PRICES AND INCOMES
Mr. Terence L. Higgins (Worthing)
I beg to move,
That the Temporary Restrictions on Pay Increases (No. 2) Order 1966 (S.I., 1966, No. 1468), dated 23rd November 1966, a copy of which was laid before this House on 23rd November, be withdrawn.
Throughout the debates on incomes policy in the House over the last year, we on this side strenuously opposed the introduction of an element of compulsion into the Government's prices and incomes policy. But it is not merely our opposition to the introduction of compulsion into their policy which concerns us this evening. The Government's policy, from its inception in its compulsory form last July, has been based essentially on an element of intimidation.
When the Prices and Incomes Bill was in Standing Committee, we on this side consistently stressed that it would be impossible for the Government to ensure that prices and incomes were controlled individually. Although they denied this at the time, I think it has become abundantly clear that the Government now pick individual cases and then take statutory powers against particular groups of individuals and use this threat to intimidate general compliance with their over-all policy. Therefore, it is not only the element of compulsion but the element of intimidation to which we object.
Earlier this evening, the Minister of Defence said that the argument in favour of the incomes policy was that it must be applied to everyone. Yet it is abundantly clear that it is not applying to everyone, and the Government do not have any clear statistics on a number of extremely important groups—for example, those who are paid salaries—as to whether the policy is working. This Order is a typical case in which a small group of people has been singled out and has had thrown against it the whole weight of Government and of legislation and the Statutory Instrument procedure. The group consists, I understand, of about 62 individuals. My right hon. Friend the Member for Wolverhampton, South-West (Mr. Powell) earlier today stressed that the Government were singling out a few thousand of the Armed [column 178]Forces for special treatment. In this case, an even narrower group is involved. In some instances, it can be narrowed down to individuals to whom one can give individual names. It is surely wrong that Government should be conducted on this basis.
Before turning to the details of the case, I wish to ask the Under-Secretary of State, Home Department, who I understand is to reply to the debate—we certainly cannot complain that there is a lack of variety among the Ministers who reply to debates on prices and incomes policy—exactly what criteria the Government use when deciding whether to make an Order against a particular group of people, whether it be with regard to an increase in wages or an increase in prices. For example, do they propose to make Orders against anyone who has the audacity to fight in the courts the case which they believe they have for an increase in wages or prices? Will prices and incomes orders be slapped only on people who resort to the law of the country to defend their legitimate interests? Or are the Government selecting those people with the best case for defending their position? This certainly seems to be so in respect of the prices and incomes Order concerning the launderers and dry cleaners who had an extremely strong case and the Government used their powers to make an example of them. In the case which we are considering tonight much the same principle seems to have been applied.
Thirdly, is the decision whether to slap an Order on a certain group determined merely by the individual whim of a Minister? I hope that when the Under-Secretary replies he can make clear exactly what basis the Government use when deciding whether to impose an order.
The case under consideration concerns a group of draughtsmen employed by the Receiver of the Metropolitan Police. It appears that as the result of a Pay Research inquiry, Civil Service draughtsmen were awarded a pay increase in May 1966 which in one case was backdated to 1st January, 1965, and in the other case was backdated to 1st January, 1966. In addition, however, to the Civil Service draughtsmen who are normally covered by these agreements, architectural and [column 179]engineering draughtsmen, employed by the Receiver of the Metropolitan Police District are normally included.
Hitherto, the practice has been for their conditions of service, in particular their rates of pay, to correspond with those of the civil servants. One might, therefore, reasonably have supposed that when the award was made last May it would also be applied to the draughtsmen of the Receiver of the Metropolitan Police as well as to draughtsmen who were civil servants. It appears that instructions were issued that the Civil Service draughtsmen should actually receive the increased rate of pay which was paid in June and July and in August also.
However, in view of its incomes policy, the Government apparently took fright and a “hold-tight” direction was issued for the Civil Service draughtsmen. This was subsequently reversed on the ground that other comparable draughtsmen had already received a similar increase. But in the case of the draughtsmen employed by the Metropolitan Police Receiver alone, it was decided that the increase should not be given to them on the ground that they were not civil servants whereas the other draughtsmen were civil servants.
In addition to this, it transpires that the reason why the Metropolitan Police draughtsmen had not received their increase was because of a purely technical hold-up caused by the breakdown or the delay in implementing a computer procedure for making payment. I shall be glad if the Under-Secretary will confirm whether this was the case.
It is surely absurd that the Government should exclude from their prices and incomes freeze a group of civil servants and at the same time say that this arrangement should not extend to the Metropolitan Police draughtsmen merely because there was delay in making payment. This comes out clearly in the background note which the Department of Economic Affairs issued at the time, the second paragraph of which states that
“The pay increase claimed by the draughtsmen was not paid out in the Receiver's Office by the 20th July.”
It does not state that the increase had not been negotiated or that the people [column 180]in question had not been told about it. It was merely that it had not actually been paid out. For this reason, we feel that these people have been unjustly treated.
I pass now to consider under what part of the Prices and Incomes Act this action has been taken. Clearly, it comes within the scope of the Prices and Incomes Standstill White Paper, which subsequently became Schedule 2 of the Prices and Incomes Act. The House well knows that that Schedule was not substituted until the day after the Bill received its Third Reading. The Government substituted a quite different Schedule, which was not debated at the Committee and Report stages in this House at all. This Schedule, which was then used only a day after the Royal Assent to impose a particular restraint on this group of draughtsmen, has not been considered by the House as the Schedule to the Act.
