Orders of the Day — Industry

Part of the debate – in the House of Commons at 12:00 am on 20 November 1975.

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Photo of Mr Michael Neubert Mr Michael Neubert , Romford 12:00, 20 November 1975

It is evident that the start of a new Session signalled by the Queen's Speech is welcomed by Ministers and back benchers alike. To Ministers it gives the opportunity to clear desks and embark on a new batch of largely avoidable and unnecessary legislation. Back benchers no longer face the prospect of all-night sittings, with the Chinese torture of being awakened by the Division bells as they lapse into the deepest recesses of sleep. They can look forward to a few Second Reading debates ending with a Division at the civilised hour of 10 o'clock.

Unlike the hon. Member for Dewsbury (Mr. Ginsburg), I cannot welcome the Government's proposals to reform our procedures. It seems to me to be quite unnecessary. The simplest solution is staring us all in the face. It is that there should be fewer Bills. It may prick the vanity of Ministers to be told that their legislation is not indispenable, but, on an independent judgment, that is the case.

If I may reflect on the comments of the hon. Member for Perth and East Perthshire (Mr. Crawford), the one argument for devolution that strikes a chord in my heart is the prospect that if there is a Scottish Assembly, English Members will have to spend fewer hours listening to speeches by Scotsmen and Scotswomen in this House about a country that I have yet to visit. After their immediate departure from the House as soon as they have made their comments, the English are yielded the Floor.

It is an anniversary when the Queen's Speech comes around, but anniversaries should not be occasions for reflecting on the melancholy process of ageing. They should be occasions for measuring the achievements of the past 12 months. When we take the all-important subject of inflation, it is instructive to see what was said in the Queen's Speech in October of last year on the subject—namely: My Government, in view of the gravity of the economic situation, will as their most urgent task seek the fulfilment of the social contract as an essential element in their strategy for curbing inflation". That was the only mention of inflation in last year's Gracious Speech.

If we are to judge the achievements of the past 12 months in terms of the Gov- ernment's fight against inflation, it is clear that the Government have failed lamentably. Although some hopes are rising following the announcement of the rise in prices in the past two months, let us not forget that prices are still rising. The only sign of relief is that they are not rising quite so fast. The annual rate of inflation is running at 26 per cent. It is a measure of the fulfilment of that one-sided social contract that it allowed wage increases overall to reach a peak of 35 per cent. In turn that created a level of inflation that we had never known in the past and that we had associated only with South American countries.

I do not normally wish to discourage effort and enthusiasm, but I find it difficult to share the fulsome congratulations that have been heaped upon the Secretary of State for Prices and Consumer Protection. I do not wish to be discourteous, unchivalrous, or discouraging, but if I were the Secretary of State responsible for protecting consumers, and if I were still in office at the end of a year that had seen a rise in the cost of living of 26 per cent., I should feel a shade depressed. However, there is no sign of depression on the Government Benches. Indeed, at the Labour Party conference at Blackpool, in reward for the right hon. Lady's efforts and enthusiasm, she increased her vote on the National Executive.

One is left in some bemusement at the turn of events. Inflation remains a serious matter. It is clearly among the unfinished business of last Session. Inflation has meant that the value of money has declined in the past year by no less than one quarter. That damage is irreversible. Individual personal losses in savings and loss of purchasing power are irrecoverable. Let us not forget last year's legacy.

In the course of our discussions the argument put forward from the Government benches has changed. Throughout last year we were told confidently that wage increases played little part in raising prices, but now we know differently. The Remuneration, Charges and Grants Act was introduced at short notice in an attempt to secure voluntary restraint of wage increases. As an Opposition we pointed out the danger of spiralling, uninhibited wage increases in terms of the cost of living. We have seen the consequences and we must welcome any attempt to restrain wage claims beyond what can be afforded and earned.

At the same time, it will not do for the Prime Minister to criticise the Opposition for not supporting his rag-bag measures. It was rather like the fair-ground huckster offering to sell a gold watch for £15 provided that the buyer was prepared to buy the rest of the shoddy items in his basket. Surely it is possible to support one part of a policy while severely criticising the rest. Many of us did not wish to support a policy in the division lobby that would set so many reprehensible precedents. We must be grateful in so far as it achieved an abatement of wage claims. We wait and hope for the improvement in the cost of living to show. There is little else in the Queen's Speech that offers the prospect of abating inflation.

Some minor measures are proposed in an attempt to abate inflation. For example, there is unit pricing. That is already under way with some goods. It may be welcomed as an extension of the programme, but it will not make much of a contribution except, as the hon. Member for Bolton, West (Mrs. Taylor), the seconder of the Address, mentioned yesterday, as a possible preparation for metrication, although there is no mention of that in the Gracious Speech.

There is also a proposal for price displays. If one believes, as the Government obviously believe, that by papering the wall of grocers' shops with price displays one will secure the avid reading of the displays by customers before they make their purchases, I suppose that that, too, is a good thing, but to the shopkeeper it may well appear to be further bureaucracy that is unlikely to achieve very much.

