Duration of Section 2

Orders of the Day — Counter-Inflation (Temporary Provisions) Bill – in the House of Commons at 12:00 am on 14 November 1972.

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5.28 p.m.

Photo of Mr Reginald Prentice Mr Reginald Prentice , East Ham North

I beg to move amendment No. 1, in page 1, line 5, at beginning to insert: '(1) This Act shall come into force thirty days after the date on which it is passed.(2) Her Majesty may by Order in Council at any time before the expiration of the period mentioned in subsection (1) above, substitute any longer period the Minister considers necessary so as to enable a voluntary agreement to be concluded with the Confederation of British Industry and the Trades Union Congress'.

Photo of Miss Betty Harvie Anderson Miss Betty Harvie Anderson , Renfrewshire East

With this Amendment we take the following Amendments:

No. 2, in page 1, line 7, leave out 'ninety' and insert 'thirty'.

No. 3, in page 1, line 7, leave out 'with the date on which this Act is passed' and insert 'on 6th November 1972'.

I understand that it would be for the convenience of the Committee also to discuss the following Amendments:

No. 4, in page 1, line 9, at beginning insert: 'Subject to the details of the second stage of the counter-inflation proposals having been published'. No. 5, in page 1, line 9, leave out subsection (2).

Photo of Mr Reginald Prentice Mr Reginald Prentice , East Ham North

It would be for our convenience and that of the whole Committee to discuss these five amendments together.

The purpose of the first amendment is to seek postponement of the operation of the Bill for 30 days or for a longer period if necessary so that the Government could make a further attempt at reaching voluntary agreement with the CBI and with the TUC. The other Amendments are variations on the same theme.

The Opposition are desperately anxious to avoid the deepening conflict which we see arising from the operation of the Bill in its present form in accordance with the timetable laid down in Clause 1. We are seeking a constructive alternative to that and, even at this late stage, holding out a lifeline to the Government by which they can seek a more constructive alternative to the policy on which they are embarked.

That is the attitude we have been taking to this measure ever since it was announced. On Second Reading we voted against the Government, not because the Labour Party is opposed to an agreed policy on prices and incomes—indeed, we believe that an agreed policy is essential to the wellbeing of the country—but because we hold the Government principally responsible for the degree of inflation from which the country has been suffering and because the Bill in its present form is likely to lead to a widening gulf between, on the one hand, the Government and, on the other, the Trades Union Congress and the millions of people it represents. Therefore, the Bill will make an agreed solution more difficult to achieve.

I start by making an appeal to the Minister. The Committee is entitled to a clearer statement about the way in which the Government propose to use the standstill which the Bill will achieve. There has been talk of phase 1 and phase 2. We are entitled to know the Government's plans for preparing phase 2 and how they see the relationship between phases 1 and 2. Whatever plans the Government are making are public business. Whatever information they can give to the country, should be given sooner and not later. If ever a situation demanded the open government which the Government promised, it is this situation. The Government's plans for dealing with the longer term should not leak out piecemeal over the coming weeks. The Government should share their thinking with the Committee and the country, and should start this afternoon by telling us more about the way they wish to use the time provided by Clause 1.

Ministers are constantly making two contradictory statements. On the one hand, they say that they propose to introduce a more permanent measure and that the temporary measure now in front of the Committee is to buy time to make preparations. On the other hand, they say that they want to resume talks with the CBI and the TUC. That is double talk. It is time Ministers came clean and stopped talking with the degree of humbug we have heard in the recent past.

For example, last night the Prime Minister at the Guildhall used these words: The Government is now working on proposals for the next phase to present to Parliament and we shall stand ready to discuss them, and wherever possible agree them, with the two sides of industry. This afternoon, the Leader of the House in moving the timetable Motion said—and I took a note of his words—that if agreement eludes us it will be necessary to proceed with the longer-term statutory measures that the Government have in mind. It is dishonest for Ministers to say, as the Prime Minister did last night, that they want to talk with the two sides of industry unless they are prepared to say what they are ready to do to make such a resumption of talks more likely to succeed. It is humbug to pretend that they want to talk while they are pursuing policies which make the resumption of talks less likely.

This has been the sequence of events. When the Government started talks with the CBI and the TUC they decided at the outset that they would not make the basic changes of Government policy that would clearly be necessary if the talks were to be successful. The Government went through the motions of the talks, possibly hoping that an element of extreme good luck would enter into them and enable the Government to bring something off, but they were not prepared to make the basic shifts in policy necessary to make the talks successful. Now, although the Government say that they want further talks, they still refuse to contemplate the changes of Government policy which are necessary to make those talks successful.

