Orders of the Day — Cost of Living

– in the House of Commons at 12:00 am on 28th July 1965.

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4.8 p.m.

Photo of Sir Keith Joseph Sir Keith Joseph , Leeds North East

I beg to move, That this House deplores the Government's policies which have caused the steep rise in the cost of living since the General Election, a rise which is causing widespread anxiety as well as real hardship, particularly to public service and armed forces pensioners. Keeping prices steady in a fully employed and growing economy is not an easy matter. It is, therefore, only right that I should freely admit at the beginning of my speech that we, the Tory Party, did not achieve full success ourselves in keeping prices stable. On average, over 13 years prices rose under Tory Governments just over 3 per cent. per annum. During the first six years they rose at the rate of 4½ per cent. per annum and during the last seven years at the rate of 2½ per cent. per annum.

The country did not think this record good enough. It had had time to forget that, under the Socialists from 1945 to 1951, prices rose 6½ per cent. per annum. When the election came, one of Labour's firmest pledges was to keep the cost of living steady. Its election manifesto, "The New Britain", promised … new and more relevant policies to check the … rise in prices … Labour will attack …"— the problem of rising prices— … at its roots …". The First Secretary of State, whom we are glad to see here, gave the pledge triple emphasis. He said: The continued rise in cost of living can and must and will be halted. In opposition, the Labour Party criticised rising prices time and again. It fastened on rates, on interest rates, on house prices, on land prices and on prices in the shops. It gave firm pledges on all these.

The Labour Party promised to transfer a large slice of the rate burden from the ratepayer to the taxpayer. It attacked the 5 per cent. interest rate that was normal under the Tory Government so savagely as to give the public the impression that it would never tolerate a rate of interest as high as 5 per cent. let alone a rate of interest higher than that. It gave a firm pledge that it would not increase taxation. These were all categorical pledges and all related to the cost of living. They were given in the manifesto, in election speeches by the party leaders—and we are glad to see the Prime Minister here—and in speeches made, I am sure sincerely, by hundreds of Labour candidates.

Now let us see what has happened. During the first eight months of office of the Government, there has been an increase in the cost of living of 4·4 per cent.—an annual rate of 6·6 per cent. We are back again to the same pace as took place in the period of office of the Labour Government after the war. Over these eight months, grocery prices are up 6 per cent., an annual rate of 9 per cent. There is not a sign of the Government's famous land price policy—not even a White Paper. Indeed, the Minister of Land and Natural Resources is not even attending this debate—[HON. MEMBERS: "Yes."] I beg the right hon. Gentleman's pardon. I see that he is here.

Houses are up in price, although not in number, at a rate of 14 per cent. per annum. Rates are up 14 per cent. The interest rate is now at 6 per cent., but for month after month it was at the panic level of 7 per cent. Nationalised industry prices are up—railway fares by 8 per cent., electricity by 8 to 14 per cent. and hard coke by 18s. 6d. a ton.

The surcharge put, first, 15 per cent. and now 10 per cent. on to the prices of imports, including essential ones. Sixpence has been put on cigarettes, 1d. on beer, 4s. on spirits, 33⅓ per cent. on stamps, 50 per cent. on the excise duty on goods vehicles, £2 10s. on the car tax and £1 3s. to £3 10s. on motor bicycles. In addition, television and radio licences have been increased. Income Tax has risen by 6d. and there was a 6d. increase on the petrol tax. Many of these rises enter into costs not once but at many stages of production and distribution. The Socialists are doing worse, much worse, even than their previous record.

It is true that, in 1951, the Socialists found the terms of trade turning savagely against them due to the Korea War. Therefore, part of the explanation of the 6½ per cent. average rise was due to that which was beyond their control. But now there is no such excuse. Indeed, the Chancellor of the Exchequer last month said that import prices are tending to fall. World food prices were 12 per cent. lower in May this year than they were in 1964. Import prices as a whole were 2·3 per cent. less this spring than last spring. In fact, there can be no doubt whatever that our rising prices are home made.

I must warn the Government and the House that it may possibly be that, with Vietnam taking, we hope, a far smaller and far shorter place in the world scene than Korea, commodity prices may tend to harden. The terms of trade which have recently moved gently in our favour may start to move against us and thus make our home prices situation even worse.

The prices prospect is worrying. Professor Paish shows in an article in this quarter's issue of the Irish Banking Review that, in previous similar stages of the economic cycle, the rise in prices has continued long after Government checks on the pace of the economy. Certainly, the Government, by their package announced yesterday, intend to check the pace of the economy and this phenomenon results, of course, from the fact that increased earnings already granted to the bulk of the population continue to be received even after the output of goods has been checked. There is, therefore, at that stage in the cycle over the next few months more money to buy fewer goods, and the result can only be one of two things or a combination of both—a further rise in prices or an increase in imports. This must continue until, of course, the earnings curve flattens out to follow the output curve. Many of the price and tax increases I have listed have not yet had time to work their way fully through the economy and into the shops.

So the present position is one of a widespread rise in prices at an increasing pace. Nearly every item on every shopping list of every household has risen and is rising in price. Nearly every bill has gone up. Nearly every service costs more. The only exceptions, broadly, are the results of the courage of this side of the House in passing the Resale Prices Act last year, with no help from the Labour Party. The prices have fallen, for instance, of sewing machines, nylon goods, light fittings, vacuum cleaners, petrol, tyres, razor blades, paint, wallpaper, sports goods, refrigerators, heaters and other electrical appliances and drink—although, of course, the Chancellor put the price up again by extra taxation. Yet, despite the beneficial beginnings—and they are only beginnings—of the Act, the cost of living is rising now at a rate of nearly 7 per cent. per annum.

The prospect is that the rise will continue. The Socialists may well beat their own 1945–51 record with prices rising not just at 6½ per cent. per annum, as now, but at 7 per cent. or even 8 per cent. per annum. Our Motion refers to widespread anxiety. The public seems to feel that the rapid price increases will continue. It feels that the Government are floundering out of their depth and out of control.

Although actual pensioners are still substantially better off from their increased pensions, those on fixed incomes are inevitably suffering. Our Motion refers, in particular, to one group of these, most on fixed incomes—the Armed Forces and public service pensioners, whose case was put in a recent Adjournment debate forcefully by the hon. Member for Brighton, Kemptown (Mr. Hobden) and supported, as usual vigorously and effectively, by my hon. Friend the Member for Tynemouth (Dame Irene Ward).

During the election, promises were made to the Armed Forces and public service pensioners in terms which gave the clear impression—and they were promises by the right hon. Gentleman who is now the Prime Minister and by his right hon. Friend who is now the Colonial Secretary —that a Labour Government would look very sympathetically on giving to these pensioners what is called parity. These promises were made before the election in answer to specific applications from the associations representing these people.

What has happened since? Absolutely nothing. In reply to the Adjournment debate which I mentioned, the Minister of Defence for the Royal Navy gave a completely empty reply. We shall expect during this debate to have a firm answer to what the Government intend to do to honour the pledges which they gave to the Armed Forces and public service pensioners.

How did the Government get the country into this mess? In charity, the first thing which needs to be said is that the problem of governing a country is not as simple as it looks in opposition. Prices are the result of supply and demand. One of the first duties of a Government is to get supply and demand into the right balance. I am glad that there is no disagreement about that.

In October, it was the considered opinion of the present Government that on the home front the balance was right. I quote from paragraph 7 of the White Paper issued on 26th October, 1964, 10 days after the election, which said that there was no undue pressure on resources calling for action". So, in the view of the present Government, they inherited a fully employed, but not over-stretched economy, with a balance of payments problem; but it was not in the Government's view, expressed unambiguously in this White Paper, overstretched.

They put as the first priority of their economic policy on the home front an incomes policy, and the whole country will pay tribute to the energy and sincerity of the right hon. Gentleman the First Secretary. The Government concentrated on getting an incomes policy going, but meanwhile, by a series of inept blunders, they shattered foreign confidence. They exposed sterling to extreme pressure. They took no action at all on a whole series of wage increases far beyond any productivity gain and they allowed the economy to overheat and confidence to evaporate.

But the extraordinary thing is that, with an economist as Prime Minister, they never seemed to assess the true economic state which they—in the light of that assurance of 26th October—had allowed to develop. Instead of dealing quickly and relatively painlessly with what in those early days were controllable home problems, they have dribbled out a whole series of ineffective doses of ill-judged, ill-timed and ill-managed expedients.

Let me list the instalments to the House. There was first the November Budget, when petrol tax was put up. Later in the same month, Bank Rate went up to 7 per cent., despite all the promises. In early December, the credit squeeze began with a letter from the Governor of the Bank of England. In April, there was the Budget with taxes up all round. Later in the same month, special deposits withdrawing £90 million from circulation were required. Then there was a pause of a few weeks, but in May another turn was put on the credit squeeze screw, as though already the prognostications of the Government in the Budget had not developed, and in June hire-purchase deposits were raised.

But the culminating tragi-comedy, because that is what it is, is that only 13 days ago, in early July, on the Third Reading of the Finance Bill, the Chancellor of the Exchequer said that he did not propose to take any further action to restrain the economy. Yesterday, within a fortnight, he produced what, in effect, was his third Budget in eight months. I ask the House to recognise what a floundering Government it must be who make nine separate attempts to get back to the right level of pressure on resources which, by their admission in the White Paper of 26th October, they found on taking office.

It is this balance between supply and demand which is at the heart of the problem of prices. Prices are the result of supply and demand. On the supply side, whether production, distribution or services, there are a number of factors—skill of management, techniques, innovation, design, marketing, good labour relations. But one of the most important is the cost of labour per unit of output. The cost of labour does not just reflect the cost of wages. Earnings include fringe benefits. They include the effect of overtime resulting from shorter hours and they reflect above all earnings drift. Wages drift, earnings drift, we are told, has been higher in the last few months than in the whole of the previous 13 years.

It is primarily the employer's job to cut costs by every proper means, but it is not always possible even for the best employers and managers to offset the scale of earnings increases now current. The Government promised to attack the problem of rising prices at its roots, but what are its roots? I suggest that they are the ability of wage earners to extract from employers earnings larger than practicable increases in productivity.

The Government have totally failed to restrain disproportionate leaps in earnings and to insist on productivity bargains. They have totally failed to control the balance of supply and demand, so that employers just cannot put up prices without losing profitable turnover.

New and relevant policies were promised and we now know what that promise meant. It meant the Prices and Incomes Board.

I have a great respect and admiration for Mr. Aubrey Jones. I admire his emphasis on the productivity-pricesearnings bargain by which consumers, workers and investors all benefit. But Mr. Aubrey Jones stresses that his powers are inevitably limited. I was impressed by a speech which he made on 9th July when he spoke of two therapies being needed, one to deal with the immediate fever—and that lies with the Government—and the other, which is his Board's responsibility, to operate on the relations between productivity, incomes and prices.

How have the Government carried out their side of the therapy? On 42 major settlements so far, only one is below the norm of 3½ per cent. set by the right hon. Gentleman the First Secretary. Ironically, that is an award to 204,000 hospital workers of 2½ per cent. In the Labour manifesto I find: Labour's incomes policy will not be unfairly directed at lower paid workers and public employees. The average rise in wage rates has been 6 per cent., to which must be added about 2 per cent. for drift. On the general task of getting supply and demand into balance, the therapy of dealing with the immediate fever, in Mr. Aubrey Jones's phrase, I have already listed the nine dithering instalments of Government ineptitude.

What is the proper policy? Prices and earnings interact on each other. Changes in one produce repercussions in the other. That is why Governments must use policies that bite on both. They must get the balance of supply and demand right first. Secondly, they must stimulate and enforce competition. It is competition which should enforce better management or bankruptcy. Thirdly, and hardest of all, the Government must try to persuade the workers just how quickly earnings could rise and prices could fall if, and only if, workers would co-operate fully with good management—the good management that competition should produce.

We on this side of the House believe in a high earning, low-cost, competitive, compassionate society. We want high earnings just as much as we want low costs.—[Interruption.]

Photo of Dr Horace King Dr Horace King , Southampton, Itchen

Witty or angry interjections from time to time are in order, but not running commentaries.

Photo of Sir Keith Joseph Sir Keith Joseph , Leeds North East

We want high earnings just as much as we want low costs. The two can go together, given good management and workers' co-operation. But the Government must get supply and demand right, or it is too easy for the inefficient business and management to flourish. "It is not we", said the First Secretary on 11th May, "who are stopping industry being more competitive." But it is the Government who are putting an obstacle in the way of competition if they allow demand to get too high. Speeches and White Papers cannot be a substitute for action.

The Government have now produced their third Budget. My right hon. Friends will be commenting upon it, and the whole House will hope that it will achieve its purpose of improving the financial position. But if the energy put into the incomes policy had gone into a more accurate assessment of the country's needs, and more stimulus given to competition, this long series of floundering and irresolute expedients would not have been necessary. People cut costs not because of White Papers, but because they must cut them to survive. If competition is really biting, employers just will not agree to pay wage increases and drift which they cannot absorb. But the Government have failed to put competition in the forefront of their policy.

Photo of Mr Harold Wilson Mr Harold Wilson , Huyton

We hear a lot about competition and about the need to get supply and demand into balance so that competition becomes effective. Will the right hon. Gentleman tell us exactly what he means by getting supply and demand into balance; what he intends to cut and what levels of unemployment he is proposing?

Photo of Sir Keith Joseph Sir Keith Joseph , Leeds North East

In the words of his right hon. Friend the Chancellor of the Exchequer, what I understood the Government's intention to be was to redeploy some labour from home industries to the export industries, and that we believe is the proper objective. Part of the necessary means of getting there is to achieve supply and demand in the right proportions. I admit this is very difficult. The Prime Minister asked how. The answer is by a proper assessment, which, as an economist, he should have been competent to perform, of the real state of the economy.

I did not intend to say this, but it has been forced from me. Time and again we have had policies announced from the Dispatch Box and then totally contradicted within days, or weeks. The assurance of the Chancellor of the Exchequer on the Third Reading of the Finance Bill, that he contemplated no further cuts on our demand at home was contradicted within two weeks by the package he gave us yesterday.

To get stable prices the Government must encourage personal effort. They must encourage new investment and growth industry, and they must attack restrictive practices. The Government have done the exact opposite. They have decreased personal incentives by raised taxation, they have devalued investment allowances, damaged growth industries by the Corporation Tax and they have struck restrictive practices out of the terms of reference of the Royal Commission on Trade Unions.

The Government have flinched from effective action, just as they flinched from resale price maintenance. They have made nine dithering attempts to balance supply and demand; competition they have avoided like the plague—civil airlines strangled; the Geddes Report shelved; coal given more protection. Let the Government get their priorities right. Competition, and efficiency. Stop distracting businessmen with complex and often damaging new taxes. Stop the farce over steel; and let the First Secretary laugh about that. Clarify investment allowances, act on the Geddes Report, be tougher with disproportionate wage demands, and insist on productivity bargains.

The Government may say now how hard it all is, but they gave the country a very different impression before the election.

The Government won votes by promises that they are now brazenly breaking. What the country was promised was no higher taxes, lower rates, lower interest rates, no more stop-go and, above all, stable prices. What the country is getting is higher taxes, higher rates, higher interest rates, the toughest of all credit squeezes, back to building licensing and ever-higher prices, which will go on rising.

The Government have smashed their election pledges; they smashed the aircraft industry, they smashed the civil airlines, they smashed foreign confidence. They even smashed their record for rising prices and they grabbed £500 million extra in taxes. It is a smash and grab, stop, stop, stop Government. Not go with Labour, but Labour should go—and the sooner the better.

4.59 p.m.

Photo of Mr Douglas Jay Mr Douglas Jay , Battersea North

Even though the right hon. Gentleman the Member for Leeds, North-East (Sir K. Joseph) forgot to move his own Motion, he has apparently been trying to persuade the House, and the country, that if the Tories were in power today we should automatically achieve some sort of price stability. He did not sound to me as if he had even persuaded himself of that. If that is not what he was trying to argue, it would help if he would say so straight away and then we could conduct this debate rather less on party lines.

Nobody in the country believes at this moment that the party opposite has any recipe whatsoever, except outright deflation, for keeping prices steady. Everybody remembers what happened during the 13 years of Tory rule. Between October, 1951, and October, 1964, the cost of living rose by 51 per cent. The right hon. Gentleman was candid enough to admit this quite clearly at the beginning of his speech. That was what the Conservative Party really meant by talk about mending the hole in the housewife's purse. In the very last year, from October, 1963, to October, 1964, the cost of living rose by 4 per cent. in 12 months.

Photo of Sir Keith Joseph Sir Keith Joseph , Leeds North East

But the right hon. Gentleman—[HON. MEMBERS: "SO soon?"] What the right hon. Gentleman has said so inaccurately states the position that I must intervene. In our 13 years of office, although the cost of living rose by 50 per cent., earnings rose by 100 per cent. and pensions by 140 per cent. Under the present Government, earnings have risen less than half as much as the rise in the cost of living.

Photo of Mr Douglas Jay Mr Douglas Jay , Battersea North

If the right hon. Gentleman interrupts too often, he will do very great damage to his own case.

The fact is that in those 13 years, when the cost of living rose by 51 per cent., we had recurrent deflations and stagnations and a very slow rise indeed in production and output. We had in those years neither stability of prices nor a steady rise in production. During the past year, although certainly prices have risen, we have at least achieved a marked rise in output and employment at the same time.

I agree with the right hon. Member for Leeds, North-East, that the problem before us is to secure growth in output without a rise in prices. But at least in the past eight months we have achieved a rapid growth in output. In the previous 13 years we had rapidly rising prices and a miserably slow growth of the economy at the same time. Today, at this moment, output is higher than ever before and unemployment is down to the extremely low level of 1·2 per cent. over the whole country. The Index of Production was 4 per cent. higher in May this year, which is the latest month for which we have a figure, than it was in May, 1964.

According to the Motion which the right hon. Gentleman failed to move the rise in living costs in this country since last October is wholly due to the policy of the Government. How does the right hon. Gentleman explain the fact that living costs between last October and April this year in Holland rose—more steeply than in this country—in Belgium, in Denmark—as steeply as they rose here—in France, Germany, Italy, Norway, Sweden and Switzerland, if the rise in the cost of living is due to the policy of the Government? In all those countries, as the right hon. Gentleman must know perfectly well, the rise in the cost of living last year was manifestly due to the rising level of demand which has gone hand in hand with the growth of the European economies, including our own, during this period.

The right hon. Member for Leeds, North-East, mentioned the level of import prices and the terms of trade, but he failed to tell the country this. Despite all the talk which we hear about falling primary produce prices in the world, the fact is that the United Kingdom's import prices today are over 7 per cent. higher than they were in 1962 when the Conservative Party was in power and, indeed, 4 per cent. higher than they were even in 1963. However, we are told by the right hon. Gentleman—this was one of the implications of his speech today—that it is quite wrong of the Government to use the instrument of higher indirect taxes to restrain purchasing power when it becomes excessive. This is a very extraordinary argument to be advanced by the Conservative Party.

Right hon. and hon. Members opposite, during their years of office, repeatedly increased indirect taxes in order to moderate what they regarded as inflationary forces. The tobacco tax was raised by Mr. Harold Macmillan as Chancellor of the Exchequer in the Budget of April, 1956. It was again raised by the right hon. and learned Member for Wirral (Mr. Selwyn Lloyd) as Chancellor of the Exchequer in April, 1960. The right hon. and learned Gentleman, knowing that he is the guilty man in this debate, absconded from the Chamber before we came to this part of the argument. He raised the tobacco tax yet again in July, 1961, and the tax on beer, and the tax on spirits, and the tax on petrol. In April, 1962, I regret to say that the right hon. Member for Barnet (Mr. Maudling), who at least has had the courage to stay here and to face the music, raised Purchase Tax on the whole range of items taxed at 5½ per cent. to 10 per cent. in one fell swoop.

However, if right hon. Gentlemen opposite are now converted to a new doctrine and believe that higher indirect taxes should never be used to cream off excessive demand, what do they advocate we should do in the present situation? That is what the country would like to know. Can they possibly deny that if my right hon. Friend the Chancellor of the Exchequer had not raised taxes in both November and April Budgets of last winter and spring demand would have been wildly excessive today, that prices would have been out of hand, and the balance of payments no longer in control? We should like to know whether they agree with that or not. If they deny it, there is no informed economic opinion either at home or abroad which agrees with them.

Photo of Mr Terence Higgins Mr Terence Higgins , Worthing

The point that we have been trying to make is that the timing of the tax changes has been so hopelessly wrong. It is because the timing has been wrong that we are in the present situation, with the build-up of wage claims pressure and the Government having to clamp down.

Photo of Mr Douglas Jay Mr Douglas Jay , Battersea North

I entirely agree with the hon. Gentleman: the timing was wrong. These steps should have been taken by the Conservative Party years ago.

If hon. Members opposite do not deny this, and if they would not have raised indirect taxes, what would they have done in the circumstances of last winter? Would they have raised direct taxation more steeply? If so, I find it difficult to understand the point of all their votes against the Finance Bill throughout this spring and summer. Or do they want a tougher credit squeeze and still more hire purchase restrictions? If so, perhaps we could be told this afternoon. It does not seem as if we are to get an answer. [Interruption.] If we have an answer, we shall be very grateful. We should like to know what hon. Members opposite think should have been done.

The right hon. Member for Leeds, North-East did not tell us what policy he thought should be pursued. However, he paid a tribute, which I share, to Mr. Aubrey Jones, in his position as Chairman of the National Board for Prices and Incomes. But he entirely failed to make clear whether the Conservative Party supports the general purpose of the Government's prices and incomes policy. Representatives of both sides of industry support this policy. Are we to understand that the official Opposition alone are against an agreed incomes policy? If they are the only opponents of this policy, do they think that this is a very public-spirited contribution to the country's economic recovery? Perhaps right hon. Gentlemen opposite, either now or later in the debate, will tell us whether they support the general purposes of our policy.

I had supposed until recently that at least responsible members of the Conservative Party agreed with the leaders of the Confederation of British Industry, and the other industrial organisations that a general and collective effort to restrain the rises in prices and incomes all round was necessary. However, we have just had a remarkable contribution to wisdom on this subject from the right hon. Member for Wolverhampton, South-West (Mr. Powell), who, also, has not stayed with us this afternoon.

The right hon. Gentleman is, of course, a would-be leader of the party opposite. It might be said that he does not get much support in that effort, but he is at least some sort of shadow spokesman for something or other and he therefore speaks for his party. According to The Guardian of 22nd July, speaking at Hove on the evening before, he said: Anyone who deliberately gets less than the best possible return for his labour, anyone exercising restraint is guilty of a kind of sabotage. That is fine, patriotic advice to give to a laggard exporter or an unofficial striker at the present time.

The right hon. Member, who sits on the Front Bench opposite, then described the prices and incomes policy, which is supported by almost all the responsible industrial organisations on both sides of industry in the country, as "a most monstrous pantomime". That is the sort of advice given to the public today, to wage earners and profit earners alike, by right hon. Gentlemen on the Front Bench opposite and that apparently is the sort of selfish free-for-all which we should have to expect if right hon. Gentlemen opposite were in power.

Photo of Sir Harmar Nicholls Sir Harmar Nicholls , Peterborough

Would the right hon. Gentleman say at this juncture where his right hon. Friend the Member for Nuneaton (Mr. Cousins) fits in?

Photo of Mr Douglas Jay Mr Douglas Jay , Battersea North

The hon. Gentleman sits below the Gangway, but the right hon. Gentleman the Member for Wolverhampton, South-West sits on the Front Bench, and, there again, I do not think that he is authorised to interpret the views of his right hon. Friend.

Photo of Mr Paul Bryan Mr Paul Bryan , Howden

May we ask where the right hon. Gentleman the Member for Nuneaton sits?

Photo of Mr Douglas Jay Mr Douglas Jay , Battersea North

He sits above the Gangway, and he is very well qualified to answer for himself. I say that much, therefore, in view of the utterances of the right hon. Gentleman the Member for Wolverhampton, South-West and the sort of speech which was made by the right hon. Gentleman the Member for Leeds, North-East himself in opening the debate.

I see that my right hon. Friend the Minister of Technology is now in his seat. We shall be delighted if the right hon. Member for Wolverhampton, South-West also comes into the Chamber. I believe, frankly, speaking for myself and not for any others of my hon. and right hon. Friends, that what the country wants at this moment is not to listen to a great deal of party argument, but to understand the causes of the economic differences which beset us, and see the road out of them, however hard and uphill that road may be.

First, I believe that we have got to realise that economic growth and high employment necessarily involve a high level of demand and, indeed, in the case of the United Kingdom, a tendency for pressure on the balance of payments and for imports to rise and exports to be held back. Unless, therefore, we relapse into stagnation, which is to give up the problem and not to solve it, we must expect that from time to time, if the economy is to be intelligently managed, the Government must restrain an increase in the flow of purchasing power which has become or is likely to become excessive.

I am endeavouring to enlighten the hon. and right hon. Gentlemen opposite. If restraint is exercised through credit restriction, then it can be said that that restrains investment instead of consumption, and that what we ought to do is to put taxes on personal spending. If that advice is accepted and indirect taxes are raised, then it can be said, as the right hon. Gentleman tended to argue this afternoon, that the Government is itself pushing up the cost of living. That dilemma is inescapable with indirect taxes.

If one tries to mop up demand inflation by such taxes, one is bound to some extent to inflate prices and cost inflation at the same time. But if, for those reasons, one concentrates solely on increasing direct taxes—and I gather that the Opposition are not asking us to do that this afternoon, and, if they are, they can tell us so—then it can be said that one is striking at incentives and investment.

There are objections to any measure of restraint, which can very easily be stated. But if one has the courage to act and not just to let things slide and stagnate, the sensible policy, I suggest, is to rely on several of these controls at the same time and not push any of them to extremes. That is what the present Government have done and will do. Let us remember that the whole of the dilemma arises from the fact that output in this country is now growing and that employment and demand are extremely high. If the economy were deflated and stagnant, then, as the price of failure, my right hon. Friend the Chancellor would have the great pleasure of reducing taxes all round. But that is not the situation today.

The right hon. Gentleman also mentioned this afternoon some of the rises in charges by nationalised industries and public enterprises over the last year.

Photo of Sir Harmar Nicholls Sir Harmar Nicholls , Peterborough

The right hon. Gentleman may not have been in the House when his right hon. Friend the Chancellor made his statement, but he has just made a point about maintaining full employment. His hon. Friend the Member for Nelson and Colne (Mr. Sydney Silverman) clearly implied that the action taken yesterday by the Chancellor may undermine that, and the Chancellor was not able to reassure him. In the light of that, I do not think that the right hon. Gentleman ought to claim full employment as a permanent feature of the Government's action.

Photo of Mr Douglas Jay Mr Douglas Jay , Battersea North

I was in the Chamber, and I was coming to that point. I would be grateful if the hon. Gentleman would not waste time.

I was saying that right hon. Gentlemen opposite complain about rises in charges by nationalised industries during the past year. But, here again, there is a basic dilemma which we have got to face if we are going to be serious about these issues. If public enterprises never raised their charges, they would become a charge upon the taxpayer and, in the end, the enterprises themselves, I believe, would become demoralised.

