Orders of the Day — Prices and Incomes

Part of the debate – in the House of Commons at 12:00 am on 25th October 1966.

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Photo of Sir Charles Mott-Radclyffe Sir Charles Mott-Radclyffe , Windsor 12:00 am, 25th October 1966

What surprises me now is that the hon. Gentleman did not know that the calculations made at the time of the institution of the Selective Employment Tax were quite wrong.

The Government now tell employers that they must dishonour contracts made in respect of productivity. This is a very serious step. It is unheard of either in war time or in peace time. If this is the Government's first step in trying to solve an economic crisis, what will the next step be? Employers are told that they must dishonour contracts already entered into based on higher productivity, but employees, quite rightly, reply, "You must stand and deliver. You promised you would". The employer says that he is sorry, but Government legislation forbids him to do so. In these circumstances, how are we to get production going? If we do not get production going, how on earth are we to get out of the wage freeze? It is the "hen and egg" argument all over again, and I see no end to it.

A good deal has already been said about prices, and the Statutory Instrument applies to prices in some respects. Some prices can be controlled statutorily, but not all. The Government cannot control all prices, and I do not believe that they should. The moment the Government start to control prices by statute—and this will be the next step following the wage freeze—they interfere with the free laws of supply and demand and make an absolute nonsense of the whole economy. If five desirable bungalows or houses are built for sale and 25 people are after them, how is the price to be controlled?

We have had references to dividends, and the hon. Member for Watford wants to control dividends, too. I have no doubt that, in the legal or Parliamentary sense, we could legislate to control dividends. My right hon. Friend the Member for Reigate (Sir J. Vaughan-Morgan) told us earlier of his own company being forced to pay a dividend lower than it had promised. But if companies are forced by statute to pay a lower dividend than the one they have advertised, what happens to investment? Where does the capital come from? Above all, where does the risk capital come from? Why does anyone invest their money in anything if it is not in the expectation of a dividend? If all profits have to be ploughed back and retained, then there is no dividend. Now I will give way.