Another point is that the Metropolitan Police draughtsmen will never be able to obtain the pay which they would otherwise have received. It was reasonable to suppose that they would have had their pay backdated, like the other draughtsmen, and that they would then have received it when the others did. Instead, they will not receive the additional amount.
Their case was, therefore, taken up by the Institute of Professional Civil Servants. I should explain that the draughtsmen employed by the Metropolitan Receiver are not civil servants but are members of the Institute. As a result, this group put down two legal actions to cover two specific points which they felt ought to be taken to the courts.
The first concerned a Mr. Phillips, a new entrant, who had been recruited to the Receiver's Office. He had been offered a certain sum, but, when he appeared on the job, was told that he would be paid a smaller sum. The case was brought and should have been heard on 18th January. However, it was withdrawn, because the Receiver agreed to pay the full amount of the increase. In the second case, the Institute took out another writ which, I understand, concerns the more general principles.
It is these two cases which I should like to take up with the Under-Secretary——[column 181]
This is not sub judicie, is it?
This is a point on which I would appreciate your guidance, Mr. Speaker.
I am asking for information at the moment. The first case, I gather, is closed. I am concerned about the second; is it still sub judice?
This is something of which I am not sure, but perhaps the Under-Secretary could inform us.
The Joint Under-Secretary of State for the Home Department (Mr. Dick Taverne)
Perhaps I can assist the House. There is a case, which is sub judice, which challenges the effect of the Order, but the original case, which led to the making of the Order, is finished and is not sub judice.
Perhaps we might proceed on that basis, and I will try to keep within the rules of Order.
What the hon. and learned Gentleman has just said raises some very different questions. He is saying that the case of Mr. Phillips led the Government to lay the Order. If that is correct, some odd situations arise. Mr. Phillips was recruited into the Receiver's Office and was originally offered a salary of £1,188 a year, but when he took up his employment he was told that he would be paid only £1,068 a year. Therefore, the case which the Under-Secretary has just mentioned was brought to the court but was dropped after the Receiver decided that he should not defend it.
Consequently, the additional amount was paid to the gentleman concerned, who received the full amount. I should have thought that this case anyway came outside the terms of the Government freeze, because it was a case not of a wage increase but of someone being recruited to a different firm. Hon. Gentlemen opposite have never argued that cases of people changing their jobs for a higher salary should be covered by the freeze. If that were so, no one would be likely to be attracted to any job within this period. Yet to my surprise I am told by the Under-Secretary tonight that it is this case which prompted the tabling of the Order. If that is so, am I wrong in thinking that it is contrary to [column 182]the Prices and Incomes Act, since such action would not be justified within the Government's prices and incomes policy?
I pose this question in the hope that we will be given a clear answer, because I want to know whether such a case comes within the terms of the Government's freeze and, if it does not, why this Order has been tabled and why was it necessary to bring a case forward in the first instance?
Having dealt with a particular issue—on which it is vital that we receive a clear reply—I turn to the more general case concerning all the draughtsmen who are employed by the Metropolitan Police Receiver and who have been prevented from having their pay back-dated in the same way as those who are employed as civil servants.
As I understand the position, the Order we are considering was laid before Parliament and came into operation on 24th November. It has also been stipulated that only the Home Secretary should have the right to give consent to a pay increase for this group of people and that he should decide whether consent should be given for an increase. In fact, the right hon. Gentleman did something somewhat unusual—indeed, I suggest something very unusual indeed—for while he gave consent for a pay increase in respect of these draughtsmen, he also said that that should be deferred until such time—and I urge hon. Members to note that it was not such time as the end of the period of severe restraint—as the back pay that they had been paid had been collected back into the coffers of the Government. This is a complicated matter but, to put it another way; the draughtsmen's pay was frozen, although they had in fact been awarded a pay increase. They had been paid the money between the date of the award and the date of the Order, because the Receiver had decided that he was not empowered by law to refuse to pay it to them.
But on 24th November the Order is laid by the Government and it says, first, that they should not be entitled to their pay increase within this period and, secondly, that, as they had already been cunning enough—perhaps “cunning” is not the word to use; “fortunate” might be more appropriate and would probably [column 183]be the word which the Government would prefer to use—I should say deserving enough—to get the money, because they had done such a wicked thing the Government decided to collect that amount back from them by deferring their pay increase until such time as it had been collected back.
This is an extraordinary state of affairs indeed and one of the major reasons why my hon. Friends and I feel it important to ask that the Order be withdrawn. That being so, I trust that we will be given a clear explanation from the Under-Secretary about whether this is, in fact, what the Government are doing, and particularly whether it is the Government's intention to get back from the people who obtained this back-dated pay this amount of money by deferring the pay increase which they would normally have obtained at the date applicable to similar people.
There are other complicated points which arise on this issue. The matter is extremely complicated. One need only consider Section 3 of the Order to see what I mean, for it states:
“In comparing the rate of any remuneration with earlier remuneration paid before the date of coming into operation of this Order, so far as required for the purpose of giving effect to this Order, account shall only be taken of such earlier remuneration as fell within the period of three months ending immediately before that date.”
that is, the date of the Order. In view of the extraordinary circumstances of the case I have described, I think the expression:
“such earlier remuneration as fell within the period of three months ending immediately before that date”
requires some clarification by the Under-Secretary.
Is it the amount that this group of people were told they would receive and subsequently found that they would not receive unless they took action? Which amount are the Government taking as the relevant price or wage for comparison? We have the original wage rate, secondly, the increased wage rate and, thirdly, the increased wage rate which they were paid but which is subsequently to be reimbursed by the Government collecting it back.
