House of Commons Hansard Debates for 1 Feb 1989

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A stronger view is taken by the British Institute of Management. Its director-general wrote to the right hon. Gentleman on 19 January. He said :

"We remain unconvinced that the time is right for the abolition of Wages Councils. We do not see the structures as being inflationary, nor harming job creation to a significant extent, and they continue to provide some necessary protection for low-paid workers." I do not believe that the right hon. Gentleman could expect a more majestic put down.

Not even the right hon. Gentleman's favourite, the Institute of Directors, is a lot of help to him. It may come out later in the debate, but the Institute of Directors claimed that its call for abolition was supported by three quarters of its members. However, on closer examination it emerged that the survey on which that conclusion was based had a non-response rate of 93.5 per cent. The Institute of Directors admitted, too, that most of its membership had no direct experience of wages councils. Of course, that did not stop Sir John Hoskyns, the director-general--never one to be put off by lack of knowledge or facts--saying two days later that anyone whose pay dropped because of abolition could rely on family credit. What he did not say, or perhaps he did not know, was that there are 2.5 million workers covered by wages councils, of which 400,000 are entitled to family credit, but only half that number claim it.

Mr. Dave Nellist (Coventry, South-East) : Is my hon. Friend aware that, in a previous incarnation, John Hoskyns worked for the No. 10 policy unit, where he wrote the paper which set up the YTS scheme in 1983? In that paper he said that the aim of the YTS should be to bring in

"a scheme that increases the differential between youth and adult wages."

John Hoskyns' experience is all about driving down wages, especially those of young people.

Mr. Meacher : That is why John Hoskyns has always been a great favourite of this Government, whose aim has always been to drive the maximum wedge between all sections of the population, whether it be between the north and the south, manual and non-manual workers, young and elderly people or ethnic minorities. It would be helpful if we could have that point answered by the curiously quiet and subdued Secretary of State.

Mr. Ian Bruce (Dorset, South) : Will the hon. Gentleman give way?

Mr. Meacher : No, I shall not give way to the hon. Gentleman, but I will give way to the Secretary of State.

Mr. Bruce rose --

Mr. Meacher : No, I shall not give way. The right hon. Gentleman can look after himself.

A large part of low pay is in retailing, and significantly the Retail Consortium--which employs a large number of low-paid workers--has reported to Ministers :

"the overwhelming majority of the retail trade favour the continuation of the wages council system, subject to reforms." Even among small firms--they must always be the Government's last hope--the Government's fanaticism for abolition is not shared. This is the second time in three years that they have come back with exactly the same proposals. In a Department of Trade and Industry survey of 200 small firms, only 4 per cent. agreed--in answer to a prompted question--that wages councils were a

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"burden" on their business. Only 1 per cent. mentioned wages councils in any context and of the 19 listed so-called burdens, wages councils ranked third from the bottom. If the right hon. Gentleman is really interested in lifting the burden on businesses he should concentrate on what is crippling them now--the soaring interest rates.

Mr. Chris Mullin (Sunderland, South) : Has my hon. Friend noticed that only five Conservative Back Benchers--four if one omits the Minister's bag carrier--are present? Does he agree that that no doubt will be widely remarked upon in our free press tomorrow?

Mr. Meacher : I certainly hope that my hon. Friend's observation will be carried in the papers where we hope to read about it tomorrow. From a quick glance at our Benches, I would say that about 60 of my hon. Friends are present, which is 10 times greater than the attendance on the Tory Benches.

Mr. Ian Bruce : I am grateful that the hon. Gentleman has given way and is at last demonstrating that he is willing to take part in a debate.

I am having some difficulty following his argument because he has said clearly--I thought that he was trying to recant what he had said in previous debates--that we had taken young people out of wages councils and that their wages had gone up. I have always argued that wages councils keep wages down. If the hon. Gentleman has admitted that, how can he continue with his argument that people's wages will go down if the protection of the wages councils is removed? Surely logic and experience tell us that their wages will go up in a free market.

Mr. Meacher : The hon. Gentleman is a little too eager. He is the victim of Government propaganda because it is the Government's document that states that the wages of young people have gone up. I do not believe that that document is worth the paper it is written on. There is not a shred of evidence behind it and I am sure that every allegation it makes is completely unsupported by evidence. The Secretary of State has no support in this country or abroad. He is ditching Britain's international obligations. One of the articles of the treaty of Rome--we hear a lot about that treaty when it is convenient to the Government-- aims :

"To promote improved working conditions and an improved standard of living for workers".