Right hon. Gentlemen opposite themselves, on this issue, recognised that by publishing their White Paper on the Finance of Nationalised Industries in 1961, which laid it down that those industries ought to cover their costs, including their capital costs. Right hon. Gentlemen opposite, in so far as they object to increases in charges by nationalised industries, are now simply criticising us and those enterprises for fulfilling the obligations which the right hon. Gentlemen opposite themselves laid upon them in that White Paper.

Nor, in my view, can anyone who honestly faces these issues really doubt that some sort of incomes and prices policy is necessary today if we are to keep the rise in the cost of living down?

Photo of Mr Douglas Jay Mr Douglas Jay , Battersea North

I had better get on.

I admit that I have at times been sceptical myself about the possibility of an incomes policy, and that it might perhaps have been argued until a few years ago that if import prices did not rise and if reckless mistakes like the 1957 Rent Act, which the right hon. Gentleman described as "a compassionate and competitive policy", or some words of that kind—could have been avoided, we could have achieved growth and full employment without any sort of incomes policy.

I do not believe that one can seriously argue that now. If we have an incomes free-for-all, in a fully employed expanding economy prices are almost certain to rise. To allow that to happen would, I agree, be a perfectly possible policy. But the weakest would go to the wall, and those belonging to the strongest organisations or holding the best batch of equity shares would come off best. Export costs would rise and the balance of payments would get completely out of hand.

Therefore, I would like to ask those who support the right hon. Member for Wolverhampton, South-West, is that what they really want—a free-for-all in incomes and prices—or do they really want outright deflation as the alternative? There again, it would be more honest if we were told by people who advocate that sort of thing what they are really urging upon the country.

What we on this side say at least is that if prices can be kept down—and that is what this debate is about—a concerted incomes and prices policy, with all its difficulties and strains, as certainly there will be, is indispensable. If one accepts that, one must accept the central principle of the Government's policy: first, that it must be an agreed and not imposed policy; and, secondly, that it must cover all incomes and prices and rents and not merely salaries and wages. That is exactly what my right hon. Friend the First Secretary has been tire-lessly exerting himself to achieve. If right hon. Members opposite profess to agree with that objective, they will not much impress the country by pretending to disagree with the methods pursued to achieve it.

Every responsible person knows that that is the right policy. The real question today is whether it will gain enough public support and have enough time to succeed. Those who obstruct it will incur a heavy responsibility for the rise in prices which is inevitable if it fails.

If this policy succeeds, one of its principal advantages will be to protect pensioners and old people, who would be bound to suffer from the sort of free-for-all advocated by the right hon. Member for Wolverhampton, South-West. In addition to that, however—I say this because the Motion contains references to pensioners—the Government have recognised from the very start of their life that substantial direct help must be given at the same time to pensioners and to old people.

That is why, despite all the acute economic difficulties which we inherited last autumn from the previous Government, we announced last November the biggest increase in the State retirement pension since 1948 and the biggest increase ever in war pensions. Certainly, that announcement increased some of our difficulties abroad, but in my view it was absolutely right all the same.

I remind the right hon. Gentleman that we also at that time raised the following other benefits: unemployment and sickness benefits, industrial injury benefits, widow's pension, the 10s. widow's pension and National Assistance rates. The maximum benefit also of the abolition of prescription charges went, as we all know, to old people and pensioners, including Service and war pensioners.

In spite of all this, the Opposition, in their Motion, profess to feel anxiety about the needs of public service and Armed Forces pensioners. The Government have granted all the increases in benefits which I have described in the nine months in which they have so far been in office and we are now reviewing the needs of public service and Armed Forces pensioners to see what needs to be done.

Under the previous Government, however, three years and five months was allowed to go by between the operative date of the Pensions (Increase) Act, 1959, and January, 1963, when the 1962 Act came into effect. Before that, three years and four months elapsed between the operative dates of the 1956 and the 1959 Acts. Hon. Members opposite do not, therefore, have any strong case for criticising us for tardiness in increasing these public service pensions.

Photo of Mr Tufton Beamish Mr Tufton Beamish , Lewes

As the right hon. Gentleman knows, his right hon. Friend the Prime Minister—and attention was drawn to this today by my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph)—made a definite pledge of parity in public service and Armed Forces pensions. In the House of Commons last week, when I drew this to the attention of the Minister of Defence for the Royal Navy, he appeared to deny that such a promise had ever been given. Is the right hon. Gentleman now standing positively by that pledge?

Photo of Mr Douglas Jay Mr Douglas Jay , Battersea North

What I am saying is that we regard this as an extremely important issue and we are reviewing comprehensively the needs of these pensioners to decide what needs to be done. We are doing this within nine months, whereas the previous Government took more than three years to take any action.

Photo of Mr Tufton Beamish Mr Tufton Beamish , Lewes

That does not answer the question.

Photo of Mr Douglas Jay Mr Douglas Jay , Battersea North

That is my answer to the hon. and gallant Member's question.

Photo of Mr Tufton Beamish Mr Tufton Beamish , Lewes

It is a bad answer.

Photo of Mr Eric Lubbock Mr Eric Lubbock , Orpington

The right hon. Gentleman would have been wise to give way to me earlier, because I am sympathetic basically to his incomes policy. My question, however, is how he can expect wage earners to limit their demands to 3½ per cent. per annum and pensioners to demand nothing whatever when nationalised undertakings are allowed to impose increases of up to 13·3 per cent. in their charges without reference to the National Prices and Incomes Board?

Photo of Mr Douglas Jay Mr Douglas Jay , Battersea North

I always give way, other things being equal, to the hon. Member. On the other hand, I try to achieve brevity. I assure him that the increases in charges of nationalised industries, in spite of all I have said, are not excluded from reference, where appropriate, to the National Prices and Incomes Board, as, I am sure, the hon. Member understands.

It is also true that neither a direct incomes and prices policy nor the whole series of export incentive and promotion measures which the Government have introduced during the last eight months, or even the surcharge on imports, can fully succeed if the flow of demand at home is allowed to become excessive. Indeed, during the last few months almost certainly—although this is a matter of opinion—the excessive demand in the home market has been frustrating many of the direct measures to promote exports which have been taken by the Government. Therefore, one of the purposes of the measures of restraint announced by my right hon. Friend the Chancellor of the Exchequer yesterday was precisely to moderate the present exceedingly high level of internal demand and so to check the rise in prices of which hon. Members opposite are complaining.

The fact is that the expansionist forces in the economy have proved stronger than anybody foresaw last winter and spring. That "anybody" includes the Opposition. I cannot recall that they told us at the time of the April Budget that the Chancellor should have raised taxes more steeply. If they did, they can say so now. My memory is that they voted against the increase in the petrol tax in the November Budget last year and that they voted against the increase in the vehicle tax in Committee on the Finance Bill this year. Presumably, therefore, they are not arguing that they foresaw the high level of demand which we should be experienceing in the late summer. Therefore, if their advice in opposing all these taxes last winter and spring had been followed, the excess demand of which they are complaining today would have been even greater than it is.

Photo of Mr Roger Cooke Mr Roger Cooke , Twickenham

I am quite certain that other right hon. and hon. Members opposite gave the warning that I did. I warned the Government on 11th November that their Budget at that time was inflationary and was bound to lead to rising costs and that by the summer we would be in a dangerous position.

Photo of Mr Douglas Jay Mr Douglas Jay , Battersea North

The hon. Member may be much wiser than his own Front Bench, but the fact is that he voted in accordance with the decision of his own Front Bench. From all the indicators and from all industrial reports, there is no doubt that the moderate but real excess demand from which we are suffering is causing shortages, swelling imports and holding back potential exports.

That is why further restraint is temporarily necessary, and, of course, restraint of less essential projects such as my right hon. Friend announced yesterday will enable more essential schemes such as those in development districts, and houses and schools everywhere, and above all exports, to go forward more quickly. The language of priorities, it was once said, is the religion of Socialism. Whatever one thinks about that, it is certainly a necessity of planning at present, and this package of measures is designed to check the rise in prices and to speed up the disappearance of the balance of payments deficit which we inherited from right hon. and hon. Gentleman opposite and which has already been halved since a year ago.

These measures are not deflationary, because what we are doing is merely curtailing a present excess of demand over and above what is necessary for full employment, and we have no intention of allowing it to fall below that level. Indeed, if it turned out that the effect of the measures was much greater than was intended, it would be very easy to relax them, but let us understand that, quite contrary to anything that happened while the party opposite was in power, unemployment today is at the extremely low level of 1·2 per cent. over the country as a whole.

By exempting development districts and other areas of high unemployment from the present measures of restraint, which was never done by the party opposite, even when it plunged into outright deflation, we shall reinforce the success that we have had in recent months—I gave chapter and verse and the figures during the Scottish debate on Monday—in giving effective priority at last to the under-employed areas.

If we want to succeed in the essential national task of keeping prices down and keeping our overseas account in balance, we must be prepared at times to use the brake as well as the accelerator, otherwise the economy cannot be intelligently managed. What we must avoid are violent jerks such as the extreme deflation engineered in 1961 by the right hon. and learned member for Wirral, who has also fled from this debate, and the enormous deficit last year engineered by the right hon. Member for Barnet (Mr. Maudling).

From what I heard from the right hon. Member for Leeds, North-East this afternoon, it does not sound to me as though right hon. and hon. Gentlemen opposite have learned very much from the lessons of the last few years. Judging by the right hon. Gentleman's speech, or all that we get from the party opposite is confused advice, blind opposition to whatever the Government do, and divided counsels. The only positive and precise proposals come from the right hon. Member for Wolverhampton, South-West, who wants to lead us back in a headlong plunge into unplanned laissez-faire and every man for himself.

The real need today is exactly the reverse. What our economy requires at the moment if we are finally to overcome last year's appalling deficit is firm and planned restraint. The choice is between planned restraint, hard work, greater efficiency and clear priorities, on the one hand; and, on the other, a relapse into the old mixture of selfishness and muddle and deflation which is known in this country as Toryism.

Photo of Mr Reginald Paget Mr Reginald Paget , Northampton

Before my right hon. Friend sits down, will he tell us whether the Government stand by the pledge given to the Armed Forces pensioners with regard to parity in pensions?

Photo of Mr Douglas Jay Mr Douglas Jay , Battersea North

We are reviewing—and I hardly imagine that the House would wish us to take a decision without reviewing the matter—the right course to take in the matter of Armed Forces pensions, and when answering the debate tonight my right hon. Friend the Minister of Labour will give further particulars of what is intended.

Photo of Dr Horace King Dr Horace King , Southampton, Itchen

I think that the right hon. Gentleman forgot to move his Amendment. Does he wish to move it now?

Amendment proposed: In line I, leave out from "House" to the end of the Question and to add instead thereof: approves the Government's policies which have been directed towards bringing to an end the steady rise in the cost of living which had gone on under the previous administration; and in particular welcomes the special and urgent provisions which have been made to meet the claims of those in greatest need".[Mr. Jay.]

5.18 p.m.

Photo of Mr Robin Turton Mr Robin Turton , Thirsk and Malton

I am not: surprised that the right hon. Gentleman did not move the Amendment. I think that it could have been drafted a good deal better. During the last five years of Conservative Government there was a steady rise of 2½ per cent. a year in the cost of living. I deplored that., but I believe that at the moment none of us can avoid that kind of change when one has an expanding economy. During the last eight months—we have not got the latest figures; curiously enough they have been delayed until after this debate—there has been a rise at the rate of 6½ per cent. per year.

That is a matter which everbody on both sides of the House, quite apart from party politics, has to attack and find solutions for. Naturally everybody on this side of the House is in favour of an effective prices and incomes policy.

Photo of Mr Robin Turton Mr Robin Turton , Thirsk and Malton

The view may be expressed that the right hon. Gentleman's speech was directed at a windmill, but whether it was the windmill of Wolverhampton or Nuneaton I was not clear. Broadly speaking, there is general agreement on that. Equally, there is general agreement that if the Chancellor brings in relevant measures to deal with this problem and that of the balance of payments he will get support. The disagreement—and it is not confined to disagreement between one side of the House and another—arises from the fact that many of the measures in the Chancellor's three Budgets have been irrelevant to the problems involved. The right hon. Gentleman concluded his speech by saying that we must avoid violent jerks. In all my experience in the House I have not known three Budgets in eight months, and so I think that the right hon. Gentleman should be very careful about talking as he did.

What worries me is that the Government have not found a way of dealing with this problem of the steep rise in the cost of living. Certainly, they did—as the right hon. Gentleman said—correct the position of those in receipt of National Insurance payments, but, to be fair, naturally it was the largest increase, because, as benefits keep on rising, one has to give a larger increase to cope with a 2½ per cent. per annum rise. Proportionately, it was a good deal less than many of the previous increases. It was a perfectly proper and normal increase. In the whole period 1954–62, National Insurance payments tended to be increased at three-year intervals, so we should not try to take party credit on either side of the House for what is a purely mechanical feature of National Insurance.

Public service pensions have been increased at three-year intervals. The intervention of the hon. and learned Member for Northampton (Mr. Paget) is relevant here. We are not saying that the Socialist Government are slow in raising public service pensions. At the election, they gave a definite pledge, to which in the last Parliament nearly all back benchers on both sides of the House were committed—parity of pensions. We are arguing that that pledge should be repeated, and are not content with the statement simply that the pledge is being "reviewed." That was the answer given by the right hon. Gentleman. Will he, therefore, see that whoever winds up the debate for the Government makes clear where they stand with regard to service and public service pensions? At the moment, the position is unfair. As the cost of living rises, it is growing more unjust to the older pensioners who are concerned.

There was one point in the Chancellor's statement yesterday which I deplore greatly. The problem is that politicians of all parties have not been able to get complete stability in the cost of living. In the case of this Government through certain measures like the petrol tax, a vast increase of costs was created, which is one of the factors which has precipitated this rise. What is inescapable is that certain people in our community are very much worse off as a result of the higher rise in the cost of living—in particular, those living on fixed incomes and especially those who, for certain reasons, are not in receipt of a pension. I was shocked by the Chancellor's statement yesterday when he said that one of the measures which he was taking in order to get over his difficulty about balance of payments was to postpone the measure for an income guarantee. It is wrong to make these people the victims of the problem which the nation is facing. They are least able to bear it.

My hon. Friend the Member for Abingdon (Mr. Airey Neave) introduced a Bill, which I supported, to see that a partial pension was given to all those of a certain age who were disqualified from receiving pensions. By a Parliamentary trick, a debate on that Bill was avoided, but a debate did take place at about the same time that that debate would have taken place. The Minister of Pensions and National Insurance, without having explained why she did not support the Measure which she and the party opposite did not dare to have debated, said then: We, on the other hand, have a clear policy for the old people in our incomes guarantee. We are working very busily on it at the present time. We regard this as a very urgent matter"— I underline those words, "We regard this as a very urgent matter"— and it will be introduced as quickly as possible."—[OFFICIAL REPORT. 25th March. 1965, Vol. 709, c. 1156] This is a complete betrayal of that undertaking. I ask the Socialist Government to reconsider that part of the Chancellor's statement and, if they will not introduce their Measure to deal with those people who are the worst victims of the rise in the cost of living, to support my hon. Friend's Measure or to introduce one on the same lines, so that at least those people shall have that same amount of State generosity which is given to those who qualify for pensions under the National Insurance Acts. Surely, that is not an unreasonable demand.

now turn to the problem which faces the country. It has not been made sufficiently clear that we are not living within our means. If this had been tackled by an ordinary household, they would have looked to see what they could cut down immediately in order to balance their books. I disagree with the Chancellor's measures in his first, second and third Budgets, in that I do not believe that those measures were sufficiently directed towards curing that imbalance of payments. Many of them were inflationary in character.

In his first Budget, it is quite clear that the surcharge—which was illegal and which embittered all our allies on the Continent—had the effect of putting up prices in this country but had a negligible effect on the quantity of imports coming in in those categories. In my view, as it was not selective, it tended to be of little value. In his second Budget, the Chancellor made a direct attack on overseas investment which will lead to a great decline in our exports to the overseas countries concerned. However, its penal provisions cannot take effect for at least three years, though the loss of confidence will come, as with the surcharge, immediately.

In his third Budget, the main provision is the postponement of starting dates. This will have a considerable effect, but not for 12 to 15 months, after which it will have a very grave effect on employment in certain areas. It will not have the immediate effect of cutting down our expenditure on luxuries. A very good letter in The Times on 20th July from Sir Roy Harrod drew attention to the fact that what is wrong with this country is the very large imports of luxury goods. I do not think that people realise that, seven years ago, we were spending about £38 million on imports of manufactured goods, according to the Trade and Navigation Accounts. That was in the first five months of the year. If we compare that with the President of the Board of Trade's figures for the first five months of this year, we find that they have risen by nearly 200 per cent. and now stand at £113½ million.

Photo of Mr Douglas Jay Mr Douglas Jay , Battersea North

I am sure that the right hon. Gentleman realises that this is the direct consequence of the decision of his right hon. Friend the Member for Barnet (Mr. Maudling) when he was President of the Board of Trade in 1958–59 to remove import quotas on these manufactured imports. Having removed them, it is more difficult to put them back than it would otherwise have been.

Photo of Mr Robin Turton Mr Robin Turton , Thirsk and Malton

I do not want to blame anybody but to consider the position and what we can do about it. I have felt all along that, when faced with a balance of payments difficulty, the present Government, on gaining power, would have done better to have adopted the legal method of placing restrictions on selected items of luxury imports for a temporary period. I believe that such an act would have been understood by the exporting countries, which would have regarded it as being in line with our agreements with them. It would certainly have been better than the surcharge, which caused bitterness without having any effect.

Photo of Sir Harmar Nicholls Sir Harmar Nicholls , Peterborough

Perhaps I should remind my right hon. Friend that increased imports should be balanced by increased exports. That undoubtedly took place as a result of the liberalising policies which were clearly and properly adopted by my right hon. Friend the Member for Barnet (Mr. Maudling) when he was President of the Board of Trade.

Photo of Mr Robin Turton Mr Robin Turton , Thirsk and Malton

I do not disagree with my hon. Friend. I am pointing out that when the emergency stage arrived the course I suggested would have been far superior to the surcharge.

It is amazing to think that when we have an agricultural policy which is resulting in the production of more and more food—food production is increasing by 6 per cent. a year—the cost of our food imports in the first five months of this year was about £100 million more than the comparable cost seven years ago—£697 million compared with £597 million. It cannot be right, at this time, to discourage farmers from producing more, particularly since their efforts help to solve our balance of payments problem. I also cannot believe that this country requires the quantity of food which we at present import.

In my view the right way to tackle the present balance of payments problem is to decide that for the next six months the nation will save £200 million on imports; £100 million on the importation of miscellaneous manufactured goods—and, by selection, to pick out what I have described as luxury imports—and the other £100 million on food imports.

Photo of Sir Harmar Nicholls Sir Harmar Nicholls , Peterborough

As a temporary measure.

Photo of Mr Robin Turton Mr Robin Turton , Thirsk and Malton

My hon. Friend is, of course, right in commenting that this would be a temporary measure and should be regarded in that light. Our main object must be to so increase our exports that we can absorb our imports without causing balance of payments problems.

I hope that the Chancellor of the Exchequer and the President of the Board of Trade will take advantage of the Commonwealth Trade Conference to obtain a complete reappraisal of our trade with the Commonwealth countries. I am sure that great changes could be made, particularly from the exporting point of view. What Sir William McFadzean has done for our exports to Europe could similarly be done by an export council and other measures for our exports to the Commonwealth. I am sure that all hon. Members, irrespective of party, are behind the Government in their efforts to increase Commonwealth trade, but this object will only be achieved if there is sufficient preparation. We must put forward at the Commonwealth Trade Conference specific proposals to deal with the problem of commodities because unless we can get our customers rich they will not be good customers.

The President of the Board of Trade does not appear to be facing up to the realities of the situation. We must get down to brass tacks. We can get out of our difficulties, but only by producing more and consuming less. Not sufficient people realise this and it must be said in plain terms to the general public.

5.36 p.m.

Photo of Mr Lewis Carter-Jones Mr Lewis Carter-Jones , Eccles

I hope that the right hon. Member for Thirsk and Malton (Mr. Turton) will forgive me if I do not comment on his remarks, because I wish to concentrate on the question of value compared with the price, quality and quantity of certain goods. I intend to deal with three basic commodities which are used in virtually every household and I particularly wish to compare value and price from the point of view of the poorer sections of the community.

In recent years, particularly since certain orders went out in October, 1964, the quality of bread has gone down while the price of this important commodity has gone up. Although the quality of milk at the farm has been improved, its quality when it arrives on the doorstep has gone down. The third factor is the cost of ordinary day-to-day medicines—the type of medicines which sensible housewives give to their families. I will show that, in terms of quality and price, the housewife is being taken for a real and metaphorical ride.

I will deal, first, with medicines, a particularly interesting set of commodities to consider. The standards which are laid down by the Medical Council and the Pharmaceutical Society are extremely good, but when one considers the prices of the proprietary brands of the same medicines one finds that they are frequently twice or three times the amount of the equivalent standard.

In March, 1965, Which? published a list of day-to-day medicines which are used by the sensible housewife. The publication made a comparison between the standard formula obtainable at any chemist and the prices of the proprietary brands. Bearing that comparison in mind, I appeal to the Government to take action to see that greater publicity is given to that list. If that were done the cost of living would be reduced for all families in general and families living on small incomes in particular.

From time to time we all suffer from indigestion or experience headaches. That applied particularly to hon. Gentlemen opposite last week, although they may think that some of their problems were resolved last Tuesday. If we wish to relieve our aches and pains and use the ordinarily advertised proprietary brands of medicines—and the same applies if we bruise a part of our body and wish to buy something to relieve the pain and heal the wound—we find that we are paying three or four times the price we should be paying.

Despite this, there seems to be a conspiracy to disguise the true facts from the British public. The President of the Board of Trade would be doing a very great service to all the housewives of this country if he took steps whereby these costs could be clearly brought home to people. For example, it is known that the Macleans brand of indigestion tablets, frequently used in the House, especially by hon. Members opposite, are twice the price of an identical brand which can be obtained on the standard formula. It would be a great step forward if either through educational establishments or through publicity my right hon. Friend could bring this fact home to the public.

My next point is ever more important. It concerns what in many ways is the basic food of the country—bread. It is called bread but many of us would prefer to use the expression "blown up steamed putty", because we have been suffering from automation in the bakeries. As the price of this product has gone up, so its value and quality have gone down rather alarmingly until in the end we find ourselves with an industry with very little growth rate. The bakers are experiencing great difficulty in expanding sales. The right hon. Member for Leeds, North-East (Sir K. Joseph) emphasised that it was important to have plenty of competition, but within the last few years the baking industry of this country has got into the hands of monopolies. Four groups dominate 75 per cent. of the bakery industry of this country, with some alarming consequences. Certainly the price has not fallen, but equally certain the quality has gone down. To a certain extent hon. Members opposite must accept the responsibility for this because nothing they did in the last few years, and particularly their new instruments about the control of flour in September, 1964, in any way helped the situation. In fact, the situation has got rather worse.

We have to bear in mind that in bread there is a very high quantity of water. A near neighbour of mine is a master baker, a man with some pride in producing a good loaf. He said, "We are now producing a tasteless foam rubber substance which we are compelled to eat as bread." He is a man with pride in his job. But there is no longer competition in that craft.

He emphasises that the old mix for bread was roughly 15 gallons of water to 280 lbs. of flour. With new techniques and new processes we are using today 17 gallons of water for the equivalent amount of flour. It seems to me that this must be about the most expensive wind and water in all history, and yet we are suffering it and we see no desire to change because of a reluctance to try to raise our values and standards. This is why I want to emphasise throughout my speech that not only is price important but so is quality.

Photo of Mr Daniel Jones Mr Daniel Jones , Burnley

Would my hon. Friend add what are the profits of the companies about which he is speaking? How have they risen while the quality has gone down and the price has gone up?

Photo of Mr Lewis Carter-Jones Mr Lewis Carter-Jones , Eccles

The four groups are doing extremely well and are not suffering at all. I thank you for that point.

Photo of Dr Horace King Dr Horace King , Southampton, Itchen

Order. I am grateful to the hon. Member but he must not thank me.

Photo of Mr Lewis Carter-Jones Mr Lewis Carter-Jones , Eccles

I am sorry for that, Mr. Deputy-Speaker. I was carried away by partial indigestion in waiting to get into the debate.

Let me make another point—and I seem to be making points all the time. A survey was recently made by the Medical Research Council of the amount of water in bread and some surprising figures were produced. I do not know whether you are aware of it, Mr. Deputy-Speaker, but 40 per cent. of your bread is water. Our dilemma is that the amount of water in bread is going up and up all the while. That is why it would be interesting if the Prices and Incomes Commission, in reviewing this matter, took account not only of price but also of quality.

I promised that I would be brief. My hon. Friend the Member for Brixton (Mr. Lipton) for year after year has been trying to get the Government to improve standards of bread. May I quote his supplementary question following an Answer which he received on 14th November, 1960, when he called it a steamed concoction of doped flour commonly called bread which is more like steamed cotton wool."—[OFFICIAL REPORT. 14th November, 1960; Vol. 630, c. 10.] It is high time this was changed.

For a while I was a lecturer in a technical college which had a bakery department. I am sure that we could improve the quality of our bread in this country and at the same time, by using new techniques, could considerably reduce the price.

The third factor is milk. I am prepared to pay tribute to the British farmer. Without doubt over the years he has improved the quality and the yield of milk on British farms. This is undoubtedly true. Every piece of research done indicates that it is so. But what we have not experienced is an improvement in the standard of milk going into the homes. Basically for ordinary milk that has been 8·5 per cent. solids-not-fat and about 3 per cent. milk fat. This standard has remained. In my youth the standard of milk going into the home was well above that minimum standard.

I should like the First Secretary to analyse this point: over the years the standard of milk which has gone into the homes has frequently fallen all too near the basic minimum. Somebody is creaming this industry, and the British housewife is the sufferer. I do not say that they are watering it, but I do say that they are taking out the good stuff. This would bear very close investigation. There is plenty of evidence of this, provided that we can collate it and provided that action is taken to acquire this information. The benefits of the improvement in production should be passed on to the ordinary people. Far from the quality of the milk going into the home rising, in my view it has fallen. The House ought to deplore that and to tackle the problem.

Photo of Mr Alick Buchanan-Smith Mr Alick Buchanan-Smith , North Angus and Mearns

The hon. Member is making a very serious charge against the milk distributing industry that they are either watering or creaming off the milk which is being delivered. Could he give some evidence to substantiate his remarks?

Photo of Mr Lewis Carter-Jones Mr Lewis Carter-Jones , Eccles

I can supply evidence, but this applies to a highly restricted localised area. In consequence I might be doing harm to that one area. What I ask for is an investigation. This is my main worry. I do not say that water is being added to milk but that some of the quality is being taken out of it and the average quality of milk going into the home is getting all too near to the basic minimum standard. It would be in the public interest if that were further investigated.

I have been far more critical on bread and medicines. I object strongly to the way in which the baking industry is being run today and ordinary standard medicines should be more readily available to the public. My point in regard to milk distribution is that it could well bear investigation.

5.51 p.m.

