Orders of the Day — Prices and Incomes Bill (Committee Stage)

Part of the debate – in the House of Commons at 12:00 am on 3rd August 1966.

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Photo of Mr Emlyn Hooson Mr Emlyn Hooson , Montgomeryshire 12:00 am, 3rd August 1966

I support the hon. Member for Penistone (Mr. Mendelson) in his view. I find myself in almost complete agreement with some aspects of his speech, although no doubt for different reasons. I was pleased to hear him say that this is a matter of constitutional importance. As such, it should not be decided, as he said, on Standing Orders or on the long titles of Bills, as was suggested by the hon. Member for Stalybridge and Hyde (Mr. Blackburn), whose speech was in marked contrast with those of the hon. Member for Penistone and the hon. Member for Ebbw Vale (Mr. Michael Foot).

The essential liberty of the country is safeguarded largely by constitutional convention and by the stand that back benchers make in this House. The matter we are debating is of great constitutional importance. The Prime Minister is reputed to have said when he went to the United States—no doubt with the intention of impressing the Americans—that this country was introducing and had introduced measures unprecedented in time of peace or war in a democracy.

One then asks where we find these unprecedented measures. One finds them in the Amendments in Part IV of this Bill. Did the House of Commons discuss them? When did the Second Reading take place? The answer is that such a debate never has taken place. There has never been the opportunity to discuss the vital matters of principle with which these measures are concerned.

The Amendments proposed as Part IV of the Bill are vastly more important than the Bill itself. They introduce an entirely new matter of principle which was not even considered on Second Reading. They make a farce of the Second Reading. That was concerned with a totally different Bill. Everyone should agree that, if these measures are as important as the Prime Minister has judged them to be, it was surely not right that they should first be considered by a Committee of 25 Members on which my party is not represented at all.

The Leader of the Opposition today made the most effective speech I have heard him make as Leader of the Opposition. He had many matters to be effective about. He had all the necessary ammunition provided by the Prime Minister himself both as Prime Minister and in Opposition. But the right hon. Gentleman said that the Liberal Party voted against the Bill being considered on the Floor of the House. He should take a little more care of facts. If he refers to HANSARD he will find that his statement is untrue and I ask him to withdraw it.

The whole point of a Second Reading debate in the House is that matters of principle should be adequately considered and no such opportunity has been given on this Bill as amended, although the principles are of crucial importance to the country. The Government are introducing measures through Part IV which many hon. Members on both sides find utterly reprehensible. It is not unprecedented for Bills which have been committed to a Standing Committee to be recalled to the Floor of the House. We did this with the Murder (Abolition of Death Penalty) Act 1965. There are other examples to be found further back in Erskine May. This course should be followed with this Bill.

There is something radically wrong with the procedures of the House of Commons when the Chairman of a Standing Committee can rule as the Chairman of Standing Committee B did last night. Presumably the new Clauses proposed by the Government were drafted by Parliamentary draftsmen after the Ministers responsible told them what was wanted. Presumably, they were then considered by the Law Officers or at least the Law Officers may have been consulted. Presumably, thereafter they were submitted to the Clerk of the House for his opinion.

At that stage, no one on the Opposition Benches and no back bencher on the Government side of the House had even had time to consider them. I do not know whether the Chairman of the Committee himself then took advice on the matter before the Committee sat, but the Parliamentary Secretary seems to be nodding his head in assent. So these matters were considered by authority without any back bencher on either side of the House having had an opportunity to consider them. Our procedure in this respect seems to need to be cleared up a good deal. We ought not to be faced with these faites accomplis.

I want now to turn to matters mentioned by the First Secretary this afternoon. Let me first echo the sentiment expressed by hon. Members opposite and say across the Floor of the House that it was a very good speech. I disagreed with a good deal of it, but it was a good fighting justification of the right hon. Gentleman's attitude. I thought that his speech the other evening was disastrous, and it always gives the House pleasure to hear a good Parliamentarian retrieve his character as a Parliamentary speaker.

What the right hon. Gentleman did not do was to give any kind of justification for refusing to allow the House to debate the principles of the Bill. Most of his speech was spent trying to justify those principles. I understood his main argument to be that the situation had become so serious, that urgent, unprecedented measures were now needed. He virtually said that while under a voluntary system decent responsible chaps would try to co-operate, the fellows who were not prepared to cooperate would get away with murder and had to be prevented from doing so. I understood that to be the psychological reason for the introduction of the measures in Part IV and why they are so urgent.