Photo of Mr Jock Bruce-Gardyne Mr Jock Bruce-Gardyne , South Angus

The right hon. Gentleman has frequently referred to basic changes in policy which are required. Is it his view that a Government should be prepared to make themselves answerable in their policy directions to the CBI and the TUC in priority to the House of Commons?

Photo of Mr Reginald Prentice Mr Reginald Prentice , East Ham North

My view is that the Government are responsible to the House of Commons and cannot therefore be expected to negotiate the details of legislative policies with outside bodies. I will deal with that precise point later in my remarks if the hon. Gentleman will bear with me.

If the Bill goes through unamended—

Photo of Hon. Nicholas Ridley Hon. Nicholas Ridley , Cirencester and Tewkesbury

The right hon. Gentleman's answer to my hon. Friend surprised me. He affirmed that he thought the Government should be responsible to the House of Commons for the details of legislation, whereas hitherto he advocated that the Government should be prepared to negotiate with the TUC and the CBI and to concede to them on policies which have been approved by the House of Commons and Acts which have received the Royal Assent during this Parliament. Surely there is a contradiction between the right hon. Gentleman's answer and what he said earlier?

Photo of Mr Reginald Prentice Mr Reginald Prentice , East Ham North

I am delighted to have aroused the interest of the hon. Member for Cirencester and Tewkesbury (Mr. Ridley). I intend later to develop these points. My thesis is that the Government have pursued policies which have stoked up inflation. The charge against the Government is not simply that they have failed to keep prices down, but that they have put prices up as a deliberate policy. They have therefore created a situation in which it is unrealistic for them to ask the TUC and the CBI to bale them out. The Government are responsible for the situation which they have created which has led to the difficulties of people of good will, both in the CBI and the TUC, who would have liked to have an agreement if the situation had been different. That is not to say that the Government should negotiate every policy with the CBI and the TUC, but, if they want the CBI and the TUC to co-operate in fighting inflation, the Government must first set the scene so that there is a realistic background against which they can open talks with the other parties.

Photo of Mr Arthur Lewis Mr Arthur Lewis , West Ham North

In the past the Government have negotiated with lame ducks and have then come to the House and persuaded hon. Members, including my right hon. Friend, to agree. There is nothing new in it.

Photo of Mr Reginald Prentice Mr Reginald Prentice , East Ham North

There are many inconsistencies in the Government's attitude and in the attitude of Government supporters.

The key point to be considered is that if the Government have put themselves in a position in which they cannot realistically reach agreement with the CB1 and the TUC, that situation will become worse week by week as the measures in the Bill take effect throughout the country. We are considering a period of perhaps 90 or 150 days—a period beginning I am not quite sure when, but perhaps in a couple of weeks' time. In other words, we are thinking of a period up to the end of February or the end of April or thereabouts. Let us consider the effect of the Bill during that period in terms of the point raised in the amendment, namely whether the Government will be in a better or a worse position to have constructive talks with the two sides of the industry.

First, I suggest that during this period the freeze on incomes will operate unfairly, and will be seen to operate unfairly. I do not wish to anticipate the discussions which we shall be having tomorrow on particular groups of workers, such as the agricultural workers, hospital workers and others, but I must point out that the unfair treatment of groups of workers such as those I have mentioned—and I could go through a whole list of them—is bound in the coming months to cause justifiable resentment as those workers see their situation being controlled by the freeze.

It is no use Ministers saying that one of their three main objectives in beginning the talks was to help the lower paid when the first results of their policy is to postpone a modest improvement—and many of us would say a too-modest improvement—in the position of agricultural workers and others. Nor can the Government expect to have the good will of women workers, most of whom are housewives as well, if one of the effects of the Bill is to postpone any progress towards equal pay for equal work during the period under discussion.

The unfairness of the impact of the Bill on incomes will make it much more difficult for the Government to get any kind of constructive agreement with the trade unions. I repeat a point which has been constantly made in debates of this kind that in talking about agreement with the trade unions we are talking not about agreement with a half-dozen TUC General Council representatives but about a package which will be acceptable to millions of wage earners throughout the country and to their wives who from day to day must do the shopping.

