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 David Howell Mr David Howell , Guildford 12:00 am, 8th April 1970

That is the theory. As the hon. Member for Orpington (Mr. Lubbock) knows, the idea is to attract £18 million worth of private research. But if, as time goes by, this is not forth-coming, then the definition which the Minister has adhered to of the research being done at full cost will become more and more eroded under pressure to provide the work for these facilities. But we do not want a debate on another Green Paper at this stage. This is my view and it lies behind the point I am putting forward.

For these reasons it seems to me that the Ministry of Technology could not be the home of the new Monopolies Commission, the C.I.M. or the new instruments of competition needed in today's Government. Where then should it lie? The Government have come forward with their answer that it should lie with the Department of Employment and Productivity. What distresses me about this kind of proposition and the way that it is brought forward—and it applies to other things, like the British Research and Development Corporation—is the absence of any sign of application of the Fulton principles adhered to and welcomed by the Prime Minister on behalf of the Government. The Fulton principle was that in organisational change and adaptation and allocation of functions to civil servants and to departments in future there would be a cardinal rule which would be: define the objectives, look at the job first, analyse the function, see what one was trying to do and then create an organisation as far as possible best suited to carry that out.

One has only to have a brief look at the sort of goulash of functions put into this Bill and take a brief glance at the rumbling squabbling between Ministers and Secretaries of State which went on behind the decision to hustle these functions away from the Board of Trade into the Department of Employment and Productivity, or under that Department, to realise that in this case Fulton was pushed out in the cold. In this case there was no analysis of objectives, no definition of functions and no clear recommendation of the right organisational structure.

I do not know whether the Civil Service Department were allowed in on the act but if so it certainly has not laid its mark on it. This is clear if one looks at some of the main functions which the Bill suggests that the C.I.M. is supposed to perform—the consumer protection functions and the guardianship against the abuse of market power. There seems to me no reason why these should belong with the D.E.P. It has no tradition in that field and I doubt whether it is going to have the skills or the staff to operate effectively in that field. I believe most strongly that my right hon. Friend is right in saying that a separate registrar is long overdue; which must not be completely subject to ministerial discretion. The problems of accountability to this House can be resolved in a wav which will make for greater accountability than we have at present with the decision to refer made behind closed doors.

Then there is the competition policy which is a much broader and tougher question and the whole question of strengthening company law and policing the operation of company law and of carrying out the activities of spotting where the Government in all its industrial policies and customer rôles will be against or discouraging the competitive process. Does this belong with the D.E.P.? It has not the tradition of handling competition policy or the vigorous pursuit of competition. If such a tradition exists anywhere I suppose it is in the old Board of Trade which is now being divested of these matters. There again I cannot see a case for these matters going to the D.E.P.

Finally, there is the other part of the mixed bag—the whole question of price stabilisation for which the C.I.M. is some-how supposed to provide. This of course is the vacuum area where there is nothing. Indeed there was nothing before although there were the words of the incomes policy. I say here, and again I may part company with some of my hon. Friends, that I do not think any political party in Britain nor any political party in continental Europe has the answer to the question which the right hon. Member for Newton (Mr. Frederick Lee) seemed to be demanding to the whole question of rapid inflation in modern society. I do not think—I am suspicious on panaceas—there is a total answer. Some of it may lie in a monetary policy, but one has looked a little askance, particularly in the last two years, as the Treasury has gone dotty on monetary policy in the belief that by operating on the money supply, wages and prices will be miraculously slowed down. One ought not to pass without commenting that during this year of so-called stringent monetary control, wages and prices have gone roaring up faster than ever. Of course, we must have a sensible monetary policy and proper monetary discipline, but the whole answer to inflation does not lie there. It does not lie in the incomes policy panacea either. It does not lie in the effort which the right hon. Lady, the right hon. Member for Belper (Mr. George Brown) and other right hon. Gentlemen opposite have been making for years to peddle the incomes policy like a religious trinket off a tray which will solve the inflation problem. This panacea approach makes no more sense.

If we are to find an answer, and if we are to look beyond the absurdity of the C.I.M. and consider other sources from which we may begin to draw an answer, it may be that the hon. Member for Tottenham had something. We must go back to the rather unfashionable question of the rate of growth of output. This is embarrassing for the Government to talk about because it is not very big—only 2 per cent. last year—and it has been pooh-poohed by those who say that output is not everything, that there is the smell of flowers of spring to be added to the rate of growth and that one must not be too much of a "growthman". But, however we define output, whether including leisure or not, this I believe is where our eyes must turn.

It is not the least surprising that, with a 2 per cent. rate of growth of output last year, there has been an enormous rate of inflation. The point is made even stronger if we consider, not merely output, but the rate of increase of industrial investment which, over the last five years, since 1964, has been 0·2 per cent., a minute amount—one-tenth of the rate of increase of industrial investment between 1951 and 1964. Against that background, it is not surprising that there has been a very rapid rate of increase in price inflation. For it is in innovation and in new products, in the input of imagination, ideas and equipment into making products that the hope for price stability lies.

No much can be done by campaigning against wage increases. Of course, I agree with my right hon. Friends that the wage situation is out of control because a general neurosis has seized the land. Everyone believes that prices will go up and therefore more wages must be grabbed. But, on the whole, the rate of wage inflation last year of 8, 9 or 10 per cent. seems to be about the norm in Western countries, the kind of wage increase which is unavoidable and even possibly desirable in Western economies. If this is a low wage economy, as it is, and if higher wages are desirable, as they are, wage inflation of 8, 9 or 10 per cent. is not too disastrous. But it is certainly disastrous if there is only a 2 per cent. increase in output and a 0·2 per cent. rate of increase in investments. It is disastrous if wage increases continue without output rising and if, therefore, prices are roaring upwards.

When an hon. Member opposite said that this country is no different from other countries, he was right about the rate of wage increase, but utterly wrong about the rate of output increase and therefore utterly wrong about the consequent rate of inflation, which is intolerably high in this country.

It is here, and not in the five years wasted energy in rampaging against wage rates, that the answer lies. It is in innovation and in the application of imagination and the motivation of management and incentive to management to make that innovation and not in the restriction of wages that the answer lies. And of course it lies in a structure of trade unions and labour relations which allows that high investment and rapid innovation to take place.

The question is: how will these things come about? Will the C.I.M help? Of course it will not. It does not even begin to do so. Will the C.I.R. help? Of course it will not. It is without teeth, a busted flush. The Government made a fatal mistake in not accepting Mr. Andrew Shonfield's recommendation in the Donovan Report. If they had done so, they might have had some success in reshaping trade unionism to cope with a high innovation economy.

Does the answer lie in the Department of Employment and Productivity? There are few of us left who have much hope in that direction. Inflation at the present rate—5 per cent. last year, with a 7 per cent. increase in food prices—is a symptom of a dying Government, rather like a dying man who loses control of his muscles one after the other. I do not believe that it is any use attacking rising prices I have said that to my hon. Friends.

The root causes of the trouble which people in this country are perfectly capable of looking to beyond the immediate question of rising prices are a low growth of output, an absurdly and desperately low rate of investment, low efficiency, a vast, bulbous and antique public sector and a public administration which neutralises enormous areas of resources within a crazily ineffective and inefficient framework. These are the things to tackle. Shuffling the Monopolies Commission from the Board of Trade to the Department of Productivity, or talking about competition without creating effective instruments of competition, or placating the right hon. Lady's hon. Friends—I suppose that they are her friends—below the Gangway by abandoning the incomes policy will not do.

I shall vote against the Bill because it symbolises all that is second rate in the present style of government.