Today, the House is asked to pass the Commission for Industry and Manpower Bill. I think that its title should be, "Commission for Interference and Meddling."
The right hon. Member for Newton (Mr. Frederick Lee), who is not now in his place, asked, on prices and wages: does the Conservative Party believe in an uncontrolled free-for-all or in State intervention? He challenged us to say which we would choose. I accept that challenge, and answer that that is not the choice. There is no need to look in a crystal ball to ask what we would do. The right hon. Gentleman can look in the book and see what happened when we had a voluntary wages and prices policy. The cost of living went up at half the rate that it is now going up. Hon. Gentlemen opposite, who will be going to the country before long, would be very glad if they could show that they had a record of price increases as good as that which the Conservatives had when in office.
The right hon. Gentleman's second question was: why should the Government accept responsibility for current price increases over which they have no control? That is a rhetorical question which at first sounds interesting. No control? What about S.E.T., designed to increase prices? What about the extra cost of vehicle licences, designed to in crease the cost of distribution? What about the extra cost of money in business with the high Bank Rate? The right hon. Gentleman may be right that they have no control, but they have the responsibility for causing the excess inflation facing the country.
I want to stand back and look at the priority needs of industry in the 'seventies and consider whether the Bill will help or damage it. Britain in the 'seventies will be dominated by the Government's intention, announced by the Prime Minister in 1967, to apply to join the Common Market. I hear that negotiations will start in July. The Prime Minister is on record as saying that he intends that those negotiations should succeed. Apparently the news has not reached the Minister or the Department putting forward the Bill.
Looking at the White Paper, "Britain and the European Communities: An Economic Assessment", we find the dreary tale of the effect on food prices, consumption and the cost of living, the contribution to the Community Agricultural Fund, and the net effect on the balance of payments. Not until we come to page 26 do we find the advantages:
There would be substantial advantages for British industry from membership of this new enlarged Common Market, stemming primarily"—
I stress "primarily"—
from the opportunities for greater economies of scale".
It is clear that the White Paper is saying that the economic advantages of joining the Common Market will come with the economies of mass production.
If we have any doubt about that, turning to page 35, we read:
But successful competition with the United States in the high technology industries of the future will increasingly depend on the existence of at least some West European companies of comparable size to their United States counter-parts. At present, most of the largest companies in the United Kingdom and in the rest of western Europe are much smaller than their United States competitors.
It is clear that the first question which one is entitled to ask of the Bill is whether it will assist in company growth, in company amalgamations, and in rationalisation. The answer is clearly, "No". Indeed, far from assisting, and instead of sharpening its teeth to attack monopoly, something with which I entirely agree, it attacks size. Any company with £10 million assets, or any amalgamation involving a company with more than £5 million assets, will be caught within the ambit of the Bill. In the past, monopoly defined as market dominance was rightly held to be suspect. Now the very things which we need if we are to be a success in the Common Market, the size and the economies which can come from large-scale production, are to be suspect.
People may ask why the threat of investigation should inhibit growth and amalgamations. I say bluntly to anyone woh doubts that that will be so that he has not been in contact with a company which has been involved in investigations by the P.I.B. Days of management time are devoted to preparing and answering questions. More days are devoted to preparing answers to questions. There are discussions on company policy about the investigation and on the questions which are being put up. Management is virtually paralysed for days from doing its proper function by the need to please its political masters. Nothing could be more disastrous for the country at a time when we should be preparing ourselves for the toughest cut-throat competition that we will have known when we get free trade with Western Germany, Italy and France.
The second priority for industry now is investment, more investment, and yet more investment. We need investment in more modernisation, in more mechanisation, in computerisation, and in new plant and process. If 10 economists were gathered together and asked to define the answer to a problem, they would provide 10 different solutions, except one. On the question whether Britain needs more investment in her industry today, they would all agree.
What do we find? Where is the money to come from? We find that during the recent period of Government the rate of increase of investment in industry has been falling off. My hon. Friend the Member for Guildford (Mr. David Howell) drew attention to the fact that it has fallen from an increase of 2 per cent. per annum under the Conservatives from 1951 to 1964 to 0·2 per cent. last year. And this is the seed corn of our future prosperity.
Where will the money come from for the modernisation of, and investment in, industry? At the moment, 40 per cent. of it comes from pension funds, but once the Crossman pension proposals are on the Statute Book that figure will be slimmed down quite a bit. Where is the money to come from? In the main, it comes from the ploughing back of profits, but one hon. Gentleman opposite after another has told us this afternoon that profits are immoral, and this Commission is designed to lean heavily on industry to see that it does not make profits or, if it does, that they are as slim as possible.
The C.I.M. may make orders requiring notification of price increases by any company—not a monopoly, but any company—with assets of more than £10 million, and after a C.I.M. report the Government can take power to fix prices themselves. They can fix prices in a situation in which they will not control wages, and in a situation in which the Minister's trade union friends can demand a wage increase. Despite that, the Minister will be able to tell companies that they cannot increase prices. There will be a squeeze on profits, a squeeze on the money which should be invested in the modernisation of firms, and in the modernisation of industry.
I say again that this is the seed corn of our future prosperity, and it will mean, inevitably, that the amount of money available for reinvestment in industry will be less than it should be. Already, profits in industry are below those of our international competitors. Investment in industry is below that of our international competitors and, consequently, as a direct result, wages in this country are increasingly below those of our international competitors.
I turn, next, to the effect of the Government's proposition that we should join the Common Market. With an enlarged Market, we shall have totally free trade with Europe. The whole purpose of the Common Market is to do away with the artificial restrictions imposed by national boundaries. Under this system, what might have been a monopoly within the United Kingdom in the past will no longer be one, with the result that the definition of monopoly will be totally different from that which operates today. In those circumstances, it cannot make sense to ask the House to pass a Bill which, in a couple of years' time, will not be worth the paper on which it has been written.
The Bill is a nonsense and a waste of time when we should be concentrating on competition to keep prices down. We ask the Government to wake up to the fact that the Prime Minister has applied to join the Common Market and that the whole basis of the Bill and the thinking behind it have, therefore, been totally changed by that prospect. If the Government had already been alive to that fact, there would have been a different Bill, perhaps designed to bring British practice and law closer to those now applied in Europe.