Which of these possible amounts is being used in making the comparison which the Government will use when [column 184]applying this Order? Will the Under-Secretary give us a clear definition of what he thinks the expression
“such earlier remuneration as fell within the period of three months ending immediately before that date”
means? Which of the three possible concepts I have outlined will he employ when he interprets this Order?
In the case which the Clyde Shipyard workers brought in regard to a productivity agreement, they were given an increase even though it might have been considered to be within the period of the freeze because:
“a substantial proportion of those involved had already received it before 20th July.”
Is not this case as entitled to get their increase on the same grounds? I understand that senior police officers were given an award from 1st January, 1966, and this was concluded before 20th July. I am in favour of this increase being given, as I am sure we all are, but, if it could be given, why should the increase not be given to the draughtsmen? How does the Under-Secretary distinguish this case from that of the draughtsmen?
I turn to a point concerned with the way in which the Government are proposing to recover the increased amount actually paid to the draftsman. Section 33(2) of the Prices and Incomes Act states clearly:
“An employer shall not under any circumstances be entitled, in consequence of the provisions of this Part of this Act relating to contracts of employment, to recover any remuneration which he has paid.”
Is it not true that the Government are endeavouring to recover by the device I outlined in the middle of my speech the remuneration to which these people are entitled and which they actually received as back pay? How can the Government take this action without being in conflict with Section 33(2) of the Act?
I have endeavoured to outline an extremely complex subject. I do not think there can be any doubt that there are a number of very serious points of principle involved which we ought to examine. I have endeavoured to keep within your Ruling, Mr. Speaker in regard to the second case which the Under-Secretary says is sub judice. But I cannot refrain from observing that we are now in a situation in which a case was brought before the courts and has not been [column 185]heard and yet the Government seeks to impose an Order which might influence the ultimate decision in that case, which may be heard at a subsequent date. I may not be right but I shall be grateful in the Under-Secretary can clarify the situation and, as a lawyer, give a legal opinion on it.
A final point ought to be made which is prompted by the headlines in the Financial Times this morning. The Government and the incomes policy are rather like the story of an individual who came out of a consulting room after seeing a psychiatrist and was asked, “Are you coming or going?” . He replied, “If I knew that, I should not be here” . The Government now find themselves in a period between severe restraint and the freeze.
Order. So far the hon. Gentleman has been in order. He must keep in order.
I shall have no difficulty in doing that, because I have only two more sentences. The Government's prices and incomes policy is in the interim period between freeze and severe restraint, and we on this side are totally opposed to the element of compulsion which it contains. I hope therefore that my hon. Friends will vote in favour of the Motion that this Statutory Instrument be withdrawn.
Mr. Ray Mawby (Totnes)
I support everything which my hon. Friend the Member for Worthing (Mr. Higgins) has said. Although this is an isolated case, it is the forerunner of many cases the House will have to deal with. This arose from the decision of the Pay Research Unit. Hon. Members know the valuable work which the Unit does. The main reason why it was set up was that it was difficult to measure the efficiency of, and therefore the rate of remuneration which should be paid to civil servants. It has always been accepted that the Unit's advice, which is tendered after taking into account comparable trades and professions, should be taken as valid.
The Unit does not make a report on each part of the Civil Service every so often, because it has a long way to go round. It makes reports only at long intervals for various parts of the Civil [column 186]Service. The Under-Secretary cannot get away with it by saying that technically the men involved are not civil servants. Their remuneration has always been related to that of civil servants in that grade.
The hon. and learned Gentleman has been given an impossible task tonight. It is interesting to see the various Ministers who have to stand at the Despatch Box to support the Government's prices on incomes policy. The hon. and learned Gentleman will no doubt do his best. I do not see how he can justify the fact that the reason why these people were not paid was purely the inefficiency of the system of pay and remuneration. Throughout industry most of us are concerned with the dispute which goes on mainly because of a mistrust between one side and the other. This is a case in which the Government, by their policy, tend to create a greater mistrust between employee and employer.
The whole matter has come to a head in the case of Mr. Phillips. This was a matter in which a man was taken into the Service under certain agreed conditions. Those conditions were not fulfilled. Although the case was at first contested in court, finally it was not contested. Even if one accepts this case, the hon. Gentleman is still in a dilemma, for if one accepts that new recruits will be taken on at a certain remuneration, that will obviously be a higher rate of remuneration than that which is received by those who are already employed. Therefore, one would reach a situation in which it would pay the normal servant, whether he be a civil servant or otherwise, to leave his employment for a time and then go back to be re-employed. This could easily happen.
The Government now believe that they are out of their main difficulties because we are now moving into a period of severe restraint. But I would utter a word of caution here. Under the criterion laid down under the Second Schedule of the Act, only about half of the total membership of the T.U.C. would ever have a chance of justifying any increase at all during the next six months of severe restraint.
The hon. Member is going rather wide of the Order that is under discussion.[column 187]
I apologise for having trespassed too far, Mr. Speaker. I was making those observations purely by way of an example.
This is an important case, particularly bearing in mind the various groups of people who have been allowed to have increases. My hon. Friend has mentioned a number of these cases, and in particular he referred to a case in which an increase was allowed because a substantial proportion of the men involved had already received increases. Bearing in mind the case in which the only reason for the non-receipt of an increase was the inefficiency of the machine, I suggest that this Order should be withdrawn.
The other important point made by my hon. Friend concerns a situation which seems to be contrary to the Second Schedule, namely that those who have received increases, although they may not repay the money, will mark time for a long time until everybody else catches up with them. This is an important point upon which we would expect an answer from the Under-Secretary.