Perhaps the right hon. Gentleman will tell us how the abolition of wages councils will achieve that. Article 4 of the European social charter--it would never surprise me if the Government disavowed that charter--enshrines the right of people to receive

"fair remuneration sufficient for a decent standard of living". How does paying people less than one third of the national average wage do anything but prohibit a decent standard of living? The International Labour Organisation has stated :

"almost all countries in the world have some form of minimum wage protection".

All European Community countries, without exception, either have a statutory minimum wage or national agreements reached within individual industries, which are binding at law and provide a statutory minimum rate.

National minimum wages also exist in the United States. That is rather surprising, as the Government are anxious to emulate the capitalist leaders of the western world--Canada, Australia and Japan. When top-rate

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taxes were much higher in Britain, the Tories insisted that for market reasons they must be brought into line with our competitors. Now when it comes to minimum wage rates, about which the rest of Europe is in step, the Tories say that for market reasons we must move out of line with our competitors. There is not a shred of logic behind that argument ; it is just Tory self-interest.

Ms. Clare Short (Birmingham, Ladywood) : At the time of the removal of wages councils' protection of young people, Ministers, time and again, gave undertakings that the remaining wages council system would be in place indefinitely. A couple of years later they are now breaking their promises. Those Ministers are dishonourable and their word is worth nothing.

Mr. Meacher : I am sure that my hon. Friend is not one of those people who still believe that there is any credibility in Government promises. I doubt whether there are many people left in the country who still believe that. The abolition of the wages councils is not in the Tory manifesto, but, of course, they have done so many things that were not in that manifesto. Their abolition is not supported, of course, by the low paid, but nor is it supported by the overwhelming majority of our people. The right hon. Gentleman is not only going back on his promises, but is acting in the teeth of the views of the great majority of people.

The Government may not realise that their strategy may be blocked by the EEC. There is clear evidence that other member states will not be prepared to tolerate Britain using low wages as a form of hidden subsidy or tariff to give British firms an unfair competitive advantage. I know that the Germans in particular are strongly opposed to what they call "social dumping" by firms illegally paying low wages.

The Government in the lead-up to 1992 are trying to have it both ways. Of course they are behind the single market initiative because they believe passionately in removing obstacles to competition in the international market place. They have not faced up to the fact that, although in some areas that requires the removal of regulations, tariffs, protection and import restrictions, in other areas it requires a standardisation of such things as product standards, health and safety and environmental regulations. That is why the harmonisation of employment rights throughout Europe is also necessary to ensure fair competition. It is extraordinarily myopic for the Government, alone in Europe, to be so fanatical about competitive markets and yet to be so blind to the logic of their own position, which will undermine them.

Not for the first time, what is good for the Thatcherites is bad for Britain. If the Government ideologues succeed in deregulating the labour market, they will be launching diametrically the wrong economic policy for Britain.

Mr. Julian Brazier (Canterbury) : Will the hon. Gentleman give way?

Mr. Meacher : In a moment. I am glad to welcome the hon. Gentleman to the debate. The Government Benches are beginning to fill up--there must be six Conservative Members present out of 350. That shows their interest in this issue.

An unregulated market is based not on efficiency, productivity, quality or design--all the things that the Government talk about--but on wage cutting. In such a

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market no individual firm dare risk investing in training or re-equipment for fear that a competitor will steal a march by offering a lower price base on low wages. The Government's policy is a recipe for stagnation, low morale, low productivity and technological backwardness. That is precisely what the Government's and the Chancellor's low-tech no-tech economy is headed for. Forcing down wage rates is not improving efficiency, but escaping from it. On that point I shall quote the words of a former Minister with responsibility for labour affairs who said in this Chamber : "It was formerly supposed that the working of the laws of supply and demand would naturally regulate or eliminate that evil "-- payment below a living wage-- "But where you have no organisation, no parity of bargaining, the good employer is undercut by the bad and the bad employer is undercut by the worst".--[ Official Report, 28 April 1909 ; Vol. IV, c. 388.]

