Orders of the Day — Commission for Industry and Manpower Bill

Part of the debate – in the House of Commons at 12:00 am on 8th April 1970.

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Photo of Mrs Barbara Castle Mrs Barbara Castle , Blackburn 12:00 am, 8th April 1970

I cannot help my hon. Friend the Member for Stoke-on-Trent, Central (Mr. Cant) over that intervention because I am totally at a loss to understand what the right hon. Gentleman's policy is.

As I was saying, the right hon. Member became remarkably evasive with the Financial Times a few days ago when asked to commit himself as to what the Conservatives would actually do to stimulate competition. Would they keep the I.R.C. in existence with reduced powers? He replied: Well, this battle is still going on and we've not quite finally decided. Would they increase the investment incentives for industry? His reply was: We haven't finally decided. Richest of all was his answer to the question whether they would intensify competition on American lines: He said: This is what we have got to decide before one or other of us makes the speech on mergers. I do not know which right hon. Gentleman opposite is to make the speech on mergers today, but we await it with interest. While they are thinking out their policy, perhaps I can explain the Government's approach as outlined in the Bill.

The structure of industry has been changing rapidly and fundamentally recently, and rightly so. I think we are all agreed that there had to be rationalisation, regrouping, concentration into larger units, if this country was to hold its own with development in other countries.

This process, which the Government have deliberately stimulated, has gone ahead dramatically in the last few years. But I should have thought that we would all also recognise that it could carry its own dangers with it. It would be folly to worship size for its own sake. Of course, we want economies of scale and we also want to be sure that larger units really do produce those economies.

The Government, therefore, have pursued two complementary strategies. On the one hand, with the help of the I.R.C., they have stimulated the most far reaching restructuring of industry since the Industrial Revolution. On the other, they have recognised that the concentration of industry into a smaller number of hands has created situation of market power which can lead to less efficiency, not more, and which call for public scrutiny. We believe, therefore, that we need a body which will carry on the excellent supervisory work of the Monopolies Commission. I am sure that we all want to pay a warm tribute to the way in which the Commission has carried out its work.

But we also believe that the scope of the inquiries of the Monopolies Commission is inadequate for the new industrial situation of today. As my right hon. Friend the Member for Grimsby (Mr. Crosland) pointed out when he was President of the Board of Trade, the Commission has never been solely concerned with investigating particular abuses of market power. It has also had a constructive job to do, seeing whether a firm enjoying monopoly power is making the most efficient use of its resources—and in this the work of the Commission has tended increasingly to merge with that of the Prices and Incomes Board which has approached the same problem from a different angle.

As my right hon. Friend put it, size is not a universal guarantee of efficiency, and there are plenty of "sleeping giants" in industry. We need, therefore, to ensure that the concentration of industry we have promoted—and shall continue to promote where necessary—really does produce the return in greater efficiency which is the whole justification of the exercise.

It is this which has led us to extend the concept of market power in the Bill to include, not only situations of technical monopoly or situations where a firm controls one-third of the market in particular products, or situations where a group of firms act together to restrict competition, but the behaviour of large firms. This wider concept is set out in Clauses 2 to 4.