It seems that the scapegoat nowadays for our problems is no longer wage increases but investment. On this aspect I find the Gracious Speech quite breath-taking in its effrontery. The Government are calling for the achievement of a satisfactory level of productive investment while saying in virtually the same breath that the present price controls will continue to be vigorously enforced. If it is the Government's intention to mainttain price controls at their present restrictive and rigorous levels, there is precious little chance of an improvement in investment.

Investment is not the failure of capitalism. My right hon. and hon. Friends are castigated for the crisis of capitalism, but it is not capitalism that is at fault. Capitalism struggles while being suffocated by Socialism. Up to now there have been two main factors that have led to a lack of investment. One factor has been over-taxation. At last, and to his credit, the Chancellor of the Exchequer now realises that he has gone as far as he can go in increasing the intolerable level of taxation on British companies. The other factor is overmanning.

Apparently it is accepted at Chequers and elsewhere that overmanning is one of the most serious endemic problems facing industry. However, on the Prime Minister's own authority, at a time of high unemployment, this is not the time to deal with the problem of overmanning. If we are not now to take advantage of the bitter lessons of unemployment to create more fluidity in the labour market, when are we to do so? We could not do so in the years of high employment.

The Secretary of State referred to ossification. Nowhere is ossification more evident than in the labour staffing practives in many industries. If we cannot change them now, what hope is there of ever changing them?

To those two factors there must be added price control. That brings about a trinity of iniquity. We have overtaxation, overmanning and price control. In an interesting speech, which could have been made from either side of the House, the hon. Member for Newcastle-upon-Tyne, East (Mr. Thomas) departed from those views which might have accorded with those of his colleagues by putting forward the views of the co-operative movement, which apparently find a great chord of acclaim in the House. The hon. Gentleman made a passionate plea for profit. He pointed out that from profit we must look for investment. It is impossible to invest a deficit. Perhaps it is necessary to present such truisms to some Labour Members. I hope that I am not doing the Government an injustice, but it may not be sheer nerve on their part that they call for improved investment at the same time as reinforcing price control; it may be sheer ignorance of the economic facts of life.

From time to time a remote tribe is found in a distant jungle apparently so unaware of the facts of life that it does not connect the sexual act with the birth of a child nine months later. It may be that the Government are guilty of the same sublime innocence. It may be that they do not realise how much investment depends upon profitability. Perhaps it is necessary for us to point out the economic facts of life. Until we obtain higher profits, we are unlikely to have improved investment. As we are now being told, improved investment means more jobs, a better balance of payments, a higher volume of exports and all the other things that we should like to see.

In waiting for the constructive benefits of a restraint in wage increases and income levels to come through—it is a benefit that will not be apparent for some time as we are promised that it will be a hard winter and it certainly will be—it is important not to conceal the truth from the British people. They will respect the truth if they are told it plainly.

We have yet another scheme which attempts to ameliorate the immediate position by appearing to do something about prices. I refer to the selective price restraint scheme. This is to be widened to include a variety of items, some 100 of which are presented for discussion. We had a passionate advocacy of such a scheme by the hon. Member for Newcastle-upon-Tyne, East. But I am concerned that once again this will involve subsidy, because a cross-subsidy is a subsidy like any other. One of its disadvantages is that it conceals the true state of the cost of living and the way in which prices are rising.

If we are to have a wide-ranging cross-subsidy in essential goods, it may affect the retail price index. I need not remind hon. Members that that index is used in the House as a measure of the rise in the cost of living. But we know it to be a very imperfect instrument of measurement. It attempts to represent the average family's expenditure.

No one doubts the sincerity of those who want to help people who are less well off and who have the greatest need. The Opposition have urged constantly that the way to do that is to be selective in terms of benefits and not to intro- duce across-the-board subsidies for rich and poor alike. Even the Secretary of State for Social Services has been converted to this view and has decided to abandon the Christmas bonus for the very reason that she can see no argument for giving a tax-free bonus to people all the way up the income scale.

Although the analysis made by the hon. Member for Newcastle-upon-Tyne, East was correct, he drew quite the wrong conclusion. It is not possible to re-write the rules of economics and make the small shopkeeper charge less for goods which cost more to provide. Instead, we must help those who need to buy from his shop who might otherwise not be able to afford the price of goods in that locality. Rather than trying to re-write the rules of economics, we should be helping people selectively.

In terms of the retail price index, the Government have set themselves a very tight target. By the end of next summer, or by the end of the next pay round, which is commonly taken to be 1st September, the rate of inflation is to be down to 10 per cent. per annum, and it is currently running at an annual rate of 26 per cent. What is more, they say that by the end of the year it will be down to single figures.

The Government will always be tempted to achieve that target one way or the other. I was apprehensive about an earlier reduction this year when mortgages were included in the retail price index. It may be that mortgage payments are a justifiable element in family expenditure which should be brought into the retail price index. However, the effect of doing so has been to stablise the index, because mortgage interest payments have not gone up. If there is too much tampering with the economic facts of life and too many items on the retail price index are kept down to an uneconomic or unreal level, there may be some falsification of the index—