Those are not the words of my right hon. Friend the Member for Blaenau Gwent (Mr. Foot) nor the words of Frank Cousins or Ernie Bevin ; they are the words of the Prime Minister's exemplar, Winston Churchill. I might say that there are many people who would welcome him back in exchange for the Government.

Mr. Brazier : I am glad that there is one more hon. Member on our Back Benches than there were on the Opposition Back Benches when we were debating cold weather payments. However, the hon. Gentleman makes an interesting point. He asks what is the logic of the Government's policy of deregulation in regard to the economy as a whole. Surely the logic of deregulation is that it has led to unemployment in this country falling over the past five years, while it is still rising in other parts of the EEC, when our average wages are rising rapidly.

Mr. Meacher : The trouble with Government Back Benchers is that they are victims of the Government's propaganda. They do not seem to realise that unemployment is still twice as high as it was on the last day of the Labour Government. The Government's low-pay policy is completely inconsistent with the objectives that they like to profess. The Secretary of State continually talks about getting people off benefit, but a policy of wage cutting pushes more people into dependence on benefit, whether it is housing benefit or family credit.

This year, according to the public expenditure White Paper, the Government are proposing to budget £409 million for family credit. That is a substantial subsidy, by any standards, at the taxpayers' expense for the lowest-paying firms. I hope that the Secretary of State will touch on some of those matters when he replies to the debate. Is he not ashamed that the Government are subsidising inefficiency in that way?

The Secretary of State is always preening himself on reducing unemployment. That is what misled the hon. Member for Canterbury (Mr. Brazier). However he is increasing unemployment by actively encouraging wage cutting. Workers are also customers. By cutting their pay and their capacity to buy goods and services, he is undermining employment. It is time that the Government and the Secretary of State took it on board that one man's pay cut is another man's job loss.

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The Secretary of State for Employment (Mr. Norman Fowler) : Now that the hon. Gentleman is talking about employment which is a central part of the debate, will he confirm that the work force--people in employment in this country--is at an all-time record high and is far in excess of anything achieved in 1979 by the last Labour Government?

Mr. Meacher : The right hon. Gentleman is saying that the numbers of people in work as a proportion of the total number who want work is higher than it was in 1979. That is a most extraordinarily illiterate statement. The percentage in work is still substantially lower than it was in 1979. If the right hon. Gentleman is also a victim of his own propaganda, God help this country.

Mr. Fowler : The hon. Gentleman clearly does not understand the point, or if he understands the point, in his typical way he is evading it. There are more people--almost 26 million people--in jobs in this country. Does he accept that that is an all-time record in this country? For once let the hon. Gentleman be frank.

Mr. Meacher : The right hon. Gentleman is ignoring the real issue which is the proportion of people who want work who are able to get it. That is what counts. If the number of people in the country grows, it is not surprising that the number of people in work grows. The question is whether it is as high as it was in 1979 in proportion to the total number of people wanting work. It is not. It is substantially lower. As several of my hon. Friends have said, a very high proportion of the extra 1 million jobs that have been created, about which we hear so much, are part-time, low-paid and insecure jobs. In the coming recession later this year those will be the jobs that go first.

Mr. Thomas Graham (Renfrew, West and Inverclyde) : Is my hon. Friend aware that Strathclyde in Scotland has lost 40 per cent.--146, 000--of its manufacturing jobs since 1979? What a record for the Government to be proud of.

Mr. Meacher : My hon. Friend is quite right. It is extraordinary that the Secretary of State should seek to defend his position when the Government are so vulnerable on this matter.

The Chancellor likes to tell the House that people need incentives and that is why he gives tax breaks to the affluent and the well-heeled. Will the right hon. Gentleman tell the House why the rich need to be paid more to work harder while the poor need a pay cut to make them work harder? I shall be happy to give way to him. The latest news is that the Government are targeting the low paid for the Budget. One might have been forgiven for thinking that they had been targeting them for the past 10 years. There are now 9.9 million adult workers in Britain paid below the European decency threshold--an increase of 2 million under the Tories. Pay rises for the highest paid one fifth of men in the work force have been 50 per cent. greater than those for the lowest paid one fifth. The poorest paid one fifth of male manual workers now earns less, relative to the average, than in 1886 when the figures were first collected. Relatively, they have never been poorer than they are today. Things have not improved since Lord Gowrie resigned as Minister of State four years ago because his £33,000 a year salary could not provide a decent civilised existence against the cost of living in London. Presumably he is the most celebrated victim yet of the Government's pay policy.