Photo of Miss Edith Pitt Miss Edith Pitt , Birmingham, Edgbaston

With much of what the hon. Member for Eccles (Mr. Carter-Jones) said I find myself in agreement because the general tenor of his argument was that he would like the housewife to obtain better value for the money she spends. I am afraid I do not agree with his recommendation that those on this side of the House should take indigestion mixtures. I should have thought that his own Government needed a jolly good dose in order to regurgitate the load of broken pledges which must lie heavily on their stomachs.

A large number of people in the country would support the censure Motion on the Order Paper if they were in a position to do so. I hope I may speak for some of them, especially for housewives. Many people voted Socialist in the last General Election because they were misled entirely by the promises on which their votes were bought. It is they who would like to be here today. My right hon. Friend the Member for Leeds, North-East (Sir K. Joseph) referred to the triple pledge given by the First Secretary of State and Secretary of State for Economic Affairs. I have looked up some of the comments made by hon. Members who now represent some Birmingham constituencies which they won as marginal seats in the General Election.

The hon. Member for Birmingham, Sparkbrook (Mr. Hattersley), in his election address, said on the question of prices: Every housewife knows that each week her money buys less and less. I wonder what he dares to say to the housewives of Sparkbrook now. The hon. Member for Birmingham, Yardley (Mr. Joan L. Evans), writing in the Birmingham Mail, said: The Government's policies …"— He meant the Conservative Government— had led to ever-increasing prices. What on earth does he think the policies of the Labour Government have led to? The hon. Member for Birmingham, All Saints (Mr. Walden) said in his election address: A Labour Government means to give the housewife steady prices. Instead of steady prices we have had a steep rise. What the public were led to expect has not happened.

I tell hon. Members on the Government benches—although they should know this if they have regular contact with their constituencies—that the weekly wage earners in their areas are the most outspoken on this subject of rising prices. The wives say that something goes up in price every week. The husbands say that their wives are always grumbling that they cannot manage on the money their husbands allow them. These people for whom hon. Members on the Socialist benches have always claimed a prescriptive right to speak, the weekly wage earners, are now saying that they are very disappointed with the Labour Government. I hope that hon. Members opposite are collecting that comment in their constituencies.

Photo of Mr Daniel Jones Mr Daniel Jones , Burnley

We are all disturbed about rising prices. No hon. Member is worthy of his position in this House if he is not disturbed about this, but I hope the hon. Lady will remember that in the early part of the year when the 15 per cent. surcharge was applied a number of companies increased their prices, their profits and their dividends. That, more than anything else, has contributed to the unfortunate situation in which we are now. Those people have been appealed to but I am afraid that they have been appealed to in vain. This has been a marked contribution to the unfortunate state we are in at the moment.

Photo of Miss Edith Pitt Miss Edith Pitt , Birmingham, Edgbaston

The hon. Member cannot pin the blame on one action, and that the action of his own party, for a number of Government Measures have brought about increases in prices. It is true that weekly wage earners are probably able to maintain their standard of living. It is very important to think not only of the cost of living but of the standard of living. Perhaps they are able to maintain that standard and many of them can manage because of the benefit of wage increases referred to by my right hon. Friends. What one has to remember today is that wage increases are lagging behind price increases. This is contrary to the pattern which obtained when my party was in power. It seems that we are getting back to the old Socialist pattern again.

Even workers who may be able to maintain their standard of living because they have had increases in pay often make the comment that whereas in years gone by there was a margin and they were able to save a little—figures prove that they were able to save under Conservative Governments—they are now having to spend more in order to maintain their standard of living. I suggest that the fall in National Savings is a matter of very real and growing concern. That is important, not only in the context of this debate on the cost of living, but in the whole context of our national economy.

I talked at the weekend with a housewife who has two small boys aged 7 and 9. I thought her case was typical. I know her to be a careful, prudent manager. She bottles fruit and she bakes and her husband grows the vegetables. They are a happy family. I asked her what extra money she has had to spend on housekeeping since the General Election. Because she is a good manager and jots things down, she was able to tell me straight away. She had worked out that the extra cost was between 15s. and 20s. a week. I think that is the general pattern throughout the country.

Her main grumble was about the cost of children's clothes. She said that they were as expensive in many cases as clothes for her husband. [An HON. MEMBER: "That is true."] I am glad to hear confirmation of that. I would not charge the present Government with this because it is not a new phenomenon, but I charge them that the main part of the high price of children's clothes is a result of labour charges and not actual cost of materials. So far the Government's incomes policy is still only a matter of fine words.

Photo of Mr Richard Winterbottom Mr Richard Winterbottom , Sheffield, Brightside

I make this point after a very careful study of the problem. It is true that the cost of children's clothes may be similar to the cost of clothes for an adult over a period, but that is because there is heavier depreciation of children's clothes through wear and tear. That has to be taken into consideration.

Photo of Miss Edith Pitt Miss Edith Pitt , Birmingham, Edgbaston

I am glad of the confirmation the hon. Member gives. He makes a further point. My point was about initial cost, but he makes a point about durability. We are agreed that the cost of children's clothes is a heavy item in the family budget. It is not only wage earners who are affected by rising prices. They affect all sections of the community. A section less vocal is the younger professional workers. Rising prices hit them especially hard, because they are at the early stages of their careers. They are just beginning to climb the career structure ladder. They are probably buying a house on mortgage and thus paying heavily. Their rates have been increased. They have certain commitments, because they are expected to maintain certain standards.

The real hardship falls on pensioners and those on fixed incomes. To them a reduction of 1s. in the £ in their purchasing power—that is the figure since the Labour Government took office—means going without something. Although it is true that through State pensions—by this I mean National Insurance pensions—an increase has been given by the Government, part of that increase has already been whittled away by rising prices, and the pensioners are afraid that this pattern will continue. Public service pensioners have had no benefit at all from the present Government, despite the pledges which were given. Already in this debate the Minister has been asked to say whether the pledge given so firmly by the Labour Party when it was in opposition is still valid, because the Service pensioners look to the Government for that reassurance.

The only exception to the sections of the community I have mentioned who are affected by rising prices are the teenagers. They are the ones who seem to have the money nowadays, and they jolly well spend it. I am sorry that the President of the Board of Trade is no longer here, because I would have liked to ask him to confirm my point. I think he is in a position so to do.

It is a fact that the Index of Retail Prices has risen by 4·4 per cent. since this Government took office. I do not propose to take up the time of the House by giving a shopping list of the various articles which have increased in price. They range from bread to sausages—or are those two so far apart?—and from electricity to bus and rail fares. Housewives always talk to me about the price of meat. What they mean is the price of beef, which is higher than I have ever known it. The price of lamb and mutton is reasonable, though one must qualify "reasonable" by saying that it is relative to one's personal income. Meat is high in price. Good cuts of meat are almost impossible for those on fixed incomes.

Today people are becoming more choosey. They are pondering more over their spending, because they want to get full value for the money they have. This in turn affects the small shopkeepers, who tell me that business is tightening—no more than that. It affects the small business firms, such as the small repairing garage and similar service traders, because they depend on their customers, who themselves are traders and who have a little less money to spend. It affects the smaller employer.

There are two aspects of this problem. It is not only the question of prices in shops. It is deductions from pay. The workman is interested only in his take-home pay, but the employer has to consider the gross. Increases in taxation and in National Insurance contributions have made it more difficult for employers to keep pace and to reflect this in the take-home pay of their workers. The extra Income Tax and the increased National Insurance charges must go on the price of the commodity. It is particularly difficult for a small firm trying to live in this highly competitive world.

The Government deserve censure on this matter because their own actions have brought about this increase. Higher taxation and higher transport costs affect everything we buy and sell. Higher fuel costs and higher rates drive up prices and account for the sharp rise in the cost of living—I stress "sharp rise". People are worried about the future. They want to know what is likely to happen because of their concern about rising prices. They are, to use the vernacular, "feeling the pinch"—the pinch of Socialism and the price that must be paid for electing a Socialist Government.

Photo of Mr Alf Morris Mr Alf Morris , Manchester Wythenshawe

The hon. Lady has made a fairly serious charge against three of my hon. Friends—my hon. Friends the Members for Birmingham, Sparkbrook (Mr. Hattersley), Birmingham, Yardley (Mr. Ioan L. Evans) and Birmingham, All Saints (Mr. Walden). Will she tell me what impression she gave the electors of Edgbaston about the balance of payments deficit during the election campaign last October?

Photo of Miss Edith Pitt Miss Edith Pitt , Birmingham, Edgbaston

The hon. Gentleman must not sidetrack today's debate. We are talking about rising prices. He is endeavouring to defend three of his hon. Friends who are not even present to listen to the debate. However, I will answer his question, if I may do so within the bounds of order. I certainly told my constituents of the difficult situation the country was in because of the adverse balance of payments. I referred them to the figures which were issued during the course of the election campaign by my right hon. Friend the then Chancellor of the Exchequer.

6.6 p.m.

Photo of Mr Ronald Lewis Mr Ronald Lewis , Carlisle

The Opposition today are having a field day. I am reminded of an end of term session when everyone is anxious to have a go. The right hon. Member for Leeds, North-East (Sir K. Joseph) was rather like the overgrown schoolboy, anxious and in a hurry to fall ever himself in what he has to say. The speech of the right hon. Member for Thirsk and Malton (Mr. Turton) was rather more moderate, as was the speech of the hon. Lady the Member for Birmingham, Edgbaston (Dame Edith Pitt). I must confess that I was somewhat nauseated by the fact that both the right hon. Member for Thirsk and Malton and the hon. Lady laboured rather heavily on the whole question of pensions and those on fixed incomes. I ask them this question in all sincerity; if they are so keen to help those in receipt of retirement pensions, Service pensioners, and so on, why did not they during the 13 years of Conservative rule badger their own Front Bench until they did something about it?

Photo of Mr Ronald Lewis Mr Ronald Lewis , Carlisle

Evidently not with any success.

Photo of Mr Ronald Lewis Mr Ronald Lewis , Carlisle

I do not claim any special privilege to speak in this debate. My only association has been with the co-operative movement, which was the workers' champion in days that have passed because it was their only means of saving. We all deplore the rise in the cost of living. When I was employed by British Railways, I was reminded of this almost every week by my wife. On returning from shopping on Fridays she would say, "Another 1d. on so and so and 2d. on so and so". The increases were persistent. That happened under the Conservative Government.

Today most people associate the cost of living with food. Perhaps our present cost of living index should be looked at again. I agree with the hon. Lady that the average housewife is probably more concerned than the average man about the cost of living. I want to examine the prices of some items of food since 15th October of last year when the Labour Government were elected.

Over the past ten years the official retail price index for all foods has climbed 30 per cent., and in the last four years of Tory rule the increase was 16 per cent. Increases in the price of food since last October are not in excess of the general rise over the past ten years, despite all the moaning and groanings of hon. and right hon. Members opposite. The basic commodities in the grocery trade such as sugar, butter, lard, cheese, bacon, tea and eggs, which together represent 20 per cent. to 25 per cent. of the total grocery trade, show, not an increase but an overall decrease in retail prices.

The details are as follows: sugar a decrease of about 15 per cent., butter a decrease of about 9 per cent., lard a slight increase of 1 per cent., cheese a slight increase of 2 per cent., bacon no change in the price, and likewise with tea. There has been a slight increase of about 2 per cent. in the price of eggs. All these figures average a decrease of 2·6 per cent. Even this figure, I would suggest, is somewhat deceptive since far more sugar is sold than cheese and the decrease in the sugar price is about 15 per cent.

Many price increases during the first few weeks of the Labour Government were obviously motivated by political considerations. I pay my respect and tribute to my right hon. Friend the First Secretary on his appeal to business people and manufacturers to hold their prices. Some readily responded but, unfortunately, others chose to raise prices. I saw a circular from a firm which makes drinking straws for children. This was issued during the first weeks of the Labour Government. There was an insinuation in it against the Government, because it accused them of having manipulated a financial crisis with the result that the firm had had to increase the price of drinking straws. In spite of the spate of increases, which we readily admit has occurred, in some instances prices have settled down and in some cases there have been decreases.

There has been an intensification of competition in the grocery trade, which I welcome. It has meant that many retailers have not passed increases on to their customers and some firms have co-operated in the appeals made to them. Therefore, I suppose that it can be said that increased competition means that the wise shopper can buy her groceries much more cheaply now than she could before October 1964. Coupled with this, a great many people have had wage increases, with which we all agree, and these increases are far in excess of the small increase in the cost-of-living.

Photo of Mr Ronald Lewis Mr Ronald Lewis , Carlisle

No, I will not give way. The hon. Member must listen. [HON. MEMBERS: "Oh."] I have looked up some of the Conservative Party manifestoes. In 1951 the party said that, The greatest national misfortune which we now endure is the ever-falling value of our money". The manifesto added that the Tories would control the cost of living. In 1955 the Tories said: We accept the obligation to continue to work for more stable prices. In 1959 they claimed, We have now stabilised the cost of living. When it came to October, 1964 they said: No country has succeeded in keeping postwar prices completely steady. During the period from October, 1951, when the Tories came to power, until October 1964 the value of the £ shrank to about 13s. 4d. What did the Tories do? Under the Tories the National Health Service contributions were increased on three occasions, petrol prices were increased on four occasions, and tobacco and cigarette prices were increased on five occasions. Mortgage interest rates were increased variously during the 13 years, and the average rate poundage in England and Wales increased almost yearly under Tory administration. In addition, Post Office charges, telephones and stamps were increased and the cost of the combined television and radio licence was raised. In view of the past record of the Tories, their present image appears to be laughing through and spitting at their creed.

6.17 p.m.

Photo of Mr Philip Goodhart Mr Philip Goodhart , Beckenham

The hon. Member for Carlisle (Mr. Ron Lewis) said that the price of sugar in the shops had dropped. This is certainly true, but it is not due in any way to action by the present Government. It is because international commodity prices have generally collapsed in recent months. It is particularly disturbing that the cost of living in this country should have skyrocketed at a time when the cost of basic commodities which we buy overseas is plummeting down and one would expect to see some savings.

Photo of Mr Philip Goodhart Mr Philip Goodhart , Beckenham

The hon. and learned Gentleman says "Rubbish", but if he will look at the list of commodity prices published regularly on the back pages of the Economist he will see the statistics set forth quite clearly to show that there has been a substantial drop in international commodity prices.

Photo of Mr Niall MacDermot Mr Niall MacDermot , Derby North

Is the hon. Member suggesting that prices of imported food have gone down recently?

Photo of Mr Philip Goodhart Mr Philip Goodhart , Beckenham

I am suggesting that the price of sugar and of cocoa, to both of which the hon. Member for Carlisle referred specifically, have collapsed on the international market. The hon. Member for Carlisle said that the Conservative Party had no right to pose as the champion of the consumer because of its past record. In this Parliament we have had a great many narrow Divisions. They were very rare in the last Session. I remember the narrowest Division during the whole period of the last Parliament. It took place in Committee on the then Resale Prices Bill, on an Amendment which affected the livelihood of tens of thousands of chemists, a substantial, worthy and most deserving pressure group. The arguments in favour of exempting chemists from the effect of the Resale Prices Bill were very powerful, and I admit that during the debate I had considerable qualms on the subject myself. But, when we came to a Division, the Amendment was rejected by the Conservative Party, albeit with a majority of one.

That one vote, and scores of others during our proceedings, entitle the Conservative Party to say that it is prepared to stand up for the consumer despite pressure groups and despite all the weighty arguments which important manufacturing and retail interests may bring to bear. I think that that vote on that evening had some effect on another vote which took place yesterday not so far from this Chamber. Although hon. Members opposite may not be prepared to recognise it, I have no doubt whatever that the Press and the public as a whole appreciate that every important price cut which has been made since the election has been due not to any action of the present Government but to the operation of the Resale Price Maintenance Act.

Sometimes, this Government have stepped in immediately to offset the effect of price cuts brought about by increased competition. The hon. Member for Eccles (Mr. Carter-Jones) spoke about milk. I can remember what happened in regard to a somewhat stronger drink. The abandoning of resale price maintenance by the Distillers Company led to an immediate cut, due to the increase in competition, in the price of spirits, but within days the Chancellor of the Exchequer and his hon. and learned Friend the Financial Secretary stepped in and removed the benefit of these price cuts by raising the duty.

Virtually every action of this Government has tended to force up prices. We have had the increases in taxation. We have had the import surcharge, to which the hon. Member for Eccles referred, which not only puts up prices directly but shields this country's industry from competition. We have had the price increases in the nationalised industries which were set forth in HANSARD only last Thursday, and we know that there are many more to come because, since the beginning of this year, there have been more than 20 wage increases averaging more than 3½ per cent within the nationalised industries.

To offset all this, what have the Government done? They have set up the National Board for Prices and Incomes. I admit that, at the time, I gave this a pretty dusty welcome, and I wrote of the proposed Review Commission: Indeed this whole exercise seems likely to become as ludicrously ineffective as the enormous effort which the American State Department devoted in the 1920s to persuading European countries to sign treaties renouncing the use of force. But, since the publication of the first Report by this body, presided over by an ex-colleague from these benches, I have begun to think that there may be considerable merit in it. It is unlikely directly to affect the course of prices in the next few months. Perhaps, as so often happens, the best comment on the net result of it was made by Osbert Lancaster when, in one of his cartoons, he showed his usual gloomy idea of an hon. Member opposite talking to Maudie Littlehampton after the publication of this Report and saying, "You see, thanks to George Brown, prices will now go up separately instead of all together".

Nevertheless, I think that this Report is of considerable value. It sets forth in detail some of the restrictive practices that could well be removed, with beneficial effect on prices. My hon. Friend the Member for Louth (Sir C. Osborne) has had a bit of a go on this subject at Question Time, and a very dusty answer he has had from the Government Front Bench. The Board set forth in some detail also certain of the effects of increased Government taxation on road haulage rates as a whole. But what I welcome above all is the fact that this Report—I hope that the same will be true of subsequent reports—is a paean of praise in favour of competition. Referring to the road haulage industry, it says: In those sections of this variegated industry where competition is keen, the recommended increase will be passed on only in part, but in those sections where competition is not so keen it may be passed on in whole. It seems to me that the road haulage industry today affords a fair test of the Government's intention. Some hon. Members below the Gangway opposite would, undoubtedly, like to see the whole of the road haulage industry nationalised, but then there would be small chance, if any at all, of the consumer shopping around for lower rates, as the Board recommended he should. The users of road haulage services have been told that they ought to refuse to pay the increases, but if my constitutents refused to pay the increased charges recently introduced by the electricity board, they would jolly soon find themselves without electricity and in court.

One does not necessarily have to consider the views of those who are thinking in terms of complete nationalisation. We have now before us the Geddes Report on the licensing of road haulage which recommends greatly increased competition. If the Government really believed in competition, there would be a good chance of action being taken on this Report. But we all know perfectly well that there is no chance whatever of the Government taking any action.

So I am delighted that the Prices Board has come out so firmly in favour of competition, because I am convinced that this is the only way in which prices can be kept down. I am afraid that this lesson will never be learnt by hon. Members opposite, and that is one of the main reasons why they face another 13 years in opposition.

6.30 p.m.

Photo of Mr James Tinn Mr James Tinn , Cleveland

I confess that throughout this debate I have experienced a sense of unreality, which has not been entirely absent on other occasions but seems to have been particularly marked today. It seems to have been even more of a "phoney war" than usual, even the two right hon. Gentlemen who opened the debate hardly seeming to believe in everything they were saying, and both typifying this atmosphere by forgetting to move the Motion and the Amendment.

I believe that in their choice of subject for debate the Opposition have tried to present the House and the country with a snapshot of crisis, a limited picture, trying to present it as a general true panorama of the economy as a whole. This will be, and has been, exposed for the sham that it is. We cannot allow the Opposition to isolate one aspect of our economic affairs and concentrate attention on it as they seem to do. They seem to be seeking to distort the facts by ignoring so many of them. We cannot allow them to get away with this. We must try to broaden our view of the picture a little and ascertain where the real responsibility lies.

Photo of Mr Cyril Osborne Mr Cyril Osborne , Louth Borough

Surely after the Chancellor's statement yesterday, the gravest that I have heard in the House for 20 years, the hon. Gentleman must agree that we are facing a real crisis.

Photo of Mr James Tinn Mr James Tinn , Cleveland

That is precisely the point that I was about to make. I believe that the Opposition stand exposed as having been in the position of the head of a household faced with major illness who has refused to call in the doctor because he did not wish to pay the bill. That was what they did in election year. The charge against them is that in the year when the nation was facing an accumulated crisis of greater magnitude than it has ever faced before, the right hon. Member for Barnet (Mr. Maudling) was sitting tight and doing nothing but cover over the facts, and the recently deposed Leader of the Opposition was assuring us that the economy had never been so healthy. The responsibility is inescapably that of right hon. Gentlemen opposite, and that must be brought home to them time and time again.

Now that the country has a Government who are tackling problems, we find the Opposition refusing to take their medicine. They are refusing to support the Government in their unpopular but essential decisions which are made all the more drastic and urgent by the failure of the Opposition to take them in time. We can contrast the stage-managed elections of the last 13 years with the purposeful decisions and actions of the present Government. The Government might well have been deterred from many of these urgent and inevitably unpopular decisions by the size of their majority. In spite of their majority, the Conservative Party could not face up to these decisions in an election year. The present Government, with their pitifully small majority, have thrust aside party and electoral considerations and deliberately gone ahead with the course of action which they believe to be necessary for the public good, having sufficient confidence that the British people will approve of it when an election comes. We can contrast this with the cynical neglect by right hon. Gentlemen opposite. We on this side of the House have no need whatever to apologise for what the Labour Government have done.

We can also contrast the actions of the Labour Government in this year of crisis of unprecedented magniture with the actions of previous Chancellors in much less serious situations. The Government have taken—we are fully conscious of this—unpopular but necessary decisions. But look at the other things we have done. Could anyone have imagined that right hon. Gentlemen opposite in the middle of their successive credit squeezes would have handed out one of the largest increases in pensions ever? Could one have envisaged that the first act of a Conservative Government after an election would have been to bring in a Bill to give security of tenure to people who have been harassed by landlords and all the evils of Rachmanism? Could we have expected right hon. Gentlemen opposite at such a time of economic emergency to have produced the Rent Bill, which will bring relief to thousands of people? Could we have expected right hon. Gentlemen to produce in such circumstances a Redundancy Payments Bill which contrasts so effectively with the golden handshakes of the Tory years and goes some way at least to give security and justice to the ordinary worker and salary earner?

Nothing has been more bogus than the crocodile tears which have been shed by hon. Members opposite on behalf of public service pensioners. This has come from the Conservative Party which had so much time in the past to do something about that problem. How much of our policy did they expect us to get through in the first eight or nine months? Let us look at a little more of what we have done. We gave the pensioners, as I said, the largest increase ever, 100 per cent. of what their own association demanded. So far as I know, no trade union leader has ever succeeded in obtaining so much.

We gave the largest increase ever in industrial injuries benefits. We tackled the vicious earnings rule which reduced the incentives of widows to earn and which, in effect, dipped into the widow's mite for the national Exchequer. That vicious and much criticised rule has been abolished. The 10s. pension for widows has been trebled. All these are emergency measures in an attempt to restore the position of this hard-hit section of the community while the Government prepare their major Measures of social insurance. In grappling with the long-term as well as the short-term economic problems, my right hon. Friend the First Secretary of State has gone ahead with his plans, despite the constant and carping criticism from the benches opposite. He has kept well up to schedule at each stage. Yet on each occasion hon. Members opposite have said that he will never get over the next hurdle. Nevertheless, he has moved on and has set up machinery which is in strong contrast with the toothless tools of the last Government. He has secured agreement on objectives and the first cases have been referred to the Prices and Incomes Board, which has produced its first reports. The first results are already apparent. [HON. MEMBERS: "Where?"] Surely the reaction of the road hauliers gives hope that private industrialists are not as blind in their prejudice as some hon. Members opposite, who simply seek party profit from the country's difficulties.

The Government will continue to govern purposefully and courageously. When the present crisis has been surmounted, they will move on to the truly constructive phase when they will begin to carry out the rest of the programme on which they were elected. Then, my right hon. Friend the Minister of Pensions and National Insurance will produce her income guarantee scheme and the other major insurance Measures which are in preparation.

When we are free from the difficulties that we on this side of the House inherited from the party opposite, we shall be able to honour our pledge to the house buyers and house builders on land prices, interest rates and rents. We shall be able to do something about the too-long neglected problem of leasehold reform, and thereby alter the situation in which people see their security, their hard work and their money vanishing on the expiry of a lease.

We have nothing to apologise for. The Government will govern vigorously and effectively and when the time come to return for the verdict of the people we shall be able to do so with confidence and success.

6.43 p.m.

Photo of Mr Eric Lubbock Mr Eric Lubbock , Orpington

The hon. Member for Cleveland (Mr. Tinn) encroached a little on tomorrow's subject. He will therefore understand if I do not follow him now, except to remark that I think that this week's business has been rather badly arranged by the usual channels because it was almost inevitable that there would be some overlapping between the subjects discussed today, tomorrow and next Monday.

I do not think that the House is at its best when discussing matters of this kind. People outside who are not familiar with the way the House works often say that it is at its best on general subjects and broad matters of principle. I wonder how many of them have been present to listen to a Supply day debate.

So far the debate has been rather sterile. It has been limited to the Government saying that they cannot do certain things because they inherited a difficult situation from the Opposition and to the Opposition saying that the Government should have done certain things during their first eight months of office.

I was disappointed by the speech of the right hon. Member for Leeds, North-East (Sir K. Joseph). He did not seem up to his usual form. He spoke mainly in Daily Sketch headlines, finishing up in a thunderous way with "crash, bash" in describing how the Government had destroyed so many things erected by the Tory Party. A little euphoria seems to have come over the Tory Party as a result of its solution of the leadership difficulties which have been plaguing it. I was reminded of the old song, I was walking along, minding my businessWhen out of an orange-coloured skyCrash, bash, alakazamWonderful you came by. That seems to be the attitude of the Tory Party at the moment and I expect that we shall be seeing more of it in the rest of today's debate and tomorrow and on Monday.

The right hon. Member for Thirsk and Malton (Mr. Turton) had nothing constructive to say. The depressing thing about the country's situation is that the Opposition have only destructive opinions to offer about the measures taken by the Government, particularly those announced by the Chancellor yesterday. The Opposition cannot put forward any alternative policies that we can take seriously.

In saying that, I except the hon. Member for Beckenham (Mr. Goodhart). I agree with almost every word he said. I believe that the Government must take far greater measures than they have so far taken to stimulate competition if price rises are to be controlled. But I see that I have fallen to some extent into the trap of departing from today's subject, just as other hon. Members have done.

The President of the Board of Trade raised, in relation to the Chancellor's statement yesterday, the question of areas of high unemployment. These are to be exempted from the restrictions, according to the Chancellor. The terms "development districts" and "areas of high unemployment" were used. The right hon. Gentleman must have in mind some other areas besides development districts. What are the criteria? Would the Chancellor consider extending these areas to cover places which are losing population and which the Government, when in opposition, said should be included within the ambit of "development districts".

This is the first time during the present Session that we have had a debate on public service and Armed Forces pensions, apart from the Adjournment debate initiated by the hon. Member for Brighton, Kemptown (Mr. Hobden). I do not think that we would have had it even today had it not been for the insistence of my right hon. and hon. Friends that a debate on the subject should take place. We Liberals do not arrange Supply day debates. We are not part of the "usual channels". But I want to make it clear not only to the House, but to the public service and Armed Forces pensioners, that we have been pressing for such a debate for many months and my only dispute now is that the subject should be coupled with the subject of the cost of living.

