HIS D O C U M E N T IS T H E P R O P E R T Y O F H E R B R I T A N N I C M A J E S T Y ' S G O V E R N M E N T
C
*
7 5
)
6
7
COPY NO
58
13 J u n e 1 9 7 5
CABINET
D R A F T TUC S T A T E M E N T ON THE D E V E L O P M E N T O F
THE SOCIAL CONTRACT
N o t e b y t h e S e c r e t a r y of S t a t e f o r E m p l o y m e n t
1.
I n m y m e m o r a n d u m o n t h e d e v e l o p m e n t of t h e s o c i a l c o n t r a c t o n
p a y I s u g g e s t e d ( C ( 7 5 ) 6 6 , p a r a g r a p h 19) t h a t w e s h o u l d c o n s i d e r o u r
p o s i t i o n i n t h e l i g h t of t h e d r a f t T U C s t a t e m e n t .
By arrangement with
t h e G e n e r a l S e c r e t a r y of t h e T U C I n o w c i r c u l a t e i n c o n f i d e n c e t o m y
c o l l e a g u e s the a t t a c h e d draft w h i c h w a s c o n s i d e r e d b y the TUC E c o n o m i c
C o m m i t t e e on 11 J u n e , a n d w h i c h w i l l b e c o n s i d e r e d f u r t h e r b y t h e
G e n e r a l C o u n c i l on 25 June w i t h a v i e w t o d e c i d i n g , e i t h e r t h e n or a t
t h e i r July m e e t i n g , on definite r e c o m m e n d a t i o n s t o be put to C o n g r e s s
in September.
S U M M A R Y OF D O C U M E N T
2.
P a r t I r e l a t e s t h e s o c i a l c o n t r a c t t o t h e w i d e r g o a l s of t r a d e
u n i o n i s m and a c c e p t s (paragraphs 8 - 1 2 ) that w a g e s e t t l e m e n t s a r e playing
a m a j o r p a r t i n k e e p i n g U n i t e d K i n g d o m i n f l a t i o n w e l l a b o v e t h a t of o u r
overseas competitors.
P a r t II r e v i e w s t h e d e v e l o p m e n t of a l l a s p e c t s
of t h e s o c i a l c o n t r a c t o v e r t h e p a s t y e a r .
On p a y , p a r a g r a p h s 3 9 - 4 2
r e c o g n i s e t h a t t h e r e h a v e b e e n u n d e s i r a b l e g a p s i n o b s e r v a n c e of t h e p a y
g u i d e l i n e s and s t r e s s the n e e d for l o w e r s e t t l e m e n t s in the n e x t round.
3.
P a r t III r e v i e w s t h e e c o n o m i c p r o s p e c t s f o r t h e c o m i n g y e a r a n d
d i s c u s s e s p r i o r i t i e s o n t h e G o v e r n m e n t s i d e of t h e c o n t r a c t ( p r i c e c o n t r o l ,
e m p l o y m e n t p o l i c i e s , i m p o r t c o n t r o l s and i m p r o v e m e n t s i n the s o c i a l
wage - paragraphs 50-57).
On pay, i t p o i n t s t o the n e e d to g e t p r i c e
i n f l a t i o n d o w n a t l e a s t t o 15 p e r c e n t , r e q u i r i n g a m a j o r e f f o r t t o g e t
both w a g e and p r i c e figures b e l o w 20 per c e n t e a r l y i n the n e x t wage round
(paragraphs 58-61).
It p o s e s , w i t h o u t s p e c i f y i n g f i g u r e s a t t h i s s t a g e ,
v a r i o u s t y p e s of o p t i o n f o r t h e G e n e r a l C o u n c i l s c o n s i d e r a t i o n , i n c l u d i n g : ­
i.
c o n t i n u a t i o n of t h e p r e s e n t p a y g u i d e l i n e s ( p a r a g r a p h 6 3 ) ;
i i .
setting a p r i c e inflation t a r g e t for e a r l y next y e a r and
a d v o c a t i n g s e t t l e m e n t s a t t h a t l e v e l f r o m t h e b e g i n n i n g of t h e
n e x t round (paragraph 64);
i i i .
under i , or ii, fixing a single figure whether in c a s h
t e r m s , a s a p e r c e n t a g e o r a c o m b i n a t i o n of t h e t w o
(paragraphs 66-69);
i v .
a l t e r n a t i v e l y , i n d e x a t i o n i n p l a c e of a n o r m a l a n n u a l
i n c r e a s e (paragraph 70).
It r e a f f i r m s t h e 1 2 m o n t h r u l e ; c o n t i n u e s b u t q u a l i f i e s a p p r o v a l of
e f f i c i e n c y d e a l s ; and i n d i c a t e s that h o u r s r e d u c t i o n s would m e a n l o w e r
pay i n c r e a s e s (paragraphs 72-74).
4.
P a r t IV e m p h a s i s e s t h e n e e d f o r c o n s e n s u s f o r a c t i o n w i t h i n t h e
t r a d e u n i o n m o v e m e n t a n d r e a f f i r m s t h e r o l e of t h e T U C i n a d v i s i n g k e y
negotiating g r o u p s and o t h e r s a s r e q u i r e d , and i n k e e p i n g the d e v e l o p i n g
situation under r e v i e w (paragraphs 7 5 - 7 9 ) .
It m a k e s c l e a r t h a t b r e a c h e s
of t h e g u i d e l i n e s m u s t n o t b e f o l l o w e d b y o t h e r s ( p a r a g r a p h 8 0 ) .
It
p r o p o s e s a publicity c a m p a i g n on the l i n e s s u c c e s s f u l l y o r g a n i s e d o v e r
t h e I n d u s t r i a l R e l a t i o n s A c t ( p a r a g r a p h 8 1 ) a n d u r g e s r e a f f i r m a t i o n of t h e
c o n t r a c t g e n e r a l l y b y the G o v e r n m e n t and by the T U C / L a b o u r P a r t y
M a i s on C o m m i t t e e (paragraph 82).
T U C S NEXT STEPS
5.
In a c o v e r i n g l e t t e r t o t h e G e n e r a l C o u n c i l M r M u r r a y h a s
i n d i c a t e d t h e T U C s i n t e n t i o n t o h a v e " e x p l o r a t o r y c o n t a c t " w i t h the C B I
and w i t h M i n i s t e r s b e f o r e the C o u n c i l ' s m e e t i n g 25 J u n e .
There has also
b e e n m e n t i o n of t h e p o s s i b i l i t y of f u r t h e r d i s c u s s i o n a t a s p e c i a l m e e t i n g
of t h e E c o n o m i c C o m m i t t e e .
A n a p p r o a c h to M i n i s t e r s b y TUC
r e p r e s e n t a t i v e s m a y t h e r e f o r e b e e x p e c t e d w i t h i n a m a t t e r of d a y s , t h o u g h
w e understand they w i l l be s e e k i n g to m e e t the C B I f i r s t .
l
6.
It i s u n c e r t a i n a t t h i s s t a g e w h e t h e r the d o c u m e n t w i l l b e f i n a l i s e d
for p u b l i c a t i o n and s u b m i s s i o n to C o n g r e s s by the G e n e r a l C o u n c i l on
25 June or a t a l a t e r m e e t i n g .
This w i l l r e q u i r e the C o u n c i l s d e c i s i o n
o n t h e v a r i o u s f o r m s of p a y o p t i o n a n d t h e f i g u r e t o b e s p e c i f i e d .
It i s
u n d e r s t o o d t h a t t h e r e s t of t h e d o c u m e n t i s a l s o l i k e l y t o b e s u b j e c t t o
s o m e editing, p a r t i c u l a r l y a s r e g a r d s the s e c t i o n on p r i c e s , p r o f i t s ,
top i n c o m e s , e m p l o y m e n t and investment.
RECOMMENDATION
7.