Another reason why the Bill as it stands will lead to a widening gap and less likelihood of constructive talks is its ineffectiveness on prices. I do not want to go into the subject matter of later amendments, but wish to draw attention to the impact of this aspect of Government policy on TUC thinking. I quote from the statement issued a few days ago by the TUC Economic Committee: The legislation is at its weakest or nonexistent in precisely the key areas where statutory control, as urged by the TUC, is most needed. It goes on to draw attention to the fact that basic foods such as meat, fish, fruit and vegetables will be allowed to escape control; that rent increases are to operate and are to be enforced on unwilling local authorities; and that the price of houses and land is not subject to any control. The statement continues: This lax attitude to many of the most important elements in the cost of living of workpeople and pensioners is in stark contrast to the rigorous controls to be imposed on negotiated wages and salaries. We shall develop these points on later amendments, but I wish to underline this reaction from the TUC Economic Committee, members of which were engaged in the talks with the Government, since it emphasises the point that the policy in the Bill will make it more difficulty for the Government to resume talks, even if they seriously intend to do so.

5.45 p.m.

Thirdly, I suggest that the gap between the thinking of the TUC and the general public, on the one hand, and the Government, on the other, will widen in the three or five months ahead because Government policies will still go on pushing up the cost of living in the way they have over the last 2½ years. I will not go over again the catalogue of Government policies which has increased prices in the period since June, 1970, but I wish to emphasise that many of those policies are due to continue in the coming months and many will lead to a higher cost of living next April.

If what we are discussing is a standstill period on incomes and on some prices for the period to the end of April, let us bear in mind that in April value-added tax is due to take effect; that in April another round of rent increases is due under the Housing Finance Act; and that there is to be another increase in the cost of school meals. In other words, during the very period under discussion Government policies will continue to increase the cost of living just as they have done over the last 2½ years.

In this amendment we are seeking a constructive alternative. We are arguing that there should be a further attempt by the Government to obtain an agreed solution with the CBI and TUC. We are not pretending that this is a simple topic or that any government of this country or any other country in the democratic world have yet succeeded in making a complete success of agreed policies in fighting inflation; it is an incredibly difficult topic on which none of us can be sure of having the precise answers. But we are saying that if the Government go ahead on the lines indicated in this legislation, it will make a difficult situation in Britain much more difficult than it has been or than it needs to be. We are saying that, instead, the Government should set out on a new path.

We believe that the new path to be taken by the Government should include the following points. First, the Government immediately should announce that they will cancel the big rises which are due in the coming months and which flow directly from their own decisions. I repeat that we are considering particularly VAT, rent increases under the Housing Finance Act, school meal charges, the impact of entry into the Common Market on food prices and many other matters which lie within the direct control of the Government.

Secondly, the Government should announce that they accept as a permanent feature of our legislation some degree of statutory control on key prices. There are many countries which have embarked on policies of statutory control to a greater or less extent, without necessarily coupling those controls with similar controls over incomes. This is an important area of policy which was argued in the talks by the TUC representatives. We think that they were right so to argue and we believe that the Government should accept the necessity of such a course.

Thirdly, we believe that the Government should announce—and this might require a new Finance Bill at an early date rather than that it should wait for next year's Finance Bill—cancellation of the enormous tax reliefs to well-to-do people, reliefs which are due to take effect also, in the main, next April. The Government are heading for a position next April when there will be large increases in the cost of living and a further redistribution of wealth in favour of those already best off, and this is all to take effect towards the end of stage 1 of the statutory policy on which they have embarked.

I turn to deal with the point on which I was questioned by two hon. Gentlemen opposite. The Prime Minister was tackled about some of these matters when he made his statement on 6th November, and he said this in reply to points made by my right hon. Friend the Leader of the Opposition: Many of the other matters mentioned by the right hon. Gentleman—I must frankly say this to him—are political. They are not matters which directly affect the discussions which we have been having. Every Government has the right to carry through its policy. The point that needs to be made is that none of us argues that any democratically-elected Government can negotiate with other bodies, however important, the details of legislation. But if they are to ask those other bodies to cooperate with them in important public policies, the Government have to decide on the merits of the case to pursue policies themselves which are helpful and which set the scene. That is not an argument for a corporate State. It is an argument that the Government cannot avoid responsibility for having themselves embarked on policies making it difficult for this to work—

Photo of Mr Jock Bruce-Gardyne Mr Jock Bruce-Gardyne , South Angus

I appreciate the right hon. