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

The right hon. Gentleman has anticipated a later part of my speech. I shall, of course, be referring to the procedures of the new Commission. I am at present dealing with the need to coordinate the arrangements for determining pay in the public sector, and I said that the Bill would give us the opportunity to do so.

Clause 24 of the Bill enables Ministers to refer to the Commission any question relating to pay and conditions in the public services, and the people to be covered by this Clause are set out in Schedule 3 of the Bill. They include civil servants, N.H.S. employees, the police, the Armed Forces, local authority employees and university teachers.

Most of these are already covered by their own negotiating machinery, and this will not be interfered with; but it will be a question of asking the Commission from time to time to satisfy itself that we are working out the best pay structures, relating pay to performance wherever possible and securing the most efficient use of manpower.

Other groups will be covered by standing references to the C.I.M., as they were to the P.I.B. The obvious case is the Armed Forces, though power will be there to cover other cases as well, such as university teachers.

But there are other groups in the public service the fixing of whose pay raises special problems, because it is what I would call "politically sensitive". In Clause 25 we make provision for the Commission to review and report on the pay of these groups, as defined in Schedule 4. The House will note with interest that, in addition to senior civil servants, the boards of nationalised industries and the top levels of local government, it includes Members of Parliament and Ministers. I am sure that the House will welcome this development.

It is only right and proper that all public servants, including ourselves, who have no normal negotiating machinery, should have their pay and conditions reviewed at regular intervals by an independent body. It is clearly right that the Commission, which is responsible for advising on pay questions generally, should also be responsible for seeing that pay structures and settlements in these cases accord with the best principles of incomes policy.

We would all agree that the present arrangements are unsatisfactory from a number of points of view. In the first place, for some of these groups there are no arrangements for regular review at all, and that means that ad hoc inquiries have to be set on foot on each occasion. As a result, we get a series of disconnected reports, perhaps based on different principles, and it often happens that the increase for one group is then used as an argument for increases for the others.

The provisions of the Bill will overcome these difficulties. We propose that there should be a standing arrangement whereby a special panel of the Commission, whose constitution is set out in paragraph 13 of Schedule 1, would automatically review the pay for these groups at stated intervals.

We are not laying down in the Bill a precise timetable for these reviews. But we have come to the conclusion that there would be substantial advantages in adopting a system of automatic reviews at regular intervals, and not leaving this to the discretion of Ministers or the Commission.

I propose, therefore, to ask the chairman, when appointed, to make it the practice of the panel to report fully on the pay of these groups at four-yearly intervals; with a less detailed review every two years. I would ask the chairman to set the work of the panel in motion as soon as the Commission is set up, so that we could have an initial major report by mid-1971. There would then be a mid-way review in 1973, and a full report in 1975.

The House will see that the Commission will consult with me about the timing of reports, and that I have the power to ask it to make a report. These are necessary provisions to meet unforeseen circumstances. But, as far as can be foreseen, we shall want the Commission to proceed on the regular automatic timetable I have just described, and the Bill gives me no power to veto the panel from reporting at any time if it regards it as desirable to do so.

The Government believe that reports from this panel of the Commission will command public confidence. In the case of those groups whose remuneration is within the Government's direct control, I can give an undertaking that the Government would take their decisions on the Commission's recommendations without delay. In the case of Members of Parliament, Peers and Ministers, we would put the recommendations before Parliament. The only reservation here is that if a report happened to be made near the end of a Parliament's life it would be desirable to leave action to the new Parliament. In the case of officers of local authorities, it would, of course, be for the local authorities to consider action on the recommendations.

So much for the references. Now for the powers that will be available to the Government to follow up the Commission's reports. These are set out in Clauses 10 to 18 of the Bill. They no doubt appear far-reaching. So they have to be if the Government are to be able to deal with the variety of detriments which the Commission's reports may reveal. But they have been on the Statute Book since 1948, and neither this Administration nor previous ones have used them harshly or unfairly.

There are only two points on which we are proposing an extension of the powers under the present monopolies legislation. The first will enable Ministers to stop a firm recommending resale prices if—and only if—the Commission finds the practice to be against the public interest. This flows from the report which the Monopolies Commission made on this matter, in which it recommended that powers should be taken.

The second new power relates to the disclosure by a firm of financial information over and above anything required under the Companies Acts. Here again, we are acting in the light of a recent Monopolies Commission report, and I regard it as a reserve power. We intend to work out with industry a code of good practice for disclosure over and above the legal requirements, but I believe that the code is much more likely to be adhered to if, in the last resort, there is power to require disclosure where the C.I.M. finds that this is necessary to protect the public interest.

Indeed, all these powers are available to Ministers only where the C.I.M. states in its report that a matter has an adverse effect on the public interest. The powers are available only to remedy or prevent that specific adverse effect. To allay some of the unnecessary alarm which has been aroused about the possible use of these powers, we have deliberately tightened up the wording of the previous legislation to leave no doubt that Ministers can act only to deal with what the Commission has found to be wrong, and that no power can be used unless it is directly relevant to the adverse effect on the public interest. These safeguards are spelt out in Clause 10(1).

I know that the C.B.I. is particularly concerned about the power to regulate prices set out in Clause 13(c) of the Bill. As I have said, this power has always been an essential part of our monopolies policy and, for the reasons I have given, we have no intention of abandoning it. But, with the widening of the scope of the Bill, the C.B.I. has been alarmed lest the power might be used indiscriminately to hold down prices in a whole range of situations which have nothing to do with the abuse of market power. This is certainly not our intention, and that is why we have spelt out two safeguards in the Bill.

First, in Clause 13, we have included a new condition which says, in effect, that the Government may not make a price regulation order unless the Commission has found in its report that the prices concerned represent an unreasonable use of market power; in other words, that competition cannot be relied on to protect the consumer.

Secondly, in Clause 16(2) we have provided that, where the reference to the Commission related only to a specific price increase, the power of price control can be used only for a maximum of 18 months. This means that if the C.I.M. finds a particular price increase is unjustified and against the public interest, then such a report cannot be used as a basis for permanent price control over that firm.

I want to emphasise that all these powers are there only as a last resort. The real protection to the public interest springs from the inquiry and report of the Commission, from setting out the facts and from the well-based recommendations which I am sure we shall obtain from the Commission. I do not believe that those concerned are likely to persist in conduct which the commission finds contrary to the public interest, and that once the Commission has pointed out the undesirability of certain practices they will then be ready to modify those practices. But the powers are there, and need to be there, in reserve.