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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 Mrs Shirley Williams Mrs Shirley Williams , Hitchin 12:00 am, 9th August 1966

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