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Clause 11. — (Prices and Charges Enforcement.)

Orders of the Day — Prices and Incomes Bill – in the House of Commons at 12:00 am on 9th August 1966.

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Photo of Dr Horace King Dr Horace King , Southampton, Itchen 12:00 am, 9th August 1966

The next Amendment selected is No. 13, and I suggest that with it we discuss the following five Amendments: Amendment No. 14, in page 10, line 1, to leave out subsection (2).

Amendment No. 15, in page 10, line 27, to leave out subsection (4).

Amendment No. 16, in page 10, line 39, to leave out subsection (5).

Amendment No. 31, in Clause 26, page 24, line 21, to leave out subsection (7).

Amendment No. 35, in Clause 27, page 25, line 26, to leave out subsection (8).

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

I beg to move, in page 9, line 35, to leave out subsection (1).

This group of Amendments has as its common theme the elimination of the penalties for the breaking of the price obligations under Parts II and IV of the Bill. In case it might be thought that the Opposition are moving only on prices, I point out now that we have another group of Amendments to eliminate the penalties for breaches of the pay provisions. As the Government know by now, we are against all the compulsory measures in the Bill, and we hope that even at this stage we may persuade them to abate, in part if not entirely, some of the idiocies at least of the provisions on prices.

The consumer needs protection against irresponsible price increases, but the proper way for the Government to protect the consumer is to see to it that the level of demand is such as to ensure that the producers of goods and suppliers of services have to compete for the custom of the public. That is how we would like to see the Government treating the economy. Now, the Government having introduced a package of deflation far more severe than would have been necessary if they had acted earlier, the economy will produce the competition which is the best protection of the consumer, and this is why we feel absolutely clear in our consciences that it would be right to strike out of the Bill all the compulsory provisions and a great deal of the others as well in connection with prices.

There could be an occasion, for instance in war, when some sort of compulsory price control was legitimate, but, generally, if it is legitimate it will go with a scarcity of goods which requires rationing to accompany price control. This is not such an occasion. The hon. Member for Renfrew, West (Mr. Buchan) and his hon. Friends may be tempted to equate price control with social justice, but this is a very naive view. Price control is far more likely to produce poverty, to lead to a creaking economy, and, in due course, if continued long enough, to lead inevitably to what the hon. and learned Member for Northampton (Mr. Paget) has already prophesied, the return of rationing. [An HON. MEMBER: "Why?"] Does someone want to waste time asking such a simple question as "Why?". I shall not take up time on it. I should enjoy a disquisition on "Why?", but we must try to make some progress for our own sake if not for the Government's.

Now that deflation is coming imminently upon the economy, we believe that these compulsory provisions for price control are completely unnecessary even for the Government's own purposes. But not only are they unnecessary; they produce several dangers. First, from the experience we have already had of the Government's voluntary system for trying to abate price and pay increases, it has been noted that the Government have been marginally less unsuccessful on prices than they have been on pay increases. Economists who have measured the changes believe that it is a very small success, about ½ per cent. in a year, in abating price increases and a nil success in abating wage increases. But to the extent that the Government are marginally successful in abating increases of prices, to the same extent they increase the danger of inflation because they release the equivalent amount of purchasing power to be spent on other goods, which generally means exports. Consequently we believe that any attempt to control prices is likely to be inflationary, and that is the first condemnation we have, in addition to the unnecessary nature of this provision.

Secondly, we believe—and in Committee my hon. Friends gave dozens of examples—that it is completely impracticable to control prices. The right hon. Gentleman the First Secretary admitted that evasions would be impossible to stop. I am not talking about people who deliberately seek to evade, and, of course, they will be able to evade price control unless an enormous bureaucracy is established. I am referring to the normal daily evasions that will be almost necessary for the ordinary trader who is trying to carry out his duty of supplying the public and surviving as an economic unit.

We believe that when one takes into account the infinite variety of changes of weight, content, type, packing, colour and a score of others which hon. Members could illustrate, it is absolutely impossible for any bureaucracy that is thinkable, even by this Government, to have a fair and effective control of prices.

I will not spend the time of the House elaborating this point because I believe that it is common ground. The First Secretary admitted that bringing the price control section of Part IV into operation would be an abominable headache, and I will, therefore, mention only a few of the matters which the right hon. Gentleman will have to contemplate if he decided to take this step. He would have to consider whether restaurant, cafe, shop, laundry prices and the prices of an infinite number of services provided by people for people to a different measure in each case could possibly come under this sort of price control.