We should have taken these two subjects separately. A debate on public service and Armed Forces pensions could easily have taken the whole of the day. I am certain that enough hon. Members would have wished to speak on that topic to have made a full day's debate. We Liberals have always made clear our policy on public service and Armed Forces pensions. We reiterated it before the last election at a Press conference we held on 7th September, at which I was present.

We said then that our policy was based on the twin principles of parity and dynamism. The principle of parity is that all public servants should receive the same pension for the same service, regardless of the date of service and the date of retirement, and the principle of dynamism is that pensions should be upgraded in line with current salaries of public servants.

At that time, I believed that if the Labour Party were successful in the election, it would adopt these policies. Although it was not committed to these twin principles by its manifesto, it certainly gave the impression in public utterances before the election that it would introduce these principles as soon as possible. I believe that the hon. and learned Member for Northampton (Mr. Paget), as well as many public servants, certainly had that impression.

I need not run through all the statements which gave that impression, since the hon. Member for Kemptown reminded us of them only the other night, but I should like to reiterate what the Prime Minister said at his Press conference and which the hon. Member for Kemptown quoted. The right hon. Gentleman said: Pensions will be reviewed so that they will keep their full purchasing power instead of being eroded as they have been in recent years. He did not say that after eight months the President of the Board of Trade would say that the Government would wait until they had carried out a review to see whether those promises made by the Prime Minister during the election would be implemented. We should have an answer to that this evening.

When answering the Adjournment debate on 14th July, the Minister of Defence for the Royal Navy had very little to say, but what he said rather discouraged those who would like these changes to be introduced in the near future. He pointed out that the immediate cost of parity for the Armed Forces pensioners would be about £25 million and that the cost of parity for the public service as a whole would be more than £100 million. He admitted that it could be introduced in stages, but he said the national economy would soon feel the weight of the ultimate commitment which could amount to as much as £1,000 million in the long term if applied to the private sector as well.

That is all very well, but as we are speaking about prices and their effect on public service and Armed Forces pensioners, I emphasise that this large group of people have suffered more than any other from rising prices which we would all like to be controlled and which the Government's prices and incomes policy is supposed to be controlling. In the little pamphlet "Changing Britain" issued by the Department of Economic Affairs in June, we read these words: Rising prices have bad social effects, and can have bad economic effects. Socially they inflict injustice on people living on fixed incomes and on a number of other groups in the community, although pensions increases and other adjustments can help to offset the effects of inflation for some people. The Tories have at least been honest about this and have never adopted the principle of parity as part of their policy, but they have said that they will attempt to cope by introducing pensions increases legislation from time to time as and when such increases can be afforded. As far as I know, that is still their policy.

But the Labour Party is committed to the principle of parity as a means of curing this evil to which they themselves drew attention in the D.E.A. booklet which I have just quoted. The Labour Party must be aware of the present position of Armed Forces and Civil Service pensioners. For example, civil servants who have retired since May, 1961, have had no increase in their pensions, while over the period May, 1961, to May, 1965, the Ministry of Labour Wages Index has moved from 124·4 to 145 and the Retail Prices Index has risen by more than 12 per cent.

It is not about those who have retired most recently that I complain most. As the House knows, it is the public servants and the officers and other ranks who retired long ago who have suffered most from the effects of inflation. That is why the most recent Pensions (Increase) Acts have given them larger increases compared with those who retired more recently. But the substantial fact still remains that all Civil Service pensions up to as recently as April, 1957, are still far below the level of currently dated pensions. Much the same is true of Armed Forces pensions. These latter pensioners have the additional disadvantage that most of them have retired at a much earlier age than civil servants and have therefore suffered from the effects of inflation for many years longer. I am reliably informed that more than 45 per cent. of retired officers retired on rates fixed in 1945, or before the war. Although I do not have the figures for other ranks, I believe that the percentage is very similar.

The pensions increase system which the Tories had and which has not been changed by the Labour Party has remained practically unchanged for the 45 years since it was introduced and it has resulted in all these pensioners having constantly to lower their standards of living, so that those who have been retired longest have received less on which to live when old and least able to help themselves.

I know that it may be said that the Labour Government increased the retirement pension and that many of these pensioners are receiving that increase, but that is not true of all of them, for many older officers and civil servants did not qualify for the retirement pension. They are in the group which the hon. Member for Abingdon (Mr. Neave) tried to help by his Bill. I am sorry that he did not succeed.

In view of the grave situation which the country faces, I appreciate that we cannot expect the Government to introduce parity now, or even in the very near future, but, in view of their promises at the election, as an absolute minimum I would expect them to make a gesture now towards these pensioners and to commit themselves in the House of Commons to the ultimate fulfilment of their promises on the hustings last October.

Photo of Mr Walter Monslow Mr Walter Monslow , Barrow-in-Furness

Would not the hon. Gentleman accept that in our manifesto at least we assured a guaranteed income for everyone? When the economic circumstances are desirable, that will be done.

Photo of Mr Eric Lubbock Mr Eric Lubbock , Orpington

The hon. Gentleman knows that the guaranteed incomes scheme has been put off into the indefinite future by yesterday's announcement by the Chancellor of the Exchequer.

Photo of Mr Eric Lubbock Mr Eric Lubbock , Orpington

I do not know how temporary it is. At least it will not happen in the next session, according to the Chancellor's announcement. What I am about to ask the Government for is something much more short term than the introduction of these changes, promised at the election, some time in the session after next.

As an absolute minimum, the pensions of those who retired before 1st January, 1956, should be brought up to the levels applicable at that date. The reason I mention 1st January, 1956, is that I have figures showing what the cost of that proposal would be, and it is modest enough in all conscience as a gesture towards the implementation of these promises. The cost is a sum which we can afford, even in our present economic difficulties.

These figures were given to me by the Financial Secretary in an answer to a Question on 5th February, 1955. For retired Servicemen the cost would be about £5 million a year. Although he could not calculate the figures for the rest of the public service, he estimates that it would be about £2 million a year in addition to this. Altogether we are talking about a sum of £7 million as a first step towards honouring this promise made at the time of the election.

Secondly, I should like the Government to give me a definite commitment to the principles of parity and dynamism which they espoused at the time of the election, and to give at least a provisional time-scale in which these promises would be carried into effect. No one is going to hold them to within a few months, one way or another. I should have thought that these promises could be carried out over a period of five years, with this initial step of raising pensions to the level pertaining on 1st January, 1956. Unless we get these promises we must, regretfully, say that they have broken the promise which they gave to the pensioners during the election, and that therefore we shall have to vote against them this evening.

7.2 p.m.

Photo of Mr Richard Winterbottom Mr Richard Winterbottom , Sheffield, Brightside

The hon. Gentleman the Member for Orpington (Mr. Lubbock) has jumped from twig to twig with the skill of an elephant. First of all he advocated the claims of the Armed Forces and the Civil Service pensioners, then he agreed that parity was impossible at the present time. He went on to a fanciful scheme, entirely of his own, and finished up by asking the Government to give certain assurances, which he knows the Government cannot give, and would be very foolish if they tried to do so.

Photo of Mr Eric Lubbock Mr Eric Lubbock , Orpington

The Government gave them in October. Why should they not give them in the House?

Photo of Mr Richard Winterbottom Mr Richard Winterbottom , Sheffield, Brightside

They can give a general assurance in terms of an intention, providing that the kitty will allow them to pay it, and providing that certain other conditions also, of a financial and economic character, have been satisfied. When the hon. Member says that this debate has a certain falseness about it, because it links the cost of living to the question of pensions for the Civil Service and the Armed Forces, he is perfectly right. He could have gone further and made another division. There could have been a division between those who have worked in the Civil Service and those who have been in the Armed Forces, because there may be a stronger case for parity for the Armed Forces than for the Civil Servants.

This Notice of Motion, put down by the Conservative Party, includes other people as well as the Armed Forces and the Civil Service. We have also to deal with those on fixed incomes. When the hon. Member talks about asking for the intentions of the Government in regard to the Civil Service pension he has to remember that the increased contributions, or the increased cost of that increased pension, may come out of those people on fixed incomes who have to pay the increased cost but who can get no extra benefits themselves. This is one of the points which has to be considered in assessing the whole situation. To a certain extent the whole of this debate can be bedevilled by recriminations. On both sides of the House we can fight the battle of the election all over again. We can say what he said and what other people said, and forget the very simple but basic facts of the economic situation which we have to face today.

I am not going to start apportioning blame anywhere at the moment, though I might have second thoughts later on.

Photo of Mr Cyril Osborne Mr Cyril Osborne , Louth Borough

They are not always best.

Photo of Mr Richard Winterbottom Mr Richard Winterbottom , Sheffield, Brightside

I know that. At the moment I am not starting to apportion blame. What I am saying is that, whether we like it or not, this country is still in a serious economic plight. A balance of payments problem, which started during the lifetime of the previous Government—and I am not trying to blame them for that at the moment—had the characteristic about it that as it went on it grew in intensity until, when a change of Government came about, the rate of deficit was running at over £1,000 million per year. Quite frankly no one knowing that economic situation, knowing that a new Government had taken over the business of this country, and knowing that the Government have to face this serious economic situation and the problems arising from it could honestly say that the Notice of Motion on the Order Paper had not been put down with deliberate political intent.

It is not in order to benefit the Civil Service pensioner, or the Armed Forces pensioner, or the person on a fixed income. It is in order to gain political capital for the Conservative Party, and it is to ignore deliberately an economic situation for which I am not blaming the Conservatives, although I will say that they were a part of it. Just as a balance of payments situation grows in intensity when it is ignored by a Government, so a policy of prices grows in intensity as the prices advance. There are some manufacturers and some distributors in this country who can be condemned for taking advantage of the Government having to enforce certain measures which have caused increased overheads. Some people have taken more out of the customer than those increased overheads warranted.

I will give an illustration. A few weeks ago my wife told me on the telephone that she was going to send a birthday card to a friend of ours. That birthday card, which originally cost less than 2s., had gone up 8d. The reason for that increase of 8d. was attributed to the 6d. extra charged on petrol. There have been many cases like that. The Government sometimes must face not only the serious economic situation which they have inherited, but those people who do not accept the spirit of the voluntary method and take advantage for themselves. Despite that, there are some increases which are natural, and those increases which are percentage increases, because of the rise in prices, show heavily in the cost of living.

This applies to the meat trade. The hon. Lady the Member for Birmingham, Edgbaston (Dame Edith Pitt)—

Photo of Mr Richard Winterbottom Mr Richard Winterbottom , Sheffield, Brightside

I know, but I will not criticise her for that. She mentioned the price of meat, and the price of the best cuts of meat. She did not know that the best cuts of meat do not amount to much in terms of the weight of the carcase of a bullock or heifer and that the price being charged today for the best cuts of meat is not the average price for the meat of the whole carcase. Nevertheless, the price of meat has advanced more than the price of any other food commodity. Much of this is due not to the fact that there has been extraordinary overcharging but because so many people in meat distribution have to have a percentage on the cut that the increased percentage on the cut amounts to a great deal at the end of the transaction.

Photo of Mr Peter Mills Mr Peter Mills , Torrington

Could the hon. Gentleman tell me how much the price of lamb, pork and poultry meat has increased in the last year? I think he will find that the price is exactly the same as last year.

Photo of Mr Richard Winterbottom Mr Richard Winterbottom , Sheffield, Brightside

I was speaking only of beef. I agree that the price of lamb and pork has been comparatively stable. I should have referred to beef, and I apologise for not doing so.

Photo of Mr Cyril Bence Mr Cyril Bence , Dunbartonshire East

I think my hon. Friend will find that the rise in the price of beef has been going on for the last three years.

Photo of Mr Richard Winterbottom Mr Richard Winterbottom , Sheffield, Brightside

Yes. My point is that when percentage increases are spread over so many factors, as is the case in beef distribution, they amount to a tremendous sum of money in the final calculation.

This is one of the things which the Government will have to face. This is the crux of the situation. The Government face a serious economic situation. One way in which the country can recover is by the implementation of an effective policy based on production and productivity, based on the relativity of that production and productivity to wage values, based on a conception of the profit motive which is related to those wage values and based on price stabilisation. In one of my first speeches in the House of Commons I said that any Goverment, whatever their colour, outlook or policy abroad, which ignored the question of prices in this country would commit political suicide. Price stabilisation is not only a good thing for a political party but the only fundamental basis for the recovery of Britain; and that matters to me as much as it does to any hon. Members opposite.

When I first worked in a shop, a new young branch manager came to me and said, "I have taken over this shop. It is in a bad condition. The overheads amount to far more than the gross profits." After a fortnight, he was asked, "Has the shop recovered? Are we making a profit yet?" This is the situation of this country, and it is the situation which the Government must face.

In my first speech in the House after the Government took office I said, to the taunts of Members opposite, would to God the Prime Minister, fully realising the economic situation of this country and all its implications, had said, even though the election had taken place only two months previously, that the situation was so bad and the Government could not manage with their narrow majority to carry through the policy which they wanted to implement, and will implement, that we should go to the country and tell the people the true situation and ask them to give us greater representation in the House to enable us to carry through our programme. I wish that that had happened. We should have faced the issue then; and the people would have faced the issue then.

The alternative is not the voluntary "go as you please and not please as you go" type of system in which manufacturers, behind the pretence of advances which they said had to be made in the interests of the economy, increased prices abnormally, in which there was no relationship between the margins in distribution and good common sense, and in which there was not in reality a correct relationship between various aspects of distribution and the productive effort of the country. Those who have tabled the Motion, who know the economic situation of this country—

Photo of Mr Richard Winterbottom Mr Richard Winterbottom , Sheffield, Brightside

—realise that what I am saying is true and is the only real way out of our economic difficulties. The alternative is to go back to the chaotic type of Toryism that we had in the last century, the laissez faire of Liberalism. If we go back to the laissez faire situation of Liberalism in which every man's hand is turned against his fellow man and the devil takes the hindmost, this country will lose in competition with other countries.

Whether we like it or not, we must have a planned economy which relates to margins between productive effort and distributive effort and between one job and another job and which establishes a price system which starts from stability and allows increases according to the increase in the productive effort. The creation of this system has been bedevilled because so many people would not play ball. This is the only system which can get us out of the difficulty of constantly advancing prices followed by applications for wage increases.

The Government who stabilise prices so that every advance in wages that takes place after that is an advance in real wages are doing a great service to the country and a great service to the population. Until we reach that position, all these resolutions and Motions on the Order Paper are idle and futile and are a waste of time both to Britain and to the people.

7.21 p.m.

Photo of Sir Alexander Spearman Sir Alexander Spearman , Scarborough and Whitby

I can well understand the hon. Member for Sheffield, Brightside (Mr. Winterbottom) wishing that there had been a General Election when the country had only had two months' experience of the present Government.

The right hon. Gentleman the President of the Board of Trade attributed to my right hon. Friend the Member for Barnet (Mr. Maudling) responsibility for the present situation because he had not sufficiently cut back consumer spending. That is an attack which hon. and right hon. Gentlemen opposite make very often. It seems to be their only method of defence. But I remind them of the old saying that people in glass houses should not throw stones, and I remind the right hon. Gentleman the President of the Board of Trade that in his speech on 16th April last year he roundly condemned my right hon. Friend for raising consumer taxes. In an earlier debate, he complained that the Budget was too timid, his right hon. Friend the Chancellor of the Exchequer complained that the Budget was too cautious, and the Prime Minister made it clear in both Budget debates that he agreed with his right hon. Friends.

My right hon. Friend the Member for Leeds, North-East (Sir K. Joseph), in a very vigorous speech, told us today of the very specific pledges that right hon. Gentlemen opposite made about what a Labour Government would do to keep the cost of living stable. They made some very reckless promises. Were these the promises of ruthless men prepared to buy votes at any price or, as I would like to think because it is the lesser crime, were they the promises of foolish men who were ignorant of how the economy works? I am quite sure that if the late Hugh Gaitskell had been Prime Minister, it would not have happened. No one could accuse Gaitskell of a lack of integrity. No one could accuse him of not knowing how the economy worked.

May I quote two sentences from a speech that he made a lone time ago, at a time when these matters, even on this side, were not quite so clearly realised as they are today? He said this in 1951: If incomes go up more than production goes up, then prices will rise. The truth is as simple as that. What the country wants to know is why the Government have failed. Is it due to an incompetent Cabinet unable to understand the economy, or is it due to a divided Cabinet who cannot agree? It is said that the Prime Minister's cure is gimmicks. It is said the Chancellor's remedy is to finance expansion by borrowing and that the First Secretary's is going to depend entirely on physical controls, which is a very ingenuous belief.

The Prime Minister, who is so powerful with words and so singlarly ineffective in action, seems to be unable to control the conflicting views of his Cabinet. So we get the worst of all worlds. The remarkable reversals of policy that we have had time and time again, with the Chancellor saying one thing at the beginning of a month and the opposite at the end of the month, seem to bear out the view that the Prime Minister has not got control of his Cabinet.

The rise in the cost of living has been considerable. However, the serious factor—and my right hon. Friend touched on this—is not what has taken place but what is going to take place. All experience shows that when output is rising, efficient employers can absorb additional costs by increasing their turnover. But when they reach the state, as we have reached now, where there is no slack left in the economy, increases in output can only come from technological improvements which we all know, however much they are speeded up, are a slow process. That is when we get a sharp rise in prices, and that is what we have to face now.

I believe that the Government's objective should be to do everything that they can to promote growth and, at the same time, to slow down increases in spending so as to get the two in balance. Governments can facilitate but not initiate growth. They have only a partial responsibility. However, for spending they have complete responsibility. I do not believe that one can stop increases in earnings by exhortation. I do not believe one can do it by pressure on the trade unions. These rises do not occur because of trade union pressures at all.

Look at domestic wages. They have risen as much as any, and there is no trade unionism there. These rises take place because, if there is excess demand, employers are competing for labour and, when they are competing for labour and when demand is so great, they can afford to pay and will pay willingly higher wages in order to get that labour. The rise in wages generates the demand which makes it possible. Therefore it is the prime duty—the first, I believe of all economic duties of the Government—to regulate demand. In this, the Government have utterly failed. Spending is increasing and savings are declining. The Government and the whole country should take very seriously the effects on savings of the Chancellor's measures in his Budget and the Government's measures in general, and I should like again to quote one sentence from Gaitskell. He said: And besides there really does come a point when, if the process goes on swiftly enough, people begin to lose confidence in the value of money, saving is regarded as a useless habit and the rate of spending increases. Such general inflation has occurred more than once in European countries. It could happen here. The Government have increased their spending considerably, and they have increased it in a way that has had a particularly severe effect on spending. For example, there has been the abolition of prescription charges. I expect all that money was spent. If the Government increase their expenditure, economically that is a perfectly sound thing to do, providing they offset it by cutting back consumer spending.

Here I may not be in complete agreement with all my hon. Friends, but I believe that the effect on prices of raising indirect taxes is grossly exaggerated. It has a certain effect, of course, but unless it causes the Government to spend more because of the revenue from those taxes, the effect is very limited.

But a rise in earnings means a further rise in demand. That means a further rise in earnings, and so you get the vicious spiral going on and on. That is what I am sure Hugh Gaitskell was speaking about when he talked about the possibility of disastrous inflation.

The Chancellor of the Exchequer pays altogether too much attention to trying to match up revenue with expenditure, and much too little attention to trying to match up total demand with total resources. I will give one example of what I mean. In a very interesting article by a member of the Treasury in the National Institute's May Bulletin, Table 9 showed that if insurance benefits were increased by £300 million and contributions were increased by £300 million, there would be no cost to the Treasury at all. In the second year, however, the increase on demand, which is what matters, would be no less than £233 million.

Taxes that come out of savings serve no economic purpose. Taxes that take a long time to operate are entirely irrelevant to the present situation. My right hon. Friend the member for Leeds, North-East (Sir K. Joseph) referred to an interesting article, which I commend to the House, by Professor Paish in the Irish Banking Review of June this year. In that article, Professor Paish compares some of the taxes which we have had to applying a brake on a motor car when going downhill, but the brake does not operate until the car is halfway up the next hill, when the driver should be using, not the brake, but the accelerator. On checking spending, the Government have failed. On encouraging industrial investment, I believe that they will fail. The uncertainties of the Budget plus the credit squeeze will, I believe, bring about a sharp decline in industrial investment next year which will spark off a general recession.

It is extraordinary when one remembers how, throughout the term of office of the Conservative Government, the Labour Party attacked us again and again for the credit squeeze. Now, they are operating something far more massive than anything that was contemplated in the last 14 years. I wonder whether they have really thought this out.

If there is one thing about which the country as a whole is worried, it is the inconsistency of the actions of the Labour Government. I should like to remind hon. Members what was said on 10th November last year by no less a person than the Leader of the House, a most respected Minister. He said that if the Conservatives had won the election, we should have been going in for a Bank Rate increase, with a credit squeeze and the whole mixture as before. That is precisely what would have happened."—[OFFICIAL REPORT, 10th November, 1964; Vol. 701, c. 965.] It is precisely what did happen. I believe that the new plans about which we heard yesterday are a belated—perhaps a disastrously belated—recognition of the limitations of the expenditure the country can afford. Why did not the Government think of all this before?

I always regard it as presumptuous for a back bencher to quote his own speeches, and I have never done it before, but to show that I am not just being wise after the event I should like the indulgence of hon. Members to quote just two sentences from speeches which I have made during the past year. On 12th November last, I said: I am convinced that if the brakes are not put on now they will have to be put on later, and the longer the delay the more drastic the measures will have to be."—[OFFICIAL REPORT, 12th November, 1964; Vol. 701, c. 1271.]

Photo of Mr Walter Monslow Mr Walter Monslow , Barrow-in-Furness

How does the hon. Member reconcile what he is saying with the fact that by their election promises the party to which he belongs would have committed us to an additional £650 million expenditure?

Photo of Sir Alexander Spearman Sir Alexander Spearman , Scarborough and Whitby

After the Conservative Government came to power in 1951, the rate of productivity went up very satisfactorily from 2 per cent. to about 3½ per cent. That enabled a careful, well-managed Government to spend more than their predecessors had been spending. However, as I have said before in this House, the Conservative Government had spent right up to the hilt and we cannot afford the extra expenditure of the present Government.

On 10th May this year, I said: I believe that this year the increase in spending by public authorities and by consumers … will considerably exceed the increase in production. Therefore, this year we are going to have a consumption inflation."—[OFFICIAL REPORT, 10th May, 1965; Vol. 712, c. 139.] If I, limited in mind and body, could foresee these things, why could not those who are expected to have the qualities of Cabinet Ministers foresee them?

I believe that now the Government should cut consumption. Had they been able to cut their own expenditure, that might not be necessary. Having failed to do it, however, they should cut consumption quickly and severely, simultaneously taking steps to promote an expansion of industrial investment that will take several months to operate. They should start by modifying the credit squeeze in order to give encouragement to industrial investment.

It is unfortunate that so often what is politically desirable is economically disastrous, and vice versa. To do things that are unpopular requires courage. No one who knows my right hon. Friend the Member for Bexley (Mr. Heath) will doubt his courage and determination. Indeed, towards the end of the last Parliament some of my hon. Friends thought that he was a little too courageous in his admirable action on resale prices. The sooner that the Prime Minister gives the country the opportunity for my right hon. Friend to take his place, the sooner shall we have a Government of courage and determination and a Government who will consider in advance the economic consequences of their actions.

7.37 p.m.

Photo of Mr Alf Morris Mr Alf Morris , Manchester Wythenshawe

I wish to preface my remarks by referring to the speech of the right hon. Member for Thirsk and Malton (Mr. Turton). He is a widely respected Member of the House, especially among hon. Members with much less experience of Parliamentary proceedings than himself. Many hon. Members must, however, have been disquieted to find that the right hon. Gentleman's remarks about the difficulties of public service pensioners were tinged with a certain measure of humbug. I should have thought that all hon. Members who have considered the effects of rising costs upon those who have to live on fixed incomes are equally concerned about the problem of the public service pensioner, and particularly those public service pensioners who, in saddening circumstances, for example, by the oncoming of a serious illness, have been obliged to retire prematurely.

My right hon. Friend the President of the Board of Trade pointed out that a period of three years and five months elapsed between the operative dates of the two Pensions (Increase) Acts of 1959 and 1962. The present Government have been in power for nine months. The right hon. Member for Thirsk and Malton will, I am sure, agree that that is not a period within which one could expect every pledge to have been met. I recall, because I was here at 3.30 a.m., when my hon. Friend the Member for Brighton, Kemptown (Mr. Hobden) raised the subject of Armed Service pensioners two or three weeks ago. I hope that both sides of the House will adopt less of a tactical approach to the problem of public service pensioners, because I am certain that there is a wide measure of agreement that something ought to be done as soon as possible to improve their position.

Photo of Mr Robin Turton Mr Robin Turton , Thirsk and Malton

Perhaps the hon. Gentleman has forgotten what I said. I said that I was not complaining that the Government were slow in introducing this measure. I said that I was disturbed by the statement by the President of the Board of Trade that he was still reviewing the matter when the party opposite and the majority of back benchers of my party in the last Parliament had demanded a change to parity of pensions. I asked that whoever wound up the debate should make it clear that the Government stood by their pledge for parity of pensions.

Photo of Mr Alf Morris Mr Alf Morris , Manchester Wythenshawe

My right hon. Friend spoke of a review, but he also said that my right hon. Friend the Minister of Labour, who would wind up the debate, would return to the question of public service pensioners, and one of my hon. Friends has expressed his concern about the need for a definitive statement of the position. I hope that no other right hon. or hon. Member who takes part in this debate will attempt to make what I think people outside will regard as unworthy party capital out of the plight of public service pensioners. I have worked in the public service for a number of years, and I appreciate as much as anyone does the difficult cases that arise.

The right hon. Gentleman the Member for Thirsk and Malton (Mr. Turton) also referred in his speech to a recent letter from Sir Roy Harrod to The Times, but the right hon. Gentleman did not refer to that part of Sir Roy's letter which suggested that for a period of time there should be control of wages, salaries and dividends. I think I am entitled to ask hon. Members opposite whether they share Sir Roy Harrod's view that there should be control of wages, salaries and dividends. For my part, I take the view that a dividend controlled is only a dividend delayed, but that a wage claim controlled can be a wage increase lost.

Sir Roy's views are important to this discussion. While he may be more popular now, the party opposite was very annoyed with him for his comments about the European Common Market. Hon. Gentlemen opposite did not refer to Sir Roy's letters to The Times when he was attacking the Tory drive to join the Common Market. I am sure the House will agree that the agricultural policy of the Common Market has proved to be so restrictive and inward looking that, if we had followed the policy advocated by the previous Government and the party opposite, there would have been a drastic increase in the cost of living as well as very serious damage to the interests of the Commonwealth.