M y c o l l e a g u e s w i l l w i s h t o c o n s i d e r i n t h e l i g h t of t h i s d o c u m e n t
t h e g e n e r a l a p p r o a c h t o t h e d e v e l o p m e n t of t h e s o c i a l c o n t r a c t o n p a y s e t
out i n m y e a r l i e r m e m o r a n d u m .
M F
D e p a r t m e n t of E m p l o y m e n t
13 J u n e 1 9 7 5
T R A D E S
U N I O N
C O N G R E S S
THE DEVELOPMENT OF THE SOCIAL CONTRACT
A document for d i s c u s s i o n as a
first
b a s i s for a statement t o Congress
PART I
THE S O C I A L CONTRACT AND THE
WIDER GOALS OF TRADE UNIONISM
1
At
the
Government
obtained
that
time
did
that
since
the
majority
the
time
deepest
The
largely
TUC i n
took
3
majority.
October
and
programme
all
in
It
few w o u l d
of
deny
legislation
possible
external
present
vigour,
economic
has
despite
environment
the western world
since
War.
for
legislative
on p o l i c i e s
1972
Liaison
the
recession
New O p p o r t u n i t i e s
Congress t h e
a working
in
critical
Second World
2
last
forward with
continuing
and t h e
the
not have
that
been pressed
of
Trade
Unionism
programme
of
the
formulated
in
conjunction
and 1973.
The work
Committee h a s
continued
of
Government
the
since
with
TUC-Labour
the
rests
the
Party
Government
office.
A central
the 3-stage
feature
of
the
legislative
programme on i n d u s t r i a l
programme
relations
is
and
j
industrial
democracy.
the introduction
of
the
The r e p e a l
Employment
now b e i n g a c c o m p a n i e d b y t h e
Bill
and on i n d u s t r i a l
of
1971 Act
Protection
progress
democracy
the
on t h e
legislation,
and
Bill
are
Industry
which
will
r e i n f o r c e t h e s t a n d i n g and f u n c t i o n o f t r a d e unions
and t r a d e u n i o n i s m a t every l e v e l , o f economic
4
activity.
The c e n t r a l s i g n i f i c a n c e o f t h e s e developments
is
t h a t t h e y make i t t i m e l y t o c o n s i d e r t h e : w i d e r r e s p o n ­
s i b i l i t i e s , o f t h e t r a d e u n i o n movement s i d e by s i d e
w i t h these wider o p p o r t u n i t i e s .
T h i s i s n o t t o say
t h a t g r e a t e r i n v o l v e m e n t i n r u n n i n g t h e economy does
n o t need t o go f u r t h e r . ; t h e i n a d e q u a t e d i s c u s s i o n o f
Budget s t r a t e g y b e f o r e t h e 1975 Budget i s b u t an
i m p o r t a n t example o f how t h e l o g i c o f t h e s o c i a l c o n ­
t r a c t , w h i c h i s a w i d e r u n d e r s t a n d i n g and agreement
between t h e t r a d e u n i o n movement and t h e Government
about t h e management o f t h e economy among o t h e r
m a t t e r s , needs t o be even more f u l l y and a d e q u a t e l y
developed.
5
To t a k e a n o t h e r example, t h e w i d e r
responsibility
which t h e Government i s t a k i n g f o r t h e f i n a n c i n g
of
i n d u s t r y has n o t y e t gone f a r enough from t h e . s t a n d ­
p o i n t o f many o f those d i r e c t l y a f f e c t e d i n t h e £ r a d e
u n i o n m o v e m e n t . H e r e t o o f u r t h e r t r a d e /union i n v o l v e ­
ment i s needed i n c o n j u n c t i o n w i t h Government i n
the
p l a n n i n g o f i n v e s t m e n t and t h e c r e a t i o n o f a w e l l
understood s e t o f p r i o r i t i e s
f o r n a t i o n a l economic
development and hence t h e growth o f l i v i n g
standards.
The r o l e o f c o l l e c t i v e b a r g a i n i n g i n r e l a t i o n , t o
inyest­
ment, company f i n a n c e , p r o f i t a b i l i t y and price;? c a n be
;
seen i n a new l i g h t as t h e s e developments t a k e p l a c e .
6
There i s
within
the
trade
new s e n s e o f
is
taking
insufficient
direction which the
time
to
the
t o o much a u t h o r i t y
to
ciate
the
ihg
this
is
to
the
Government,
trade
arid i t
is
a full
of
these problems
of
which i s
Why t h e
8
union
of
great
and important
sue the p o l i c i e s
who d o n o t
and t o
of wage bargaining
They b e l i e v e ,
in
"claims and wage
difficulty.
of
that
the
for
there
nature
lies
behind
the
development,
Congress,
Central
the
Importance
Government t o
earlier
or b e l i e v e ,
approaches i s
other words,
settlements
its
chal­
the
commend t o
of
reach­
u n i o n i s t s who b e l i e v e
outlined in
understand,
appre­
even greater
commitment t o
Remains
some t r a d e
ceding
must
importance
continued
Contract
outside
priorities.
discussion
contract
develop­
forward towards
present
the
movement
for
leaders
economic
the policy which they
correct
contract
and t h e r e a s o n i n g which
T h e r e may b e
is
is
social
Social
but those
both
of
Major
u n i o n movement and t o
Council's
the
future.
o n l y way
and w i d e - r a n g i n g
General
policy
it
trade
The coming y e a r w i l l
lenges
the
social
agreement on t h e major
7
the
for
it,
trade union
be understood,
who c r i t i c i s e
that
understanding,
u n i o n movement and o u t s i d e
and must t a k e
ments take
critics
as yet
that
the
can never
pur­
TUC d o c u m e n t s ,
right
that
that
any
or
modification
necessary.
level
cause
but
of
wage
economic
9
The G e n e r a l C o u n c i l do n o t accept t h i s .
course t r u e t h a t ,
It
is
of
i n many y e a r s , p r i c e i n c r e a s e s can
i n no s i g n i f i c a n t way be a t t r i b u t e d t o . wage i n c r e a s e s .
Even a t t h e p r e s e n t t i m e , t h e r e a r e many o t h e r
in inflation?
elements
t h e r e i s t h e s t a g n a t i o n o f t h e economy
which means t h a t improvements i n e f f i c i e n c y a r e n o t
a b l e t o o f f s e t p r i c e and c o s t increases?
there i s
wave o f p r i v a t e s e c t o r and p u b l i c s e c t o r p r i c e
the
increases
s a n c t i o n e d by r e c e n t budgets and a d j u s t m e n t s i n . t h e
p r i c e code? t h e r e i s t h e d e c i s i o n t o i n c r e a s e
indirect
t a x a t i o n as w e l l as t h e c o n t i n u e d i n c r e a s e s i n o t h e r
t a x e s i n c l u d i n g income t a x and l o c a l r a t e s . . But t h e
f a c t remains t h a t wages tsoo a r e a t t h e . p r e s e n t
p l a y i n g a major p a r t i n t h i s
10
time
development.
I t i s now g e n e r a l l y expected t h a t t h e r e w i l l be
a major expansion i n t h e w o r l d economy w i t h i n t h e n e x t
12 months.
B r i t a i n must be i n a p o s i t i o n t o t a k e
advantage o f t h i s .
The d i f f e r e n c e a t p r e s e n t i n
full
rates
o f p r i c e i n c r e a s e s i s v e r y l a r g e , w i t h t h e UK r a t e w e l l
over 2 0 p e r c e n t and o t h e r r a t e s about 10 p e r
cent..
One way o f c l o s i n g t h e gap would be t o a l l o w t h e £ t o
d e p r e c i a t e f u r t h e r and t h u s equate U n i t e d Kingdom
p r i c e s on t h e w o r l d market w i t h t h o s e o f our major
c o m p e t i t o r s such as t h e U n i t e d S t a t e s , F r a n c e ,
Germany
and J a p a n .
11
The consequences o f a d e p r e c i a t i n g £ a r e ,
serious.
however,
I t would r a i s e i m p o r t p r i c e s and g i v e a
..
* :--v-
;
^noooK
3 o f l o& £ A o j w o D i s s o e o D
f u r t h e r t w i s t to the cost s p i r a l .
------
v
s
More i m m e d i a t e l y ,
t h e r e a r e now s e v e r a l thousand m i l l i o n pounds o f
short
t e r m funds i n London w h i c h r e l y t o a g r e a t e x t e n t on
s e c u r i t y i n terms o f t h e r e l a t i v e v a l u e o f t h e
£.
B r i t a i n ' s s h o r t t e r m a s s e t s p o s i t i o n cannot s u s t a i n a
major r u n on t h e s e s h o r t t e r m l i a b i l i t i e s .
i n g f a c t i s no d i f f e r e n t
T h i s bank­
from t h a t w h i c h a f f e c t s a
p r i v a t e i n d i v i d u a l o r a g r e a t n a t i o n a l company such as
t h e B r i t i s h L e y l a n d Motor C o r p o r a t i o n .
12-
1
The G e n e r a l C o u n c i l have r e p e a t e d l y i n s i s t e d ,
in
discussions w i t h t h e Government"Ministers i n v o l v e d
in
economic and i n d u s t r i a l i s s u e s , t h a t economic manage­
ment cannot r e l y p r i n c i p a l l y on t h e p a y p o l i c y
of the social contract.
aspects
I n v e s t m e n t and t h e use o f
resources are of c r i t i c a l importance.
The G e n e r a l
Council are not s a t i s f i e d t h a t investment p o l i c y has
y e t been p u t oh t h e r i g h t l i n e s - though t h e s c a l e o f
t h e commitment on BLMC i s i t s e l f o f m a j o r
f o r t h e t r a d e u n i o n movement:'
importance
Nevertheless the General
C o u n c i l a c c e p t t h a t t h e r e l a t i o n s h i p between wages and
p r i c e s i s t h e ' c a u s e o f c o n s i d e r a b l e and r e a l a p p r e h e n ­
5
sion--at :'t3ie p r e s e n t t i m e .
FART II
1974
15
Congress
REVIEW OF THE PAST YEAR
The 197^ Congress overwhelmingly adopted the General Council s report "Collective Bargaining and the Social T
Contract" and two composite motions which both .rejected a statutory wages policy.
The report set out the achievements of the Labour Government and, under the heading of the restoration of voluntary collective bargaining, the TUC guidelines to negotiators.
The main points of the guidelines we're the maintenance of real incomes, a twelve-month interval between major increases, the encouragement of agreements having beneficial effects on unit costs, efficiency and job security, and agreements to secure reasonable minimum standards such as the TUC low pay target, progress towards four weeks holiday, the elimination of discrimination against women, and full use of the Advisory Conciliation and Arbitration Service.' 14
Composite 9 expressed full support for the policies of the TUC and the Government which form the social contract; and Composite 10, while recognising the positive steps taken by the Government, drew attention to some public sector pay problems.
The General Council also agreed to pursue points in a motion which was withdrawn.
The eight points were:
large-scale redistribution of income and wealth;
a
a massive increase in housebuilding with the emphasis on homes for those in need and those on lower incomes;
property;
municipalisation of rented public ownership of the land required for the housing programme;
price control;
a wide-ranging and permanent system of vastly improved social services by the injection of the necessary resources;
substantial increases in public ownership and public enterprise, coupled with public supervision'of the investment policies of large private corporationsj
and substantial cuts in defen-ee ­
expenditure in order to releas/e resources to help carry through this programme. Developments since Congress 15
During the past year the General Council have had the development of the social contract under continual and close review.
Following the Chancellor's November Budget the General Council issued a circular to all affiliated unions. They said that "the Chancellor has acted in his Budget to expand the economy in Britain.
Although the measures have not been as wide-ranging as the General Council would have wished, they can be seen as a courageous endeavour to protect employment, stimulate investment and promote social justice.
But unless new methods of giving selective help to industry, accountable to the Government, are speedily developed,
the momentum of the Budget will be lost.
Particular industries,
such as construction and building materials, are in difficulties and the General Council will wish to discuss with the Government the growth of public expenditure and priorities within it, such as housing, education and social services". 16
Though stressing that it was not the purpose of the
circular to reiterate every point in "Collective Bargaining
and the Social Contract",
the General Council reminded unions
of some of the .TUC guidelines, with particular respect to
threshold agreements, the 12-month interval between principal
settlements, and low pay.
They reaffirmed the central real
income maintenance guideline, while pointing out that it would.
be far better if we could gradually get prices to rise more
i
slowly, with money wages correspondingly not going up so fast,
" 2.3 than to have prices and wages equating with each other at a higher and higher level.
Any such tendency, they emphasised, would inevitably be self-defeating for most trade unionists. 1975 TUC Economic Review
17
The 1975 TUC Economic Review had as its theme the
maintenance of real incomes and employment.
Arguing against
a statutory wages policy or one which would lead to cuts in
living standards, the General Council nevertheless pointed
out that a general attempt to secure increases greater than
the rise in the cost of living would be self-defeating and
contribute to inflationary pressures.
They argued that the
dual, objectives of maintaining real incomes and employment
levels are indeed interdependent.
The Review stressed that it
was a highly desirable objective of policy that the rate of
price increases should now begin to fall, pointing out that
threshold agreements, where payment is made as and when the
particular price increases occur, can insure against an
I!
acceleration of inflation. 18 1
As^usual the Review contained the General Council's
Budget recommendations to the Chancellor of the "-Exchequer
and all the points mentioned in the withdrawn Congress motion were
pursued along with other General Council policies.
In the
Economic Review special attention was given,to investment by
the NEB-and other nationalised industries,, housing, land and
construction, the need for increased subsidies and .more
effective price control and social priorities.
May Circular 19
Following the April 1975 Budget the General Council
issued a further statement arguing that there was nothing
in the present situation that reduced the need for the social
contract,-, or the need to reach agreements on the basis of the guidelines.
The TUC guidelines had been voluntarily endorsed by Congress and it was right that they should be voluntarily upheld, and observed closely and carefully.
The General Council argued that the aim should be to realise the prospect of bringing the level of price inflation substantially below 2 0 per cent by the end of the year.
The Progress of the Labour Government 20
Over the past year the General Council have met
representatives of the Labour Party regularly in the TUC -
Labour Party Liaison Committee to discuss developments in the economic and
industrial situation and other matters. -
Close contact has been maintained with individual Ministers by sub-committees of the General Council and TUC industrial committees.
The social contract has involved a good working relationship between the TUC and the Government on a wide range of economic, industrial and social issues. II
21
The General Council have kept in close touch both
informally and formally with those affiliated unions which have encountered difficulties in conforming with the spirit of the TUC guidelines. 22
In their report to the 1 9 7 ^ Congress the General Council
set out the achievements of the Labour Government in the first
six months.of office.
has been maintained.
The momentum of those first six months
The General Council have registered
their dissent from some aspects of the April Budget,
particularly those which will affect prices and unemployment.
Even so, the Movement should acknowledge the many steps taken .
by the Government in accordance with their undertakings.
The j
Government have repeatedly made plain their rejection of the
notion that statutory control of wages could provide a just or practical answer to the nation's economic problems.
Trade
unionists welcome this endorsement of their own strongly-held view that there is no viable alternative to a continuation of voluntary collective bargaining. New Rights for Workpeople 2j5
The Trade Union and Labour Relations Act will sweep away
the last remaining vestiges of the Industrial Relations Act,
so completing the first stage of the Labour Party's programme
in this field.
The Employment Protection Bill, which will
establish a new range of legal rights for workpeople and
1
foster the development of collective bargaining is progressing
through the House of Commons and is expected to be on the
Statute Book before Parliament rises for the Summer recess.
The Bill will establish by statute the Advisory Conciliation and
Arbitration Service, which has already more than /fulfilled its
expectations as a means of solving disputes.