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At least Ministers are now conceding that the Tory trickle-down theory of economic growth is not working. That reminds me of the line of the Beatitudes which says : "It's the rich that get the prunes and the poor that get the shits."

Mrs. Teresa Gorman (Billericay) : On a point of order, Mr. Deputy Speaker. I take offence at the language being used by the hon. Member for Oldham, West (Mr. Meacher) and I should like you to bring him to order for using such language in the Chamber.

Mr. Deputy Speaker (Mr. Harold Walker) : There is so much background noise in the Chamber that it is very difficult for the Chair to hear hon. Members' comments.

Mr. Meacher : I know that the hon. Lady is a very sensitive and dainty person. Therefore, I shall make the same point about the Tory theory of trickle-down economic growth by saying that it is the rich that get the prunes and the poor that get the runs.

It is hypocritical for the Secretary of State and the Chancellor to talk about raising tax allowances as a Budget for the low paid when at the same time the Government have frozen child benefit for the second year running and are now proposing further cuts for the low paid by threatening wages councils. Nor does the Chancellor, whose concern for the low paid has been about as touching as Marie Antoinette's for the starving masses, seem to be aware that tax cuts will do almost nothing for the low paid because they trigger an automatic reduction of family credit and housing benefit leaving them no better off. I am sure that the Secretary of State does not know about that, because it is a social security matter and he has very little interest in social security.

The Prime Minister stated in memorable words on the steps of Downing street in 1979,

"Where there is discord, may we bring harmony. Where there is error may we bring truth"--

although in the event that turned out to be written by Bernard Ingham--

"Where there is doubt, may we bring faith, where there is despair, may we bring hope."

With the exception of the unemployed, there must be few sections of the population for whom discord, doubt and despair has been doubled and redoubled more than for Britain's army of low-paid workers. Privatisation, endless social security cuts, market-rigging subsidies for lower wages, the abolition of the fair wages resolution, renunciation of international treaty obligations underpinning minimum wages and now the abolition of the wages councils have all been used ruthlessly by the Government to drive low wages even lower. It is a one-sided meanness and vindictiveness in our increasingly two nations country and that is why we shall be repudiating it strongly in the Lobby.

6.59 pm

The Secretary of State for Employment (Mr. Norman Fowler) : I beg to move, to leave out from "House" to the end of the Question and add instead thereof :

noting that since this Government came to power personal disposable income has increased at every level in society and that the lowest paid have had proportionately higher increases than many other groups, considers that the best way in which the Government can help the low paid is by creating the conditions for more jobs by breaking down the barriers to

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employment and encouraging labour market flexibility ; and welcomes the Government's decision to consult about the abolition of Wages Councils.'.

As the debate is about low pay, I shall be dealing with the issue of wages councils, but first let me pick up two points made by the hon. Member for Oldham, West (Mr. Meacher).

The hon. Gentleman mentioned international comparisons of minimum wages. It is, of course, true that a number of other countries have minimum pay arrangements ; it is equally true that minimum rates in countries such as the Netherlands have not been raised since 1983. In the United States they have not been raised since 1981. Various Common Market and OECD reports have drawn attention to the need for Government to consider the impact of minimum wages on jobs. The number of prosecutions carried out by the wages council inspectors has seldom reached double figures in any year under any Government. For the record, however, the ratio of prosecutions to establishments underpaying has been higher since 1979 than during the last Labour Government. That is another fact that the hon. Gentleman got wrong.

If the hon. Gentleman wishes to quote Winston Churchill, the best and most revealing quotation that he could give is Churchill's observation that the false doctrines of Socialism, if ever seriously put into practice here, would reduce this island to chaos and starvation.

I draw little comfort from the hon. Gentleman's speech, but its most extraordinary feature was not what it contained but what it almost omitted but then glossed over. The hon. Gentleman rambled on about the Council of Europe measure on low pay, which has one distinction : it is not accepted by any European Government that I know of. As my hon. Friend the Member for Canterbury (Mr. Brazier) pointed out, the hon. Gentleman paid no serious attention to the reduction in unemployment in this country ; yet the most effective contribution that any Government can make to improving incomes is surely the creation of conditions for more jobs.

