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.

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Photo of Mr John Biffen Mr John Biffen , Oswestry 12:00 am, 13th June 1967

—yes, large scale—signs of which he already saw in the actions of the Chancellor of the Exchequer.

So much for the metaphysics. I turn now to the history of the matter.

Most hon. Members have felt obliged to pass some sort of judgment on whether the last 12 months have seen the success of the stautory powers of Part 1V, or whether, in fact, it was the credit squeeze which was primarily responsible for the movement of prices and incomes. For my part, I do not think that one can do better than the hon. Member for Oldbury and Halesowen (Mr. Homer), who said that we did not know and it was in the nature of the problem that we never would. I know of no substantial body of evidence to support the argument of the hon. Member for York (Mr. Alexander W. Lyon) that the existence of Part IV had a tangible and measurable effect upon the movement of prices and of incomes.

I shall put a few statistics to the House. I apologise for so doing, but I think that they can help us in deciding whether the existence of these considerable statutory powers has had much marked effect upon the movements of either prices or incomes. Between July, 1966, and April, 1967—the latest available date—the index of wage rates—I use the index, conscious of all its limitations—moved from 154·5 to 156·5, an increase of 2 points in nine months.

Next, I take the corresponding period of nine months, September, 1957, to June, 1958, after the Thorneycroft measures. I have deliberately gone back to that point in time because there was no question of an incomes policy, even in its most incipient form, dominating current conventionally accepted economic thinking at that time. During that corresponding period of nine months, the index moved from 111·5 to 113·4, an increase of 1·9 points.

It seems to me that, from those two corresponding periods, one can say that it looks as though the situation was roughly the same, and it is that kind of evidence which, I think, sustains the argument of the hon. Member for Oldbury and Halesowen and the great many other hon. Members who have rightly said that by far the most important factor affecting the movement of prices and incomes has probably been the existence of the July credit squeeze measures. The same case can be made on the retail prices index, but, to save the time of the House and, I hope, to allow other hon. Members to speak, I take it that I shall be excused from embarking on a general exposition of the various statistics I have here.

I come now to what is, probably, the more important part of our business today, the Bill itself. There are two major features of the Bill: first, the enhancement of the Prices and Incomes Board; second, the supposition that this will usher in a voluntary system, supervised, presumably, by the T.U.C.—with some gentle lines of encouragement from the Government—and, I suppose, by the C.B.I.

Let us consider the enhancement of the National Board for Prices and Incomes. The Board has become pretty much the sole regulator from now on. There is no question of the Government's being able, of their own accord, to control individual prices and incomes. In future, they must get the green light from the Prices and Incomes Board.

This has been advanced as a virtue, but I feel that it ought at least to excite in us some consideration of just what the Board is now to become or, perhaps, has become. What the Board can examine is, in turn, determined by the Government, and determined by them with their knowledge of the staff and competence of the Board. I am sure that the Prices and Incomes Board was never designed so that it should become a mechanism of arbitration. It was never designed to become a mechanism of price control. It was never designed to be the sole regulatory power or sole regulatory valve for a prices and incomes policy in the next 12 months.

I do not believe that that was ever in the mind of Mr. Aubrey Jones when he went to the office. [An HON. MEMBER: "It was."] If it was, I can only say that he had delusions of grandeur. [An HON. MEMBER: "He jolly well had."] This is developing into an ungenerous commentary on the Prices and Incomes Board in terms of its personnel. I am not interested in that. What should concern us is the actual power of the Board and what we can expect of it.

I put this to hon. Members opposite: how many cases can the Board possibly cope with with any degree of scholarship, skill and research in depth? I do not offer my comment. I offer a comment from the New Statesman, from an article by Mr. Arnold Strang in the current issue: The Board, with its projected manpower strength and budget, will be able to deal with no more than 20 or so cases a year". If that is so, and bearing in mind that Mr. Jones himself has said that he wants to have an increasing rôle in the matter of prices, the number of wage cases which can conceivably be dealt with by the Board will be very limited.

Do hon. Members for a moment doubt that, if the policy is to have any element of realism at all, what will be referred to the Board will have to be major trade union negotiated claims? Let no one doubt that, if the policy is to be meaningful, one's ability to identify a militant trade union, or possibly not even a militant one, but, at least, a trade union, will be a major factor in what is referred to Mr. Jones and his Board. All those employees who are nonunionised—and there are very many of them—will proceed safely in the knowledge that none of them will be selected for reference to the Prices and Incomes Board.

We might ask ourselves who will be employed to carry out these researches in depth. Are hon. Members opposite so overwhelmed by the case made on wages in retail drapery that this is a development which they wish to see encouraged? We do not know who will investigate these cases. We know that it will not be Mr. Aubrey Jones and the small body of people visible to the public and the House. A firm of consultants will be hired to do the job.