I believe this is probably the most flagrant example of a number of cases which were bound to arise when such an Act as the Prices and Incomes Act was brought in and, as my hon. Friend said, the Second Schedule was put into effect only one day after the House had decided that the Bill should be given a Third Reading.
Mr. Eldon Griffiths (Bury St. Edmunds)
I wish to refer to the specific case of Mr. Phillips who has been the unwitting case, so far as we can tell, of this Order.
Mr. Phillips, the draughtsman, had a job—presumably a job with security and expectations. So far as I know, he was happy in this job. But he had the offer of another job with the Metropolitan Police Receiver, and presumably he felt that it was a better job. So far as I know, it offered him more money. It offered him £1,188 a year, I believe.
Mr. Phillips, like most men, must have gone home and discussed this new job with his wife. He must have had to weigh up the attractions of the new job, the new salary, the security that was perhaps offered in working for the Metropolitan Receiver, and against those [column 188]advantages he no doubt had to weigh the drawbacks of giving up his existing job with all its familiar habits and his friends. Finally, after discussion with his family, Mr. Phillips makes his decision. He decides that he will go and work for the Metropolitan Receiver at a salary of something better than £20 a week. No doubt, he and his wife made some plans on the basis of that salary——
Order. I hope the hon. Member will link what he is saying with this Order.
I was linking it with the Order, Mr. Speaker, in this way, that Mr. Phillips is the subject of the Order, and his case is the——
Order. Mr. Phillips' case may or may not have been the cause or fons et origo of the Order, but the Order has a specific purpose, and the hon. Gentleman must come to the Order itself.
When Mr. Phillips, the draughtsman of whom I speak, went to his new job, he was almost at once subjected to the Order, and the effect was that, when he went to take up his work, enthusiastic about what it would mean for himself and his family, he found that, instead of being paid £20 plus he was told that he would receive £20 minus. When he arrived at his new work, his expectations high, he received immediately, or for all practical purposes immediately, a cut in pay.
The effect of the Order for this man, and the particular man is an example of all men who might be affected in this way, is that he has been offered a job at one rate of pay but, when he arrived to do his new job, he receives, for all practical purposes, a salary cut. He has been the victim of false pretence. The personal disappointment arising from the Order is bad enough, but what worries me more is the breach of faith.
There can be no more lofty, distinguished or law-abiding office in this country than that of Receiver for the Metropolitan Police District, but the Receiver is put in the position of offering a job at one salary and then being told to cut it the moment the man comes to work for him. The Government are requiring the Metropolitan Receiver to break his pledged word to this man. [column 189]
It is no wonder that the Receiver's legal advisers told him that he had better pay. They are men who understand equity and justice. They realise that, in the light of those principles, there was no leg on which the Receiver could possibly stand. They told him to pay and he paid. But at that point the Government came in with their Order and said that the principles of justice and equity should not apply, that the man should not receive the money he had been led to expect, that his family should not have the television set, the sofa or whatever it was that they had ordered in expectation of the new pay he would receive. The Government are using the power of Parliament to require the Metropolitan Receiver to break his word.
What an example to the police forces of this country. What an example to all men who may wish to redeploy—to use the modern jargon. The Government say to any man who wishes to go to a new job at a higher salary which will meet his ambition, “It shall be within the authority of the Government to disappoint you and take away that prospect” . I had not thought to live to see the day when the British Government would punish a man not because he broke his contract but because he kept it. That is the effect of the Order. The Metropolitan Receiver is told that the great engine of Government and Parliament can be used against him because he intended to keep his word and contract.
I shall with great enthusiasm join my right hon. and hon. Friends tonight in voting against this Order in protest against injustice and false pretence.
Sir Edward Brown (Bath)
As a member of the Standing Committee on the Prices and Incomes Bill, I made it clear in my own mind that we would have to oppose any Orders such as that now before us.
Before making any further remarks, Mr. Speaker, I wish to ask you whether the Interpretation Act 1889 applies
“… for the interpretation of this Order as it applies for the interpretation of an Act of Parliament.”
Is the Order valid, in view of the fact that Schedule 2 of the Act was inserted without any discussion in this House?[column 190]
Order. That is a matter of political argument on which the hon. Gentleman may not appeal to Mr. Speaker.
Sir E. Brown
I bow to your Ruling, Mr. Speaker. I cannot see how the Government can have it both ways. If they want Schedule 2, under which the Order was made, they cannot have it the other way round and take away from a man an increase of pay which he has received. Under the Act, they now rely on Part IV, which says at Section 33:
“An employer shall not under any circumstances be entitled, in consequence of the provisions of this Part of this Act relating to contracts of employment, to recover any remuneration which he has paid.”
That has happened. These men have received their money and because they are in part of the Civil Service, the Government have now made an Order to get the money back. Every trade union leader studying these Orders has a first-class case to make in the law courts. It cannot be held that the Orders are legal when they come before the courts.
If the Act is supposed to be legal, let the Government be bound by it. I see that there is some amusement on the Government Front Bench, but this is not a matter of amusement, because although hon. Members on the Benches behind will support their Front Bench on this temporary restriction of pay tonight, none of them believe in it, and they would be as willing as we are to fight it if they were not muzzled. Let there be no amusement. The time is not far distant when Orders like this will produce a mass of protests in the country. We are giving voice to it tonight.
I therefore seriously draw attention to the fact that the Government are trying to break their own law with the Order. Part IV of their Act, which relates to the recovery of money by an employer, says quite clearly that no money having been paid out can be recoverable. The Government, as employers, are taking action against those people and are taking money back.