It has been suggested by some hon. Gentlemen who have taken part in this debate that there is broad agreement about the need for a prices and incomes policy. It is, however, a nonsense to say that those who believe in classical free enterprise can at the same time be said to believe in a prices and incomes policy. It was not only the right hon. Member for Wolverhampton, South-West (Mr. Powell) who attacked the idea of a prices and incomes policy root and branch. The right hon. Member for Enfield, West (Mr. Iain Macleod) said that it was impertinent of my right hon. Friend the First Secretary, with no knowledge of industry or business, to lecture them on their attitude to costs. What the right hon. Member for Wolverhampton, South-West said as recently as 15th January, 1965, was that: There is only one price which a firm or person is justified in trying to get for his goods and his services, and that is the price which he believes will bring him the best return. … To attempt to get this price is every seller's duty. Those two statements represent a central attack on the whole concept of a prices and incomes policy, and I suggest that the Party opposite ought to reconsider its whole attitude to the question of equity in earnings, no less than its attitude to the question of prices.

I represent a consituency in which more than 20,000 people are faced with a substantial increase in their rents in September of this year. One of the principal reasons for this increase is that there has been a 7½ per cent. rise in building costs over the past two years. I am told that this upward trend in building costs is not likely to be arrested, and that we must learn to live with a constant increase in the cost of building homes. In my submission, this is a subject worthy of consideration by the Prices and Incomes Board. There may well be considerable benefits to be derived from consideration by the Board of the effect of recent and projected increases in building costs on the rents of houses in large cities like Manchester.

During the last day or two I have been reading the monumental Report on the state of affairs in the North-West of England. It points out that 440,000 houses in the North-West are unfit for human habitation. These 440,000 slums were not created during the last nine months. Nor is it right that the cost of clearing them should, for the most part, fall on council house tenants. Such tenants are the people who, in my constituency at any rate, have suffered as much as anybody in the country from slumdom, and it is neither equitable nor reasonable that they should have to bear the cost of clearing up cities such as Manchester in the North-West.

A Motion such as that before the House today not only degrades those who drafted it; in my view, it also harms the reputation of the House. The people of this country appreciate that there was a desperately serious economic situation when the Government changed hands last October. They did not then appreciate the size of the foreign payments debt, but far more of them appreciate the position now. We on this side of the House will fully document the points made by my right hon. Friend the President of the Board of Trade at every opportunity open to us.

People outside the House want us to discuss the real problems facing the country. They do not want exercises in party politics like those we have seen this afternoon. In the matter of prices, they want to see a determination by the Government to see that profiteering is stopped. They want to see the "consumers' charter", which has been promised for the next Session, introduced as early as possible. They want to see people who advance "phoney" excuses for increasing prices and people who bilk the public by all kinds of shady selling methods brought within the law. They want equity between people in different walks of life: no incomes policy can succeed without equity.

I appreciate the difficulties of the Treasury Bench. I felt for them when I heard some of the speeches which have been made against them today. Their task is correcting the damage done to the economy by the last election being delayed as long as it was. There is serious concern in the country about prices. This concern has endured for many years. We are not likely to have a successful incomes policy unless we also have a successful prices policy, but we will never get that if we follow the advice which hon. Members of the party opposite have given in the debate today.

7.52 p.m.

Photo of Hon. Anthony Berry Hon. Anthony Berry , Southgate

We are now approaching the end of the first 300 days of a Socialist Government. We heard a good deal about the first 100 days, and that was marked by the first Budget. During the second 100 days, we had the second Budget, and now, during the third 100, we have what amounts to a third Budget. Instead of a case of one, two, three, go, we have had one, two three, stop. Looking at the faces opposite as the Chancellor made his statement, I could not help contrasting them with the beaming, happy faces which first confronted me in the House last October. Two hon. Members opposite asked two very pertinent questions of the Chancellor. One was about employment and the other about housing. These were very important questions, and I share the concern of the two hon. Members.

We are talking today about the cost of living. We should not be having this debate if hon. Members opposite and candidates of their party throughout the country had not made the definite promises which they did at the time of the last election. The Labour candidate who opposed me in Southgate used these words in his election address: We shall take drastic action to stop prices rising. What has happened about that drastic action? The first drastic action was last November in the first Budget, and we know what effect that had. We know what effect the tax on petrol had. If any one believed that that would have the effect of reducing the rise in prices, they must be like the Queen in "Alice in Wonderland" who said that she once believed six impossible things before breakfast.

Figures have already been given of the overall increase in prices during the past months. I do not want to go into too many details. I asked a constituent of mine a few days ago—knowing that I was hoping to take part in the debate—how she found things. She is a widow on a small fixed income, and I asked which of the prices which had gone up had particularly affected her. She said that her bread had gone up 2d. a loaf, her beef—I know that she does not have the best cuts—1s. 8d. a lb., margarine 4d., flour 2d. If the increases in rates, postage and other household expenses are added on, one can imagine how much worse off she is today than a year ago.

Earlier in the debate, the hon. Member for Carlisle (Mr. Ron Lewis) would not give way when I tried to intervene. I think that it is fair now, although he is not in the Chamber, to put to him the question which I wanted to ask him when he was talking about the rise in prices. I wanted to know what he said in his election address about attacking the cost of living and the rise in prices. Of course, we do not know what he said. Despite what the hon. Member for Manchester, Wythenshawe (Mr. Alfred Morris), who has also vanished—I apologise to him; he has moved to another place.

I want to mention very briefly the question of public service and Armed Forces pensioners. I do not see why I should not: I am not speaking with crocodile tears. I have here two letters from constituents of different kinds, who are typical of many people in many parts of the country. One is a public service pensioner who writes about the large number of his fellow public service pensioners who are finding it difficult at this time to make both ends meet. The other is an Army pensioner who writes: In my case, I retired in 1953, after 39 years of service in the ranks, ranging from Gunner in the Royal Artillery to Major. Now I receive a pension lower than that of a Warrant Officer of equivalent service and my widow will, on my demise, receive the princely sum of 38s. 11d. per week.

Photo of Mr Alf Morris Mr Alf Morris , Manchester Wythenshawe

My point is that the hon. Member and his hon. Friends should accept that there is deep concern among right hon. and hon. Members on this side. There was so much concern that some of my hon. Friends and some hon. Members opposite came to the House at 3.30 in the morning recently to raise this subject. Will the hon. Member accept that we believe that these people are more likely to get justice from a party which believes in social justice than from a party which opposes it?

Photo of Hon. Anthony Berry Hon. Anthony Berry , Southgate

I do not accept the last part of what the hon. Member said. I accept his sincerity and I hope that he accepts mine.

The Prime Minister has, up to a point, kept his word in what he said of pensions some time ago: We have on a number of occasions given a pledge that they will be reviewed. He is reviewing them, but it is time that something was done about it—

Photo of Hon. Anthony Berry Hon. Anthony Berry , Southgate

I will just finish this sentence.

It is time that we had the result of that review. Not only is time going by, but also, because of increases in the cost of living, even the existing pensions are going down in value.

Photo of Mr Arthur Lewis Mr Arthur Lewis , West Ham North

If the Government were immediately to implement these pensions, could we have an assurance from the hon. Member that, unlike what the Opposition did when the old-age pensions were increased, they will not then vote against the wherewithal for paying these pensions? When this Government rightly came straight in and increased old-age pensions, that side of the House voted against every means and method of raising the money to pay for them.

Photo of Hon. Anthony Berry Hon. Anthony Berry , Southgate

I will not accept that for one moment—

Photo of Hon. Anthony Berry Hon. Anthony Berry , Southgate

The hon. Member may think that it is true, but my position is that I will do everything I can to support anything which is done by the Government to improve the lot of these people.

I do not want to follow the hon. Member for Wythenshawe into his discussion of the letter by Sir Roy Harrod. Any gaps in my education are due to the fact that, in October 1947, when Sir Roy was supposed to be teaching me the principles of economics, Dr. Dalton was Chancellor and Sir Roy spent all his time telling me about the follies of Dr. Dalton.

The President of the Board of Trade said that if the Government's policy succeeds prices will come down. We now have this word "if" creeping in. There were no "ifs" at the time of the last election. He referred also to unemployment figures. The Government have rightly referred to unemployment figures being wonderfully low. But do they sincerely believe that when the House reassembles at the end of October they will be able to say the same thing?

Hon. Gentlemen opposite appear to resent the Motion. They seem to resent the fact that we are spending our time today discussing what I believe is an extremely important subject. They claim that they did not know the economic position of the country when they took office last October. They may not have known all about it, but they must have had a fairly good idea. If they had any doubts at all about the economic situation they should not have made the promises they did make at that time. Parliament and the nation would have respected them much more had they said, "We believe that conditions are bad, so we will not make any promises until we are able to put things right". The public will not forget that, and that is why at the next General Election I, for the first time as a Member of Parliament, will be sitting on the benches opposite.

8.0 p.m.

Photo of Mr Eric Heffer Mr Eric Heffer , Liverpool, Walton

I hope that the hon. Member for Southgate (Mr. Berry) will forgive me if I do not follow him on the subject of service pensions. I agree with the hon. Member for Orpington (Mr. Lubbock) and others who have said that the two main subjects which have been raised today should have been considered in two separate debates. Parliament could have done proper justice to the question of rising prices and the important matter of pensions had we discussed the two items separately, instead of using one as a sort of smokescreen when the other is of vital importance to a section of the community which deserves great sympathy and consideration.

Many of the speeches made by hon. Gentlemen opposite today have been contradictory. It is obvious that hon. Gentlemen opposite cannot make up their minds whether or not they believe in the principle of a prices and incomes policy. The hon. Member for Beckenham (Mr. Goodhart) was in favour of such a policy and his right hon. Friend the Member for Thirsk and Malton (Mr. Turton) thought that all hon. Members agreed that such a policy was desirable, if it could be achieved. The trouble is that all hon. Members do not agree. There are certain hon. Gentlemen on the benches opposite who are opposed to our views on this matter. After all, the right hon. Member for Enfield, West (Mr. Iain Macleod) said on 8th January last that it was impertinent of my right hon. Friend the First Secretary, having no knowledge of industry or business, to lecture industrialists and businessmen about their attitudes towards costs. The right hon. Member for Wolverhampton, North-East—[HON. MEMBERS: "South-West."]—I am referring, of course, to the right hon. Member for Wolverhampton, South-West (Mr. Powell) and not to my hon. Friend the Member for Wolverhampton, North-East (Mrs. Renée Short)—I would not want to confuse the two; there would be a terrible row if that happened—because the right hon. Gentleman said that he was concerned about a letter which my right hon. Friend had sent to industrialists. He referred to it as: … tyranny and lawlessness of a kind we have seen too often in too many countries in our own generation". I urge hon. Gentlemen opposite to say once and for all whether they agree with the Government in wishing to achieve their prices and incomes policy. Hon. Gentlemen opposite cannot have it both ways. Either they accept that policy or they do not. The House and the country have a right to know exactly where they stand and their views are important from the point of view of controlling prices and modernising industry.

The right hon. Member for Leeds, North-East (Sir K. Joseph) made an interesting and knockabout speech, although he had to admit that it is not an easy matter to control prices. It would, of course, be a relatively simple matter if we lived in a dictatorship, in which force and not persuasion was the order of the day. Fortunately, we live in a democratic society in which my hon. and right hon. Friends believe in persuasion. The present Government are doing everything possible to ensure that persuasion and not force is used.

The right hon. Gentleman also said that the Labour Government inherited a fully employed but not over-stretched economy when they gained power. I suggest that the right hon. Gentleman gets his facts right. When the former Tory Government left office there were more than 380,000 people unemployed in Britain. The only occasion when the total of unemployed fell below that figure was in 1951, when the previous Labour Government went out of office. In 1955 it went down to 1·1 per cent. Apart from that, it has been well above that percentage, sometimes reaching 2·5 per cent. It is now down to the same rate as in 1951. It is, therefore, not true to say that we inherited a fully employed economy. We inherited an economy which had, in certain areas, relatively high figures of unemployment. The new Labour Government have reduced those figures. On Merseyside the unemployment figures are today lower than at any time since 1951. These figures must be borne in mind when discussing this matter.

The right hon. Member for Leeds, North-East went on to say that he and his hon. Friends believed in high earnings. The Tory Party and employers have never accepted a policy of high earnings for the average industrial worker. When I was in the United States a few years ago I studied the situation in industry there and contrasted it with the position here. I returned home knowing that not only do we have differences of attitude about the labour movement but we also have a different attitude in regard to employers.

Employers in Britain have never accepted a policy of high earnings for industrial workers, although such a policy is fully acceptable to their counterparts in the United States. The reason why such a policy is not acceptable here is because British employers will not accept modernisation, with the necessary technological advances, in the same way as they are accepted in the United States.

When there is a wage increase in the United States the employers immediately take measures to modernise and so meet the rising costs instead of immediately passing them on to the consumer. In this country such attempts are not even made. Increased wages are immediately passed on to the consumer and we will not go in for the highly developed industrial techniques which are necessary to avoid increased costs being passed on. This is one vital difference between the two countries, and hon. Gentlemen opposite should bear it in mind because they say that they speak for industry. They must recognise that industrialists here, even today, do not accept what in the United States has been accepted for a considerable time. Perhaps, with their new leader, the Tories will get down to the problem. Perhaps that is the object of the exercise. That would be all to the good of the country, although they have not a cat in hell's chance of getting elected as a Government at the next election.

I have listened this afternoon to the speeches of hon. Members opposite. Frankly, the hypocritical crocodile tears which have come from the other side of the House have made me quite sick. I have never listened to so much hypocrisy as I have had to listen to this afternoon, Hon. Members opposite must understand this; that we are in this position in the country economically because of their actions, on the one hand, and their inactivity, on the other hand. Yet they have the effrontery to say that the Labour Government are responsible for our economic difficulties. In fact, it would have been a miracle if the Labour Government had been able to solve the economic problems overnight.

If the Tory Party had been in office the economic difficulties would have been solved in an entirely different way. There is no doubt about that. By now we should have had a very high level of unemployment. That is always the way in which they have solved their economic problems. Let me give some unemployment figures for Merseyside. In July of this year we had 15,384 unemployed. I consider that this is still a relatively high figure—indeed, far too high. But in July, 1963, it was 29,621 and in July, 1964, it was 22,207. In the City of Liverpool in 1963, it was 17,000, or 4·7 per cent. of the working population. In 1964 it was 13,000. Today it is 9,000. That is significant, and it is very important when we are discussing the rising cost of living. At least those who are working are able to purchase the goods which are being produced and those who are unemployed or on National Assistance are getting far higher benefits than they got before, and therefore their purchasing power is greater.

The Government are trying seriously to tackle the problem. The previous Government failed lamentably, because with them we had both rising unemployment and a rising cost of living. Under the Labour Government it is admitted that the cost of living has risen far too much, certainly far too much for my liking, but at the same time we have not had a serious rise of unemployment, although that is exactly what would have happened if the Tory Party had been in Government at present.

The average increase in the cost of living was 2¾ per cent. each year from 1956 to 1964. The £ certainly is worth less now than it was in 1946. The goods and services which cost £1 in 1946, cost 31s. 3d. in 1956 and 37s. 4d. in 1964. The cost of living is well over one-third higher than it was 10 years ago. We all know what has been the effect of rising prices. The interesting pamphlet issued by the Department of the First Secretary of State outlines it clearly. I do not think there is any difference on this aspect. Everyone will agree that we have a very serious problem which must be overcome and which the previous Government never began to tackle.

For example, in the 10 years 1953–63 the rise in imports was an average of 4 per cent. a year. Exports rose by 3·3 per cent. This is the basic reason why we are in our present difficulty. The deficit last year was £745 million, and it is no good trying to run away from it or suggesting that the figure should be covered up and that all the economic ills are the responsibility of the Labour Government. The fact is that we were left with that deficit by the Tory Government and by nobody else. We followed them, and we were left with these economic difficulties and problems. Much of the talk which we have heard this afternoon has been nothing but a smokescreen by the Opposition designed to hide the facts about the economic problems from the general public.

I accept the Government's policy in setting up a National Board for Prices and Incomes. I accept the machinery established by the Government to carry this out. If I have any criticism of this policy it is that it has not sufficient teeth to deal with the problem. I am not too happy with merely appealing to manufacturers to try to restrict their prices. I certainly do not want to see a totalitarian system of society. I do not want to see the type of society which exists in Soviet Russia. But I know that we cannot rely upon the industrialists to decide off their own bat to restrict their prices, their dividends and their profits. It would be a very comforting thought if we could think that that was likely to take place. If the working people in the factories and the mines see that real efforts are being made to limit profits and dividends and to make certain that there is a greater equality in incomes, then they will wholeheartedly support the Government's policy on prices and incomes.

The situation of the past must be reversed. Let me quote from Table 21 of the National Incomes Blue Book. The share of the top 6 per cent. of personal incomes in 1954 and 1962 makes interesting reading. Pre-tax in 1954 it was £2,810 million. In 1962 it was £4,380 million. Post-tax in 1954 it was £1,950 million and in 1962 it was £3,250 million. The percentage retained after tax in 1954 was 69 per cent. and in 1962 it was 74 per cent. The share of the total post-tax income of the top 6 per cent. in 1954 was 17·6 per cent. and in 1962 it was 18 per cent. By contrast, the share of the total post-tax income for the bottom 40 per cent was only 17 per cent. An economist, well known in the Labour movement, Mr. John Hughes, makes the point that over the years of Conservative rule the cost of living of the pensioner was rising half as fast again as that of high income households". He also said: Thus in terms of purchasing power we find that the top 6 per cent. increased their real income by rather more than a third between 1954 and 1962 while the purchasing power of all the other income groups ranked by size rose by rather more than a quarter. The 6 per cent. in 1962 enjoyed 18 per cent. of the total post tax increase. These are very important figures, especially for workers in factories. This is precisely what the Government are intending and trying to reverse. This was the whole exercise in the Finance Bill which hon. Members opposite fought so strenuously and resisted almost line by line, day after day because they are opposed to greater equality of income.

The Economist of 23rd May, 1964, stated: A man who was earning between £3,600 and £4,500 in 1956 would need to have secured only a 39 per cent. to 38 per cent salary increase since 1956 to maintain his relative place in the community; a man who was earning between £600 and £2,000 in 1956 would have needed a 54 per cent. to 59 per cent. increase: in each case the man at the bottom needing more. This is vital. These facts have to be brought out in order that the policy of the Government can be understood.

The housing component of the retail prices index showed housing costs to have risen by 62 per cent. from January, 1956, to the defeat of the Tory Government in October, 1964. This is where there were great increases in the cost of living. It is important to bear in mind what my right hon. Friend the Member for Belper (Mr. G. Brown) said on 22nd Jury, in reply to my hon. Friend the Member for Woolwich, West (Mr. Hamling). He said: It is estimated that in the first quarter of 1965 total gross dividend payments in ordinary and preference shares were 28 per cent. higher than a year earlier. I consider that this rate of increase is excessive and am keeping a careful watch on the position."—[OFFICIAL REPORT, 22nd July, 1965; Vol. 716, c. 1809.] There does not seem to be any great restraint of dividends. Hon. Members opposite should bear this in mind.

They are constantly talking about competition. One of the great difficulties is that industrialists in our country are not prepared to develop in a modern way with the use of modern industrial techniques as industrialists are in the United States of America. If we are to keep prices down and at the same time to ensure that our workers have sufficient incentive to increase productivity, it is not merely a question of asking the worker to work harder. The worker in British industry works just as hard as, if not harder than, workers in other countries.

What is vital is that industrialists should introduce modern technological methods in order that we can compete in world markets. Hon. Members opposite smile at that, but I have worked all my life in industry on the shop floor. I have seen obsolete machinery being utilised when it should have been thrown out 50 years ago. It is still being used. The scandal is that the industrialists have done nothing about it. They pass on any increased costs to the consumer instead of developing new industrial techniques. Anyone who is serious would agree that this is happening. Of course there are honourable exceptions. Some industrialists have a modern outlook on industrial techniques, but in the main, it must be admitted, this is one of the basic faults of British industry to-day.

Everyone on this side of the House is more than merely disturbed by the fact that up to now we have not been able to control prices as we should like to have done. We want to introduce tougher machinery than that which has been used up to now, but we cannot get away from the basic fact that the measures which the Government are adopting and which are forced upon them because of the terrible economic problems left by 13 years of Conservative rule—

Photo of Mr Eric Heffer Mr Eric Heffer , Liverpool, Walton

I will not give way because other hon. Members wish to take part in the debate.

Photo of Mr Godfrey Lagden Mr Godfrey Lagden , Hornchurch

I was wondering where the hon. Member has been in the industrial world and seen all these factories which are living so much in the past with so little modern machinery and so forth. I invite him, if he is interested, to come to my constituency, which is in an industrial constituency and has many modern works. I should be delighted to show him the very modern methods used in those factories which the workers appreciate immensely. Before he makes these accusations against industry he should have a look at the order books and find the industries which are waiting for new machinery which is being produced as fast as may be and which will be in the hands of industrialists as soon as possible.

Photo of Mr Eric Heffer Mr Eric Heffer , Liverpool, Walton

I thank the hon. Member, because I can give one or two examples. I worked in shipyards on the Mersey, I have also seen shipyards in the United States of America. There is no comparison. In shipyards in this country we are living in the past. There is no comparison between them and shipyards in Japan. Is it any wonder that we are losing orders for shipping construction to overseas competitors?

I have also worked in the building industry and have seen the lack of modern methods there. I have worked in the docks on Merseyside and have seen the complete failure to modernise. I could go on giving such examples. I, too, have modern factories in my constituency. They are the honourable exceptions. Surely the hon. Gentleman is not suggesting that all British industry is so modern and highly developed that there is no need to worry about this. If that is what he believes, he does not agree with those on his own Front Bench who, I am certain, would never argue that there is no need for modernisation.

I have explained that the reason why the Government must carry out these measures and the reason why they have not, up to now, been able to contain prices in the way they would like to have done is primarily because of the failings of hon. Members opposite, who were in Government for 13 years.

8.30 p.m.

Photo of Captain Walter Elliot Captain Walter Elliot , Carshalton

I believe that the hon. Member for Liverpool, Walton (Mr. Heffer) is one of the new Members who are agitating strongly for an alteration in the procedure of the House. Perhaps he should take to heart his own words, also those of some of his hon. Friends, and bear in mind that short speeches are sometimes greatly appreciated.

The hon. Gentleman, in common with a number of his hon. Friends, blames us for all the troubles of the Government. Whether that is a just charge or not, what the country wants to know is what the Government intend to do about the trouble. The hon. Gentleman challenged us to say whether we believe in a prices and incomes policy. A prices and incomes policy is only part of the Government's policies. Call it what you like, we are debating the effects of Government policy, which seem to us to be leading to steeply rising prices. We do not doubt the good motives of the Government. We believe that the Government are failing in their policies. We believe that it is our duty to pinpoint and expose these failures.

The general consensus of opinion on both sides of the House in this debate has been that rising prices are automatically a bad thing. A study of economic history teaches us that times of rising prices are times of prosperity, both national and international. The trouble is that the rises fall unfairly on different sections of the community. There are pressure groups who are able to contract out of rising prices. Those without the support of a pressure group, such as pensioners and those on fixed incomes, are the ones who suffer.

This process has been assisted by the Government. I well remember the Prime Minister in the debate on the Gracious Speech repeating that rather well-known and well-worn phrase, part of which is "to each according to his needs". The Government even have the effrontery in their Amendment to say welcomes the special and urgent provisions which have been made to meet the claims of those in greatest need". The Government have taken off the prescription charges, but those have been taken off for everybody, rich and poor. The Government have increased pensions, but those have been increased for everybody, rich and poor. Council house tenants are still subsidised. I quote this from the Sun today: My yacht and cars—by council house man. This man is paying 50s. a week rent in a subsidised council house. This may be one case, but there are many cases like it. I accept that they do not all have a yacht and two cars, but there are many people in subsidised houses who do not need the subsidies.

Photo of Mr Anthony Grant Mr Anthony Grant , Harrow Central

Is this man a member of the Labour Party?

Photo of Mr Walter Monslow Mr Walter Monslow , Barrow-in-Furness

The hon. Gentleman is talking about subsidised council houses. Is he aware that the cost of subsidies for council house tenants is much less than the Income Tax rebate for owner-occupiers?

Photo of Captain Walter Elliot Captain Walter Elliot , Carshalton

That may well be so, but my point is that there are many tenants of council houses who do not need a subsidy. The effect of the Government's measures to date is not, as the Prime Minister claimed, to each according to his needs. The effect is to help many who do not need help, whilst many who need help do not get enough.

It must be recognised by hon. Members opposite that price increases in the last ten months have been an act of deliberate policy by the Government. I am surprised sometimes at the ignorance shown on the benches opposite about this fact. An instance which springs to my mind is the exchange the other day when an hon. Member opposite asked the Minister whether importers, then paying a 15 per cent. surcharge, should refrain from passing the full amount on to the customer. The Minister replied that he thought that they should, but it seems to me that the surcharge was applied precisely in order to raise prices to check imports and that if prices did not rise imports would not be checked. This is an illustration of what the Government are aiming at. There are also the increase in Income Tax, the 6d. on petrol and other taxes which were put on specifically to raise prices.

Many of these price increases imposed by the Government have still to work their way through the economy. Prices will rise higher still and, if the Government are not careful, they will achieve with the latest clampdown a classic example of rising prices in a deflationary situation. We recognise the balance of payments difficulty. We must reduce demand. It is being done now to a great extent by raising prices, but, as usual, these price increases are being borne unequally by different sections of the population.

The First Secretary is ostensibly acting fairly in attempting to put forward an incomes policy with a norm of 3½ per cent. increase in wages, but all this is a facade and the Government know it. A great deal of heat is engendered when we consider the effect of wages and salaries on prices and we relegate profits to the background, but the fact is that wages and salaries are normally by far the biggest factors in costs. No argument will conceal that. I say that the Government's incomes policy is a façade for this reason. The main purpose of trade unions is to secure the best possible pay and conditions for their members. They want the biggest possible slice of the national cake. There is a fundamental conflict between capital and labour over the share of the fruits of labour and over the size of the slice of national cake.

I am not one of those who says that there is only one side to industry. I believe that there are two sides and that they are in conflict. We can do much to mitigate that conflict, and much has been done, but there is no point in not recognising the basic differences. The unions have been very successful in the last decade in their aim to get the biggest slice of the national cake. They have not only kept abreast of inflation, they have kept ahead of it and in their approach to the Government's incomes policy they have been inspired by that one same purpose.

The following is an extract of what was said in the General Council of the T.U.C. as reported in the latest report of the Department of Economic Affairs: The General Council have throughout the discussions made it clear to the Government and to representatives of the employers' organisations that trade unions would co-operate in a prices and incomes policy only if it appeared to them likely to secure broad trade union objectives more effectively than present policies. So the T.U.C. decided to co-operate.

As I see it, there are certain broad rules which the unions adopt when making claims. First, they say that industry can bear the cost, and they refer to profits and the rest. Second, they say that present wages are too low anyway. Third, they apply the principle of comparability. Those three criteria give any pressure group ample room to stake a claim in practically any conditions, indeed, in all except one, and that is when the money is not there.

If the Government were to have the co-operation of the unions, those three criteria had to be covered in any incomes policy. This was done, and in paragraph 15 of their Prices and Incomes Policy White Paper, Cmnd. 2639, they said: Exceptional pay increases should be confined to the following circumstances:

  1. "(i) where the employees concerned, for example by accepting more exacting work or a major change in working practices, making a direct contribution towards increasing productivity …
  2. "(ii) where there is general recognition that existing wage and salary levels are too low to maintain a reasonable standard of living;
  3. "(iv) where there is widespread recognition that the pay of a certain group of workers has fallen seriously out of line …"
I make no complaint about those conditions, but that is what is written into the Government's income policy White Paper. Under that policy, therefore, the unions have, in their view quite legitimately, to secure—in their own words—"broad trade union objectives" and I believe that the Transport and General Workers' Union is only being a bit more straightforward and frank in admitting it.