Training and Health and Safety 24
The General Council welcomed the^ extra funds allocated in the Budget to the Manpower Services Commission andyi through their representatives on the MSC, they will be pressing for a continued expansion of industrial training and for the MSC to develop job creation schemes itself.
The General Council's representatives have also been playing an active role on the Health and Safety Commission and are pressing for the imple­
mentation of the statutory system of union, safety representative provided for in the Health and Safety at Work Act. Public Ownership and Accountability in Industry 25
The problems of British industry are structural and
medium term, and their solution requires not blanket fiscal
measures, but detailed planning with trade union involvement.
An organisation committee for the National Enterprise Board
with strong trade union representation has already been
established, and when the Industry Bill reaches the statute
book it will have a £ 1 billion financial backing from the
Government.
The new industry legislation contains legal
back up powers on the disclosure of information, and the
General Council are looking for speedy progress in the formu­
lation of planning agreements between trade unions, management
and Government, in all the major firms in UK industry.
The
NEB will have regional responsibilities, including Northern
Ireland, and in Scotland and Wales new Development Agencies
are to be set up.
The Government has already demonstrated its
willingness to use existing powers to protect jobs and
industrial capacity in the past few months of economic recession,
as exemplified by their action to put British Leyland and
Ferranti on a sounder economic footing with a public sector
stake.
Special help for industrial investment was promised in
the Budget and funds will be made available for the reorganisa­
tion of the ferrous foundries industry following tripartite ­
talks at the industry's newly formed Economic Development
Committee.
Help has als^ been promised for the textile industry,
though the General Council take the view that more vigorous
help is needed and could be given by means of import controls.
26
Legislation to bring the shipbuilding and aircraft
industries into public ownership has been introduced in line I
with the preparatory-work carried out by- joint TUC/CSEU/Labour
Party working groups.
27
In the key energy sector, the Government has given a
clear commitment to the target of 1 5 0 million tons, of . coal ......
production.
After a period of procrastination by the
previous
!
Government a type of nuclear reactor has been chosen which will create the maximum amount of employment in the UK.
tt
The sites for the construction of oil production rigs and platforms are being brought under public control.
Legislation is being introduced to redress the balance between the Government and the multi-national oil companies and the British National Oil Corporation should be developed as quickly as possible as a fully fledged publicly-owned oil company.
Although the rate of the Petroleum Revenue Tax will prove overgenerous for the very profitable oil fields, the tax receipts from North Sea oil will be in the
28
£2-£3 billion
range by
1980. In the transport field the General Council have welcomed
the progress made towards extending the dock labour scheme
and the reorganisation of British ports which will extend
public ownership and planning.
29
. In construction tougher tax measures to deal with the
abuses of the lump have been announced and long overdue
legislation is shortly to be introduced which will set up
a register of approved sub-contractors and a Construction
Industry Manpower Board to monitor progress and lead towards
the decasualisation of the industry,
30
The Community Land Bill, now progressing through Parliament, will take development land into public ownership and, together with the proposed Development Land Tax, it will put an end to the speculative profits that have unfairly been made out of the granting of planning permission. The,Social Wage 31
1973-74 and 1974-75 the social wage increased
30 per cent, from £11.50 a week per head of the
Between
by over
working population to £15 on the basis of current expenditure, or from £14.20 a week to £19 a week if capital expenditure on such projects as new hospitals and schools is included. 32
The concept of the social wage is a recognition of the fact that personal consumption is not financed entirely out of take-home pay.
In fact for every £4 of personal spending financed privately £1 of spending is financed by the Government.
One of the first actions of the Labour Government was to increase old age pensions to the £10 and £16
level agreed by i
Congress and this has been followed by an increase in April this year with a further increase payable in December
1975* Family allowances have been increased and through the child benefit scheme will be payable for the first child in
1977* increased family allowances will be payable for all children of one parent families from April 1976.
Many of the cuts imposed by the previous Government on the education and health services have been restored and a substantial increase has been made in housing expenditure.
Rents were frozen for the i
first year of the Labour Government's office and the new Housing Rents and Subsidies Act repeals the Housing Finance Act and allows local authorities 'to.:assess rents on a fairer basis. Between
1973-74 and 1974-75 there
was a
32 per
cent increase in Government expenditure on housing. 11
33
The General Council welcome the Governments commitment to meet priorities such as pensions and housing and their action to increase the social wage. The real increase in the­
social wage, concentrated as it is in areas such as housing and pensions, has had an important effect in redistributing income and in giving disadvantaged groups better living.standards. Redistribution of Income and Wealth 34
The increase in the social wage, financed through -
2.9
v
taxation,-'is" a potent means of redistributing income in our
society.
The' General Council recognise that this increase
must involve increases in taxation, particularly when output
is not rising.
Their criticism of some of the April 1975
Budget measures was not that a 25 per cent VAT rate on less
essential goods is unfair, but that it was not accompanied by
increased subsidies for essential goods and services. The income
tax system has been made fairer by increases in personal
allowances, and higher rates on unearned incomes.
Many tax
loopholes have been closed, though a continuing effort is needed
here.
The capital transfer tax on all major transfers of
wealth from the 197 4- Spring Budget onwards has been introduced.
This will put an end to the death duty system and its abuses, as
well as' bring other forms of capital transfer into the tax
system.
Government plans for a wealth tax are being studied
by a Parliamentary Committee and legislation is expected in the
1976 Budget.
The Royal Commission on the Distribution of Income
and Wealth has completed the first three of its reports
on the standing reference on the distribution of income and
wealthj
income from companiesj
and higher incomes
- arid
the General Council look to the Government to take full account
of the Commissions recommendations for improving the"
distribution of income and wealth in formulating its fiscal
and other policies.
Economic Situation in the Past Year 35
The General Council do not wish to minimise the
seriousness of the present economic situation.
On the other
hand they would emphasise that in some respects the economic
situation has improved substantially since March 1974is right to draw attention to these improvements.
a n d
it
There has
in particular been a substantial improvement in the balance of
payments.
at about
In 197 ^ the current account deficit was running £900 million
a quarter:
the deficit was down to
1975 by.the first quarter of
£325 million.
The current balance in goods and services, other than petroleum and petroleum products has turned from a deficit of
to a surplus of £100
£450 million
a quarter in 197^
million in the first quarter of
(The April current account deficit was £170
1975.
million which was millions on more than accounted for by the deficit of £213
petroleum and petroleum products). 36
Nevertheless certain features cause continuing concern, in particular the slow growth in output.
Both the July
197^
and November 197^ measures were reflationary, injecting about £1,000 million
in real demand terms,, though the effect of these measures will not be felt until
was deflationary and will take
economy in the. coming year.
1975/76. The April 1975 Budget about £300 million out of the There has been a decline in industrial production in recent months and the index in the first quarter of 1975
is.some 4^ per cent below the index in ­
the first quarter of
1973­
37
This recession, which has hit all industrial countries
to some degree or. other
-
Britain less than most
to a disturbing increase in unemployment.
.. has led.
T
By mid-May the
seasonally-adjusted figure for unemployment (excluding school­
leavers) stood at
817,000 or 3.6
the previous month.
156,000 and
250,000.
to
38
per cent, a
56,800 jump
on
Unfilled vacancies in mid-May were down
the latest estimate of those on short time is
­
The rate of price inflation has increased in the past yea and is currently running at over ,20 per cent.
prices since 1970
The. increase in was initially the result of increases in the price of imported commodities, and the more recent increase in oil prices accelerated this process.
The position has been made worse by the continued depreciation of the pound. Undoubtedly the movement of wages over the second half of last year was partly a reaction to the rapid rise in prices. However, the higher rate of wage increases, together with the bunching of threshold payments, itself exerted an upward push on prices, which was not offset by the moderation in import . prices.