But why should not the Amendment have been introduced in the form of a new Bill, as the hon. Member for Ebbw Vale suggested? There is no reason why a fresh Bill should not have been introduced, when the matter could have been properly debated on Second Reading. That would have been the right way to do it. The Liberal Party is completely opposed to the principles upon which the White Paper and the consequent Amendments are based. We feel that in resorting to these highly illiberal principles, the Government are acknowledging the bankruptcy of their prices policy.

Of course I accept, and anyone who knows him would accept, that if it is correct that the First Secretary is becoming an economic dictator, then he is a reluctant economic dictator. I accept that he genuinely intends these powers to be of a strictly temporary nature. But will they be? His feet, in the words of the Prime Minister, are on the slippery slope. We are not concerned with his motives, but with the effect of his legislation. One can have the best possible motives for introducing legislation and taking certain powers, but the person with those motives may not be the person in charge when the powers are later exercised. Who knows what changes there will be in the country's conditions, or whether the economic situation will get worse? There might even be another Government in power. Once these powers have been taken—even though as drafted the Amendments automatically come to an end twelve months after the first effective date—once one is embarked on this course, it will be very difficult to change to another direction.

This could be one of the most important debates in the House since the end of the war. It is a matter of great concern to hon. Members opposite, as it is to hon. Members on this side of the House. I can understand that hon. Members with deeply-held Socialist principles, which I do not have, are as concerned about this matter as I am, who believe in a far more liberal economy.

Paragraph 2 of the White Paper says that the country needs a breathing space of twelve months in which productivity can catch up with the excessive increases in incomes which have been taking place. Yet not in the White Paper, nor in the Bill, nor in any of the Amendments to it is there any sign of a policy designed to increase productivity. What makes the Government think that productivity will catch up with incomes, even though those incomes are frozen during the next twelve months? Will not the effect of the freeze rather be to stultify productivity?

What will the Government's attitude be if, at the end of twelve months, or at the end of six months, it is found that productivity has not increased and that the disparity between productivity and the rise in incomes, even though they have been frozen, is exactly the same? What measures do the Government then propose to take? What will happen to the poor employer who has managed to survive because of a low wage structure in his particular industry—and who has only been enabled to survive because of the lack of competition to make him brighten up his ideas? Very often what many of these employers need is more competition for the labour they employ at higher rates of wages. But what will happen as a result of the freeze? Such an employer will be able to remain in business. The low wages which he pays will be frozen. There will be no need for him to improve his methods or change his ideas, for his employees will be unlikely to leave him in the course of the next six or twelve months, or even longer, because they will prefer the certainty of a job at their low wages to the possibility of unemployment if they leave and go in search of a job at higher wages. I do not think that the Government have sufficiently thought out the consequences of their policy, particularly if, as I expect, it is likely to fail.

Where do they go from there? Once embarked on this kind of exercise and having taken powers of compulsion and freezing of the wages structure in this way, if it fails they will then seem to take even more severe measures next time. There is no turning back. That is why this debate is of such crucial importance.

In the new situation introduced by these Amendments and the White Paper, what is the relevance of the Selective Employment Tax? The direct result of this tax is to increase many prices, so that the Government themselves are responsible for increases. Their right hand is unaware of what their left hand is doing. They will be creating pressure by putting up the cost of living, which will inevitably lead to further demands for wage increases. What would have helped in the Budget and what would help even now would be a tough and well-based payroll tax instead of this stupid Selective Employment Tax.

Even if one accepts the aims of the principles of the Bill as it is to be amended, how competent are the measures taken to achieve the desired end? I have no reticence about saying, because I have heard it discussed in many circles, how easy it will be to get round many of the Bill's provisions by such upgrading. There will be loaders first-class, second-class and third-class. There will be constant changes in status so that employers can get round the Bill and cooperate with their workers in doing so.

There is a case which highlights the difficulties of the Government which is quoted in today's Daily Mail. It says: Britain's 40,000 bakers, the first workers to challenge the incomes policy with a series of strikes, have had their pay and productivity deal frozen.They were given a 14 per cent. increase after months of negotiation—bringing their basic pay up to £14 1s. 9d. for a 40-hour week—in return for manpower flexibility, a new shift system, less overtime and other concessions. They were agreeing to the conditions necessary for greater productivity. The contract was agreed on July 7, but it was not formally signed until July 22—two days after the Government's official freeze date.The men who bake the bread have lost their rise, but the men who deliver it, the roundsmen, got a 12s.-a-week increase, with the Prices and Incomes Board's approval, before the clamp-down. It was entirely a matter of luck on which side of the line they happened to land.