We have seen the result in the past few months, a complete and utter disregard of the 3½ per cent. norm, a norm which the unions argue, according to Government policy, does not apply to them. The rest of the story we know—rapidly rising prices, exhortations from the Chancellor and the First Secretary and warnings that the nation is paying itself too much, and completion of the circle by the Chancellor's announcement yesterday. We are back to "stop", with deflation, retrenchment, discipline of the market, and a situation in which extra money cannot be paid because it is not there.

I assume that the money is not there, of course. If it is, these latest measures will fail. We have done it before. We are doing it again, and again we shall fail. No doubt, after a period of stagnation we shall expand again and then, if nothing is changed, in due course grind to a halt. But this is not the way, and it is the responsibility of every Member of the House to find another solution, I shall make my modest suggestion.

I am glad that the Minister of Labour is here to hear what I have to say. For generations in this country, labour and management have endeavoured to avoid the sanction of the law like the plague whenever disputes have arisen. They always maintain that it will not work. But times have changed. In the first place, whether they like the description or not, the unions are now a pillar of the "Establishment". No doubt, many of their members will resent that description, but I believe it to be right, and no matter how loud the singing of "The Red Flag" at annual conferences, it will remain true. Secondly, we have Government acceptance of the policy of full employment. All Governments rightly accept this. Probably they would not last very long if they did not.

These two facts, in my view, suggest that we must make a change of direction in our consideration of industrial negotiations bearing in mind the effect that they have on costs and prices. We should examine carefully the methods used in such a country as Australia. There, a modern industrial community, although small, provides a model, and it is, of course, an intensely democratic country. I lived there for a few years, and, although I was not directly connected with the unions, I saw something of their work. The days lost through official strikes there are probably as many as, if not more than, those in this country, but to the best of my knowledge the days lost through unofficial strikes, go-slows and so on are almost negligible, and it those, I believe, which do the damage in this country.

The reason for this state of affairs in Australia is perfectly clear. The unions have a tight—one might almost say "iron"—grip over their members. It might be much too tight for this country, but it has the effect which I have described. The trade union officials control their members. They can order them back to work, just as courts there can order a union to get its members back to work, or they will suffer continuing penalties—and those penalties are effective.

It is only too clear that in this country many union officials cannot control their members. I am frequently told that the responsible leaders know exactly what should be done, but the members will not accept it. We read that union officials because they are too busy with routine work are often out of touch with the men on the shop floor. In other words, whereas in Australia the control is very tight, in this country it is very loose. It seems to me that a closer examination of the possibility of some effective compromise is justified.

If we accept the changed status of the trade unions from their early days to their position as a pillar of the establishment today, then I believe that their position in relation to the law must be reconsidered, not only to circumscribe the unions but to enable them to exercise increased control over their members. In the Guardian today—I will not waste the time of the House by reading it all out—there is a report of remarks by Lord Robens under the heading: "Unions Must Control Members". There is a short article on what he said, and I agree with him. We are to have a Royal Commission to examine the position, and perhaps it will consider this. But can we wait? I think not. Prices are soaring. We are in for the full rigours of the "Stop". The change, should it be made, will take time. I believe that we have to get busy now.

8.48 p.m.

Photo of Mr Harold Walker Mr Harold Walker , Doncaster

I am glad that the hon. and gallant Member for Carshalton (Captain W. Elliot) took some of his own advice, but I wish that he and his hon. Friends would take some of that advice when they are repeating the attacks upon the trade union movement in general and the Transport and General Workers Union in particular. I trust that the repeated attacks that we have heard in the last week will have been fully reported and brought to the attention of members of trade unions so that when the next General Election comes they will know clearly what they can expect from the Conservative Party.

The picture is emerging. Clearly, repressive machinery which hon. Members opposite threaten will certainly be brought into action to curb the activities of trade unions. As I have said on previous occasions, hon. Members opposite repeatedly, with hand on heart, pledge their support for freedom for trade unions to operate and the right to strike, but will do everything in their power to restrict our trade unionists in operating this right. I do not want to follow the hon. and gallant Gentleman, in view of the time, into the labyrinths of the alleged responsibilities of the trade unions for the economic ills from which we are supposed to be suffering and for the rising prices with which we are confronted. Suffice it to say that I believe that the celebrated remark made by an equally celebrated trade union official—that, so long as the economy is based on a free-for-all, the workers will ensure that they are part of the "all"—is valid.

We are in a free-for-all economy and one cannot blame the workers if they say that, so long as that is so, they will not be made the scapegoats continuously. I agree that we have to work for the success of the Government's prices and incomes policy but I am equally convinced that we shall not get acceptance of it unless those at whom it is principally directed—the workers in industry—are able to see clearly that the burdens will be shared equally and that distributed dividends and profits will be attacked as much as wages are attacked.

I waited patiently not to reply to the speech of the hon. and gallant Member for Carshalton but to the speeches by the hon. Member for Orpington (Mr. Lubbock) and the hon. Member for Beckenham (Mr. Goodhart) who both upheld the virtues of competition, and suggested that, if there were more vigorous competition, many problems from which we are suffering would presumably diminish and perhaps even disappear.

It is odd that the suggestions about the virtues of competition seem to be confined to competition in the selling of manufactured goods and commodities. Somehow, when the advocates of competition extol its virtues they do not apply it to the working man as well. The only thing that the working man has to sell is his muscle and brain power, but we are told that he must not exercise his right to compete in selling it. I am glad that he does not. If our miners or railwaymen were to exercise the tremendous power that they have, where would this country be?

The workers have acted in a most responsible manner by not using to the full the tremendous power they possess. After all, this is what the fight is about on the Southern Region. It concerns what price men can have for the labour they sell. The ultimate logic of the sort of argument advanced from the benches opposite today is acceptance of the point of view of the right hon. Member for Wolverhampton South-West (Mr. Powell), who has said that there is only one price which a firm or person is justified in trying to get for his goods or services, and that is the price which he believes will bring him the best return, and that it is his duty to get that price.

By that standard, is it not therefore the duty of trade unionists to get the full benefits of their industrial power? But they are not as irresponsible as the right hon. Gentleman and the 20 hon. Members opposite who share his views. [HON. MEMBERS: "Fifteen."] I am relieved that there are only 15. I do not take such a detailed interest in the party opposite. Perhaps I was overwhelmed by the speculation.

The hon. Member for Beckenham drew attention to the debates in the last Parliament about resale price maintenance, making special reference to chemists. The hon. Member for Southgate (Mr. Berry) produced correspondence received from a constituent. I, too, have received correspondence from a constituent who is the proprietor of a chain of very large supermarkets and therefore not a person who would be assumed to have an identity of interests with me.

My constituent wrote to me enclosing the following correspondence: Private and Confidential.The Proprietary Articles Trades Association.We have been informed that you are selling"— Mr. X's— baby products below the manufacturer's stipulated minimum retail prices.If this information is correct, will you please note that the manufacturers concerned … have fixed the minimum retail prices at: The letter goes on to tell my constituent that unless he sells at those prescribed prices, he will be faced with an injunction against him in the High Court.

He included another letter from Messrs. McKenna and Company, Solicitors, Whitehall, London, which said: Dear Sir,We have been instructed by the Phillips, Scott and Turner Company to write to you in connection with sales by you of Andrews Liver Salt … Recently a purchase of the 3s. 9d. size of Andrews Liver Salt was made from your store at the cut price of 3s. 2d. and this sale clearly constitutes a breach of our Clients' conditions of sale.Now that our Clients' condition of sale has been brought to your notice we shall be pleased to have from you an assurance that you will, in future, sell our C'lients' medicinal products only at the retail prices fixed by them. Another letter concerns Mars Products, the makers of Mars bars, and reads: I am sure you will agree it would be a pity to cut your customers' supplies of Mars Products and will resume normal prices as soon as possible. I could give a whole string of similar examples in this correspondence from my constituent.

This correspondence suggests that business people have some responsibility for high and increasing prices. When recently interviewed by the local Press, my constituent concluded the interview with these words: I, for one, feel extremely grateful for the benefits derived from the efforts of the Socialists and the trade unions. At least they gave us the dignity to stand up as human beings and look forward to a society where there is an alternative to paying lip-service or bowing and scraping to qualify for a flunkey. I also clearly recall the debate which followed the announcement of the Price Review by my right hon. Friend the Minister of Agriculture who was severely criticised by hon. Members opposite. I recall that one of the consequences forecast was that dairy herds would be slaughtered wholesale, with a consequent shortage of milk. Hon. Members opposite built up a formidable pressure to increase the price of milk and allowances to farmers. They had some success and, as a consequence of their pressure, the price of milk will be increased by ½d. per pint bottle from next Saturday. Hon. Members opposite must accept responsibility for that increase. But, far from dairy herds being slaughtered as a result of that Price Review, they are flourishing and milk production has increased.

Hon. Members opposite have repeatedly said that farmers do not benefit from subsidies for the sale of beef cattle. A farmer wrote to me last week to say that she had driven to market for slaughter four cattle for each of which she had received f12 for each of the last four years. In addition she had received the winter keep subsidy and the barley subsidy and had therefore benefited from those subsidies in addition to the enhanced price resulting from the shortage of beef on the home market because of Continental buying of beef in this country. That is the answer to those who say that we are unjustly attacking farmers.

One hon. Member drew attention to the subsidies being enjoyed by some tenants of council houses, but the subsidies received by people being rehoused from the slums is less than that being paid in respect of beef cattle which are being exported. What a sad prospect when a beast which is going to be sold in the European markets receives a higher subsidy than a person who is being housed by a local council.

From my few remarks it will be abundantly clear that, far from the Government, far from the workers, the trade unions of this country, having been responsible for the increases in prices that have taken place, and which are taking place, they are as much the responsibility, if not the sole responsibility, of the business friends of hon. and right hon. Gentlemen opposite.

9.1 p.m.

Photo of Mr Peter Walker Mr Peter Walker , Worcester

May I immediately say that the only thing about the hon. Gentleman the Member for Doncaster (Mr. Harold Walker) with which I agree is that he has a reasonable surname. Apart from that, I must confess that I hope that when the right hon. Gentleman the Minister of Labour replies he will be announcing the Government's new attitude to farmers. I would be interested to hear that he agrees with the views of his hon. Friend the Member for Doncaster that the subsidy on the price of milk is too high and that there should be a reduction in the subsidy on beef.

I would like to say a few words about the Amendment which the right hon. Gentleman the President of the Board of Trade failed to move. I wonder if one of the reasons why he failed to move this particular Amendment was that he had a twinge of conscience about the last few lines of the Amendment which read: … and in particular welcomes the special and urgent provisions which have been made to meet the claims of those in the greatest need. I think that it is perfectly reasonable for the Government to claim credit for the increase that has taken place in pensions. It was an increase which was, as my right hon. Friend the Member for Thirsk and Malton (Mr. Turton) pointed out, in line with the general cycle of increases that have taken place over the years. In the same way, we would take credit for the fact that during the period of 13 years of a Conservative Government old-age pensions were increased by twice as much as the rise in the cost of living. The Amendment specifically states that it welcomes the "special and urgent provisions which have been made to meet the claims of those in the greatest need".

Who are those in the greatest need? I would suggest that those with the greatest need are those people on fixed forms of pensions, such as the public service pensioners, the Armed Services pensioners and those who receive no pension at all. These are the people whom I would have thought all Members of the House would agree are in the greatest need. As far as these people are concerned, I would like to reiterate the point made by my right hon. Friend the Member for Thirsk and Malton, which is that as a result of this Government being in power for eight months these people are worse off today than when the Government came into power. We do not complain that the Government have not immediately brought in an increase for these people. There has been a rise of more than 4 per cent. in the cost of living and these people have received nothing. Their hope was that expressed by the Minister of Pensions and National Insurance, who stated that there was going to be a priority to the incomes guarantee proposals. We heard yesterday that this has now been postponed. Therefore, these people must be asking what provisions the Government are going to make to fulfil their definite election promises on this subject.

The right hon. Gentleman the President of the Board of Trade, who I am sorry is not here, implied that the Minister of Labour was going to deal with this subject in his winding up speech. If the Government do have any proposals to make on this subject to the House today, I would have thought it was a courtesy to the House to deal with them in the opening speech. Speaker after speaker has wanted to deal with this topic and has been unable to know what is in the Government's mind. All we have had is the vague hint that the Minister of Labour would say something at the end of the debate.

I should like to comment on the fact that the President of the Board of Trade and the Minister of Labour have been chosen as the Government's Front Bench spokesmen on this topic. We appreciate that the Minister of Labour has a great deal to do with the subject of the rise in the cost of living. He enjoys respect on both sides of the House as a sincere, genuine Minister who boldly says what he thinks about problems affecting the cost of living and the attitude of both sides of industry. We welcome him in that context.

However, I should have thought that a debate on the cost of living should have been attended by somebody from the Department of Economic Affairs. It is remarkable that the Government have a Ministry which they state is responsible for prices and incomes and yet not only do they not put up a speaker from that Ministry to take part in this debate, but for virtually the whole of the debate no Minister from that Department has been present. We had exactly the same treatment throughout the debates on the Finance Bill, when there was virtually never a Minister from that Department involved or even listening to the debates. But to have a debate specifically on the 'subject with which that Department is concerned and for it to treat this House with such contempt that not a member of it even attends is something for which the House deserves an apology.

This is a remarkably different debate from the debate which we had last July when right hon. Gentlemen opposite were in opposition. That was a Supply day and they chose the cost of living as the subject to be debated. The two Labour Party speakers on that occasion were the Chancellor of the Exchequer and the First Secretary of State. The Chancellor of the Exchequer opened and the First Secretary of State wound up the debate. Yet a year later, when the same subject is being discussed, those two Ministers have hardly attended the debate at all.

Photo of Mr Eric Lubbock Mr Eric Lubbock , Orpington

Neither the Minister of Labour nor the President of the Board of Trade is responsible for public service and Armed Forces pensioners. We have not had the presence of the Minister responsible for those matters either.

Photo of Mr Peter Walker Mr Peter Walker , Worcester

That is perfectly true. It fits in with the general complacency of the Government on this whole topic.

I do not know why the President of the Board of Trade, who opened the debate, has failed to put in an appearance. Naturally, I wish to deal with his speech, which was quite the most complacent speech we have heard from the Dispatch Box opposite—and that is saying a great deal. Here was a Minister defending a situation in which the cost of living had been rising at a considerable rate. He said that in the last year of the Conservative Government the cost of living rose by nearly 4 per cent. What a defence for a Minister speaking for a Government under which the cost of living has risen by more than that amount in eight months!

The right hon. Gentleman said that under the Labour Government the production figures had improved. Under the Conservative Government, he said, there was not the increase in production that we needed, but at least under this Government there had been an increase in production. I should have thought that the Government would have been anxious to point out not their smugness and satisfaction with the production figures but their real and deep concern.

When did the production figures rise? They rose, not during recent months, but during the first two or three months after the Government came to power. All the increase in production took place before December. Today, the latest figures show that industrial production is running one point lower than it was in January. Yet the President of the Board of Trade boasts of the Government's record in production. [HON. MEMBERS: "Where is he?"] I can well understand him not wanting to attend the wind up of the debate, for certainly his speech dealt with none of the basic problems concerned. It was also remarkable that in a debate on this subject there should have been no mention whatever of the general subject of savings. As my hon. Friend the Lady for Birmingham, Edgbaston (Dame Edith Pitt) pointed out, savings is of vital importance at a time when one is trying to release [Interruption.] [HON. MEMBERS: "Come on, George."] I am certainly glad that the First Secretary has at last put in an appearance, and may I also give a welcome to the President of the Board of Trade, whom I now see entering the Chamber, who, having made his opening speech, has taken no interest in the debate all day. It is very good of him to arrive albeit, as always, a bit behind the times.

As far as savings are concerned, the Chancellor of the Exchequer—[Interruption.] If the right hon. Gentleman the First Secretary wishes to talk I suggest that he comes into the House. There has been no comment from the Government on the very real drop in savings which has taken place in the last few months, and the House deserves some explanation. In his speech last November, the Chancellor stated quite clearly that, in order to see that the balance of supply and demand was reasonably returned, he was dependent upon the savings movement. He paid tribute to the savings movement and referred to its great importance in keeping us free from inflation. Yet almost every section of the savings movement has declined during the period that the Government have been in office. National savings, trustee savings banks, investments in equity—all are in decline. The Chancellor appears to show no alarm at all that in the first 15 weeks of the financial year net deposits in National Savings amounted to only £2 million compared with £72 million for the same period last year. He seems to show no anxiety that investment deposits of the trustee banks are reduced to nearly half what they were during the same period last year.

The significant feature of the debate has been that almost every speaker from the other side of the House has blamed the serious rise in the cost of living upon the economic inheritance of the Government. If I may say so, the real issue at stake and the really vital matter that has been disclosed by the measures announced by the Chancellor this week has been the constant misjudgment of the Government. My hon. Friend the Member for Southgate (Mr. Berry) pointed out that we have now had 300 days of a Labour Government and that we have had a Budget for each 100 days: three Budgets during that period of time.

If the case of the Government is that it is the economic difficulties that they inherited that have caused the inflationary difficulties, they must explain their complete misjudgment in the White Paper that they published on 26th October. In that White Paper, after all the figures and all the facts were known to the Government, they clearly stated in paragraph 7 that, in their view, there was no undue pressure on resources calling for action. This was their categoric statement in the White Paper.

That was followed a few weeks later by the first Budget, when the Government admitted that the White Paper of 26th October was no longer accurate and that there was need for a degree of inflationary taxation. They introduced a Budget which partly provided for the increase in pensions and to the extent of £100 million took extra taxation out of the economy. A little later we came to the 7 per cent. Bank Rate and then to the next Budget, when the Government again decided that the measures taken in their first Budget were not adequate and they had to go in for further taxation. After that, we had special controls and various hire-purchase restrictions, and yesterday we had the latest measures.

I am sorry that the Chancellor of the Exchequer would not take advantage of this debate. I hope that the Minister of Labour, in his reply, will explain to the House the incredible statement made by the Chancellor only 13 days ago, when, on Third Reading of the Finance Bill, and knowing all the facts and figures concerning our economy, said: There is a temptation to assume, because the effects of these measures are not immediately obvious, that we should rush into further measures which would have the effect of restraining the economy even more. This would be an unfortunate thing to do and I am resisting the temptation to do it."—[OFFICIAL REPORT, 15th July, 1965; Vol. 716, c. 911.] The Chancellor resisted that temptation for 13 days.

The whole of our difficulty today is concerned with confidence in the Government. How can anybody expect to obtain confidence abroad with a Chancellor of the Exchequer who completely changes his view within 13 days—not 13 days of Tory inheritance, but a further 13 days of Labour Government—and decides that these new measures are necessary? It would have been reasonable, and the Government could have argued the case, that the measures required when they introduced their White Paper in October were needed as a result of the economic position which they had inherited, it is feasible that they could even have argued that the November Budget was in that category, but they can no longer argue that the action which they are now taking results from anything other than a complete lack of confidence in themselves.

In last year's debate, which took place almost a year ago today, the Chancellor expressed how serious he felt were the increases that were then taking place in prices upon the general situation of the incomes policy. It was interesting how he listed the various items that were increasing in price. He enjoyed himself quoting increases which had taken place in the previous months of the then Conservative Government.

I thought that tonight the Chancellor might be interested to have a progress report to see how much better he has done in these respects than his Conservative predecessors. Last year, he bemoaned the fact that petrol had gone up ½d. a gallon. He has done much better than that; he has put it up 6d. He pointed out the horrors of the rates going up by 7·8 per cent. in one year. Whilst he has been Chancellor, they have gone up 14 per cent. He commented last year on the penny on beer and 4d. on cigarettes. He has put a penny on beer and 6d. on cigarettes. A year ago he made a witty remark about the Marie Antoinette attitude of the Tories by which a position had been reached that turkey was cheaper than beef. Such is the price of beef under the present Government that it is now nearly twice as expensive as turkey.

Last year, the Chancellor drew attention to the importance of the basic services and the increases in their price. He claimed that the cost of electricity had gone up. There are millions of people in London who could tell him about the 11 per cent. increase in the cost of their electricity supplies since the Government have been in office.

Photo of Mr Michael Foot Mr Michael Foot , Ebbw Vale

Since the hon. Gentleman is recalling the debate of a year ago, will he tell the House what was the forecast of the deficit in the balance of payments as prophesied by the Government of that time?

Photo of Mr Peter Walker Mr Peter Walker , Worcester

It happened to be a debate on the cost of living, and presumably the hon. Member was absent from that debate, as he has been from this one.

Photo of Mr Michael Foot Mr Michael Foot , Ebbw Vale

Will the hon. Gentleman now answer the question that I put to him?

Photo of Mr Peter Walker Mr Peter Walker , Worcester

The balance of payments figures for the first half of 1964 were announced on 30th September, 15 days before the General Election, and resulted in no withdrawal of election promises on that side of the House at all.

The Government are up to the usual form of Labour Governments. During the six years when a Labour Government were last in office the average rise in the cost of living was 6·5 per cent. This year the current rate of the rise in the cost of living is 6·6 per cent. It is no wonder that that distinguished cartoonist, Mr. Cummings, has had to resurrect Mr. Rising Prices, who has now become a regular feature.

What is the Labour Party's attitude to all this? How do hon. Gentlemen opposite defend this situation? We have heard no proposals today for what they are going to do on this topic. I saw the hon. Member for Doncaster fumbling with the latest little piece of research carried out by Labour Party headquarters at Transport House and produced in a leaflet a couple of weeks ago, no doubt encouraged by the Chancellor's speech of the 7th June. The leaflet is entitled. "Turning the Corner. An Economic Report", and the first paragraph contains this happy note from the Chancellor: But I think we are turning the corner. From now on we can look forward to an improvement that will reflect on everybody. My word it has!

Two pages of this leaflet are devoted to prices. One section entitled, "The Price War", contains two proposals. It says: First, wasteful Government expenditure has been stopped". on the day of publication it was announced that Parkinson's Law was rampant in the Ministry of Technology. Its only other definite proposal for the rising cost of living is that plans will be announced shortly to help house buyers. They were announced shortly. They were announced yesterday, and these proposals, put forward in a leaflet only ten days ago, have been abandoned by the Government. The right hon. Gentleman mutters "Postponed", but when a Government have a duration of life such as this Government have postponed means abandoned. The Labour Party has no policy on this topic. All its policies have been essentially inflationary, and hon. Gentlemen opposite have been responsible for many of the increases that have taken place.

The First Secretary wound up a similar debate on this subject last year. He is so associated with election promises on lower prices and lower mortgage rates that it probably makes him inappropriate to try to persuade people to comply with an incomes policy, for it was the right hon. Gentleman who was the great propounder of the 3 per cent. mortgage interest rate. It was the First Secretary who said last year that food prices were rising, but they were rising nowhere near as fast last year as they have risen this year. He complained that rates were going up due to the high Bank Rate and the failure of the Government to increase grants to local authorities. Now the interest rates are higher and the loans to local authorities will be lower. He complained that mortgages were going up. He said: Everybody in every commuter area who is buying a house now finds his mortgage going up. Everyone who wants to buy a house now finds that he cannot raise the money to buy a house."—[OFFICIAL REPORT, 20th July, 1964; Vol. 699, c. 154.] What prophetic words they have proved to be. The increase in mortgages then was nothing compared to what it has been since right hon. Gentlemen opposite have been in power. He ended his speech by saying that the Government had failed. The failures he mentioned in his speech were insignificant compared to the failures of this Government in nine months.

In five minutes' time—[AN. HON. MEMBER: "You will be finished."] I want to give an opportunity to the right hon. Gentleman the Minister of Labour. In five minutes' time, there will be a party political television broadcast on behalf of the Labour Party. Its title is "Go Ahead Year". After the failure of this Government, on the cost of living, it will not be "Go ahead year" but "Get out year".

9.27 p.m.

Photo of Mr Raymond Gunter Mr Raymond Gunter , Southwark

I do not know that the debate has generated much apart from heat. Before I come to the main part of my speech, I want to correct one thing which the right hon. Member for Leeds, North-East (Sir K. Joseph), either maliciously or in ignorance, conveyed to the House about the Royal Commission. In the course of his remarks, he said that the Government had been weak enough to give way and remove restrictive practices from the Commission's terms of reference. It would be a very bad thing for anybody to understand that that is right. The Commission understands, the trade unions understand and the employers understand that restrictive practices are fully covered by the words of the terms of reference: … to consider relations between managements and employees and the rôle of trade unions and employers' associations in promoting the interests of their members and in accelerating the social and economic advance of the nation. Therefore, I thought that I would immediately correct any misunderstanding that restrictive practices were outside the terms of reference of the Royal Commission.

Hon. Members:

Withdraw.

Photo of Mr Raymond Gunter Mr Raymond Gunter , Southwark

The hon. Member for Worcester (Mr. Peter Walker) said that the trouble was that there is a lack of confidence in the Government. It might be a happier situation if that was simply the case. The real problem which faces this nation is that many people abroad are beginning to lose faith in the British people and their ability to adjust and adapt themselves. This is one of the disturbing factors abroad today. It is not only the Government but the fact that we have had so many crises over the past decade or so, we have been so unwilling as a nation—all sections of the nation—to get in tune with modern conditions, re-gear our industry and get away from restrictive practices, so that there is a growing feeling that perhaps we will never get round to doing the job.

Therefore, I say to the hon. Member for Worcester that the problem, the difficulty of the nation is not simply and solely a lack of confidence in the Government: it is this growing feeling that the British people themselves are not willing to come to terms and get out of bad habits. One bad habit is living in debt. We have reached the stage in this nation when people, even to quote myself, can start talking about the underlying principles of getting out of debt, and even a leading article in The Times can refer to it in such a condescending manner as "evangelical morality". It is as simple as the tenets on which we were brought up. We ourselves—the nation—are living in debt. It is bad and sinful and the only answer to it is to find the means of escaping from it.

I have listened to most of the speeches made today and I have not been impressed. I do not think that anybody honestly believes that we can deal with this problem by saying that the party opposite did such a thing in September of last year or that we did a certain thing in February of this year. The problem goes much deeper.

The O.E.C.D. Report, which has just been produced, was reported and quoted in The Times yesterday as follows: On last winter's crisis the survey is in no doubt about the major trouble. The hon. Member for Worcester insisted that the problem could be solved by getting supply and demand into balance. He inferred that it was only since the Labour Government came into power that this matter had arisen as a problem. The Times then quoted the survey: 'The rapid increase in total demand was the most important'. and said: This was the responsibility of the Conservative Government in an election year. Unfortunately, the Labour Government made the same mistake on reaching office. In my opinion the problems are so fundamental that it is a fat lot of good to argue who was to blame in 1951 or in 1965. For this reason I should like tonight, in my own daft way, to turn to what I believe is the real beginning and the problems which face us in this sphere. Whatever may be the arguments on either side of the House, we all come to the same conclusion in the end—that the key to success in solving these problems is better and more efficient productivity. That, in turn, depends on a properly integrated policy of prices and incomes.