The failure of production to grow meant that the whole of the increases were passed on, without savings, in costs per unit. Review of the Pay Round 39
Following the restoration of voluntary collective bargaining a number of increases recognised as special cases were made in the public sector to deal with longstanding injustices and manpower difficulties stemming from statutory , controls.
These included special reviews of nurses' and teachers' payj
postment and transport workers also received special increases.
In the private sector there were a number of similar settlements in the period immediately following the end of statutory controls aimed at rectifying problems arising from Stage 3.
This bargaining situation was complicated by Stage 3 thresholds which triggered a number of times during the period. ^0
Eater
in ' : 1 9 7 4
long-overdue improvements in the
region of 30 per cent were made in the pay of local authority
manual workers and NHS ancillaries to bring minimum rates into
line with the TUC's low pay target of £30.
However, these increases were used as abasis for "comparability" increases in other parts of the public sector beyond the low pay target level,-
and the miners' settlement of over 30 per cent in the early part of 1975
had repercussions in electricity supply and 2.12 . elsewhere.
In the meantime civil servants received a substantial increase under PRU procedures. 4l
The result was a general level of settlements signifi­
cantly above the guidelines endorsed by Congress, although, if recognised special elements are excluded, the underlying rate of increase in wages has been closer to the index of retail prices than is suggested by much uninformed comment. The General Council also wish to acknowledge the real leader­
ship given by many negotiators even if, under pressure from their membership, and sometimes in response to offers by employers, they have ultimately had to settle at levels which could not be justified by the guidelines. 42
Nevertheless, there have clearly been undesirable gaps in the observance of the guidelines, and if settlements in the next round of negotiations are pitched at the level of some of those negotiated recently, or if new settlements are made before their due date, the prospect of reducing price inflation towards the end of this year and during next year. will be seriously threatened. 3.1 PART I I I - THE COMING YEAR 43f
It
i s a g a i n s t t h e background o f t h e p a s t
year's
e x p e r i e n c e t h a t t h e G e n e r a l C o u n c i l how r e v i e w t h e
p r o s p e c t s f o r t h e coming y e a r ,
including p r i o r i t i e s
for
t h e Labour Government and t h e TUC 's guidance t o
; ? v
negotiators.
- '--- - -
Economic P r o s p e c t s
44
F o l l o w i n g t h e p e r i o d o f r e c e n t slow growth t h e
economy w i l l
period.
s t i l l be growing v e r y s l o w l y i n t h e coming
The T r e a s u r y f o r e c a s t i s t h a t b e t w e e n t h e
second h a l f o f 1975 and t h e f i r s t h a l f o f 1976 t h e
real
growth i n t h e economy w i l l o n l y be 1 . 0 p e r c e n t a t an
annual r a t e , w h i c h i s f a r below t h e p r o d u c t i v e p o t e n ­
t i a l o f t h e economy. ,
45
W o r l d t r a d e i s e x p e c t e d t o p i c k up i n 1 9 7 6 ,
and
p o s s i b l y around t h e end o f 1 9 7 5 , and -this should g i v e
a welcome boost t o UK e x p o r t s and so h e l p
employment.
increase
But UK e x p o r t s c o u l d become u n c o m p e t i t i v e
i f i n f l a t i o n i s n o t b r o u g h t c l o s e r t o t h e OECD a v e r a g e
which i s f o r e c a s t by t h e end o f t h e y e a r t o be o n l y 1 0
or 11 p e r
46
cent.
The C h a n c e l l o r has f o r e c a s t t h a t i n t h e
second
h a l f o f t h e y e a r t h e r a t e o f i n c r e a s e i n p r i c e s would
d e c e l e r a t e month by month t o some 1 2 - 1 6 p e r c e n t
annual r a t e s .
at
T h i s however w i l l mean t h a t t h e y e a r on
y e a r f i g u r e s f o r t h e months at"--the end o f 1975 w i l l
stillo.be over 20 per c e n t .
The aim should be t o - b r i n g
t h e r a t e o f i n f l a t i o n s u b s t a n t i a l l y below t h i s w i t h "a
continuing f a l l during 1976.
The G e n e r a l Cbuncil-­
b e l i e v e . t h a t t h i s p r o s p e c t w i l l be t h r e a t e n e d i f
:
s e t t l e m e n t s i n t h e n e x t round o f n e g o t i a t i o n s
;
p i t c h e d a t t h e l e v e l o f some o f those
are
negotiated
recently,
or i f new s e t t l e m e n t s a r e m a d e ' b e f o r e
due d a t e i
.-
47
-­
their
'
The General C o u n c i l would have p r e f e r r e d t o see ­
: t h e economy g r o w i n g . a t a f a s t e r r a t e t h a n a t
present
: 1 5
and w i l l c o n t i n u e t o p r e s s t h e Government t o a d o p t
m e a s u r e s . t o ensure t h i s ?
a slackening o f the r a t e
wage i n c r e a s e s would g r e a t l y s t r e n g t h e n t h e i r
of
ability,
and t h e G o v e r n m e n t s w i l l i n g n e s s , t o secure t h i s major
policy objective.
The p r e s e n t slow growth o f
the
economy however l e a v e s no scope f o r i n c r e a s e s i n
real
wages, g i v e n t h e n e e d t o f i n a n c e i n c r e a s e s i n t h e
s o c i a l wage advocated by u n i o n s .
Most o f t h e growth
o f consumption i n r e a l terms w i l l be accounted f o r by
groups such as p e n s i o n e r s , one p a r e n t f a m i l i e s
and
l a r g e f a m i l i e s supported by low wages.
I n v e s t m e n t , P l a n n i n g Agreements and I n d u s t r i a l Democracy
48
D e s p i t e t h e p u b l i c e x p e n d i t u r e c u t s which have been
announced f o r 1976-77 p u b l i c i n v e s t m e n t : - i s f o r e c a s t
;
to
grow by 2 per c e n t between t h e f i r s t h a l f o f 1975 and
t h e f i r s t h a l f o f 1976,,
On t h e o t h e r hand p r i v a t e
f i x e d i n v e s t m e n t i s f o r e c a s t t o d e c l i n e by 4 p e r
The c o n t i n u i n g f a l l i n p r i v a t e f i x e d i n v e s t m e n t
l i n e s t h e urgency o f t h e new i n d u s t r i a l
w h i c h t h e Government i s
49
cent.
under­
legislation
introducing.
The G e n e r a l c o u n c i l hope t h a t t h e f u l l e s t use
w i l l be made o f t h e new i n d u s t r i a l powers p r e s e n t l y .
being l e g i s l a t e d f o r ,
and t h e n e g o t i a t i o n o f p l a n n i n g
agreements w i t h major companies w i l l be a p r i o r i t y .
I n t h i s context progress i n e s t a b l i s h i n g a N a t i o n a l
P l a n n i n g C e n t r e would h e l p b r i n g t o g e t h e r t r a d e u n i o n
r e p r e s e n t a t i v e s , managers and c i v i l s e r v a n t s t o
study
t h e b e s t methods o f implementing p l a n n i n g agreements
and i m p r o v i n g t h e performance o f B r i t i s h
industries.
The n a t i o n a l i s a t i o n l e g i s l a t i o n f o r s h i p b u i l d i n g ,
air­
c r a f t and t h e BNOC should proceed as q u i c k l y as
possible,
and t h e r e w i l l be a need t o e x t e n d p u b l i c
ownership t h r o u g h t h e NEB.
Major l e g i s l a t i o n on
i n d u s t r i a l democracy, based on t r a d e union o r g a n i s a ­
tion,
i s a f u r t h e r key p r i o r i t y for the next year
in
o r d e r t o e x t e n d t h e concept o f j o i n t p l a n n i n g and
c o n t r o l t o a l l t h e l e v e l s o f t h e economy.
Priorities
f o r t h e Labour Government
Prices
50
The G e n e r a l C o u n c i l welcomed t h e f a c t t h a t t h e .
