more far-reaching part merely than making compulsory the earlier parts of the Bill. During the Second Reading debate on the Prices and Incomes Bill, my right hon. Friend the Member for Barnet (Mr. Maudling) forecast, as he has often forecast before, that the Government would eventually bring in an Order giving them compulsory prices and wages powers. But even he did not envisage the kind of powers which the Government propose to take. Even he thought that if the Government wanted to make them compulsory they would make the decisions of the Prices and Incomes Board binding.

That is quite different from Part IV. Part IV by-passes the Prices and Incomes Board completely and gives blanket powers to Michael Stewartthe First Secretary of State to certain other Cabinet Ministers. These may, assuming the Order goes through, be legal, but they are so arbitrary that they are certainly not within the spirit and meaning of the phrase “the rule of law” .

It would have been very easy to have gone through this debate merely giving quotations from the Government Front Bench spokesmen. The Chancellor of the Exchequer, who has just arrived in the Chamber, made an excellent speech on a voluntary pay pause in 1961. He tendered a good deal of advice in that year to the Labour Party conference. He said:

“In Ernie Bevin 's day at the Ministry of Labour, of course, if there was one thing he insisted upon … it is this, that we, too, should regard wage agreements as inviolable, we, too, should regard them as sacrosanct; we have had to keep our share of the bargain as well. But now, of course, we have not got Bevin at the Ministry of Labour …   . Instead, we have not a rock but a rather good-natured well-meaning ‘hare’, someone who is a ‘wee timorous beastie’ who has been chased into a corner by the Chancellor of the Exchequer” .

I wonder whether R. Gunterthe present Minister has been chased into a corner, not by the Chancellor of the Exchequer, but by Harold Wilsonthe Prime Minister. I do not believe that the Minister of Labour, of his volition, would bring forward this Order today. If there [column 955]were a free vote, I have a fairly good idea which way he would vote.

The Chancellor ended that tremendous speech with a message to the whole of the Labour movement. He went on to say that

“the only safety for these workers, whether they be industrial workers in Government establishments, whether their conditions are determined by wage councils, whether they be white collar workers, is in the return of a Labour Government at the earliest possible moment.”

When the Labour Government came into power, what those workers got was not a voluntary freeze, but a compulsory freeze.

George BrownThe former First Secretary, now Foreign Secretary, stumbled again on the truth when he said on 11th May last year to us on this side:

“It is time some hon. Members opposite made up their minds whether they believe in a free society and consultation and discussion or in a totalitarian society with the right to direct and control.” —[Official Report, 11th May, 1965; Vol. 712, c. 296.]

We on this side have made up our minds about this important topic and we shall be showing it in the way we vote tonight.

I understand that Richard Crossmanthe Leader of the House will reply to this debate. He and I have debated together on many occasions, for longer than I care to think. For a time I was at the Ministry of Pensions and he was always talking on pensions from this side. Then he went to housing. I followed him “shadowing” housing. Now, somehow, he has come right out of his present position and is replying on an economic subject.

We are all used to the right hon. Gentleman's ebullient, effervescent style. It is always extremely attractive. It is often something of an Oxford Union style. [Laughter.] I assure hon. Members that I am making no blandishments. The right hon. Gentleman has the kind of style which sounds tremendously impressive and which is most agreeable to listen to, but I find that one never believes a word of what he says because one knows that he is quite capable of making just as attractive an ebullient and effervescent speech tomorrow entirely contradicting all he has said today.

The right hon. Gentleman made a speech on this topic the other day at Coventry. Knowing his style, I assumed [column 956]that it must have been an “off-the-cuff” speech, because I know how the words and the language flow. But this is what he said:

“The July measures” ——

he was referring to the deflationary measures and the compulsory freeze—

“were not a last-ditch defence of Government policy, but a last-minute dash for freedom, a breakthrough into new patterns of industrial relations” ——

Well they will certainly be new patterns!

“and new experiments in co-operation between State planning and collective bargaining.”

When I read that, I thought that it was probably one of his “off-the-cuff efforts” , but it was not. That makes it much more serious than if it had been. It was a Press release and, therefore, the Leader of the House had considered extremely carefully what he intended to say. I can only say that I thought it was one of the most calculated pieces of cynicism that I have read for a long time.

The Order which we are discussing is no dash for freedom. It is the first step on the journey to coercion, and it should be rejected.