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 Dudley Smith Mr Dudley Smith , Warwick and Leamington 12:00 am, 8th April 1970

The Secretary of State began her speech this afternoon by describing this new body as the "ally of industry". Later, she referred to it as "a virile stimulant to efficiency". She ended by calling the C.I.M. a "blueprint". I should have used a different colour in describing it, particularly after hearing the speech of the hon. Member for Tottenham (Mr. Atkinson). He said frankly that he was a total interventionist and that this was an interventionist Bill. We know the sort of intervention he was talking about. In some ways he let the cat out of the bag, but he is one of the most honest hon. Members and we understand and appreciate his point of view. I wish that there was more frankness among hon. Members on the Government benches on this subject.

I have listened to practically every speech in this debate. There have been some very good ones on both sides of the House, but nothing I have heard leads me remotely to think that the Bill is a good one or deserves to become law. As I usually do, I declare my interest. I work in industry. The company with which I am associated will probably qualify under the size criterion for treatment under this Measure. On reflection, I think that those who perhaps had a hand in preparing and presenting the Bill ought to have had some industrial experience. If they had, its provisions might well have been different.

One is left at the end of the day with a single question—why are the Government doing this? One can hardly expect the Minister of State, when he winds up the debate, to add any extra information over and above what we have heard already. This is a question I shall try to examine and to answer. There are three possible reasons for the action on the part of the Government. First, apparently they are bringing forward this legislation because they wish to strengthen the law against monopolies. That is an admirable sentiment which has been commended on both sides of the House. It is well worth doing, but I think they will fail to do it by this provision. In my view, the new Commission will not be flexible enough and it has the wrong terms of reference. If it tackles all the tasks envisaged in the Bill, its members will be grievously over-burdened in the work they have under-taken. There is no guarantee whatever that anyone connected with the C.I.M. will have had any industrial experience.

The hon. Member for Heywood and Royton (Mr. Barnett) chided my right hon. Friend the Member for Mitcham (Mr. R. Carr) on the question of staffs. He said that there was provision in the Schedules for extra staffs if they were found necessary. That could apply to any Government Department. Any Government can double the number of any institution which they happen to run. They could even double the size of Parliament if they wished and brought in the necessary legislation. If the Government are serious they should have strengthened the C.I.M. from the outset and given it a reasonable number of members for it to operate. The right hon. Lady did not think this was of any significance, for she did not mention the subject.

Apparently the Government wish to get rid of prices and incomes policy because it has been like some ugly unwanted child over the years, becoming more and more an embarrassment to the family as it has grown older. That is an admirable sentiment, but the Government will fail to do that because the Prices and Incomes Board will remain as a prices board. It will still have some dealings with the question of incomes, but no effective powers over them. In many respects, this will be the same old interfering busybody set up, despite its grandoise title and irrespective of whichever Smith, Jones, Robinson, or Brown is appointed to run it. Therefore, again I think that the Government will fail on that point.

In that situation we must emphasise more and more that incomes are being left out of the Bill. Under the previous legislation we were bitterly opposed to the implementation of a prices and incomes policy. We did not disguise the fact, but at least business and commerce were dealt with under one legislative heading. Under these proposals no powers will be retained to delay or limit wage increases. All the statutory backing for the incomes policy is removed and this will inevitably tend to encourage rather than discourage further excessive increases in income.

As my hon. Friend the Member for Guildford (Mr. David Howell) said in an admirable speech, the neurosis has already settled in because we now have severe wage inflation. He rightly stressed that one can only have wage inflation when this is properly matched by output.

The Government apparently wish to establish a vigorous-sounding expert industrial body which will guide and help commerce and promote genuine competities in the public interest. Again, this is an admirable sentiment and one which all hon. Members would like to see. But I think that the Government will fail to achieve it through this medium. Industry and commerce are likely to be obstructed rather than assisted by the proposals before the House today.

The present monopolies position is all-important in these circumstances. As my hon. and learned Friend the Member for Darwen (Mr. Fletcher-Cooke) said in his usual lucid and compelling speech, this marriage is very damaging to the Monopolies Commission. In the past, it has had a fair bill of health and I think that it has become accepted on many sides. My hon. and learned Friend does not want its reputation injured by this shotgun marriage. Nor do I.

I remember only too well the superficiality of some of the later reports of the Prices and Incomes Board when comparing them with the reports produced by the Monopolies Commission. There are great dangers in a roving commission into the efficiency of industry as a whole which is concentrated on size and largely, in some respects, ignoring monopolistic position.

The opportunities for misuse and abuse are greatly increased if one has a body such as the C.I.M. which has been detailed to us today. It is no secret that we on this side of the House want a stronger, more effective Monopolies Commission which will safeguard free enterprise and prevent market domination. There is genuine public concern—and rightly so—that monopolistic tendencies should not be allowed to get out of hand and that people should have alter- native choices in goods and services and also in firms for which to work. One of the worst considerations arising from a monopoly is that many people are sometimes thrown out of work and find it difficult to get comparable positions else-where. Therefore, I feel that the field should not be too much narrowed.

There is a good deal of agreement between hon. Members on both sides of the House. The point was made in a fine speech by my hon. Friend the Member for Rutland and Stamford (Mr. Kenneth Lewis). Nevertheless, while we must not become mesmerised by size alone as the equation of efficiency—mere size does not always mean efficiency—we must also not forget that experience has shown that, on the whole, as a nation, we have coped reasonably well with the question of monopolies and monopoly growth. The Government now seem to be pretending, by the introduction of these new and rather ill-defined powers, that monopoly in industry is on the rampage, or will shortly be so. I agree with my hon. Friend the Member for Guildford that we must be ever vigilant against monopoly and have a sharp instrument to deal with it. But there is no sign of growth on this score.