Prices Secretary,
i n h e r major autumn r e v i e w o f
the
p r i c e code, r e s i s t e d t h e many demands from
t h a t t h e p r i c e code should be a b o l i s h e d .
industrialists
Nevertheless
t h e G e n e r a l C o u n c i l a r e concerned t h a t n o t enough i s
b e i n g done t o c o n t r o l p r i c e s o r w i n p u b l i c c o n f i d e n c e
the present
51
system.
In particular,
an i n t e n s i f i e d e f f o r t needs t o be
made a t shop l e v e l , t h r o u g h t h e p u b l i c a t i o n o f p r i c e
lists,
u n i t p r i c e s and p r i c e range o r d e r s , which can
a l l h e l p t h e shopper.
Over t h e p a s t y e a r t h e TUC has
been encouraging t r a d e s c o u n c i l s t o p r e s s t h e i r
a u t h o r i t i e s t o s e t up h i g h s t r e e t consumer
centres.
this,
local
advice
Trades c o u n c i l s have been a c t i v e l y
pursuing
b u t on many occasions l o c a l a u t h o r i t i e s have
r e p l i e d t h a t t h e y have i n s u f f i c i e n t
such c e n t r e s .
funds t o s e t up
Only a s m a l l i n j e c t i o n o f
central
Government money, perhaps £ 1 m i l l i o n , t o h e l p
authorities
local
s e t up t h e s e c e n t r e s c o u l d r e a p v e r y sub­
s t a n t i a l rewards i n terms o f p u b l i c c o n f i d e n c e i n t h e
p r i c e c o n t r o l system.
52
The r o l e o f s u b s i d i e s a l s o needs t o be examined
further,
and t h e p r e s e n t f o o d s u b s i d i e s have had a
v e r y marked e f f e c t i n h e l p i n g t h e low p a i d and t h e
pensioners.
The G e n e r a l C o u n c i l a r e p r e s s i n g t h e
Government t o r e v i e w i t s d e c i s i o n t o c u t
expenditure
on f o o d s u b s i d i e s , n o t l e a s t t o a v o i d i n c r e a s e s
p r i c e s matched by h i g h e r wages.
in
Here a g a i n , an a b a t e ­
ment i n t h e r a t e o f wage i n c r e a s e s would g r e a t l y
in
1
strengthen the General C o u n c i l s
53
efforts.
The General C o u n c i l r e c o g n i s e t h a t t h e Government
has made g r e a t e f f o r t s t o " I n t r o d u c e a comprehensive
system o f p r i c e c o n t r o l ' .
An e x t r a e f f o r t a t
1
the
p r e s e n t t i m e , i n c l u d i n g g r e a t e r p u b l i c i t y , would be
w e l l worthwhile.
Employment
54
On p r e s e n t t r e n d s t h e l e v e l o f unemployment may
w e l l r e a c h t h e one m i l l i o n mark b e f o r e t h e end o f
19757 arid r i s e even more t h r o u g h t h e coming w i n t e r .
It
1
I s therefore v i t a l that the fastest possible pro­
g r e s s i s made i n I n t r o d u c i n g t h e Temporary Employment
Subsidy, i n t h e a d m i n i s t r a t i o n o f w h i c h t r a d e
should p l a y a p a r t .
unionists
The Manpower S e r v i c e s Commission
w i l l have an i n c r e a s i n g l y i m p o r t a n t r o l e and i t
should
be encouraged t o develop j o b c r e a t i o n schemes.
55
I n a p e r i o d o f h i g h unemployment t l i e Government
should improve t h e o p e r a t i o n o f t h e v a r i o u s
national
i n s u r a n c e and supplementary b e n e f i t r u l e s , and remove
t h e u n f a i r n e s s w i t h which t h e e x i s t i n g r u l e s
operate
a g a i n s t t h o s e on s h o r t t i m e w o r k i n g .
Import
56
Controls
D e s p i t e t h e welcome improvement i n t h e b a l a n c e
o f payments t h e l e v e l o f i m p o r t s , p a r t i c u l a r l y
of
s e n s i t i v e manufactures, i s s t i l l causing.concern.
i m p o r t a t i o n o f c e r t a i n goods such as t e x t i l e s ,
The
clothing,
f o o t w e a r , g l a s s , e l e c t r o n i c s and m o t o r . c a r s i s h a v i n g a
s e r i o u s e f f e c t on employment l e v e l s i n t h e UK.
Evidence
o f dumping o f some o f t h e s e commodities i s c l e a r and t h e
Government should n o t h e s i t a t e t o a c t i n t h e s e c a s e s .
T h e r e i s a l s o a case f o r i n t r o d u c i n g more w i d e s p r e a d
i m p o r t c o n t r o l s on m a n u f a c t u r e d goods as a t e m p o r a r y
measure u n t i l t h e economy b e g i n s t o expand a g a i n . ,
The S o c i a l Wage
57
The G e n e r a l C o u n c i l w i l l be l o o k i n g f o r
further
improvements i n t h e s o c i a l wage t h r o u g h more r e g u l a r
r e v i e w s o f pensions and o t h e r n a t i o n a l
insurance
b e n e f i t s , and t o meet p a r t i c u l a r needs such as
h e l p f o r t h e d i s a b l e d , a generous l e v e l o f
benefits,
and e d u c a t i o n a l p r i o r i t i e s
extra
child
such as n u r s e r y
school p r o v i s i o n , day r e l e a s e and a d u l t
education.
Defence c u t s have a l r e a d y been announced w h i c h w i l l
h e l p a l l o w i n c r e a s e s i n t h e s o c i a l wage w i t h i n
total
p u b l i c e x p e n d i t u r e , b u t more should be done i n
this
c o n n e c t i o n , w h i l s t b e a r i n g i n mind t h e employment
implications.
Pay Guidance
58
I f t h e UK i s g o i n g t o t a k e advantage o f
increase i n world trade,
the.coming
so b o o s t i n g e x p o r t s and j o b s ,
UK produced goods have t o be c o m p e t i t i v e .
Given t h e
average r a t e o f i n f l a t i o n i n o t h e r OECD c o u n t r i e s , .,par­
t i c u l a r l y Germany,, we must g e t down a t l e a s t t o 15 per
c e n t i f we a r e t o remain a t a l l
59
competitive.
The 15 per c e n t t a r g e t , i s n o t an i m p o s s i b l e one
b u t i t w i l l mean t h a t i n t h e coming y e a r t h e r e w i l l . , , ,
have t o be a t u r n i n g p o i n t a f t e r which t h e r a t e o f
i n f l a t i o n w i l l c o n t i n u e to. f a l l .
60
It
i s i n t h i s context t h a t negotiators
should
bear i n mind t h e c e n t r a l TUC g u i d e l i n e - t h e m a i n t e ­
nance o f r e a l incomes.
The problem i s how t o ensure
t h a t r i s e s i n incomes match a l e v e l o f ,
e g , 10 or 15,
per c e n t p r i c e r i s e , r a t h e r t h a n a l e v e l o f 2 0 or 25
per c e n t p r i c e r i s e .
The e x t e r n a l p o s i t i o n o f t h e
economy means t h a t t h e r e i s an overwhelming need f o r
t h e e q u a t i o n t o be a t t h e lower end o f t h e range
r a t h e r t h a n t h e h i g h e r end.
61
*
.
P
T h i s means t h a t a major e f f o r t has t o be made t o
g e t t h e wage and p r i c e f i g u r e s below 2 0 p e r c e n t
i n t h e n e x t wage r o u n d .
early
T h i s w i l l be v e r y , d i f f i c u l t ; - :
t o a c h i e v e , and i n d e e d i m p o s s i b l e i n t h e s h o r t r u n ,
if
t h e p r e s e n t r a t e o f r i s e i n p r i c e s i s t a k e n as t h e
b a s i s o f a wage g u i d e l i n e f i g u r e f o r t h e whole o f t h e
n e x t pay r o u n d .
