Orders of the Day — PRICES AND INCOMES (No. 2) BILL

Part of the debate – in the House of Commons at 12:00 am on 13th June 1967.

Alert me about debates like this

Photo of Mr Michael Maitland Stewart Mr Michael Maitland Stewart , Fulham 12:00 am, 13th June 1967

I beg to move, That the Bill be now read a Second time.

Parliament and country are agreed that prices and incomes should be the subject of policy—that is to say, that they should not be left to sort themselves out and that there should be a deliberate attempt by those concerned—employers, employed and the Government—to see that prices and incomes are properly geared to the production of real wealth.

The objects in mind in making productivity, prices and incomes the subject of policy are, first, that we may be able to protect our balance of payments against the danger of inflation and be able to embark on economic growth without fear of its being arrested by a balance of payments crisis; secondly, that we may be able to give some help to those who are the worst sufferers if there is a free-for-all in prices and incomes—that is to say, those who are the lowest paid and those who, by reason of age, are not working and are on small fixed incomes.

But there is a third object of policy, which is emerging with increasing clearness from the events of the last 12 months—that the development of incomes policy itself can point the way to the use of methods in industry which encourage the production of real wealth. So a policy of this kind is not only a safeguard for our balance of payments and a safeguard for the ill-paid and those on small incomes. It can also be an instrument for the positive promotion of economic growth.

This general national agreement that there should be a policy for productivity, prices and incomes found expression in the Statement of Intent. It may be easy to ridicule perhaps the fact that the Statement of Intent was not carried out with the same zeal with which it was signed. But we have to note that the creation of policy rather than a free-for-all in this field is something which every nation which has tried it—and it has been tried with varying degrees of success—has found that it could not be done quickly or immediately or at the first attempt and that a combination of the difficulties of getting people to turn intent into practice and of certain particular difficulties which affected our economy at that time led us from the Statement of Intent to the emergency position we faced last July.

Last July, therefore, the whole concept of productivity, prices and incomes policy had to wear for a time a different face. It could not wear the face of voluntarism embodied in the Statement of Intent—it had to wear the face of stringent powers in the hands of the Government embodied in Part IV of the Prices and Incomes Act, 1966. We moved then from the Statement of Intent to Part IV and this Bill is a stage in moving backwards steadily towards a properly voluntary system.

It is in that context that the Bill should be understood, since Part IV of the Act—and I trust that there is no doubt about this—expires completely, ceases to be part of the law, on 11th August this year. We have now to undertake the task of moving from this situation of stringent legislative powers to a system of prices and incomes policy which shall be both voluntary and effective.

As I have said, it is in this context that we must see the Bill and I want briefly now to run through the provisions of the Measure. It has to be read together with Part II of the Prices and Incomes Act and the House will, in due course, be invited to approve the necessary Order in Council which brings Part II into force. In the first place, Part 11 gives to the Government power to require advance notification of any proposed increase of prices or wages or salaries. Although we shall call Part II into existence and the Government will, therefore, have the power to require those notifications, we both hope and expect to be able to rely very largely, if not wholly, on voluntary notification.

The consultations we have had indicate that it will be Possible for the Government to get the advance notifications they want by voluntary means, but it is desir- able, when one is trying to work a voluntary system, to see that the great majority who will co-operate with one should not be put in a worse position than a minority who will not. If, therefore, there are avoidances it will be possible for the Government to use the power to require notification which is contained in Part II.

Next, Part II gives the Government power—again, power which may or may not be used—in certain circumstances to halt proposed increases either in prices or in wages. The Government can do so in the first instance for a period of not more than 30 days, during which they must decide whether to refer the proposed increase to the National Board for Prices and Incomes and, further, to halt that increase for a period of three months or until the Board reports, whichever period is the shorter. Those briefly are the powers contained in Part II of the Prices and Incomes Act.

Clause 1 proposes to increase those powers in this respect—that the kind of standstill that can be imposed on increases in Part II may be continued for a period of up to six months from the time the proposed increase is referred to the Board. But this can only be done provided that the Board's report supports such action. In all cases—and this is an essential principle of the Bill—the Government will not be able to act in a manner more hostile to a proposed increase than is the report of the Board. They will, if they see fit, be able to adopt a more relaxed attitude than the Board to an increase, but will not be able to go beyond what the Board has recommended. That is the effect of Clause 1. It deals with a situation where the Government have been notified of a proposed increase and if they decide that it is necessary to halt that increase.

But, clearly, a situation could arise in which manufacturers, suppliers or employers and employed put an increase into effect without giving any advance notification. If there were no power to deal with that, it would give exactly the position we want to avoid—that people who refused to co-operate would be in a better position than those who do cooperate by notifying the Government of proposed increases.

Clause 2, therefore, makes it possible, when this situation has arisen, to require an increase to be reversed—for the price or wage to be put back to what it was previously, for those who have acted without notification to be put back in the same position as those who have notified the Government what they propose to do.

A similar situation could arise, dealt with by Clause 3, where, to begin with, possibly the parties have proceeded in a voluntary manner, have notified the increase and it has been referred to the Board, but then, either before or after the Board has reported, the incease has been put into effect despite the fact that it is not supported by the Board's report. In these circumstances, also, the Government will have power under Clause 3 to put the price or wage back to what it previously was. That is the position with regard to Clauses 1, 2 and 3.

These powers are subject to considerable safeguards. When the Prices and Incomes Act was passed, and again when Part IV of it was called into operation last October, a number of apprehensions were expressed that this was giving too great an arbitrary power to the Government. I think that the course of events and the use of the power since then has largely removed those apprehensions. [HON. MEMBERS: "No."] I shall be returning to that point.

None the less, it was thought desirable to surround the powers in the Bill with safeguards. The House should notice, first of all, that the use of them is limited by the fact that they cannot be more hostile to the parties concerned than the report of the Board is. Secondly, they are subject to the control of Parliament. There are certain powers in Part II which are subject to direct Parliamentary check, others that are less directly subject. But wherever there is an increase of power in this Bill over what is in Part II, that will be subject to Parliamentary check.

There is, furthermore, the check that the powers cannot be used without the opportunity for the parties concerned to make representations and for there to be consultations about the use of the powers. Further, Clauses 1, 2 and 3 cease to have effect after 11th August, 1968. Any Orders that have been made under these Clauses and are still in force at that date can run on for the six-months period from the time the reference was made to the Board, but there will be no power to make further Orders after 11th August, 1968. Both in duration and then in the way the powers are to be exercised, they are surrounded with careful safeguards against any arbitrary behaviour by the Government.