It is worth putting on record that, despite the Government's best efforts to interfere with industry, competition in this country has increased in recent years, because of a number of factors. One was the abolition of resale price maintenance. Others were more effective restrictive practice legislation and sustained and vital growth of international competitiveness. This goes both ways, because one must learn to sell abroad. Many British companies are now international whereas once they were national.

Other factors are the general erosion of tariff barriers since the end of the Kennedy Round, the increased prospect of entry to the European Economic Community, and, perhaps above all, the advancing technological change which penetrates once cosy and stagnant markets and shakes up the operators and makes then realise that overnight their manufacturing and marketing techniques can become obsolete and put them out of business. The availability of substitutes is very important in this respect.

Where the Government have made their mistake on monopolies—and this has been emphasised by a number of hon. Members today—is by decreeing that size shall be one of the two criteria for implied guilt or Ministerial interference. The manifest unfairness to our large industrial companies can be seen when one examines the size proposition more closely. I assure the Government that we shall examine it very closely and critically in Committee.

The Government have decided, quite arbitrarily and without any convincing explanation, on a size criterion of £10 million net assets. It is almost as if they said in their appropriate Cabinet Committee which considered the matter, "Let us clobber the big boys and make an example of them. Take, for example, The Times list of the 400 leading companies of the country". I cannot believe that any bigger or better yardstick was employed by the right hon. Lady and her political advisers.

This raises enormous difficulties for the larger industrial companies. Imagine that one is boss of one of these companies and one falls under the eagle scrutiny of the right hon. Lady the First Secretary. After the Bill becomes law, because one's asset exceed £10 million, she can at her whim play havoc with one's pricing policy by referring it for investigation, while one's competitor, who by act of fate, falls on the right side of the £10 million line can have a field day at one's expense.

I do not accept the premise of the right hon. Member for Newton (Mr. Frederick Lee), who, in an interesting speech, said that he felt that this would be a price rubber stamp. The C.I.M. would involve itself very considerably with prices. A competitor, given this unfair advantage, can exploit his opportunities, and he will do so with skill and judgment to full measure. Take the subsidiary company of an international organisation based out-side the United Kingdom. It is unlikely to be caught by these proposals, because I believe—and perhaps the Minister of State will confirm this—that only its local assets will be taken into account whereas the companies which it is tackling on a competitive basis—its British inter-national counterparts—will have all their assets taken into consideration.

Take the conglomerates with vastly differing sectors of business I am associated with the pharmaceutical industry. The company for which I work has a wide variety of interests and activities besides being one of the nation's leading pharmaceutical companies. The Swiss and American companies predominate in the pharmaceutical industry in Britain. I should have thought that most of them will escape this legislation, particularly as they are subsidiaries. But a company with multifarious activities which take it above the £10 million cut-off mark will be assessed and judged on all its activities while its foreign competitors escape.

If, subsequently, these unfairnesses are discovered and underlined, some of the foreign companies, if the legislation is changed, will probably depart from these shores to avoid further meddlesome statutory control. This is another important point when companies are looking to this country for expansion, either by investment or by establishing factories here.

In these days of industrial troubles and a deplorable unofficial strike record, we often hear of companies which might be tempted to uproot and transfer their production to the Continent. Can any-one imagine anything, pursued to its ultimate conclusion, more calculated to drive leading companies to consider establishing a European base than this legislation. It is price control which will inhibit a proper return on capital if it is pressed home against them. Surely, size is a thoroughly bad yardstick, when we analyse the situation, for deciding issues in cases like this. We can all think of smaller combines which can often establish a far more monopolistic position than their larger counterparts. Competition often comes from the larger concerns much more fiercely than lower down the scale.

One is forced to ask what the real purpose is of the early warning system which is now to become permanent, and of this mixing up of prices legislation with monopoly investigatory procedure. I do not accept the First Secretary's assurance that industry has not much to fear from these proposals. If the new price powers are pursued too strongly, they will destroy profit margins and undermine business confidence alarmingly, and will ultimately sabotage British investment policy.

There has been a strong backstage hint, which I find incredible, that, as the Government are now completely unable to control inflation and are worried about the staggering wage increases and the concomitant price rises, they have hit on this solution as an attempt to save the day. They will now take a tough line on prices, so that companies can tell unions pressing for wage increases that they cannot possibly respond and that if they do they will be forced into a decline. This is a complete recipe for disaster and it will encourage more industrial concern and strife than the present situation.

But, if the proposed Commission does become effective, surely it will foster an institutionalised mentality in industry, just when those members of it, whether or not we enter the Common Market, should be looking to other parts of the world and meeting the challenges of other continents. This will make industry play safe and shun competition. The Government are saying to industry, "Your sponsoring civil servant at the Board of Trade or the Department of Employment and Productivity is really your best friend. Keep on his right side and he will not discriminate against you. Let him establish your pricing policy for you."

Today, the number of man hours wasted by senior executives in industry in keeping pace with Government demands is an absolute scandal—hours which could be better spent in aiding the export drive, increasing productive efficiency, or earning profits for the future prosperity of the country. There are questionnaires to be answered, officials to be seen and reports to be compiled.

Added to this is the enormous burden of new legislation coming out week by week, which impinges on a company's every activity and needs constantly to be surveyed and conjured with. I know of one senior executive in industry—a friend of mine—who estimates that he nowadays spends two-thirds of his working lifetime coping with problems thrown up by the Government, instead of getting on with his appointment as a research director. This is particularly valuable to his company, because he is very good at understanding legislation, but it is quite wrong that he should——