For the reasons which my hon. Friends have given, I shall be glad to go into the Lobby to vote against the Order, as against every such Order to come before the House.
10.43 p.m.[column 191]
Mr. Albert Booth (Barrow-in-Furness)
I wish to address myself to only two rather limited aspects of the Order. The first concerns what in my opinion is clearly an injustice against an individual, an individual who applied for a job, got it at a particular rate of pay and then found on arriving at work that that pay was knocked down to a lower level. This is unjust because it applies to him in a peculiar and not a general manner.
It is true that one of the ways in which many draughtsmen can get round the effect of the wages freeze is by going to another job. However, this is a peculiar case; it can have happened to very few and to my knowledge has happened to only one man, who is singled out by the Order. It is an injustice, which must be faced.
There is one further aspect of the matter with which I wish to deal, concerning particularly the engineering draughtsmen referred to in the Order. The effect of the freezing of engineering draughtsmen's wages is more general, but my argument is no less appropriate. The Order will encourage mobility of labour. Presumably that was one of the intentions of the Prices and Incomes Act. However, it will encourage the wrong form of mobility. It will encourage men who have valuable experience—experience needed for a particular job—to leave that job and go elsewhere to places where their experience is not so valuable, where, indeed, they will have to learn things before they can use their skills to their maximum ability.
These men will go not because they wish to leave their jobs by any normal considerations but because this will be the only way to get what they would otherwise have got in the normal progression of their wages. During recent years, the unions and other bodies representing draughtsmen have established a salary pattern which lays down minimum scales for different kinds of work, but these are minimum scales within the real meaning of the word “minimum” . Few men draw salaries on these minima. They receive advanced scales for special skills and responsibilities. If we reduce the rates for men on salary scales like this, it will damage the ability of employers to retain such skills and responsibilities. [column 192]
The Order should be withdrawn to enable these wage increases to be paid which have been found to be suitable to the particular skills of draughtsmen in a particular job. Its withdrawal would prevent the undesirable change of labour in a form which, I am sure, was not in the mind of any Minister who has said that the Government want to encourage mobility of labour.
The Under-Secretary of State for the Home Department (Mr. Dick Taverne)
Some of the arguments advanced tonight have been arguments against any Orders being made under Part IV of the Act but most have been directed against this Order because of the special circumstances which exist in its case. I have been asked a number of complex questions on the Order and its effect is by no means simple. The hon. Gentleman for Bury St. Edmunds (Mr. Eldon Griffiths) made a speech entirely devoted to a point which does not arise under the Order and utterly misconstrued the effect under it. It is clearly desirable that I should set out exactly what has happened in this case and what the effect of the Order is.
The Receiver of the Metropolitan Police has some 3,000 civilian staff. These include 62 architectural and engineering draughtsmen. Hitherto, the Receiver's staff's pay and conditions of service have been aligned with comparable grades of the Civil Service but the staff themselves are not covered by the Civil Service Pay Agreement.
The position, therefore, of the Receiver's draughtsmen is that they are treated and have been treated in the past in the same way as the Civil Service draughtsmen. Variations in pay which applied to the Civil Service draughtsmen have in due course been applied also to the Receiver's draughtsmen. But, again, they are not a party to the Civil Service Pay Agreement.
On 15th June, under Treasury instructions, the Civil Service draughtsmen had their pay increased, with a retrospective increase dating from 1st January, 1965, and the dispute which arises on the effect of the Order concerns essentially a pay increase that should have been made or perhaps could have been regarded as being due in 1965. [column 193]In the normal course of events, increases and retrospective increases in the pay of the Civil Service draughtsmen would have been followed by an increase in the pay of the Receiver's draughtsmen.
There has, however, always been a certain time lag. It is, for administrative reasons, not always possible for the Receiver to pay out increases immediately. In the past, this has not always been very important because, generally, where there has been a retrospective pay increase, this has remedied itself. But on this occasion the Receiver's pay branch had to deal with a very large claim relating to some 1,000 cleaners and also, at that stage, the branch was changing from a mechanical pay system to a computer system. It was not quite accurate to say that it was a case of a computer breaking down.
The Receiver's intention was to make the pay increase effective in the last week of August, but, of course the July measures intervened. The Receiver's draughtsmen were caught by the freeze on the wrong side of the operative date. I do not deny for one moment that this caused hardship. It is of small consolation that it has also been hard on others; but if, in fact, a different pay policy operates on a particular date, then, of course, there is bound to be hardship on the part of those who fall on the wrong side of that date. A line had to be drawn, and the Receiver's draughtsmen were on the wrong side of the line.
It means that under paragraph 19 of the White Paper, there was clearly an undertaking which ranked as an existing commitment. It was a commitment which, in effect arose before 19th July, but which was to be implemented after 19th July. Under paragraph 21 of the White Paper, the operative date of the retrospective increase was to be postponed for six months. It means that the increase was to be back-dated, not as from the 1st January, 1965, but as from the 1st July, 1965. It also meant that the increase was not to be payable under the standstill until the end of 1966.
What happened next was that after preliminary correspondence and discussion with the Institute of Professional Civil Servants, which represents this section of the Receiver's staff, two members decided to take proceedings. One of them was Phillips, whose case was some-[column 194]what special. Another was called Griffin, who in effect, sued on behalf of all those who were benefiting from a large retrospective increase. Like their brethren in A.S.S.E.T., they were not prepared to accept voluntarily a standstill which the majority of trade unionists accept. It was quite clear that these kinds of attempts to break the standstill and to gain an advantage which others who voluntarily accepted it would not gain, were bound to lead to the use of Government powers under Part IV.