If a Government are serious about tackling low income, they must be serious about creating jobs. Achieving more jobs means removing the barriers and obstacles to employment. That has led the present Government to tackle, for example, the industrial relations problem left by the Labour Government of which the hon. Member for Oldham, West was a member, who exported British job after British job overseas and left the country in chaos.

Mr. Win Griffiths (Bridgend) : Does the Minister realise that, according to figures provided by the Library, by the end of last year in Wales, Scotland, the north-west, the north and the west midlands there were more than 800,000 fewer jobs than in 1979, and that the extra jobs created in Britain are mainly part-time jobs in the south-east?

Mr. Fowler : I do not accept that, but I was about to deal with precisely that point.

If the hon. Member for Oldham, West wants European comparisons, surely European comparisons on employment are the most relevant. If he was serious about low incomes, he would welcome the reduction in unemployment. He would welcome the fact that the unemployment rate has fallen faster here in the past two years than in any other major industrialised country. According to standardised figures, it is below both the European Community average and the rate in countries such as

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France, Belgium, Italy, the Netherlands and Spain--and that in, for instance, Canada. He would also welcome the fact that as many new jobs have been created in this country over the past four years as have been created in the rest of the European Community countries combined, and the fact that more people are now in employment in this country than at any time in history. That includes 1979, and takes no account of those undergoing training. The work force now totals nearly 26 million.

Anyone who is seriously concerned about low incomes will see the importance of those dramatic improvements. Unemployment is clearly the chief factor in low incomes, and more employment is the best and surest path out of lower incomes. Our number one aim must surely be to produce the pay cheque rather than the dole slip.

Mr. Tony Banks (Newham, North-West) : It is difficult to believe what the right hon. Gentleman is saying, given that since 1979 there have been 19 or 20 changes in the way in which unemployment figures are calculated. [Hon. Members :-- "24."] I am told that there have been 24. It is going up all the time.

Despite that, the right hon. Gentleman must accept that unemployment is still twice as high now as it was in 1979 when his Government were elected. So that we can proceed objectively and rationally, is the right hon. Gentleman prepared to allow the International Labour Organisation to conduct an independent inquiry into the various changes so that we know once and for all whether the Government are telling the truth or giving us a pack of lies?

Mr. Fowler : The hon. Gentleman knows that there are two ways of counting unemployment. The first is to count those drawing unemployment benefit, which is the way in which not only the present Government but their Labour predecessor did it. Another way is by means of the labour force survey, in which 60,000 households are surveyed.

The latest labour force survey will, I hope, be published in a month or two, and I ask the House to wait for its publication. Past labour force surveys, certainly the one last year, have shown that the figures that we have published as the unemployment count, far from overstating the improvement, have, if anything, understated it. It would be wise for the House to wait for the survey's publication before jumping to any conclusions and to see whether it confirms a real and dramatic fall in unemployment, as has been the case in previous years.

The hon. Gentleman and his party lose a good deal of credibility up and down the country when they try to challenge what everyone else recognises as a real improvement. It is entirely legitimate for the hon. Gentleman to argue that the improvement should be greater and should continue, and I shall come to that point, but to deny that there has been an improvement at all is simply to make his position untenable.

Mr. Meacher : Is the right hon. Gentleman aware that he is directly misleading the House? The facts are completely contrary to what he has said. The labour force survey for the latest year for which information is available--1986-87--shows a fall of 80,000 in unemployment, while the fall in the unemployment benefit count for exactly the same period, given monthly by the Government, was 240, 000. In other words, the Government's unemployment

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benefit count exaggerates three times the much better and, indeed, standardised international definition of the fall in unemployment. Rather than a fall of 1 million over the past two and a half years, there has been a fall of about 300,000.

Mr. Fowler : The hon. Gentleman, in his hysterical way, has got it wrong again. We have tried to point this out to him, but he never listens. The unemployment total in the labour force survey is below that in the count of unemployed claimants.

I urge the hon. Gentleman, in his own interests, to wait until the new labour force survey is published and then to come back if he believes that the figures that we are publishing exaggerate the position. I do not believe that they do or that any serious commentator or politician in this country will consider that to be the position.