An American firm of consultants was used for the examination of newsprint prices, and in the case of bank charges a firm of foreign consultants was used. If the Board is to have this new quasi-arbitration rôle, perhaps determining what it thinks are to be superior systems of wage negotiation and bargaining, do hon. Members opposite relish the prospect of American consultants being employed on this job? Does the experience of Roberts-Arundel, at Stockport, carry any message for the techniques of American management in this country and in this sphere? We should know whom Mr. Aubrey Jones will hire to carry out these surveys. If the cases which he will conduct are limited in number presumably the Government will attach immense significance to the conclusions.

My second point concerns whether we should sanction the Bill because we believe that it will lead to a voluntary policy. The whole idea of a voluntary incomes policy is one on which we require considerable and detailed definition before we accept it as self-evidently good and to be applauded.

We understand from the Prime Minister that this means that the T.U.C. will take greater powers of control and regulate the claims of the constituent unions. I wonder if that is a rôle that the House should willingly put upon the T.U.C. Presumably it will be done in the name of Government policy, and the conclusions reached will be presented to some extent as though this was the outcome of deliberate Government concern.

Should the House willingly yield up these powers? I think not. This places on the T.U.C. intolerable burdens. First, there is the assumption that the existing pattern of income is fixed; in other words, that the distribution of total income as between employment income and other forms—self-employment, dividends, interest, rent, social security receipts, and so on—is fixed within those broad classifications and all that the T.U.C. has to do is to allocate the order of priorities for employment income. Does any member of the trade unions regard the present balance as fixed and permanent? I would not have thought so.

I happen not to be a trade unionist, but I am much concerned with the reality of any policy which proceeds from legislation here. If the T.U.C. has one interpretation and the Government, perhaps unconsciously, have another, only a nonsense will follow, and it carries with it all the seeds of destruction so eloquently referred to by the hon. Member for Oldbury and Halesowen, with whose speech I found myself in overwhelming agreement.

There is a number of cases one can make on the question of whether or not the T.U.C. is in a position to supervise a policy on behalf of the Government. I wish to give just one or two quotations, first from what Mr. David Currie, President of the Clerical and Administrative Workers' Union said at the union's annual conference at Margate a short while ago. The Financial Times reported: Referring to the T.U.C.'s proposals to run its own incomes policy, Mr. Currie said: 'We cannot say that Congress will succeed in applying such a policy. We do not know if it has the skill, the knowledge and the authority to make it work'". The report added: Mr. Currie pointed out that the T.U.C. entered this field with substantial weaknesses. It represented only about one in three of employed people and about one in five non-manual workers. We have seen what a virile trade union leader like Mr. Clive Jenkins will do in the circumstances of the past 12 months. I cannot imagine what he will do if he is expected to obey the advice handed down by the T.U.C. Actually, as any regular reader of Tribune will know, he has told us that as far as he is concerned a T.U.C. sub-contracted incomes policy is a non-starter.

Take it a stage further. What are we to do about prices? Are they to have differential treatment from incomes? Are the Government proposing that we should try to encourage trade associations to take an active rôle in the pricing structure of their members? If so, why have we been spending I do not know how many years trying to break down the paraphernalia of trade association price control and price rings inherited from conditions of the 'thirties? Are we to reverse this whole process, sanctified by some sort of view that we are promoting a voluntary prices structure?

These are the issues to which the House must address itself, not in a spirit of partisanship, but with complete, total and ruthless realism, because to believe that a voluntary policy has a hope of succeeding is to encourage people to believe in the moon. It has no hope at all as long as one gives people their capacity for independent action. If one believes that all the maverick trade unions and employers must then be brought into conformity and the safety of a comprehensive and universal trade union and employer system, one is moving nearer to the corporate State than I believe anybody in this country is prepared to accept.

It is comparatively easy to make the kind of critical speech which I have made tonight. However, I have never disguised from the House my view that the most important item in the control of the economy is to get the aggregate level of demand right. For that reason I was pleased to support the Chancellor of the Exchequer in his July measures. I am now pleased to offer this advice to him: that he should keep a steady nerve and, above all, resist any siren calls for early reflation. He should not be unsettled by the taunts that he is held in thrall by the Treasury or banking community. The greatest danger we face is early reflation. This morning's news in the Financial Times, under the heading "Sensible Advice to Governments", refers to the annual Report of the Bank for International Settlements. It contains points on which we should ponder with special care, for it comments: The section on Britain concludes with a sentence to which the Chancellor would be well advised to play the closest attention, all the more so in the light of the measures announced in the past few days to stimulate consumer demand. Since, the Bank says, a longer-term easing of the balance of payments constraint is directly linked with private investment, it is important that private sector spending is tailored to make room for the recovery in business spending when that occurs. Inasmuch as the Chancellor has been the recipient of a good deal of criticism—and advice, proferred under the guise of an alternative policy—from the point of view of this Measure, he should not continue the process of encouraging the public to believe that there is contained in this House or in Whitehall, or in whatever businesses or trade unions the Government can get to co-operate, a skill and power which enable us to identify the key prices and incomes and then to try and influence them.

Ultimately, the character of this country depends on the high street, the shop floor and boardroom and not on the lobbies of Westminster or the corridors of Whitehall.