I was asked in what sort of cases these powers would be used and what Orders would be made. Clearly one of the categories in which these Orders will apply is where, by suing, certain people try to evade the effect of the standstill to secure advantages which others have voluntarily forgone. If the Government did not make the Order, there would be discrimination between those who accepted the standstill and those who did not, and there would be penalisation, in effect, against those who co-operated. It was, in that respect, a similar position to the case of A.S.S.E.T. and Thorn which the House has already discussed.
On the advice of counsel, the Receiver settled these claims and agreed to pay arrears in pay where applicable from 1st January, 1965. To make the standstill effective, the First Secretary made an Order on 23rd November, which is the subject of this Motion. It is extremely important to establish the effect of the Order. In the case of those who have received retrospective increases for the period before 1st July, 1965, under the settlement made by the Receiver, the Order freezes the pay to the level at which it was immediately before the Order was made—that is, to the level it was without the increase.
The hon. and learned Gentleman will appreciate that this is the crucial point. He says that the Order freezes the pay to the level at which it was immediately before the Order was made. Were not the men receiving the increased amount at that stage?
They had not been paid the amount at the time when the Order was made; so the amount which they were receiving before the Order was made was the lower level without the increase. [column 195]
I was asked about the wording of Article 3 of the Order and the final words:
“within a period of three months ending immediately before that date” .
I apologise for interrupting a second time, but this is clearly the crux of the whole matter. Was not the rate which had been agreed before the date of the standstill in fact that to which they were entitled at the date when the Order was made, and have they not in fact been paid that amount, albeit after the date when the Order was made?
Yes, they have been paid that amount. They were paid that by the Receiver and after the date when the Order was made.
Mr. Julius Silverman (Birmingham, Aston)
When was the court order made for the payment of this money? Was not this before the Order was introduced?
No court order was made. This action was settled out of court. [Hon. Members: “When was counsel's advice given?” ] When counsel's advice was given is neither here nor there. The position was that the rate of remuneration before the Order was made was the lower rate of remuneration and it is at that rate that the pay is frozen for those who have had the increase before 1st July, 1965. Perhaps I can go on to explain the effect of the Order. I hope that the hon. Member for Worthing (Mr. Higgins) will listen to this, because this is the crux of the matter, as he rightly said, and there has been considerable misconception about the effect of the Order.
Can the hon. and learned Gentleman just clarify why counsel said the wrong rate? Why when asked what the rate was did counsel say that it was the rate which the hon. and learned Gentleman is now saying was the wrong rate?
In effect, the Order overrides counsel's view of what the law was, exactly as happened in the Thorn case. This is an argument about the effect of the Order to which I shall come and which is the subject of later proceedings. [column 196]But the position is quite clear. In effect, the Order freezes the pay to the level at which it was immediately before the Order was made. The Order freezes the pay in the case of those, and only those, who have received retrospective payments in respect of the period before 1st July, 1965. The intention of the Order is to restrict the total emoluments of each draughtsman to what he would have received if he had voluntarily accepted the standstill, in order to secure universality and not give the advantage, as in the Thorn case, to those who sued.
When this has been achieved, when the total emoluments are what a person would have received if he had stuck to the standstill, when this position has been achieved through keeping the pay at the non-increase level, the pay will be restored to a higher level, and this will be done under the terms of the instrument of consent which has been made by the Home Secretary.
The effect of the Order, therefore, is that it relates only to back pay for the increased rate between 1st January and 1st July, 1965. No one who entered the Receiver's employment after 1st July, 1965, is affected by the Order. Mr. Phillips is not affected by the Order. The whole of the speech of the hon. Member for Bury St. Edmunds (Mr. Eldon Griffiths) was totally misconceived in its judgment of the effect of the Order, and for that reason I hope that the hon. Gentleman will not oppose the Order when we come to vote on it.
Mr. Eldon Griffiths
The hon. and learned Gentleman is wallowing about in a lot of technicalities and I am sure that he is hoping to get to the end of his brief as soon as he can, but he is not carrying the House with him. He says that Mr. Phillips is not affected by the Order. In that case, why has his pay been reduced? Secondly, the hon. and learned Gentleman said that the retrospection in the Order goes back only to the amount of pay which a man was getting before the Order was made. I suggest that the amount of pay which the Government should have had in mind was not what the man was actually receiving in pound notes, but the rate of pay which he had been promised. It is to this rate of pay that the Government should direct their attention and not the actual pounds, shillings and pence.[column 197]
The last part of that argument has been used before and met before in the case or Thorn. In fact the hon. Member is wrong about Mr. Phillips, who is receiving the increased rate of pay. The only people who are affected are those who were getting the retrospective pay increase between 1st January and 1st July, 1965. The Order has not been properly understood by hon. Members opposite and to a large extent the arguments directed against it are totally invalid.
Mr. Eldon Griffiths
I accept that because of the advice given by counsel to the Official Receiver, Mr. Phillips is getting the pay. In practice, counsel has advised the Official Receiver to take no notice of this Order. For all practical purposes the man is getting the pay which the Government by this Order are seeking to deny him.
The Government are not seeking by this Order to deny Mr. Phillips increased pay. The effect of this Order relates only to back pay in a period of six months in 1965 and it does not affect Mr. Phillips.
There is still one case pending and that relates to the effect of the Order. It relates to what the effect is in the case of those who are affected, assuming the Order is still in force through the actions of the House.
Sir John Eden (Bournemouth, West)
This is chaos.