Apart from the unnecessary inflationary nature of this provision, we believe that it will seriously damage investment, remembering that every time prices are controlled, profits are squeezed. It is out of profits that investments are built up. A lengthy control of prices would be bitterly damaging to investment which, as hon. Members know, is essential for the well being of the country.

We hope, therefore, that the House will approve the Amendment. If that were the happy outcome of this debate the economy would not suffer great torrents of price increases because of the deflationary package introduced a few weeks ago by the Prime Minister. It is because, in this context, we regard price control as nothing less than dotty and, therefore, the criminal sanctions written into Parts II and IV of the Bill as evil, that my hon. Friends and I seek the support of the House for the Amendment.

Photo of Mrs Jill Knight Mrs Jill Knight , Birmingham, Edgbaston

This part of the Bill is utterly unfair because it refers virtually completely to the private sector as opposed to the public sector. We cannot take the mote out of the eye of private enterprise while ignoring the beam in the eye of State enterprise.

One of my hon. Friends spoke earlier about social justice being outraged. It is in this context that it seems that social justice is being outraged, since costs will be forced up in the private sector by Government action—including S.E.T., petrol increases and so on—while, at the same time, State Departments are apparently being allowed to fix their prices at whatever level they choose.

I had a very angry letter from a constituent yesterday saying that Ordnance Survey maps had gone up in price by an enormous amount—from 8s. 6d. to 16s. My constituent was told that it was in order to pay for maps which would be available in 1980. It is the height of "topsy-turvyism" to permit a State Department to put up costs by this much for something which will not be available for 14 years. Why is that permissible, yet these subsections will remain? To carry public opinion with us, we must appear to provide social justice.

Photo of Sir Edward Brown Sir Edward Brown , Bath

I have a different reason from that of my right hon. Friend for supporting the Amendments. We tried in Committee to get some sense into the Bill. I should like to ask the Chancellor, who is present, what would be the situation under this subsection if a person were taken to court. Could he rely on the Chancellor's statement during debates on the Finance Act, that, with S.E.T., hotels should raise their prices? Which is right, the Finance Act or this subsection? We need clarity, so I repeat the question.

Perhaps the Parliamentary Secretary will check with the Chancellor. If someone is to be pursued in the courts, will he rely on the Chancellor's statement or the entirely different statement of the First Secretary. The Government are "mixed-up kids"; they will take no advice. This is a typical example which will make them a laughing stock in the country and will be joy and paradise for lawyers. I want a clear answer, so that the hoteliers in Bath will know what to do.

Photo of Mrs Shirley Williams Mrs Shirley Williams , Hitchin

The Amendments would remove the sanctions with regard both to early warning orders over prices and charges and, if it were brought into force, to any orders made under Part IV, freezing prices. Hon. Gentlemen opposite have been expressing disappointment with us from time to time, so I will now express disappointment with them. It is obvious that, a Bill of this type must carry sanctions. It would be impossible and ludicrous for the Government to bring in a system of early warning for prices which carried no sanctions for those who failed to co-operate, as it would, in those circumstances, be even more ludicrous to bring in Part IV, should it be necessary.

As we made clear in Committee and have made clear today, it is the Government's earnest wish and hope that it will not be necessary to bring in Part IV, but, if it is, there would be no point in trying to enforce a standstill on prices, through which anyone who wished not to co-operate or to act in a non-patriotic manner could drive a coach and horses. This would be very unfair to the majority of firms and industries which attempted to uphold the Government's standstill and the Government's early warning system. Quite simply, as is the case in almost every other type of legislation brought before the House, there must be sanction of some kind.

10.15 p.m.

These sanctions are very closely controlled, amounting to a fine of a maximum of £100 on summary conviction in a magistrate's court, or £500 maximum for non corporate bodies in a higher court and leaving to the discretion of the court any greater fine, which is normal under similar types of legislation, should they be brought before a higher court. I repeat that in addition to this there are a number of important safeguards. The first of these is that with Parts I, II and III of the Bill, we are talking purely about the early warning system and not as the right hon. Gentleman said, about a system of price control. Parts I, 11 and III do not involve a system of price control, but merely involve an attempt to get firms and industries to comply with an early warning system carrying an absolute maximum of four months' delay in an increase in prices. That has been made clear time and time again in Committee.

There are other safeguards in Part IV. As my right hon. Friend has pointed out, at most Part IV can last a year and it cannot be extended. It is subject to affirmative Resolution by the House. It cannot involve any action against anybody without the prior permission of the Attorney-General. That also applies to any sanctions under the early warning system. So there are substantial safeguards to which right hon. and hon. Gentlemen opposite have not referred.