If
t h e p r e s e n t r a t e o f wage i n c r e a s e s
i s t a k e n as t h e b a s i s f o r s e t t l e m e n t s i n t h e n e x t round
i t w i l l be i m p o s s i b l e t o a v o i d an even more dangerous
inflationary
spiral.
.
62
There a r e t h e r e f o r e t w o ' b r o a d o p t i o n s f o r the'
G e n e r a l C o u n c i l to. c o n s i d e r , and t h e s e o p t i o n s
t a k e a number o f d i f f e r e n t
63
could
forms
The f i r s t o p t i o n i s t o c o n t i n u e t h e p r e s e n t pay
guidelines -
i e , matching r i s e s i n "the c o s t Of l i v i n g .
:
T h i s approach h a s - t h e major advantage t h a t i t
u n d e r s t o o d and has a r e l a t i v e l y
structures.
is
wdll
s m a l l e f f e c t on wage
I t would however, a t b e s t ,
slow down t h e
r a t e o f p r o g r e s s t o lower p r i c e s .
64
A more s t r i n g e n t approach would be f o r
the
G e n e r a l C o u n c i l t o s e t as a t a r g e t t h e achievement o f
a p a r t i c u l a r r a t e o f p r i c e i n c r e a s e by e a r l y n e x t
year? and advocate s e t t l e m e n t s a t t h a t l e v e l from t h e
b e g i n n i n g o f t h e n e x t r o u n d , w h i c h w o u l d mean t h e
acceptance o f s e t t l e m e n t s s i g n i f i c a n t l y below t h e
going r a t e o f increase i n p r i c e s .
recognised t h a t i f
I t has t o be
any group o f w o r k e r s was t o a c c e p t
a wage s e t t l e m e n t below t h e c u r r e n t l e v e l o f
price
increases i n order t o a s s i s t i n a d e c e l e r a t i o n
p r i c e s ; "to t h e l e v e l o f t h e i r
of
s e t t l e m e n t t h e y would a t
t h e v e r y minimum need t o be s u r e t h a t a l l
other
succeeding groups o f w o r k e r s would do t h e same.
would a l s o need some assurance t h a t ,
p r i c e s r i s i n g more t h a n t h e i r
be a b l e t o - r e c o u p - i n f u t u r e
-
They
i n t h e event o f
s e t t l e m e n t t h e y would
( e i t h e r by way o f
thresholds
though t h o s e have caused s e r i o u s problems i n t h e
year - or a t t h e next
settlement).
last
65
E i t h e r o f t h e s e o p t i o n s c o u l d be pursued i n a ^
number of. d i f f e r e n t ways - and i n d e e d t h e
different'
ways would themselves i n some.:respects be c o n s i d e r e d
as f u r t h e r
66
options.
I n e i t h e r case a s i n g l e cash f i g u r e c o u l d r e p l a c e
whatever percentage f i g u r e
(whether t h e g o i n g p r i c e ­
r i s e f i g u r e or a t a r g e t p r i c e - r i s e
the relevant
67
figure)
implicit
in
option.
A s i n g l e cash f i g u r e would have t h e advantages
o f b e i n g easy t o u n d e r s t a n d , p r o v i d i n g g r e a t e r
cash
i n c r e a s e s f o r lower p a i d w o r k e r s and p r e v e n t i n g h i g h
cash i n c r e a s e s f o r t h e h i g h e r p a i d .
i A t t h e same t i m e ,
however, i t would d i s t u r b d i f f e r e n t i a l s based on s k i l l
and r e s p o n s i b i l i t y and f a i l t o m a i n t a i n r e a l incomes
f o r a l l above a c e r t a i n l e v e l .
A s i n g l e cash f i g u r e
c o u l d t h e r e f o r e be d i v i s i v e and l e a d t o opposition?
and p a r t l y . b e c a u s e o f t h i s t h e r e would be a tendency
f o r t h e cash i n c r e a s e s f o r t h e lower p a i d t o be
g e n e r a l i s e d i n p e r c e n t a g e terms 'to o t h e r g r o u p s .
68
A s i n g l e p e r c e n t a g e f i g u r e c o u l d be combined w i t h
a low pay t a r g e t minimum, and p o s s i b l y w i t h a l i m i t on
h i g h e r p a y , i n o r d e r t o a t l e a s t m i t i g a t e any adverse
d i s t r i b u t i v e e f f e c t s compared w i t h a cash f i g u r e .
69 .
A. f u r t h e r p o s s i b i l i t y would be t o combine t h e cash
and p e r c e n t a g e approaches, e g , £ X + Y per c e n t .
This
c o u l d share t h e b e n e f i t s o f b o t h approaches; t h e cash
f i g u r e c o u l d ensure h i g h e r p e r c e n t a g e s f o r t h e low
:
p a i d , w h i l e t h e p e r c e n t a g e f i g u r e p r o v i d e d some p r o ­
t e c t i o n f o r those above a c e r t a i n income.
The
"per­
c e n t a g e " element would have t o be w e l l s h o r t o f
the
f u l l c o s t o f l i v i n g i n order' t o p r o v i d e f o r t h e
"cash"
element.
70
A d i f f e r e n t t y p e o f v a r i a n t would be complete
i n d e x a t i o n , e i t h e r on a monthly or a q u a r t e r l y b a s i s ,
f o r g o i n g any normal -annual i n c r e a s e .
(A v a r i a t i o n
of
t h i s would be t o i n c l u d e a second element on w h i c h
a n n u a l n e g o t i a t i o n s " c o u l d be"based, i n v o l v i n g
f a c t o r s as t h e v a l u e of" t h e work i n v o l v e d ,
on a j o b e v a l u a t i o n b a s i s . ) '
it
such
possibly
Against indexing,
however,
i s c l e a r t h a t unions do w i s h t o n e g o t i a t e "annual
improvements, and t h e a d d i t i o n o f - f u r t h e r e l e m e n t s on
t o p o f i n d e x i n g would c o n f l i c t w i t h t h e c e n t r a l o b j e c ­
t i v e o f m a i n t a i n i n g - b u t n o t improving - r e a l incomes,
and p r o v i d e a h i g h e r f l o o r o f wages and p r i c e s
from
which t o begin the process o f reducing i n f l a t i o n .
71
Clearly there are d i f f i c u l t i e s w i t h - a l l
approaches.
these
Recommending a s p e c i f i c f o r m u l a may,
depending on t h e f o r m u l a chosen, add t o c l a r i t y .
But
t h e danger i s t h a t t h i s w i l l b e a t t h e expense o f
reducing the f l e x i b i l i t y
for negotiators i n
relation
t o t h e i r own n e g o t i a t i n g circumstances and t r a d i t i o n s .
Twelve Month Rule
72
The t w e l v e month r u l e f o r m a j o r . i n c r e a s e s
need t o be r e t a i n e d ; and s e t t l e m e n t s w i l l
t o t a k e account o f any i n t e r i m i n c r e a s e s
will
still
need
including
t h r e s h o l d s , a l t h o u g h t h i s i s l i k e l y t o be l e s s o f a
p r o b l e m as t h e c o m p l i c a t i o n o f e x i s t i n g Stage 3
t h r e s h o l d s i s p r o g r e s s i v e l y reduced o v e r t h e r e s t o f
1975.
Efficiency
73
Improved arrangements f o r j o b s e c u r i t y i s a
p r e r e q u i s i t e f o r t h e i n t r o d u c t i o n o f new t e c h n i q u e s
i n t h i s period of d i f f i c u l t i e s .
Priority
should
c o n t i n u e t o be g i v e n t o t h e s e arrangements and t o
agreements w h i c h w i l l have b e n e f i c i a l e f f e c t s on
u n i t c o s t s and e f f i c i e n c y .
However, i n t h i s
period
u n i o n s w i l l need t o g i v e s e r i o u s c o n s i d e r a t i o n t o
t h e need t o a v o i d r e p e r c u s s i o n s on o t h e r g r o u p s ,
and t o t h e p o s s i b i l i t y o f
"phasing" i n c r e a s e s .
