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Clause 11. — (Prices and Charges Enforcement.)

Part of 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 Sir Keith Joseph Sir Keith Joseph , Leeds North East 12:00 am, 9th August 1966

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.