The hon. and gallant Member for Carshalton (Captain W. Elliot) said that the prices and incomes policy was a facade. That is his opinion, after three months. I do not believe that any responsible hon. Gentleman opposite would deny that at least an incomes policy of some sort is necessary. Whether this is the right way I do not know, but I will deal with that shortly. Meanwhile, surely we all accept that some form of prices and incomes policy is necessary.

It was described as a facade, but whatever may be said, the Government have at least achieved one thing for the first time. It is that members of the Government and of both sides of industry have agreed on a strategy for creating a dynamic and socially just Britain. At least we can claim that the trade unions, employers and the Government have come together and have set down on a piece of paper what they know to be necessary to do this job.

I submit—and I think that hon. Gentlemen opposite will agree with me here—that if we look back in history we find that incomes policies of the past failed in their objectives because they were not agreed policies, because they concentrated on wages and salaries to the exclusion of other forms of income, because they did not leave room for social adjustments which justice required and, most important, they did not cover prices as well as incomes.

We have, therefore, at least got to this point since we have been in power. There is the intention. Of course, we all have intentions to live righteous lives and most of us are sinners. I know that. Nevertheless, there is the intention. Following the declaration of intent, and with the establishment of the National Board for Prices and Incomes, the Government has worked out criteria for assessing price increases and the norm against which to assess wage claims.

I turn from the intent, if I may so put it, to the working out of the policy. Some hon. Members opposite have consistently tried to show that this agreed policy—and I emphasise the word agreed—has been and is ineffective. I will not try to claim for one moment any glorious successes in the first three months. Hon. Members opposite have argued, in many ways justifiably, that prices have continued to rise and that wage and salary increases have continued well above the norm. It is true that there have been rises in prices. Nobody can deny it; the facts and the statistics are there. And it cannot be denied that some of these rises are partly due to Government action; they are partly due to measures to reduce the pressure of demand in the economy, and partly due to increases in money incomes which have exceeded the rise in productivity. In considering price trends, it is necessary to remember that there is always some time lag before changes in costs are fully reflected in price changes. As to labour costs, it is true that many settlements have exceeded the norm and also that the rate of increase in average earnings has continued to be high. I will speak more of this in a moment.

But I think that it would be wrong to assume, after this short period, that this policy is entirely ineffective. It has been fully in operation for only three months, and it would have been very foolish, I think, to expect a solution of the problem of inflation in such a short time when this country and others, as we all know, have been grappling with it for many years past. This policy requires changes in traditional habits and attitudes, and this cannot be achieved overnight, certainly not in this country. It is therefore, in my view, premature to judge such a policy on the experience of three months. In addition, the high level of demand and acute shortage of manpower, the current move towards the 40-hour week and the forward commitments on wages and salaries already entered into have all been obstacles in making this policy immediately effective.

It is quite clear, however, that prices and money incomes have recently been rising much too fast for the health and strength of the economy. It is impossible to show what prices and incomes increases there would have been had there been no agreed policy. We do not know. We have developed and are still trying to develop further a climate of opinion in this country in which there is a wider understanding and recognition than ever before of the need not only to increase output but also to relate incomes with output if prices are not to be continually forced up.

I am satisfied that in these new circumstances considerations of the national interest as well as of individual interest enter into particular decisions affecting prices and incomes, and future decisions will without doubt be influenced by the reports of the National Board for Prices and Incomes, which will build up a body of case law.

We must, however, ensure that all individual decisions fully reflect the general considerations which have been agreed. We have said—and I repeat it—that the voluntary method will be given every chance before we try other methods. I believe, and the Government believe, despite the disappointments of the first twelve weeks, that the voluntary system can work and will work. If it does not work, then there will inevitably be some unpleasant alternatives. [HON. MEMBERS: "What are they?"] The unpleasant alternatives will have to be that any Government will have to face statutory action to control it. That is unpleasant action within a free society.

Photo of Mr Cyril Osborne Mr Cyril Osborne , Louth Borough

Since the voluntary system, which I subscribe to and we all subscribe to, failed under Sir Stafford Cripps in 1947–49 and is failing now, why does the right hon. Gentleman not say straight to the country that there will have to be a package deal imposing a limitation on all incomes and prices affecting everybody?

Photo of Mr Raymond Gunter Mr Raymond Gunter , Southwark

I am trying to argue that so far we are not satisfied that this voluntary and agreed system has failed. What I said, and what I emphasise, is that it does not matter what Government are in power if the position goes on and we get further into debt we suffer the consequences of the debt and the Government have to do something about it.

Photo of Mr Raymond Gunter Mr Raymond Gunter , Southwark

It is no good the hon. Member saying, "Do it now" for we have to take all parts of the nation with us. In a free society this is one of the most difficult problems we have to deal with. There have been critics of the policy throughout this debate. It has been said by one of the leading members of the party opposite, the right hon. Member for Wolverhampton, South-West (Mr. Powell) that it is impossible to have a prices and incomes policy and that to talk of it as if it were possible is dangerous nonsense. We cannot accept that. We do not believe that that is the way to approach our problems. It is certainly necessary to increase competition, as the Government have shown by introducing new legislation on monopolies, but, even with strengthened legislation, competition is likely to remain far from perfect.

Therefore, our submission to the House is that competition and market forces cannot be relied upon alone to achieve price stability unless drastic deflation is accepted. I followed the right hon. Member for Leeds, North-East very closely indeed and there appeared to be a suggestion in his mind that in the end a larger measure of unemployment was inescapable. I do not know, but that was the impression, and of course many people honestly believe it.

Photo of Sir Keith Joseph Sir Keith Joseph , Leeds North East

I thought I was following the Chancellor of the Exchequer in interpreting the Government's policy on the redeployment of labour towards the exporting industries. In order to achieve that it is necessary to get supply and demand in the right balance. That is all I was arguing.

Photo of Mr Thomas Steele Mr Thomas Steele , Dunbartonshire West

The right hon. Member never said how it can be done.

Photo of Mr Raymond Gunter Mr Raymond Gunter , Southwark

I turn to what the right hon. Member said and here I am in agreement. It is necessary to control the general pressure of demand, as my right hon. Friend the Chancellor has made clear. The question is the degree to which it is considered necessary to restrain demand and the level of employment. Naturally, rises in costs and prices can be restrained, obviously, with a sufficiently drastic cut in consumption and a steep rise in unemployment. Let us remember that rises in unemployment tend to fall particularly heavily on those areas where unemployment is already above the average. What the critics of the policy have never done is to admit in effect that their policies would involve unemployment.

I say on behalf of the Government that we are determined as far as lies within our power to avoid such waste of our national resources and the hardship and suffering it would create, which this Government believe to be unnecessary. They are opposed to a free-for-all society in which the primary concern of everyone is to better his position at the expense of the whole community and the country's prospects of securing faster growth in real terms. A free-for-all society inevitably means that the strong should flourish at the expense of the weaker members and that the Government are not prepared to accept. Therefore, I say a few words on the aims of the prices policy. The aim of the prices policy is to secure stability in the general price level. This does not mean that all individual prices can or should be kept stable. It has been estimated that about 3 million price changes a year take place—increases and decreases. A stable price level requires fewer increases and more reductions than have been seen in recent years. This, in turn, requires not only greater stability in the level of wage costs, but also greater efficiency on the part of management and more determined efforts to absorb cost increases.

Very often hon. Members opposite overlook the fact that men are blamed when a wage claim is granted and prices automatically rise. The public blames the trade unionists. Very often there is not the slightest need to increase the prices to the extent to which they are increased, in the light of the wage award. It is not possible to set out detailed rules to cover the circumstances in which all individual price changes can be made. The application of the general criteria which have been set out in the White Paper must be left to the individual enterprise.

"What about the nationalised industries?", the Government were asked in one interjection. This is always a sensitive spot. The nationalised industries are expected to apply the same criteria as enterprises in the private sector, while taking account of their financial and social obligations. The Government have already made clear the two sets of considerations which underlie the pricing decisions in the public sector. On the one hand, it is important, if economic expansion is to be secured and a possible misallocation of scarce resources avoided, that the nationalised industries should earn a reasonable rate of return on the capital which they employ. Much importance is therefore attached to the achievement of financial targets agreed between individual nationalised undertakings and the Government.

On the other hand, it is equally important that the prices and charges of those undertakings should be increased only where this is justified. The nationalised industries are expected to make every effort to absorb increases in costs by increased efficiency, as they must if they are to remain competitive. Where a price increase cannot be avoided in the public sector, the Government regard it as important that its justification should be capable of being publicly demonstrated. In some cases these charges are subject to statutory forms of control or to examination by independent consultative bodies set up by statute, whose findings take into account views expressed by the consumers, and whose reports are published.

The Government do not rule out the possibility of reference of price increases in the nationalised industries to the National Board for Prices and Incomes if this seems appropriate. Indeed, they have already referred increases in London electricity charges to the Board. But such cases are not likely to be frequent—and I am sure that this would be the case whichever party is in power—as the Government are in close touch with the various nationalised industries and have arranged to discuss with them the justification for particular price increases and as many of the decisions have had to be submitted to the independent consultative bodies.

Photo of Mr Eric Lubbock Mr Eric Lubbock , Orpington

The increases imposed by the London Electricity Board have been referred to the National Board for Prices and Incomes, but those imposed by the South-Eastern Electricity Board have not. The reason given in the House for this was that the body which purports to represent the consumer has not made any representations to the First Secretary asking him to do this. Could we have some other form of public demonstration, which the Minister has said we should have, justifying this large increase amounting to 13·3 per cent., which is much larger than the increase imposed by the London Electricity Board?

Photo of Mr Raymond Gunter Mr Raymond Gunter , Southwark

I do not quite know the answer to that. I will have a look at it. [Laughter.] I do not know why the increase imposed by the South-Eastern Electricity Board has not been referred to the Board. I repeat that I do not know. What is the good of pretending you know if you do not know?

To turn to the productivity side, when all is said and done we must recognise that we cannot hold costs and prices down unless we increase our output from the limited resources available to us. The most important of these resources, and the one for which, as Minister of Labour, I am primarily responsible, is manpower. If we want to expand national production and improve our standard of living in years to come we shall, if we go on in our present ways, undoubtedly run into a continuing manpower shortage which will largely frustrate our efforts.

This is what is referred to sometimes as the manpower gap—rather misleadingly because this seems to suggest that the gap can be filled only by additional manpower. This is not so. The way we should and must fill it is by more efficient and more productive use of our existing manpower resources. This means that we must give up many of our traditional ways of working and abandon restrictive practices which impede the growth of productivity. Before anyone cheers from that side of the House or this, let me say that there are as many restrictive practices on this side as on that side and therefore I refer to the totality of restrictive practices. This is not a matter for the trade unions only. It is something which must be tackled by management as well as the trade unions and, in co-operation with the trade unions, at the national level, at the industry level and, most important, at the level of the individual firm.

I should like to say something about restrictive practices which have aroused so much fury but which are so little understood. Trade union restrictive practices are not normally used for the deliberate purpose of restricting output. The men are not daft enough for that, because the bigger the output the bigger the pay. The motive behind them is usually the worker's desire to safeguard his relative status, his conditions of work, and, perhaps most important, his security of employment. These are legitimate matters. It is only when they are carried to unreasonable lengths or based on misconceptions that they can lead to practices which are indefensible.

We must recognise, however, and I ask all my colleagues in the trade union world to recognise it, that practices which were legitimate a generation ago are often indefensible today. The whole employment picture is entirely different. The measures which the Government are now urgently bringing forward to provide greater economic security for workers, such as the Redundancy Payments Bill, and the plans for wage-related unemployment benefits, will provide protection that has never been available on so wide a scale before to those who have to change their jobs because of economic and technological developments. It is vital that both employers and trade unions alike should grasp this new opportunity they have of introducing new methods of efficient working and redeploying our labour force to its best advantage.

I emphasise that phrase "to its best advantage". It is to the advantage of all of us that our manpower resources, and that means the work of every one of us, should be used in the most effective way. One of the difficulties which we always find is to explain that the rise in the cost of living, or the increase in the retail price index figure, is the responsibility of everybody. People sometimes think that the rise in the price of potatoes, for example, is because something has happened—wages have gone up or there has been bad weather and anyhow it is the farmer's responsibility. They never stop to think that sometimes prices have gone up because of restrictive practices in the transport industry.

Photo of Mr Peter Walker Mr Peter Walker , Worcester

The time is short and we have been promised a statement about public service pensions.

Photo of Mr Raymond Gunter Mr Raymond Gunter , Southwark

On the question of public service pensions, there has been a lot of talk of pledges and counter-pledges. That is one of the curses of general elections. We all get confused [Interruption.]—but the real confusion, of course, is in the mind of the hon. Member for Worcester because there is nothing at all in the Labour Party manifesto about it. [HON. MEMBERS: "Oh."] Where is it? The Motion refers to the question of public service pensions. Under the previous Government, three years and five months were allowed to go past between the operative date of the Pensions Increase Act, 1959, and 1st January, 1963, when the 1962 Act came into effect. Before that, three years and four months elapsed between the operative dates of the 1956 and 1959 Acts.

Photo of Mr Raymond Gunter Mr Raymond Gunter , Southwark

Let me finish, boys. You have been very nice to me.

So far, it is only two years and seven months since the 1962 Act. Now, I look with trembling at the hon. Member for Orpington (Mr. Lubbock) when I say that the Government have looked very carefully at this matter and, as has been known, it has been part of a very wide review. The hon. Gentleman did not like that word from the President of the Board of Trade, but it has, in fact, been the subject of a wide review. But would the House, in the light of this debate, whatever has been said, expect me to give any pledges, as have been asked for, or any guarantees that we should spend £100 million—I think that sum was mentioned—for this purpose now? I cannot give any guarantee in this debate. I point out, however, that a lot of these people have benefited from the increases which we gave almost immediately in the National Insurance pension. The great majority of public service pensioners have benefited from these. I do not, therefore, wish to say any more about it, and I would not anticipate—

Photo of Mr Raymond Gunter Mr Raymond Gunter , Southwark

Let me finish. I was about to say that I would not anticipate the Queen's Speech.

Photo of Mr Robin Turton Mr Robin Turton , Thirsk and Malton

The question is not when a new Pensions (Increase) Bill will be brought in but whether the present Government stand by the Prime Minister's pledge that he supports parity for public service pensioners.

Photo of Mr Raymond Gunter Mr Raymond Gunter , Southwark

I understand that such a pledge was never given in terms of parity. [Hon. Members: "Oh."] In fact, I have turned up the guidance which was given

to Labour candidates at the General Election. [Interruption.] This is what is important, and it is very clear in that document that it was said that for financial reasons, among others, parity could not be guaranteed, but we were quite prepared to look at the whole situation. I repeat, therefore, that I do not wish to enter into the challenge here, and I am sure that hon. Members will have a full opportunity of discussing the question on the Queen's Speech.

Photo of Mr Reginald Paget Mr Reginald Paget , Northampton

At the Dispatch Box, on behalf of the party, I gave a pledge, with full authority, that parity would be accepted for Service pensioners. Will my right hon. Friend tell me—not for immediate implementation but as a matter of principle—whether that pledge which I gave on behalf of the party is adhered to or not?

Photo of Mr Raymond Gunter Mr Raymond Gunter , Southwark

I am very sorry to be in conflict with my hon. and learned Friend. [Hon. Members: "Cannot hear."] I am sorry. I was talking to my hon. and learned Friend in reply to what he had said. I was saying that there seems to be some conflict of opinion as to whether the pledge, or alleged pledge, was given with full authority.

May I conclude the debate in this way? I think that it is rather a pity that, on an issue of this character, a few of the hon. Members who have spoken have not directed their real attention to the fundamental problems which underlie this country at the present time. I invite the House to support the Amendment.

Question put, That the words proposed to be left out stand part of the Question:—

The House divided: Ayes 295, Noes 298.

Division No. 264.]AYES[10.0 p.m.
Agnew, Commander Sir PeterBell, RonaldBoyd-Carpenter, Rt. Hn. J.
Alison, Michael (Barkston Ash)Bennett, Sir Frederic (Torquay)Boyle, Rt. Hn. Sir Edward
Allan, Robert (Paddington, S.)Bennett, Dr. Reginald (Gos. & Fhm)Braine, Bernard
Allason, James (Hemel Hempstead)Berkeley, HumphryBrewis, John
Amery, Rt. Hn. JulianBerry, Hn. AnthonyBrinton, Sir Tatton
Anstruther-Gray, Rt. Hn. Sir W.Bessell, PeterBromley-Davenport, Lt.-Col. Sir Walter
Astor, JohnBiffen, JohnBrooke, Rt. Hn. Henry
Atkins, HumphreyBiggs-Davison, JohnBrown, Sir Edward (Bath)
Awdry, DanielBingham, R. M.Bruce-Gardyne, J.
Baker, W. H. K.Birch, Rt. Hn. NigelBryan, Paul
Balniel, LordBlack, Sir CyrilBuchanan-Smith, Alick
Barber, Rt. Hn. AnthonyBlaker, PeterBuck, Antony
Barlow, Sir JohnBossom, Hn. CliveBullus, Sir Eric
Batsford, BrianBowen, Roderic (Cardigan)Butcher, Sir Herbert
Beamish, Col. Sir TuftonBox, DonaldBuxton, Ronald
Campbell, GordonHobson, Rt. Hn. Sir JohnPearson, Sir Frank (Clitheroe)
Carlisle, MarkHogg, Rt. Hn. QuintinPeel, John
Carr, Rt. Hn. RobertHooson, H. E.Percival, Ian
Cary, Sir RobertHopkins, AlanPeyton, John
Channon, H. P. G.Hordern, PeterPickthorn, Rt. Hn. Sir Kenneth
Chataway, ChristopherHornby, RichardPike, Miss Mervyn
Chichester-Clark, R.Hornsby-Smith, Rt. Hn. Dame P.Pitt, Dame Edith
Clark, William (Nottingham, S.)Howard, Hn. G. R. (St. Ives)Pounder, Rafton
Clarke, Brig. Terence (Portsmth, W.)Howe, Geoffrey (Bebington)Powell, Rt. Hn. J. Enoch
Cole, NormanHunt, John (Bromley)Price, David (Eastleigh)
Cooke, RobertHutchison, Michael ClarkPrior, J. M. L.
Cooper, A. E.Iremonger, T. L.Pym, Francis
Cooper-Key, Sir NeillIrvine, Bryant Godman (Rye)Quennell, Miss J. M.
Cordle, JohnJenkin, Patrick (Woodford)Ramsden, Rt. Hn. James
Corfield, F. V.Jennings, J. C.Rawlinson, Rt. Hn. Sir Peter
Costain, A. P.Johnson Smith, G. (East Grinstead)Redmayne, Rt. Hn. Sir Martin
Courtney, Cdr. AnthonyJohnston, Russell (Inverness)Rees-Davies, W. R.
Craddock, Sir Beresford (Spelthorne)Jones, Arthur (Northants, S.)Renton, Rt. Hn. Sir David
Crawley, AidanJopling, MichaelRidley, Hn. Nicholas
Crosthwaite-Eyre, Col. Sir OliverJoseph, Rt. Hn. Sir KeithRidsdale, Julian
Crowder, F. P.Kaberry, Sir DonaldRobson Brown, Sir William
Cunningham, Sir KnoxKerby, Capt. HenryRodgers, Sir John (Sevenoaks)
Curran, CharlesKerr, Sir Hamilton (Cambridge)Roots, William
Currie, G. B. H.Kershaw, AnthonyRoyle, Anthony
Dalkeith, Earl ofKilfedder, James A.Russell, Sir Ronald
Dance, JamesKimball, MarcusSt. John-Stevas, Norman
Davies, Dr. Wyndham (Perry Barr)King, Evelyn (Dorset, S.)Sandys, Rt. Hn. D.
d'Avigdor-Goldsmid, Sir HenryKirk, PeterScott-Hopkins, James
Dean, PaulKitson, TimothySharples, Richard
Deedes, Rt. Hn. W. F.Lagden, GodfreyShepherd, William
Digby, Simon WingfieldLambton, ViscountSinclair, Sir George
Doughty, CharlesLancaster, Col. C. G.Smith, Dudley (Br'ntf'd & Chiswick)
Drayson, G. B.Langford-Holt, Sir JohnSmyth, Rt. Hn. Brig. Sir John
du Cann, Rt. Hn. EdwardLegge-Bourke, Sir HarrySoames, Rt. Hn. Christopher
Eden, Sir JohnLewis, Kenneth (Rutland)Spearman, Sir Alexander
Elliot, Capt. Walter (Carshalton)Litchfield, Capt. JohnSpeir, Sir Rupert
Elliott, R. W. (N'c'tle-upon-Tyne, N.)Lloyd, Rt. Hn. Geoffrey (Sut'nC'dfield)Stainton, Keith
Emery, PeterLloyd, Ian (P'tsm'th, Langstone)Stanley, Hn. Richard
Errington, Sir EricLloyd, Rt. Hn. Selwyn (Wirral)Steel, David (Roxburgh)
Eyre, ReginaldLongbottom, CharlesStodart, Anthony
Farr, JohnLongden, GilbertStoddart-Scott, Col. Sir Malcolm
Fell, AnthonyLoveys, Walter H.Studholme, Sir Henry
Fisher, NigelLubbock, EricSummers, Sir Spencer
Fletcher-Cooke, Charles (Darwen)Lucas, Sir JocelynTalbot, John E.
Fletcher-Cooke, Sir John (S'pton)McAdden, Sir StephenTaylor, Sir Charles (Eastbourne)
Foster, Sir JohnMackenzie, Alasdair (Ross&Crom'ty)Taylor, Edward M. (G'gow, Cathcart)
Fraser, Rt. Hn. Hugh (St'fford & Stone)Maclean, Sir FitzroyTaylor, Frank (Moss Side)
Fraser, Ian (Plymouth, Sutton)Macleod, Rt. Hn. IainTeeling, Sir William
Galbraith, Hn. T. G. D.McMaster, StanleyTemple, John M.
Gammans, LadyMcNair-Wilson, PatrickThatcher, Mrs. Margaret
Gardner, EdwardMaddan, Martin (Hove)Thomas, Sir Leslie (Canterbury)
Gibson-Watt, DavidMaginnis, John E.Thomas, Rt. Hn. Peter (Conway)
Giles, Rear-Admiral MorganMaitland, Sir JohnThompson, Sir Richard (Croydon, S.)
Gilmour, Ian (Norfolk, Central)Marples, Rt. Hn. ErnestThorneycroft, Rt. Hn. Peter
Gilmour, Sir John (East Fife)Marten, NeilThorpe, Jeremy
Glover, Sir DouglasMathew, RobertTiley, Arthur (Bradford, W.)
Glyn, Sir RichardMaude, AngusTilney, John (Wavertree)
Godber, Rt. Hn. J. B.Maudling, Rt. Hn. ReginaldTurton, Rt. Hn. R. H.
Goodhart, PhilipMawby, RayTweedsmuir, Lady
Goodhew, VictorMaxwell-Hyslop, R. J.van Straubenzee, W. R.
Gower, RaymondMaydon, Lt.-Cmdr. S. L. C.Vaughan-Morgan, Rt. Hn. Sir John
Grant, AnthonyMeyer, Sir AnthonyVickers, Dame Joan
Grant-Ferris, R.Mills, Peter (Torrington)Walder, David (High Peak)
Gresham Cooke, R.Mills, Stratton (Belfast, N.)Walker, Peter (Worcester)
Grieve, PercyMiscampbell, NormanWalker-Smith, Rt. Hn. Sir Derek
Griffiths, Eldon (Bury St. Edmunds)Mitchell, DavidWall, Patrick
Griffiths, Peter (Smethwick)Monro, HectorWalters, Dennis
Grimond, Rt. Hn. J.More, JasperWard, Dame Irene
Hall, John (Wycombe)Morrison, Charles (Devizes)Weatherill, Bernard
Hall-Davis, A. G. F.Mott-Radclyffe, Sir CharlesWebster, David
Hamilton, Marquess of (Fermanagh)Munro-Lucas-Tooth, Sir HughWells, John (Maidstone)
Hamilton, M. (Salisbury)Murton, OscarWhitelaw, William
Harris, Frederic (Croydon, N. W.)Neave, AireyWilliams, Sir Rolf Dudley (Exeter)
Harris, Reader (Heston)Nicholls, Sir HarmarWills, Sir Gerald (Bridgwater)
Harvey, Sir Arthur Vere (Macclesf'd)Nicholson, Sir GodfreyWilson, Geoffrey (Truro)
Harvey, John (Walthamstow, E.)Noble, Rt. Hn. MichaelWise, A. R.
Hastings, StephenNugent, Rt. Hn. Sir RichardWolrige-Gordon, Patrick
Hawkins, PaulOnslow, CranleyWood, Rt. Hn. Richard
Hay, JohnOrr, Cast. L. P. S.Woodhouse, Hn. Christopher
Heath, Rt. Hn. EdwardOrr-Ewing, Sir IanWoodnutt, Mark
Hendry, ForbesOsborn, John (Hallam)Wylie, N. R.
Higgins, Terence L.Osborne, Sir Cyril (Louth)
Hiley, JosephPage, John (Harrow, W.)TELLERS FOR THE AYES:
Hill, J. E. B. (S. Norfolk)Page, R. Graham (Crosby)Mr. Martin McLaren and
Hirst, GeoffreyMr. Ian MacArthur.
NOES
Abse, LeoFord, BenMcKay, Mrs. Margaret
Albu, AustenFraser, Rt. Hn. Tom (Hamilton)Mackenzie, Gregor (Rutherglen)
Allaun, Frank (Salford, E.)Freeson, ReginaldMackie, John (Enfield, E.)
Alldritt, WalterGalpern, Sir MyerMcLeavy, Frank
Allen, Scholefield (Crewe)Garrett, W. E.MacMillan, Malcolm
Atkinson, NormanGarrow, A.Mahon, Peter (Preston, S.)
Bacon, Miss AliceGinsburg, DavidMahon, Simon (Bootle)
Bagier, Gordon A. T.Gourlay, HarryMallalieu, E. L. (Brigg)
Barnett, JoelGreenwood, Rt. Hn. AnthonyMallalieu, J. P. W. (Huddersfield, E.)
Baxter, WilliamGregory, ArnoldMapp, Charles
Beaney, AlanGrey, CharlesMarsh, Richard
Bellenger, Rt. Hn. F. J.Griffiths, David (Rother Valley)Mason, Roy
Bence, CyrilGriffiths, Rt. Hn. James (Llanelly)Maxwell, Robert
Benn, Rt. Hn. Anthony WedgwoodGriffiths, Will (M'chester, Exchange)Mayhew, Christopher
Bennett, J. (Glasgow, Bridgeton)Gunter, Rt. Hn. R. J.Mellish, Robert
Binns, JohnHale, LeslieMendelson, J. J.
Bishop, E. S.Hamilton, James (Bothwell)Millan, Bruce
Blackburn, F.Hamilton, William (West Fife)Miller, Dr. M. S.
Blenkinsop, ArthurHamling, William (Woolwich, W.)Milne, Edward (Blyth)
Boardman, H.Hannan, WilliamMolloy, William
Boston, TerenceHarper, JosephMonslow, Walter
Bottomley, Rt. Hn. ArthurHarrison, Walter (Wakefield)Morris, Alfred (Wythenshawe)
Bowden, Rt. Hn. H. W. (Leics, S. W.)Hart, Mrs. JudithMorris, Charles (Openshaw)
Boyden, JamesHattersley, RoyMorris, John (Aberavon)
Braddock, Mrs. E. M.Hazen, BertMulley, Rt. Hn. Frederick (Sheffield Pk)
Bradley, TomHealey, Rt. Hn. DenisMurray, Albert
Bray, Dr. JeremyHeffer, Eric S.Neal, Harold
Broughton, Dr. A. D. D.Henderson, Rt. Hn. ArthurNewens, Stan
Brown, Rt. Hn. George (Belper)Herbison, Rt. Hn. MargaretNoel-Baker, Francis (Swindon)
Brown, Hugh D. (Glasgow, Provan)Hill, J. (Midlothian)Noel-Baker, Rt. Hn. Philip (Derby, S.)
Brown, R. W. (Shoreditch & Fbury)Hobden, Dennis (Brighton, K'town)Norwood, Christopher
Buchan, Norman (Renfrewshire, W.)Holman, PercyOakes, Gordon
Buchanan, RichardHoughton, Rt. Hn. DouglasOgden, Eric
Butler, Herbert (Hackney, C.)O'Malley, Brian
Butler, Mrs. Joyce (Wood Green)Howarth, Harry (Wellingborough)Oram, Albert E. (E. Ham, S.)
Callaghan, Rt. Hn. JamesHowarth, Robert L. (Bolton, E.)Orbach, Maurice
Carmichael, NeilHowell, Denis (Small Heath)Orme, Stanley
Carter-Jones, LewisHowie, W.Oswald, Thomas
Castle, Rt. Hn. BarbaraHoy, JamesOwen, Will
Coleman, DonaldHughes, Cledwyn (Anglesey)Padley, Walter
Conlan, BernardHughes, Emrys (S. Ayrshire)Page, Derek (King's Lynn)
Corbet, Mrs. FredaHughes, Hector (Aberdeen, N.)Palmer, Arthur
Cousins, Rt. Hn. FrankHunter, Adam (Dunfermline)Pannell, Rt. Hn. Charles
Craddock, George (Bradford, S.)Hunter, A. E. (Feltham)Pargiter, G. A.
Crawshaw, RichardHynd, H. (Accrington)Park, Trevor (Derbyshire, S. E.)
Cronin, JohnHynd, John (Attercliffe)Parker, John
Crosland, Rt. Hn. AnthonyIrvine, A. J. (Edge Hill)Pavitt, Laurence
Grossman, Rt. Hn. R. H. S.Jackson, ColinPearson, Arthur (Pontypridd)
Cullen, Mrs. AliceJanner, Sir BarnettPeart, Rt. Hn. Fred
Dalyell, TamJay, Rt. Hn. DouglasPentland, Norman
Darling, GeorgeJeger, George (Goole)Perry, Ernest G.
Davies, G. Elfed (Rhondda, E.)Jeger, Mrs. Lena (H'b'n&St. P'cras, S.)Popplewell, Ernest
Davies, Harold (Leek)Jenkins, Hugh (Putney)Prentice, R. E.
Davies, Ifor (Gower)Jenkins, Rt. Hn. Roy (Stechford)Price, J. T. (Westhoughton)
Davies, S. O. (Merthyr)Johnson, Carol (Lewisham, S.)Probert, Arthur
de Freitas, Sir GeoffreyJohnson, James (K 'ston-on-Hull, W.)Pursey, Cmdr. Harry
Delargy, HughJones, Dan (Burnley)Randall, Harry
Dell, EdmundJones, Rt. Hn. Sir Elwyn (W. Ham, S.)Redhead, Edward
Dempsey, JamesJones, J. Idwal (Wrexham)Rees, Merlyn
Diamond, Rt. Hn. JohnJones, T. W. (Merioneth)Reynolds, G. W.
Dodds, NormanKelley, RichardRhodes, Geoffrey
Doig, PeterKenyon, CliffordRichard, Ivor
Donnelly, DesmondKerr, Mrs. Anne (R'ter & Chatham)Roberts, Albert (Normanton)
Driberg, TomKerr, Dr. David (W'worth, Central)Roberts, Goronwy (Caernarvon)
Dunn, James A.Lawson, GeorgeRobertson, John (Paisley)
Dunnett, JackLeadbitter, TedRobinson, Rt. Hn. K. (St. Pancras, N.)
Edwards, Rt. Hn. Ness (Caerphilly)Ledger, RonRodgers, William (Stockton)
Edwards, Robert (Bilston)Lee, Rt. Hn. Frederick (Newton)Rose, Paul B.
English, MichaelLee, Miss Jennie (Cannock)Ross, Rt. Hn. William
Ennals, DavidLever, Harold (Cheetham)Rowland, Christopher
Ensor, DavidLever, L. M. (Ardwick)Sheldon, Robert
Evans, Albert (Islington, S. W.)Lewis, Arthur (West Ham, N.)Shinwell, Rt. Hn. E.
Evans, Ioan (Birmingham, Yardley)Lewis, Ron (Carlisle)Shore, Peter (Stepney)
Fernyhough, E.Lipton, MarcusShort, Rt. Hn. E. (N'c'tle-on-Tyne, C.)
Finch, Harold (Bedwellty)Lomas, KennethShort, Mrs. Renée (W'hampton, N. E.)
Fitch, Alan (Wigan)Loughlin, CharlesSilkin, John (Deptford)
Fletcher, Sir Eric (Islington, E.)Mabon, Dr. J. DicksonSilkin, S. C. (Camberwell, Dulwich)
Fletcher, Ted (Darlington)McBride, NeilSilverman, Julius (Aston)
Fletcher, Raymond (Ilkeston)McCann, J.Silverman, Sydney (Nelson)
Floud, BernardMacColl, JamesSkeffington, Arthur
Foley, MauriceMacDermot, NiallSlater, Mrs. Harriet (Stoke, N.)
Foot, Sir Dingle (Ipswich)McGuire, MichaelSlater, Joseph (Sedgefield)
Foot, Michael (Ebbw Vale)McInnes, JamesSmall, William
Snow, JulianThomson, George (Dundee, E.)Willey, Rt. Hn. Frederick
Solomons, HenryThornton, ErnestWilliams, Alan (Swansea, W.)
Soskice, Rt. Hn. Sir FrankTinn, JamesWilliams, Clifford (Abertillery)
Spriggs, LeslieTomney, FrankWilliams, Mrs. Shirley (Hitchin)
Steele, Thomas (Dunbartonshire, W.)Tuck, RaphaelWilliams, W. T. (Warrington)
Stewart, Rt. Hn. MichaelUrwin, T. W.Willis, George (Edinburgh, E.)
Stonehouse, JohnVarley, Eric G.Wilson, Rt. Hn. Harold (Huyton)
Stones, WilliamWainwright, EdwinWilson, William (Coventry, S.)
Strauss, Rt. Hn. G. R. (Vauxhall)Walden, Brian (All Saints)Winterbottom, R. E.
Stross, Sir Barnett (Stoke-on-Trent, C.)Walker, Harold (Doncaster)Woodburn, Rt. Hn. A.
Summerskill, Hn. Dr. ShirleyWallace, GeorgeWoof, Robert
Swain, ThomasWatkins, TudorWyatt, Woodrow
Swingler, StephenWeitzman, DavidYates, Victor (Ladywood)
Symonds, J. B.Wells, William (Walsall, N.)Zilliacus, K.
Taverne, DickWhite, Mrs. Eirene
Taylor, Bernard (Mansfield)Whitlock, WilliamTELLERS FOR THE NOES:
Thomas, George (Cardiff, W.)Wigg, Rt. Hn. GeorgeMr. Sydney Irving and
Thomas, Iorwerth (Rhondda, W.)Wilkins, W. A.Mr. George Rogers.

