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 Mr Joel Barnett Mr Joel Barnett , Heywood and Royton 12:00 am, 8th April 1970

Perhaps I might take up the points raised by the right hon. Member for Mitcham (Mr. R. Carr). He said that he was opposed to the Bill. However, I thought that his opposition was a bogus one. He told us about the radical changes that he would make in the Monopolies Commission. But he made it clear that the Opposition are in favour of a Monopolies Commission, and the first radical change which he mentioned affected the composition and staffing of the Commission. That was one of his major reasons for a radical change. However, in Schedule 1 of the Bill there is an opportunity for the Minister to vary by order the size of the Commission.

Does the right hon. Gentleman want the Bill to spell out the names of the members of the Commission? Unless there is a serious reflection on the competence of the members of the present Commission, what does the right hon. Gentleman imagine will be the composition of the new one? If this is the type of radical change in the Commission that he has in mind, it is very odd. If this is a major reason why he wants a change in the Bill and why the Opposition are opposing it, he must forgive us if we find it odd.

During the five years prior to 1965, the number of inquiries carried out by the Commission under a Tory Government were: 1960, nil; 1961, one; 1962, nil; 1963, two; and 1964, nil. If the Opposition have suddenly found a need for streamlining the Commission in some way, and this is the radical reason for opposing the Bill, I find it strange indeed.

The only really radical point made was literally shot to pieces almost before the right hon. Gentleman had uttered it. That was the point about the registrar of monopolies. This great new idea and radical reason for opposing the Bill was shot down by his hon. Friend the Member for Peterborough (Sir Harmar Nicholls) who asked, "Where will you find this Archangel Gabriel?" The hon. Gentleman is right. When I intervened and said that the right hon. Gentleman would take away from the Minister the right to initiate references, he said that he might consider allowing the Minister that power. We may be told later, but I think that was the only radical change of real substance, other than wanting the opportunity to impose tariff reductions.

Does the right hon. Gentleman want the Bill to set out and specify on which particular goods it will impose tariff reductions as a deterrent to companies in this country? If this is the Opposition's thinking on radical changes in a Monopolies Commission set-up, I reiterate that this is surely a bogus opposition.

Presumably the real argument, to which reference was made by the right hon. Gentleman, is the whole question of the amount of intervention in the market which was perhaps best summed up by the right hon. Member for Leeds, North-East (Sir K. Joseph)—this was referred to in another context by my right hon. Friend opening the debate—in the interview, if one can call it that, which appeared in the Financial Times on 16th March this year. I say "if one can call it that", because, as my right hon. Friend pointed out, most of the interview consisted of the right hon. Gentleman pointing out that he had not quite made up his mind, that he was leaving options open, and that he had not decided, on every question put to him. He said that the major way that he would deal with mergers would be by disclosure. In that context the right hon. Gentleman said: Management will then either have to improve the performance of an activity that is shown year after year to be disastrous, or sell it off, or close it down. I suppose that this sums up the philosophy of the Opposition. They will wait year after year until they see how the market decides to allow these companies to pursue their policies. Then, eventually, if it turns out that they are that bad, and if there are still some assets left for somebody to take over and deal with, then the market economy will have allowed it to happen. This is the way they would see the economy running.

This is precisely what they did and to what we were led in 1964—leaving companies year after year to be run in a way which was clearly to the detriment of the national economy.

I say that it is a bogus opposition because I do not believe that the Opposition are really opposed to the idea of a Monopolies Commission. Any Government must have the right to intervene to check abuse of market powers. This is why I give my support to that part of the Bill setting up a Monopolies Commission. But, with that right and my support, certain questions follow the setting up of such a commission.

First, the definition of what we mean by a monopoly. In a small country like ours the definition is somewhat different from what might be expected elsewhere. The world is our market, and our market is ever more becoming the world's. The danger of dominance becomes less in these circumstances. This is why, whilst we have a large number of what, by any definition we have known in the past, would be called monopolies, we do not in every case ask the Monopolies Commission to investigate, for the obvious reason that many do not require to be investigated.

Nevertheless, there are cases where the public interest is involved and so one comes to the question of what is the public interest and how it is defined. My right hon. Friend tried to give a definition. Clause 31 gives some criteria to the Commission when investigating and reporting on any matter referred to it. However, nothing is said about the criteria that the Minister would use in deciding whether the public interest is involved for the purpose of making a reference.

Taking the criteria in Clause 31(2) which may operate against the public interest, the Commission must have regard to

  1. "(a) the production, treatment and distribution of goods and the provision of services, by the most efficient and economical means…
  2. (b) the organisation of industry and services in such a way that their efficiency is progressively increased, new enterprise, and new investment is encouraged and costs are minimised;
  3. (c) the best distribution and most effective use of labour, materials and capital assets".
According to those criteria, there is hardly a company in this country which would not be operating against the public interest. Few companies are that efficient. Nevertheless, these are the criteria for the Commission when investigating and reporting. The criteria for the Minister in deciding whether to make a reference are much narrower. We accept this. But precisely how narrow and what they should be is not easy to define.

Since 1965, the number of inquiries has grown. There were two in 1965, 10 in 1966, and six in each of the years 1967, 1968 and 1969. Those were under the wider scope of the 1965 Act. Those figures indicate that only a small number of companies is likely to be referred to the Commission. That is because there is generally little abuse of monopoly powers in the narrow sense. In the wider sense of Clause 31 there is clearly abuse in terms of uneconomical use of assets. The reason there is no abuse of monopoly powers is not because of some desire on the part of companies to serve the public interest; it is to a large extent because of the deterrent effect of the powers of a Monopolies Commission. Without those powers I wonder whether companies would consider their duty to the public interest to a greater extent than their own interests.

I come now to where the power should lie in the making of a reference. This is where I come to the important point made by the right hon. Gentleman about the possibility of setting up a body outside this House with power to initiate references. It is worth considering whether this House, through a Minister, should no longer have that power. The right hon. Gentleman made it clear, initially, that what he had in mind was that a Minister should have power only to veto, not to initiate, references, although in an answer to an intervention of mine he quickly decided that maybe he would allow the Minister to have power to initiate.

I am reluctant to take power away from this House and put it into the hands of somebody else to decide when a monopoly, or possible monopoly, should be investigated. If that happened, it would mean that the House would be able to say something about it only when the report came out.

I am not necessarily happy about the idea that a reference should be made by a Minister without the House having any say in it other than being able to question the Minister at Question Time. I think that we should consider the possibility of allowing the House to query the very reference itself. I should not be prepared to consider the right hon. Gentleman's idea of removing some of the power from the House by taking away from the Minister the right to initiate a reference on his own. I think that it is worth considering whether the House should have the right to question the Minister rather more strongly merely than at Question Time about his decision to initiate a reference.