Any
s p e c i a l improvements o f t h i s n a t u r e w h i c h a r e agreed
should n o t be used as a b a s i s f o r
comparability
claims.
Hours o f Work
74
I n t h e c u r r e n t s i t u a t i o n t h e r e may be u n d e r s t a n d ­
able pressure f o r work-sharing arrangements.
e f f e c t i v e t h e s e must t a k e t h e form o f a c u t i n
hours worked p e r employee.
To be
actual
They should n o t be used as
a method o f o b t a i n i n g a d i s g u i s e d i n c r e a s e i n r e a l '
incomes o u t o f l i n e w i t h t h e g e n e r a l g u i d e l i n e s .
N e g o t i a t o r s should t h e r e f o r e g i v e p r i o r i t y t o
secur­
i n g a c t u a l r e d u c t i o n s i n h o u r s , and t o r e d u c i n g
normal hours t o 4 0 i n s e c t o r s where t h i s has n o t been
attained."
The 35 hour week remains a l o n g e r
term
o b j e c t i v e ) " b u t i n ' v i e w o f t h e w i d e r needs and
p r i o r i t i e s o f t h e t i m e t h e r e cannot be a g e n e r a l move
t o 35 hours t h i s y e a r w i t h o u t s p e c i f i c o f f s e t s i n t h e
form o f lower pay i n c r e a s e s .
4.1 IV
75
II4PLEMBNTING THE CONTRACT I t i s not s u f f i c i e n t
f o r t h e t r a d e u n i o n movement
a t Congress t o g i v e f o r m a l endorsement t o a r e p o r t
of
this kind.
76
Whatever f o r m u l a i s adopted w i l l be meaningless
perhaps worse - i f
settlements.
it
i s not c a r r i e d i n t o e f f e c t
I n some ways t h e f o r m u l a i t s e l f
­
in
is
less
i m p o r t a n t t h a n w i n n i n g i t s a c c e p t a n c e by members and
their negotiators.
T h e r e i s t h e r e f o r e s t i l l a major
j o b f o r everyone t o do i n e n s u r i n g t h a t t h i s
standing i s disseminated'to the ten m i l l i o n
unionists.
under­
trade
U l t i m a t e l y / t h e narrow wage and s a l a r y
a s p e c t s w i l l o n l y be seen i n t h e i r p e r s p e c t i v e by t h e
mass.;.of t r a d e u n i o n membership i f
comprehended what i t
t h e y t o o have
i s t h a t t h e t r a d e u n i o n movement
i s endeavouring t o a c h i e v e .
There must be a f a r
g r e a t e r , d e g r e e o f a s s o c i a t i o n i n t h e f u t u r e between
t r a d e u n i o n i s t s t h e m s e l v e s and t h e Congress p o s i t i o n .
There has t o be an i d e n t i f i c a t i o n and a commitment t o
the action t o
77
follow.
Many t r a d e u n i o n l e a d e r s themselves may u n w i t t i n g l y
give the impression t h a t the s o c i a l c o n t r a c t i s
something
which concerns t h e Government and something w h i c h c o n ­
cerns t h e TUC b u t does n o t concern and i n v o l v e them
personally.
T h e r e can be no f a i l u r e o f t h e
social
c o n t r a c t i f t h e r e i s an i d e n t i f i c a t i o n by t r a d e
unionists
t h e m s e l v e s , a n d . b y a l l members o f t h e Government as
well.
But f a i l u r e i s i n e v i t a b l e i f t r a d e u n i o n mem­
b e r s do n o t f e e l t h i s sense o f i d e n t i f i c a t i o n and
association.
Without t h e understanding,
support,
commitment and a c t i o n on t h e p a r t o f t r a d e u n i o n
members, t h e TUC can a c h i e v e
little.
E s t a b l i s h i n g a Consensus f o r A c t i o n
78
As f a r as unions a r e c o n c e r n e d , t h e o b j e c t
should
be t o secure acceptance and i n v o l v e m e n t a t a l l s t a g e s
v i a t h e normal processes o f p o l i c y f o r m u l a t i o n ­
r
b r a n c h d i s c u s s i o n s , c o n f e r e n c e d e b a t e s and p r e n e g o t i a t i o n meetings.
I t i s intended t h a t t h i s
s t a t e m e n t on t h e development o f t h e s o c i a l
"
policy
contract
should be g i v e n t h e f u l l e s t p o s s i b l e c i r c u l a t i o n t o ,
and d i s c u s s i o n w i t h i n , t r a d e unions down t o branch
and s h o p - f l o o r l e v e l , p r i o r to f u l l d i s c u s s i o n a t t h e
;
T
September Congress,
u n i o n p o l i c i e s on c o l l e c t i v e b a r ­
g a i n i n g should be f o r m u l a t e d i n . t h e l i g h t o f t h i s
^
:
s t a t e m e n t and o f branch d i s c u s s i o n s : o n - i t .
79
The TUC w i l l c o n t i n u e t o h o l d p a n e l meetings w i t h
c e r t a i n k e y n e g o t i a t i n g groups on t h e . b a s i s o f a t i m e - '
t a b l e drawn up s u f f i c i e n t l y i n advance. ;of n e g o t i a t i o n s
t o e n a b l e e f f e c t i v e d i s c u s s i o n s a t an e a r l y s t a g e i n
union claim formulation.
More g e n e r a l l y ,
t h e General
C o u n c i l w i l l ,continue, ,tp^expect, unions, in^ d i f f i c u l t i e s
1
i n conforming t o ; t h e , s p i r i t o f t h e p o l i c y t o i n f o r m t h e
G e n e r a l C o u n c i l o f t h e c i r c u m s t a n c e s and seek
their
adyice? or t o . respond t o an i n v i t a t i o n t o d i s c u s s t h e
s i t u a t i o n w i t h them.
The G e n e r a l C o u n c i l w i l l be
p r e p a r e d t o meet any group w h i c h r e q u e s t s such a
m e e t i n g and t o p r o v i d e what a d v i c e and s u p p o r t t h e y
can g i v e t o groups which a r e e x p e r i e n c i n g
difficul­
t i e s i n attaining the policy objectives.
The
d e v e l o p i n g s i t u a t i o n w i l l be k e p t under r e v i e w and
if
necessary a s p e c i a l conference o f union executives ^
w i l l be convened a t an a p p r o p r i a t e s t a g e i n t h e round
t o r e v i e w t h e o p e r a t i o n o f t h e p o l i c y as a w h o l e .
80
I t w i l l be made c l e a r t h a t p a r t i c u l a r
settlements
i n excess o f t h e Congress g u i d e l i n e s a r e o u t s i d e
Congress p o l i c y and must n o t be f o l l o w e d by o t h e r
groups.
81
There w i l l be more a c c e n t on p u b l i c i t y t o g e t
t h e message across t o t h e membership on t h e
and t o t h e g e n e r a l p u b l i c ,
shop-floor
i n t h e form o f massive p u b ­
l i c i t y f o r a summary - making f u l l use o f
"Labour"
and u n i o n j o u r n a l s and as f a r as p o s s i b l e t a k i n g t h e
campaign k i t on t h e I n d u s t r i a l R e l a t i o n s A c t as a
guide.
82
The Government t o o must r e a f f i r m i t s
to i t s
commitment
s i d e o f t h e c o n t r a c t -- on employment, on p r i c e s ,
on t h e r e d i s t r i b u t i o n o f incomes and w e a l t h , on p u b l i c
o w n e r s h i p , on i n d u s t r i a l democracy, oh housing and
l a n d , and on t h e s o c i a l wage.
The L i a i s o n Committee
w i l l be asked t o u n d e r l i n e t h i s , and t o ; k e e p p r o g r e s s
under continuous r e v i e w .
DL/CC/BC/E
June 4 1975