I agree that there are hon. Members opposite who have never grasped the implications of the prices and incomes policy. They have never been able to make up their minds whether the standstill was necessary and, if necessary, whether they wanted to see it enforced. This is precisely the point which arises again and again when these Orders are being debated. If there were no alternative to making the standstill, then the standstill had to be universal. We then had to see that it applied not only to those who voluntarily accepted it, which is the vast majority, but also to those who did not accept it and who tried to gain special advantage for themselves. This is the fundamental fact which hon. Members have failed to grasp in the case of this and any other Order on this subject. But it is nevertheless [column 198]the reason why this pay freeze has been widely accepted and has very wide support in the country.
The hon. Member for Bury St. Edmunds made the point that the effect of the Order in certain cases is to over-ride legal obligations. I see that he has now left the Chamber. I beg his pardon. I see that he has moved from his previous seat, which was perhaps too close to the Liberals, to a position more directly in opposition.
It is true that in certain cases the effect of the Orders is to over-ride legal obligations. That is the Government's intention. We have asked everyone voluntarily in the period of stand still to forgo that to which they might legally be entitled. In certain cases where court action has been taken an Order has over-ridden the effect of contracts. That is not totally unknown to the law. It has happened in the law of landlord and tenant and in many different circumstances. It is the only way of making the standstill universal.
Turning to the circumstances of this case, it is true that if one has to draw a line it is sometimes difficult to know on which side of the line to put a particular case. There are bound to be certain anomalies and injustices, and I concede that this case is not one in which it is necessarily easy to see on which side of the line to put it. But in fact this is not a case which is on all fours with that of the Clyde Shipyard agreement. These draughtsmen were not parties to the Civil Service agreement. They were those whose pay was linked to the Civil Service pay agreement. There is a considerable difference, and one which has important implications not only for these 62 draughtsmen but for a very much larger number of categories of those affected by the standstill.
It is true that to allow these draughtsmen through would create only a little hole, because there are only 62 of them. But there are some pertinent observations on this which I will quote from remarks made in a previous debate:
“Unless the application of this power is to be universal and is to bite not only on large blocks of men but on quite small caucuses of employees, its application is bound to be unfair and will be seen increasingly to be unfair … ” —[Official Report, 5th December, 1966: Vol. 737, c. 1083.][column 199]
That principle was a perfectly sensible principle, and it was enunciated by the right hon. and learned Gentleman the Member for Warwick and Leamington (Sir J. Hobson). He was talking about the way in which claims are brought to the notice of Ministers, but this is a principle which has a much wider application than that and which applies in this case too.
If in this case we were to have allowed the draughtsmen's pay to go up automatically because their pay was linked to a Civil Service agreement, this would apply very much more widely. The staff of museums have their pay linked to the pay of the Civil Service, and the pay of a number of librarians, including those in the House of Commons and the House of Lords, is linked to the museums. Several public authorities have pay arrangements tied to the Civil Service, and the Atomic Energy Authority is a case in point.
The implications of allowing this particularly difficult case to fall on the other side of the line would have been very much wider than hon. Members on the other side have either realised or understood. To have yielded in this case, however deserving it might be, would have been bound to set off a chain reaction and introduce a position where many people were looking over their shoulders to see what others were getting, and it would have been bound to lead to a general spread of dissatisfaction.
It would have undermined and weakened the principle of universality which is essential if one is to keep the sense of injustice to a minimum.
The whole point of this Order, and the reason for taking the decision in this particular case, was because it was essential to make the standstill as universal as possible.
For these reasons I ask the House to reject this Motion.
Mr. A.G.F. Hall-Davis (Morecambe and Lonsdale)
I have tried very hard indeed to follow the arguments of the Parliamentary Secretary, but I feel that we cannot leave this Order without seeking some further clarification.
If I appear particularly bemused and bewildered, I have no shame in declaring [column 200]my state of mind this evening because I am quite certain that if every hon. Member in this House is honest with the House and with himself there can be no one who can feel that he can follow the intricacies of this particular case, having heard the Under-Secretary try to explain it with all the time he must have had to prepare his arguments.
He was moved, in his concluding remarks, to refer to the general support in the country for the Government's prices and incomes policy. May I assure him that such support as there is stems only from the fact that the general public have not yet realised that whilst the Government proclaim that they have been defending the £ from devaluation, they have certainly devalued the living standards of a very large section of the population of this country.
The people who might have expected their real incomes to increase by 5 per cent. over the last 18 months have seen the incomes standstill and a cost of living increase of 5 per cent. This has devalued their purchasing power and I should very much like to see an economist work out the effect on the standard of living of the people of this country.
To return to the Order, there are times when one receives in this House an illuminating illustration of the true worth of policies that are being pursued. After listening to the debate this evening, no one can fail to recognise the prices freeze for what it was, and that is a desperate and ill-prepared expedient which can survive for only a short time, because it is riddled with unreason and is shown to be the nonsense that it is.
I should like to put to the Under-Secretary one or two points for further clarification, because they are points on which we are entitled to have further information. Do I understand that those who have just joined this service have received the increased rate of pay? As I listened to the hon. Gentleman, as I tried hard to do, I understood that those who have joined recently have received the increased rate of pay.
I am glad that the Under-Secretary assents. Those who have served longer, however, are receiving less. Those with longer service are [column 201]on a lower rate of pay than those who have joined the service at a later date.
The hon. Gentleman puzzled me, perhaps, most of all when he said that after a certain period, people would be restored to a higher level. He had just been telling us that they had not suffered any reduction in salary. I cannot see how somebody is restored to a higher level of salary who has not received any reduction, and yet I have a firm note that “they would be restored to a higher level” . Either there is something very peculiar about our understanding on this side or there must be something which is not yet fully clear about the Government's arguments when they say, on the one hand, that people have received no diminution in salary from what they received formerly and in the next breath talk about their being restored to a higher level.