Question put, That the proposed words be there added:—

The House divided: Ayes 298, Noes 298.

Division No. 265.]AYES[10.15 p.m.
Abse, LeoDiamond, Rt. Hn. JohnHowell, Denis (Small Heath)
Albu, AustenDodds, NormanHowie, W.
Allaun, Frank (Salford, E.)Doig, PeterHoy, James
Alldritt, WalterDonnelly, DesmondHughes, Cledwyn (Anglesey)
Allen, Scholefield (Crewe)Driberg, TomHughes, Emrys (S. Ayrshire)
Atkinson, NormanDunn, James A.Hughes, Hector (Aberdeen, N.)
Bacon, Miss AliceDunnett, JackHunter, Adam (Dunfermline)
Bagier, Gordon A. T.Edwards, Rt. Hn. Ness (Caerphilly)Hunter, A. E. (Feltham)
Barnett, JoelEdwards, Robert (Bilston)Hynd, H. (Accrington)
Baxter, WilliamEnglish, MichaelHynd, John (Attercliffe)
Beaney, AlanEnnals, DavidIrvine, A. J. (Edge Hill)
Bellenger, Rt. Hn. F. J.Ensor, DavidJackson, Colin
Bence, CyrilEvans, Albert (Islington, S. W.)Janner, Sir Barnett
Benn, Rt. Hn. Anthony WedgwoodEvans, Ioan (Birmingham, Yardley)Jay, Rt. Hn. Douglas
Bennett, J. (Glasgow, Bridgeton)Fernyhough, E.Jeger, George (Goole)
Binns, JohnFinch, Harold (Bedwellty)Jeger, Mrs. Lena (H'b'n&St. P'cras, S.)
Bishop, E. S,Fitch, Alan (Wigan)Jenkins, Hugh (Putney)
Blackburn, F.Fletcher, Sir Eric (Islington, E.)Jenkins, Rt. Hn. Roy (Stechford)
Blenkinsop, ArthurFletcher, Ted (Darlington)Johnson, Carol (Lewisham, s.)
Boardman, H.Fletcher, Raymond (Ilkeston)Johnson, James (K'ston-on-Hull, W.)
Boston, TerenceFloud, BernardJones, Dan (Burnley)
Bottomley, Rt. Hn. ArthurFoley, MauriceJones, Rt. Hn. Sir Elwyn (W. Ham, S.)
Bowden, Rt. Hn. H. W. (Leics, S. W.)Foot, Sir Dingle (Ipswich)Jones, J. Idwal (Wrexham)
Boyden, JamesFoot, Michael (Ebbw Vale)Jones, T. W. (Merioneth)
Braddock, Mrs. E. M.Ford, BenKelley, Richard
Bradley, TomFraser, Rt. Hn. Tom (Hamilton)Kenyon, Clifford
Bray, Dr. JeremyFreeson, ReginaldKerr, Mrs. Anne (R'ter & Chatham)
Broughton, Dr. A. D, D.Galpern, Sir MyerKerr, Dr. David (W'worth, Central)
Brown, Rt. Hn. George (Belper)Garrett, W. E.Lawson, George
Brown, Hugh D. (Glasgow, Provan)Garrow, A.Leadbitter, Ted
Brown, R. W. (Shoreditch & Fbury)Ginsburg, DavidLedger, Ron
Buchan, Norman (Renfrewshire, W.)Gourlay, HarryLee, Rt. Hn. Frederick (Newton)
Buchanan, RichardGreenwood, Rt. Hn. AnthonyLee, Miss Jennie (Cannock)
Butler, Herbert (Hackney, C.)Gregory, ArnoldLever, Harold (Cheetham)
Butler, Mrs. Joyce (Wood Green)Grey, CharlesLever, L. M. (Ardwick)
Callaghan, Rt. Hn. JamesGriffiths, David (Rother Valley)Lewis, Arthur (West Ham, N.)
Carmichael, NeilGriffiths, Rt. Hn. James (Llanelly)Lewis, Ron (Carlisle)
Carter-Jones, LewisGriffiths, Will (M'chester, Exchange)Lipton, Marcus
Castle, Rt. Hn. BarbaraGunter, Rt. Hn. R. J.Lomas, Kenneth
Coleman, DonaldHale, LeslieLoughlin, Charles
Conlan, BernardHamilton, James (Bothwell)Mabon, Dr. J. Dickson
Corbet, Mrs. FredaHamilton, William (West Fife)McBride, Neil
Cousins, Rt. Hn. FrankHamling, William (Woolwich, W.)McCann, J.
Craddock, George (Bradford, S.)Hannan, WilliamMacColl, James
Crawshaw, RichardHarper, JosephMacDermot, Niall
Cronin, JohnHarrison, Walter (Wakefield)McGuire, Michael
Crosland, Rt. Hn. AnthonyHart, Mrs. JudithMcInnes, James
Crossman, Rt. Hn. R. H. S.Hattersley, RoyMcKay, Mrs. Margaret
Cullen, Mrs. AliceHazell, BertMackenzie, Gregor (Rutherglen)
Dalyell, TamHealey, Rt. Hn. DenisMackie, John (Enfield, E.)
Darling, GeorgeHeffer, Eric S.McLeavy, Frank
Davies, G. Elfed (Rhondda, E.)Henderson, Rt. Hn. ArthurMacMillan, Malcolm
Davies, Harold (Leek)Herbison, Rt. Hn. MargaretMahon, Peter (Preston, S.)
Davies, Ifor (Gower)Hill, J. (Midlothian)Mahon, Simon (Bootle)
Davies, S. O. (Merthyr)Hobden, Dennis (Brighton, K'town)Mallalieu, E. L. (Brigg)
de Freitas, Sir GeoffreyHolman, PercyMallalieu, J. P. W. (Huddersfield, E.)
Delargy, HughHoughton, Rt. Hn. DouglasMapp, Charles
Dell, EdmundHowarth, Harry (Wellingborough)Marsh, Richard
Dempsey, JamesHowarth, Robert L. (Bolton, E.)Mason, Roy
Maxwell, RobertProbert, ArthurSwingler, Stephen
Mayhew, ChristopherPursey, Cmdr. HarrySymonds, J. B.
Mellish, RobertRandall, HarryTaverne, Dick
Mendelson, J. J.Redhead, EdwardTaylor, Bernard (Mansfield)
Millan, BruceRees, MerlynThomas, George (Cardiff, W.)
Miller, Dr. M. S.Reynolds, G. W.Thomas, Iorwerth (Rhondda, W.)
Milne, Edward (Blyth)Rhodes, GeoffreyThomson, George (Dundee, E.)
Molloy, WilliamRichard, IvorThornton, Ernest
Monslow, WalterRoberts, Albert (Normanton)Tinn, James
Morris, Alfred (Wythenshawe)Roberts, Goronwy (Caernarvon)Tomney, Frank
Morris, Charles (Openshaw)Robertson, John (Paisley)Tuck, Raphael
Morris, John (Aberavon)Robinson, Rt. Hn. K.(St. Pancras, N.)Urwin, T. W.
Mulley, Rt. Mn. Frederick (Sheffield Pk)Rodgers, William (Stockton)Varley, Eric G.
Murray, AlbertRose, Paul B.Wainwright, Edwin
Neal, HaroldRoss, Rt. Hn. WilliamWalden, Brian (All Saints)
Newens, StanRowland, ChristopherWalker, Harold (Doncaster)
Noel-Baker, Francis (Swindon)Sheldon, RobertWallace, George
Noel-Baker, Rt. Hn. Philip (Derby, S.)Shinwell, Rt. Hn. E.Watkins, Tudor
Norwood, ChristopherShore, Peter (Stepney)Weitzman, David
Oakes, GordonShort, Rt. Hn. E. (N'c'tle-on-Tyne, C.)Wells, William (Walsall, N.)
Ogden, EricShort, Mrs. Renée (W'hampton, N. E.)White, Mrs. Eirene
O'Malley, BrianSilkin, John (Deptford)Whitlock, William
Oram, Albert E. (E. Ham, S.)Silkin, S. C. (Camberwell, Dulwich)Wigg, Rt. Hn. George
Orbach, MauriceSilverman, Julius (Aston)Wilkins, W. A.
Orme, StanleySilverman, Sydney (Nelson)Willey, Rt. Hn. Frederick
Oswald, ThomasSkeffington, ArthurWilliams, Alan (Swansea, W.)
Owen, WillSlater, Mrs. Harriet (Stoke, N.)Williams, Clifford (Abertillery)
Padley, WalterSlater, Joseph (Sedgefield)Williams, Mrs. Shirley (Hitchin)
Page, Derek {King's Lynn)Small, WilliamWilliams, W. T. (Warrington)
Palmer, ArthurSnow, JulianWillis, George (Edinburgh, E.)
Pannell, Rt. Hn. CharlesSolomons, HenryWilson, Rt. Hn. Harold (Huyton)
Pargiter, G. A.Soskice, Rt. Hn. Sir FrankWilson, William (Coventry, S.)
Park, Trevor (Derbyshire, S. E.)Spriggs, LeslieWinterbottom, R. E.
Parker, JohnSteele, Thomas (Dunbartonshire, W.)Woodburn, Rt. Hn. A.
Pavitt, LaurenceStewart, Rt. Hn. MichaelWoof, Robert
Pearson, Arthur (Pontypridd)Stonehouse, JohnWyatt, Woodrow
Peart, Rt. Hn. FredStones, WilliamYates, Victor (Ladywood)
Pentland, NormanStrauss, Rt. Hn. G. R. (Vauxhall)Zilliacus, K.
Perry, Ernest G.Stross, Sir Barnett (Stoke-on-Trent, C.)
Popplewell, ErnestSummerskill, Hn. Dr. ShirleyTELLERS FOR THE AYES:
Prentice, R. E.Swain, ThomasMr. Sydney Irving and
Price, J. T. (Westhoughton)Mr. George Rogers.
NOES
Agnew, Commander Sir PeterBryan, Pauldu Cann, Rt. Hn. Edward
Alison, Michael (Barkston Ash)Buchanan-Smith, AlickEden, Sir John
Allan, Robert (Paddington, S.)Buck, AntonyElliot, Capt. Walter (Carshalton)
Allason, James (Hemel Hempstead)Bullus, Sir EricElliott, R. W. (N'c'tle-upon-Tyne, N.)
Amery, Rt. Hn. JulianButcher, Sir HerbertEmery, Peter
Anstruther-Gray, Rt. Hn. Sir W.Buxton, RonaldErrington, Sir Eric
Astor, JohnCampbell, GordonEyre, Reginald
Atkins, HumphreyCarlisle, MarkFarr, John
Awdry, DanielCarr, Rt. Hn. RobertFell, Anthony
Baker, W. H. K.Cary, Sir RobertFisher, Nigel
Balniel, LordChannon, H. P. G.Fletcher-Cooke, Charles (Darwen)
Barber, Rt. Hn. AnthonyChataway, ChristopherFletcher-Cooke, Sir John (S'pton)
Barlow, Sir JohnChichester-Clark, R.Foster, Sir John
Batsford, BrianClark, William (Nottingham, S.)Fraser, Rt. Hn. Hugh (St'fford & Stone)
Beamish, Col. Sir TuftonClarke, Brig. Terence (Portsmth, W.)Fraser, Ian (Plymouth, Sutton)
Bell, RonaldCole, NormanGalbraith, Hn. T. G. D.
Bennett, Sir Frederic (Torquay)Cooke, RobertGammans, Lady
Bennett, Dr. Reginald (Gos. & Fhm)Cooper, A. E.Gardner, Edward
Berkeley, HumphryCooper-Key, Sir NeillGibson-Watt, David
Berry, Hn. AnthonyCordle, JohnGiles, Rear-Admiral Morgan
Bessell, PeterCorfield, F. V.Gilmour, Ian (Norfolk, Central)
Biffen, JohnCostain, A. P.Gilmour, Sir John (East Fife)
Biggs- Davison, JohnCourtney, Cdr. AnthonyGlover, Sir Douglas
Bingham, R. M.Craddock, Sir Beresford (Spelthorne)Glyn, Sir Richard
Birch, Rt. Hn. NigelCrawley, AidanGodber, Rt. Hn. J. B.
Black, Sir CyrilCrosthwaite-Eyre, Col. Sir OliverGoodhart, Philip
Blaker, PeterCrowder, F. P.Goodhew, Victor
Bossom, Hn. CliveCunningham, Sir KnoxGower, Raymond
Bowen, Roderic (Cardigan)Curran, CharlesGrant, Anthony
Box, DonaldCurrie, G. B. H.Grant-Ferris, R.
Boyd-Carpenter, Rt. Hn. J.Dalkeith, Earl ofGresham Cooke, R.
Boyle, Rt. Hn. Sir EdwardDance, JamesGrieve, Percy
Braine, BernardDavies, Dr. Wyndham (Perry Barr)Griffiths, Eldon (Bury St. Edmunds)
Brewis, Johnd'Avigdor-Goldsmid, Sir HenryGriffiths, Peter (Smethwick)
Brinton, Sir TattonDean, PaulGrimond, Rt. Hn. J.
Bromley-Davenport, Lt.-Col. Sir W alterDeedes, Rt. Hn. W. F.Gurden, Harold
Brooke, Rt. Hn. HenryDigby, Simon WingfieldHall, John (Wycombe)
Brown, Sir Edward (Bath)Doughty, CharlesHall-Davis, A. G. F.
Bruce-Gardyne, J.Drayson, G. B.Hamilton, Marquess of (Fermanagh)
Hamilton, M. (Salisbury)Maclean, Sir FitzroyRoyle, Anthony
Harris, Frederic (Croydon, N. W.)Macleod, Rt. Hn. IainRussell, Sir Ronald
Harris, Reader (Heston)McMaster, StanleySt. John-Stevas, Norman
Harvey, Sir Arthur Vere (Macclesf'd)McNair-Wilson, PatrickSandys, Rt. Hn. D.
Harvey, John (Walthamstow, E.)Maddan, Martin (Hove)Scott-Hopkins, James
Hastings, StephenMaginnis, John E,Sharples, Richard
Hawkins, PaulMaitland, Sir JohnShepherd, William
Hay, JohnMarples, Rt. Hn. ErnestSinclair, Sir George
Heald, Rt. Hn. Sir LionelMarten, NeilSmith, Dudley (Br'ntf'd & Chiswick)
Heath, Rt. Hn. EdwardMathew, RobertSmyth, Rt. Hn. Brig. Sir John
Hendry, ForbesMaude, AngusSoames, Rt. Hn. Christopher
Higgins, Terence L.Maudling, Rt. Hn. ReginaldSpearman, Sir Alexander
Hiley, JosephMawby, RaySpeir, Sir Rupert
Hill, J. E. B. (S. Norfolk)Maxwell-Hyslop, R. J.Stainton, Keith
Hirst, GeoffreyMaydon, Lt.-Cmdr. S. L. C.Stanley, Hn. Richard
Hobson, Rt. Hn. Sir JohnMeyer, Sir AnthonySteel, David (Roxburgh)
Hogg, Rt. Hn. QuintinMills, Peter (Torrington)Stodart, Anthony
Hooson, H. E.Mills, Stratton (Belfast, N.)Stoddart-Scott, Col. Sir Malcolm
Hopkins, AlanMiscampbell, NormanStudholme, Sir Henry
Hordern, PeterMitchell, DavidSummers, Sir Spencer
Hornby, RichardMonro, HectorTalbot, John E.
Hornsby-Smith, Rt. Hn. Dame P.More, JasperTaylor, Sir Charles (Eastbourne)
Howard, Hn. G. R. (St. Ives)Morrison, Charles (Devizes)Taylor, Edward M. (G'gow, Cathcart)
Howe, Geoffrey (Bebington)Mott-Radclyffe, Sir CharlesTaylor, Frank (Moss Side)
Hunt, John (Bromley)Munro-Lucas-Tooth, Sir HughTeeling, Sir William
Hutchison, Michael ClarkMurton, OscarTemple, John M.
Iremonger, T. L.Neave, AireyThatcher, Mrs. Margaret
Irvine, Bryant Godman (Rye)Nicholls, Sir HarmarThomas, Sir Leslie (Canterbury)
Jenkin, Patrick (Woodford)Nicholson, Sir GodfreyThompson, Sir Richard (Croydon, S.)
Jennings, J, C.Noble, Rt. Hn. MichaelThorneycroft, Rt, Hn. Peter
Johnson Smith, G. (East Grinstead)Nugent, Rt. Hn. Sir RichardThorpe, Jeremy
Johnston, Russell (Inverness)Onslow, CranleyTiley, Arthur (Bradford, W.)
Jones, Arthur (Northants, S.)Orr, Capt. L. P. S.Tilney, John (Wavertree)
Jopling, MichaelOrr-Ewing, Sir IanTurton, Rt. Hn. R. H.
Joseph, Rt. Hn. Sir KeithOsborn, John (Hallam)Tweedsmuir, Lady
Kaberry, Sir DonaldOsborne, Sir Cyril (Louth)van Straubenzee, W. R.
Kerby, Capt. HenryPage, John (Harrow, W.)Vaughan-Morgan, Rt. Hn. Sir John
Kerr, Sir Hamilton (Cambridge)Page, R. Graham (Crosby)Vickers, Dame Joan
Kershaw, AnthonyPearson, Sir Frank (Clitheroe)Walder, David (High Peak)
Kilfedder, James A.Peel, JohnWalker, Peter (Worcester)
Kimball, MarcusPercival, IanWalker-Smith, Rt Hn. Sir Derek
King, Evelyn (Dorset, S.)Peyton, JohnWall, Patrick
Kirk, PeterPickthorn, Rt. Hn. Sir KennethWalters, Dennis
Kitson, TimothyPike, Miss MervynWard, Dame Irene
Lagden, GodfreyPitt, Dame EdithWeatherill, Bernard
Lambton, ViscountPounder, RaftonWebster, David
Lancaster, Col. C. G.Powell, Rt. Hn. J. EnochWells, John (Maidstone)
Langford-Holt, Sir JohnPrice, David (Eastleigh)Whitelaw, William
Legge-Bourke, Sir HarryPrior, J. M. L.Williams, Sir Rolf Dudley (Exeter)
Lewis, Kenneth (Rutland)Pym, FrancisWills, Sir Gerald (Bridgwater)
Litchfield, Capt. JohnQuennell, Miss J. M.Wilson, Geoffrey (Truro)
Lloyd, Rt. Hn. Geoffrey (Sut'nC'dfield)Ramsden, Rt. Hn. JamesWise, A. R.
Lloyd, Ian (P'tsm'th, Langstone)Rawlinson, Rt. Hn. Sir PeterWolrige-Gordon, Patrick
Lloyd, Rt. Hn. Selwyn (Wirral)Redmayne, Rt. Hn. Sir MartinWood, Rt. Hn. Richard
Longbottom, CharlesRees-Davies, W. R.Woodhouse, Hn. Christopher
Longden, GilbertRenton, Rt. Hn. Sir DavidWoodnutt, Mark
Loveys, Walter H.Ridley, Hn. NicholasWylie, N. R.
Lubbock, EricRidsdale, Julian
Lucas, Sir JocelynRobson Brown, Sir WilliamTELLERS FOR THE NOES:
McAdden, Sir StephenRodgers, Sir John (Sevenoaks)Mr. Martin McLaren and
Mackenzie, Alasdair (Ross&Crom'ty)Roots, WilliamMr. Ian MacArthur.

Main Question, as amended, put and agreed to.

Resolved,That this House approves the Government's policies which have been directed towards bringing to an end the steady rise in the cost of living which had gone on under the previous administration; and in particular welcomes the special and urgent provisions which have been made to meet the claims of those in greatest need".