I come very briefly to comment on one or two of the points which have been made in the debate. The reply to the hon. Lady the Member for Birmingham, Edgbaston (Mrs. Knight) is that paragraphs 32 and 33 of the White Paper make it clear that the standstill applies equally to nationalised industries' prices and action is being taken to make certain that the standstill is so regarded—I am talking now about the voluntary standstill. The hon. Lady referred to a particular instance and I would be grateful if she would send us information about it so that we may look into it.

I refer the hon. Member for Bath (Sir E. Brown) to paragraph 4 of the White Paper which makes it clear that where a rise in price takes place as a result of Government action, in so far as it cannot be absorbed, it escapes the terms and conditions of the standstill. I repeat "in so far as it cannot be absorbed", but if it could not be absorbed in full under the standstill, then paragraph 4 would make the position fairly clear.

I was mildy surprised by one thing said by the right hon. Member for Leeds, North-East (Sir K. Joseph). He said that the Government ought to be able to control the whole of the situation of rising prices and incomes, in other words, inflation, by control over the level of demand. I recognise that that is the position which he and many of his hon. Friends accept. But I must say that this was not the case under his own Government. The pay pause, the guiding light and the Three Wise Men were all a recognition of the inability of that Government to run the economy simply by reference to the level of demand.

Exactly the same thing arises in economies such as those of the United States, Sweden, France and Germany. None of them has been able effectively to control its economy purely by the use of control over the level of demand. Why? There is one simple reason and it is that in a modern economy inflation cannot be controlled purely by working on the level of demand. In situations as highly organised as both sides of industry in these economies are today, it means dropping that level of demand to a much lower level than was borne in mind by people believing in terms entirely of a free market system in which nothing was organised on either the prices or incomes side.

It is clear that virtually no economy in the free world has been able to operate purely on the level of demand. Right hon. and hon. Gentleman opposite should think very carefully before committing themselves to a course which might well mean a level of demand which would be far too low to encourage investment in

future and on which their own Party when in office clearly did not entirely depend, I therefore urge that the Amendment be rejected.

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

The House divided: Ayes 216, Noes 142.