Was the crisis so unexpected, were so few preparations taken that the Government were caught completely off guard by this? Is there not, even now, a great confusion in the mind of the Government between two entirely different crises? There is the balance of payments crisis, on the one hand, and the prices policy crisis, on the other. The two things are not the same and it is a great mistake to treat them as though they were.

To deal with the provisions for a standstill on incomes, how is one going to discriminate between increases in pay genuinely resulting from promotion to work at a higher level and the regrading of posts in order to enable highly competent employers to pay their employees more? As I see these Amendments, it will be impossible for the Government to do this. This policy will be riddled with anomalies. Some employers will co-operate with their workmen in order to achieve higher wages by skilful avoidance measures, and so on, and others will not.

This will lead to the most incredible feelings of unrest. The Government have put the trade union leaders in an impossible position. Responsible trade union leaders are trying to co-operate with the Government and maintain a wages policy and yet other people on the shop floor, giving an alternative form of leadership, are saying that the rank and file in the unions can disregard their leaders. What are trade union leaders going to think, and how much more impossible is their position going to become? How do the Government, in their White Paper, justify the distinction between allowing increases of pay due to regular increments of specified amounts within a predetermined range or scale and an increase in pay for a group of employees as a whole? In some occupations increases come naturally as a result of prearrangement while in others they are the result of collective bargaining. How can the Government justify allowing one and not another?

This Bill is the most direct encouragement, certainly in modern legislative history, of breach of contract that any Government have ever introduced. How can the Government hold their head high again when they are trying, through this policy, to justify the grossest of interferences with contracts freely negotiated and agreed? Sanctity of contract was and is a very important conception, and I should have thought, nowhere more so than in industrial bargaining. When the Prime Minister was in opposition he became the great authority for this when he attacked the right hon. and learned Gentleman the Member for the Wirral (Mr. Selwyn Lloyd) for his introduction of a wages freeze. Now the chickens have really come home to roost. Where is this process to end? If the Government's stated aims are not achieved—and I do not believe that they will be—what will happen then? The Government have succeeded in making the prices and incomes policy merely a matter of keeping wages and salaries down by a system alternately of fiddling and then of bullying.

The incomes policy would begin to make some sense if the Government were also to declare that wages and salaries in this or that form of industry are too low for justice or efficiency to be achieved. Some backward employers have not been squeezed hard enough by the pressure for higher earnings. What incentive is there for employers to provide the right conditions and increase productivity under this Bill? It is the Government's responsibility as well as that of employers, to provide conditions in which good earnings are possible, and if there is one tremendous gap in the policy of this Government it is the total absence of a positive labour market policy.

There are two reasons why the present freeze would prevent any improvement in productivity. The threat of unemployment has always been a factor making workpeople feel insecure. It has always prevented the total co-operation of trade unions in suggested beneficial industrial changes. It has created an irrational objection and resistance to change. Now this Labour Government are directly trying to encourage some degree of unemployment. What psychological effect do they think that this is going to have? The second reason is that once one has a freeze of productivity agreements, when agreements in train are not implemented, when there is an indiscriminate freeze, again the psychological effect is tremendous. The men will lose confidence.

It is wholly wrong for a Bill—because this is what these Amendments amount to—such as Part IV to be introduced into this House by means of Amendments in a Committee of 25 Members. Today we have been able, because of this Motion, to discuss some of the matters which could have been discussed on Second Reading, but this is by no means a Second Reading debate. There are many alternatives which many hon. Members would like to put forward. It is not right to say that the Conservative and Liberal Oppositions and Labour back benchers have no alternatives to put forward.

There are many of us who would have liked to have considered the great expenditure on defence, particularly as the balance of payments issue and what we spend east of Suez have become so intermixed with this prices policy issue. All of these matters have reference to this question. We should like to know why the Prime Minister thought that it was important at this time to introduce this freeze when a few days ago he was so very optimistic. What has occurred to make the Government ready to resort to these shabby methods of trying to get their way?

These methods would not have been tolerated by a Labour Opposition. I can imagine what the shouts would have been if this Part IV had been introduced by a Tory Government. What is good for the goose is good for the gander. I am glad to be associated with back-bench Members of both sides of the House who have protested in the name of the House of Commons that this procedure should have been resorted to. We shall certainly vote in favour of this Motion this evening.