New Clause "B." — (Appointment of Iron and Steel Prices Board.)

Part of Orders of the Day — Iron and Steel Bill – in the House of Commons at 12:00 am on 25 July 1949.

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Photo of Mr David Eccles Mr David Eccles , Chippenham 12:00, 25 July 1949

The Parliamentary Secretary to the Ministry of Supply did say price was all important. The trouble with the modern monopolies is not so much that they do not make excessive profits as they put up the cost. The old sanction we used to have when there was competition was that the consumer could change his supplier. When the sanction existed both sides of industry concerned in the level of cost knew they could not go too far. If the men asked for too much in wages they knew the business would go bankrupt. If, on the other hand, they were going to be given too low wages labour could not be hired. If costs were raised too much out of line with the rest of industry that firm went bankrupt; even the whole of the industry might go bankrupt.

Our problem is that the sanction is removed where there is a State monopoly. The long suffering and patient taxpayer is underwriting the rise in cost. It is essential that when a monopoly is set up some substitute for the ordinary play of the market should be put into the Bill. Under the iron and steel arrangements before the war, when private industry was the owner, prices came to be fixed. It was seen already in the years before the war that some kind of independent price fixing was necessary. That is why we had the Import Duties Advisory Committee operating the general notion that the industry could not get a tariff unless it justified its cost structure and the prices it was asking.

When we come to the Bill we find no substitute for the Iron and Steel Federation, afterwards the Iron and Steel Board and the I.A.C., to give protection to the consumer against rises in costs. It is where the Minister needs help. What are we to do about it? The Bill is quite unsatisfactory and that is why this Clause has been brought forward in another place. The cost has to be gone into all the time. It could not be done by the Consumers' Council. In the public interest prices should never be too far wrong; they should be looked at in advance. The Consumers' Council does not bring in an efficient substitute for the old organisation we had before.

8.0 a.m.

The Parliamentary Secretary talked about the only danger being that prices were to be too high and that nobody wanted too high prices. What is the principle upon which the prices of a monopoly should be fixed? He spoke as though a conflict existed between two principles—one, the public interest and the other, fair profits. That is a very interesting doctrine that there is such a conflict, but he will find that that is not so. If prices are too high and excessive profit is made, that is bad—we all agree about that—but if they are too low, then of course the Corporation has to come to the taxpayer for more money and it is not supposed to do that. "Taking one year with another," it must cover its costs and that means finding working capital as well. I do not think there is any conflict between the public interest and a fair profit.

My hon. Friend the Member for Monmouth (Mr. P. Thorneycroft) mentioned what has happened with regard to road transport, but it is not only in his part of the world that that has happened. It is certainly so in my part of the world, and the general reason given for raising the price of road transport in my part of the world is that we are going to see that the railways are given a rather better show. The prices have been raised in order that the road shall not take everything away from the rail.

That just shows how dangerous it is to have a monopoly which has certain sections of its price schedules outside control, and which it can do what it likes with, in order to bolster up some other part of the monopoly. It might charge too little. I think hon. Members opposite will recognise that even chain-store businesses do the same as the Co-operatives and undercut other traders in certain areas in order to establish themselves there without using their own shareholders' money. That is a gamble which is a business risk and we cannot quarrel with that if we believe in enterprise.

But if they are using taxpayers' money to go into new lines of business and then undercut the producer who is a taxpayer himself, that is not fair and it requires some kind of price-fixing machinery, independent of the Minister. I think that is a very strong point in the new Clause that the Parliamentary Secretary attacked, as that new Clause is designed to protect consumers. One of the obvious reasons for the new Clause is to protect independent producers from prices designed simply to undercut them out of business.

That is happening, I feel, with the Parliamentary Secretary to the Ministry of Fuel and Power (Mr. Robens). Does he know that in certain parts of the Southern Electricity Area when a firm gets an order from a customer to instal some electrical machine it must go to the local office of the Board and there get a permit to connect the house and supply the current. The moment that man comes to the office, the Board's representatives run round to the customer, having discovered who he is, and they say, "We will instal the machine for you more cheaply if you will drop your private supplier."