Division No. 166.]AYES[10.20 p.m.
Albu, AustinFloud, BernardMarquand, David
Allaun, Frank (Salford, E.)Foot, Michael (Ebbw Vale)Mayhew, Christopher
Alldritt, WalterFord, BenMendelson, J. J.
Allen, ScholefieldFraser, John (Norwood)Mikardo, Ian
Anderson, DonaldFraser, Rt. Hn. Tom (Hamilton)Millan, Bruce
Armstrong, ErnestFreeson, ReginaldMolloy, William
Ashley, JackGalpern, Sir MyerMorgan, Elystan (Cardiganshire)
Atkins, Ronald (Preston, N.)Gardner, A. J.Morris, Alfred (Wythenshawe)
Atkinson, Norman (Tottenham)Garrett, W. E.Morris, John (Aberavon)
Barnes, MichaelGarrow, AlexMoyle, Roland
Baxter, WilliamGordon Walker, Rt. Hn. P. C.Mulley, Rt. Hn. Frederick
Benn, Rt. Hn. Anthony WedgwoodGourlay, HarryNewens, Stan
Bennett, James (G'gow, Bridgeton)Greenwood, Rt. Hn. AnthonyNorwood, Christopher
Bidwell, SydneyGregory, ArnoldOakes, Gordon
Binne, JohnGriffiths, David (Rother Valley)Ogden, Eric
Bishop, E. S.Hamilton, William (Fife, W.)O'Malley, Brian
Blackburn, F.Hannan, WilliamOrme, Stanley
Blenkinsop, ArthurHarper, JosephOswald, Thomas
Boardman, H.Harrison, Walter (Wakefield)Page, Derek (King's Lynn)
Booth, AlbertHart, Mrs. JudithPannell, Rt. Hn. Charles
Boston, TerenceHaseldine, NormanPark, Trevor
Bottomley, Rt. Hn. ArthurHeffer, Eric S.Pavitt, Laurence
Bowden, Rt. Hn. HerbertHenig, StanleyPeart, Rt. Hn. Fred
Boyden, JamesHarbison, Rt. Hn. MargaretPentland, Norman
Braddock, Mrs. E. M.Horner, JohnPerry, George H. (Nottingham, S.)
Bray, Dr. JeremyHoughton, Rt. Hn. DouglasPrentice, Rt. Hn. R. E.
Brown, Rt. Hn. George (Belper)Howarth, Robert (Bolton, C.)Price, Christopher (Perry Barr)
Brown, Bob (N'c'tle-upon-Tyne, W)Hughes, Emrys (Ayrshire, S.)Price, Thomas (Westhoughton)
Brown, R. W. (Shoreditch & F'bury)Hughes, Roy (Newport)Probert, Arthur
Buchan, NormanHunter, AdamPursey, Cmdr. Harry
Butler, Mrs. Joyce (Wood Green)Hynd, JohnRandall, Harry
Callaghan, Rt. Hn. JamesJackson, Peter M. (High Peak)Redhead, Edward
Cant, R. B.Janner Sir BarnettRees, Merlyn
Carter-Jones, LewisJeger, Mrs. Lena (M'b'&St. P'cras, S.)Rhodes, Geoffrey
Castle, Rt. Hn. BarbaraJenkins, Hugh (Putney)Roberts, Cwilym (Bedfordshire, S.)
Coleman, DonaldJenkins, Rt. Hn. Roy (Stechford)Robinson, Rt. Hn. Kenneth (St. P'c'as)
Conlan, BernardJohnson, Carol (Lewisham, S.)Rodgers, William (Stockton)
Crawshaw, RichardJohnson, James (K'ston-on-Hull, W)Ross, Rt. Hn. William
Crosland, Rt. Hn. AnthonyJones, Rt. Hn. Sir Elwyn (W. Ham, S.)Rowland, Christopher (Meriden)
Crossman, Rt. Hn. RichardJones, J. Idwal (Wrexham)Rowlands, E. (Cardiff, N.)
Cullen, Mrs. AliceKelley, RichardRyan, John
Davies, G. Elfed (Rhondda, E.)Kenyon, CliffordSheldon, Robert
Davies, Harold (Leek)Kerr, Russell (Feltham)Shore, Peter (Stepney)
Davies, Ifor (Gower)Lawrson, GeorgeSilkin, Rt. Hn. John (Deptford)
de Freitas, Sir GeoffreyLeadbitter, TedSilkin, S. C. (Dulwich)
Delargy, HughLedger, RonSilverman, Julius (Aston)
Dell, EdmundLee, Rt. Hn. Jennie (Cannock)Silverman, Sydney (Nelson)
Dewar, DonaldLestor, Miss JoanSkeffington, Arthur
Diamond, Rt. Hn. JohnLever, L. M. (Ardwick)Slater, Joseph
Dickens, JamesLewis, Ron (Carlisle)Small, William
Dobson, RayLomas, KennethSnow, Julian
Doig, PeterLoughlin, CharlesSpriggs, Leslie
Donnelly, DesmondLuard, EvanSteele, Thomas (Dunbartonshire, W.)
Driberg, TomLyon, Alexander W. (York)Summerskill, Hn. Dr. Shirley
Dunnett, JackLyons, Edward (Bradford, E.)Taverne, Dick
Dunwoody, Mrs. Gwyneth (Exeter)Mabon, Dr. J. DicksonThomas, George (Cardiff, W.)
Dunwoody, Dr. John (F'th A C'b'e)McCann, JohnThomas, Iorwerth (Rhondda, W.)
Edelman, MauriceMacColl, JamesThornton, Ernest
Edwards, Robert (Bilston)Macdonald, A. H.Tinn, James
Edwards, William (Merioneth)McKay, Mrs. MargaretTomney, Frank