Ms. Short rose--

Mr. Fowler : That is why it is of such fundamental importance that the unemployment rate in this country is now down to just over 7 per cent.- -a fall of almost 2 per cent. over the past 12 months--that the reduction has benefited all regions and that the steepest falls have been in areas where the problem has hitherto been worst, such as the west midlands, the north-west and Wales.

Mr. Allen McKay (Barnsley, West and Penistone) rose

Mr. Graham rose --

Mr. Fowler : If Opposition Members are concerned about low pay and poor people, surely they are concerned about the position of unemployed people, particularly the long-term unemployed. Do they have no conscience? Are they not concerned? [Interruption.]

Mr. Deputy Speaker (Sir Paul Dean) : Order. I am finding it exceedingly difficult to hear what the Minister is saying.

Ms. Short : On a point of order, Mr. Deputy Speaker. You will know that Opposition days are precious to us. We put down a motion to debate low pay. The Secretary of State is filibustering and making all sorts of pretentious claims about the unemployment figures, but he is not talking about low pay. Is he in order?

Mr. Deputy Speaker : This is a very short debate, and I know that the hon. Lady is hoping to catch my eye. Bogus points of order only waste time.

Mr. Fowler : The reaction of some Opposition Members reveals their stance on unemployment and their embarrassment that unemployment is coming down. That is what I find so disturbing.

Mrs. Alice Mahon (Halifax) rose --

Mr. Fowler : The number of long-term unemployed has come down by about 450,000. That must be good news for anyone who is concerned about people on low incomes, and there is every reason to believe that unemployment can come down further. There are 700,000 vacancies, so the opportunity exists for a further fall in unemployment. It was precisely for that reason that we introduced the employment training programme to train long-term unemployed people so that they could take the jobs which, fortunately, are now available. In spite of opposition,

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employment training has got off to a good start and, after 20 weeks, there are now 125,000 people under training on the scheme. The hon. Member for Oldham, West did not support the programme for long-term unemployed people. He did not even support the position of the leader of his party on a programme for the long-term unemployed. If he has to choose between party politics and the position of the poor and unemployed, he chooses party politics every time. Mr. Nellist rose--

Mr. Fowler : The hon. Member for Oldham, West is not only a weak man ; he is a weak politician.

Great progress is being made both in reducing unemployment and in training unemployed people.

Mr. Nellist rose--

Mr. Fowler : There is no evidence that the standard of living of people in this country has dropped over the past 10 years ; quite the contrary. The evidence is that it has increased at an appreciably faster rate than was achieved by the last Labour Government. The hon. Member for Oldham, West has quoted some surveys. Let me take two surveys which have infinitely more weight than anything that he put forward. The first in an analysis of households with below average incomes carried out by the Government's statistical service and published last summer. It shows that households of all income levels have had increased living standards under this Government. It shows that there was a 6.4 per cent. increase in the real net income of the average household between 1981 and 1985 and that, for the poorest 10 per cent., the increase was 8.3 per cent. ; in other words, it was above the average. The survey goes up only to 1985, but it is clear that, as unemployment has fallen, so the position has improved.

The evidence of the new earnings survey is even more significant. Between 1979 and 1988, the real earnings of male workers increased by an average of 2.6 per cent. a year. That compares with an increase of only 1 per cent. a year under the last Labour Government up to 1979. There was a 32.9 per cent. increase in female earnings between 1979 and 1988 compared with only 16 per cent. between 1974 and 1979. Again, that is a higher annual average.

In addition, a survey carried out by my Department and published in the Employment Gazette shows that, between 1973 and 1979, a third of all male occupations in this country had not a rise but a fall in real earnings. That is the record of the Labour Government of which the hon. Gentleman was a member. Since 1979, the real earnings in almost every male occupation have increased. I am not, therefore, inclined to take lectures from the hon. Gentleman on ways to improve the position of lower paid workers.

When the hon. Gentleman was in government, he served in an Administration that made many of the lower paid even more lower paid. That is the record. In opposition, he has tried to sabotage a training programme whose aim is to find solutions for thousands of people living on what we would all agree are low incomes.

Ms. Short : I am sure that the Secretary of State knows the difference between an average and a distribution of that average and that he is capable of disaggregating the figures. He will know that we have had some economic growth in Britain every year since 1945, so to claim an

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