Surely, we cannot accept that people's living standards in the year 1967 shall be decided by whether it is possible for a Department of State to bring its computer into operation on a certain date. If I understood the Under-Secretary correctly, that is what decided the issue in this case. It was not a case of the final meeting of the negotiating machinery being due for the following day; it was not even a case of the decision being promulgated for the people concerned and, therefore, their being allowed to hear of something after the date of the freeze. What made the difference between whether the salary was or was not paid was that another pay claim for 1,000 cleaners was in the pipeline but the Government Department was incapable, apparently, computer and all, of putting the two into operation simultaneously.
Therefore, whilst someone was putting right the circuit in the computer, the pay of these gentlemen went by the board. I thoroughly agree with my hon. Friend the Member for Worthing (Mr. Higgins) that this is not only an example of bad faith. It must surely be nonsense that people's living standards are dictated by whether it is possible to bring a computer into operation on Monday, Tuesday or Wednesday of the week.
Certainly, if a decision is known, this may affect the issue, but that the issue is decided simply because it has not been possible to stuff the £ notes into the pay [column 202]packet by a certain date makes complete nonsense of the Government, and I, like my hon. Friends, will have the greatest pleasure in voting for the Motion against the Order, which surely ridicules the whole process of government.
Mr. Richard Sharples (Sutton and Cheam)
I intervene briefly because I think that when the Under-Secretary spoke, he missed one of the most important points which have been raised by my hon. Friend the Member for Worthing (Mr. Higgins).
In a notice given out by the Department of Economic Affairs, these words are used:
“The effect of this Order will be to restrict the pay of the draughtsmen until the over-payment has in effect been recovered.”
My hon. Friend drew attention to this and also to Section 33(2) of the Act, which states that
“An employer shall not under any circumstances be entitled, in consequence of the provisions of this Part of this Act relating to contracts of employment, to recover any remuneration which he has paid.”
My understanding is that, in fact, one of the effects of this Order, at least as I understand it from the hand-out issued by the Department, is to secure the recovery of money which has already been paid. I hope that we shall have a reply to this point because, otherwise, one must ask why in this case, where many employees are concerned, is not Section 33(2) of the Act complied with.
I apologise for not having dealt with that point. No money is recovered by the Receiver. Pay is kept at a level until, in effect, the total emoluments are no greater than what the employee would have had had he complied with the standstill. There is the extra six months' pay——
Mr. Michael Shaw (Scarborough and Whitby)
If this is the sort of notice we are getting under Part IV, then I hope that adherents of it are getting less in the Cabinet day by day.
I should like to deal briefly with the aspect introduced by the treatment of Mr. Phillips. We have had it admitted that he is getting his increase by virtue of the fact that he is a new employee. Therefore, we have the anomaly of a [column 203]new man having to turn to left and right, seeking guidance from his colleagues about the Department's work and the various routines and so on, so that he is getting what amounts to leadership from men who are paid at a lower rate than that which he himself receives. This is an absolutely absurd situation which, in industry generally, one has very much to guard against. I have had examples time and again where one has had to fill a vacancy, bringing in a new member of the staff from outside and one has had to pay an advanced salary.
The thing which one has to guard against is to see that the salaries of existing staff are made comparable with that of new employees. Indeed, this is one of the difficulties today in the employing of staff. As soon as one gets new staff, one has to look at the remuneration of the whole of a department, and not just the amount which one should pay the new man. This must be very unfair indeed.
I should like now to deal with one other point. It is that these draughtsmen are employed in a salary scale which is comparable in the link—I think that that is the term used by the Under-Secretary—which exists with their Civil Service counterprise. When these draughtsmen were engaged by the Department, was it clearly understood by them at the time of the engagement that their terms and conditions were to be linked to those of their Civil Service counterparts? If that was the understanding—and I believe that it was—then, even now, under the terms of the Prices and Incomes Act, their conditions should continue to link them exactly to their Civil Service counterparts
If, as is probable, this Order does go through and continues to operate for sometime, I suggest to the Under-Secretary that one thing will be certain in the future. All those other men and women employed under conditions of service[column 204]which have been traditionally linked not to a specific contract but by understanding and habit to their Civil Service counterparts, will in future make very sure that those links are not just something by way of custom, but are links by contract. The confidence of many thousands of people in this position will have been lost. It will be their union leaders' duty in future to arrange firm contracts linking them with the Civil Service.
This will apply throughout industry as well. In the past it has been good enough for people to have an understanding with their employers that their salaries would be reviewed each year. Although this is not a right, the increases are known because they always have them. Orders like this will mean that many more contracts will have to be entered into in industry, because there will be no confidence that, under pressure, the Government will not go back on all their pledges not to make wage restrictions compulsory. Once again, we might be landed in this sort of mess.
Mrs. Margaret Thatcher (Finchley)
The key phrase of Dick Tavernethe Under-Secretary's speech was that, in effect, this Order over-rides what counsel's view of the law was. He said that 62 draughtsmen have the right to six months' increase in pay which they will not now get. He defended the Order on what he called “the principle of universality” . Let me define it— “Do as the Government say, or else.” I recognise no such principle and regard it as ironic that it should be commended to the House by a Queen's Counsel. I shall vote for the withdrawal of the Order, as I hope will everyone else who believes in contractual rights for the individual and the rule of law.
The House divided: Ayes 180, Noes 241.