Eills, JohnMackie, JohnUrwin, T. W.
English, MichaelMackintosh, John p.Varley, Eric G.
Ennals, DavidMaclennan, RobertWalker, Harold (Doncaster)
Ensor, DavidMcMillan, Tom (Glasgow, C.)Watkins, David (Consett)
Faulds, AndrewMcNamara, J. KevinWatkins, Tudor (Brecon & Radnor)
Fitch, Alan (Wigan)Mallalieu, J. P. W.(Huddersfield, E.)Weitzman, David
Fletcher, Raymond (Ilkeston)Manuel, ArchieWellbeloved, James
Fletcher, Ted (Darlington)Mapp, CharlesWhitaker, Ben
White, Mrs. EireneWillis, George (Edinburgh, E.)Wyatt, Woodrow
Whitlock, WilliamWilson, Rt. Hn. Harold (Huyton)Yates, Victor
Willey, Rt. Hn. FrederickWilson, William (Coventry, S.)
Williams, Clifford (Abertillery)Woodburn, Rt. Hn. A.TELLERS FOR THE AYES:
Williams, Mrs. Shirley (Hitchin)Woof, RobertMr. McBride and Mr. Ioan L. Evans.
Alison, Michael (Barkston Ash)Griffiths, Eldon (Bury St. Edmunds)Noble, Rt. Hn. Michael
Allason, James (Hemel Hempstead)Grimond, Rt. Hn. J.Nott, John
Balniel, LordGurden, HaroldOnslow, Cranley
Batsford, BrianHall, John (Wycombe)Orr-Ewing, Sir Ian
Berry, Hn. AnthonyHamilton, Michael (Salisbury)Osborne, Sir Cyril (Louth)
Bessell, PeterHarrison, Col. Sir Harwood (Eye)Page, Graham (Crosby)
Biffen, JohnHawkins, PaulPardoe, John
Birch, Rt. Hn. NigelHeseltine, MichaelPearson, Sir Frank (Clitheroe)
Blaker, PeterHiggins, Terence L.Peel, John
Body, RichardHill, J. E. B.Percival, Ian
Boyd-Carpenter, Rt. Hn. JohnHobson, Rt. Hn. Sir JohnPike, Miss Mervyn
Boyle, Rt. Hn. Sir EdwardHooson, EmlynPink, R. Bonner
Brewis, JohnHordern, PeterPrice, David (Eastleigh)
Brinton, Sir TattonHornby, RichardPrior, J. M. L.
Bromley-Davenport, Lt. Col. Sir WalterHowell, David (Guildford)Pym, Francis
Brown, Sir Edward (Bath)Hunt, JohnRamsden, Rt. Hn. James
Bruce-Gardyne, J.Hutchison, Michael ClarkRawlinson, Rt. Hn. Sir Peter
Buck, Antony (Colchester)Jenkin, Patrick (Woodford)Rodgers, Sir John (Sevenoaks)
Bullus, Sir EricJohnston, Russell (Inverness)Rossi, Hugh (Hornsey)
Carlisle, MarkJones, Arthur (Northants, S.)Royle, Anthony
Clegg, WalterJopling, MichaelRussell, Sir Ronald
Crouch, DavidJoseph, Rt. Hn. Sir KeithSharples, Richard
Crowder, F. P.King, Evelyn (Dorset, S.)Shaw, Michael (Sc'b'gh & Whitby)
Currie, G. B. H.Kirk, PeterSinclair, Sir George
Dance, JamesKitson, TimothyStodart, Anthony
Davidson, James (Aberdeenshire, W.)Knight, Mrs. JillSummers, Sir Spencer
d'Avigdor-Goldsmid, Sir HenryLancaster, Col. C. G.Tapsell, Peter
Dean, Paul (Somerset, N.)Legge-Bourke, Sir HarryThatcher, Mrs. Margaret
Deedes, Rt. Hn. W. F. (Ashford)Lewis, Kenneth (Rutland)Thorpe, Jeremy
Doughty, CharlesLongden, GilbertTilney, John
Douglas-Home, Rt. Hn. Sir AlecLoveys, W. H.Turton, Rt. Hn. R. H.
Eden, Sir JohnLubbock, Erievan Straubenzee, W. R.
Elliott, R. W. (N'c'tle-upon-Tyne, N.)Mackenzie, Alasdair (Ross&Crom'ty)Vaughan-Morgan, Rt. Hn. Sir John
Eyre, ReginaldMaclean, Sir FitzroyVictors, Dame Joan
Farr, JohnMacleod, Rt. Hn. IainWainwright, Richard (Colne Valley)
Fisher, NigelMacmillan, Maurice (Farnham)Walker, Peter (Worcester)
Fletcher-Cooke, CharlesMaddan, MartinWall, Patrick
Fortescue, TimMarten, NeilWard, Dame Irene
Fraser, Rt. Hn. Hugh (St'fford & Stone)Maude, AngusWeathrill, Bernard
Gibson-Watt, DavidMaxwell-Hyslop, R. J.Webster, David
Giles, Rear-Adm. MorganMaydon, Lt.-Cmdr, S. L. C.Wells, John (Maidstone)
Gilmour, Sir John (Fife, E.)Miscampbell, NormanWhitelaw, William
Glover, Sir DouglasMitchell, David (Basingstoke)Wilson, Geoffrey (Truro)
Glyn, Sir RichardMore, JasperWinstanley, Dr. M. P.
Goodhart, PhilipMorgan, W. G. (Denbigh)Wood, Rt. Hn. Richard
Goodhew, VictorMunro-Lucas-Tooth, Sir HughWorsley, Marcus
Gower, RaymondMurton, Oscar
Gresham Cooke, R.Neave, AireyTELLERS FOR THE NOES:
Mr. Younger and Mr. Grant.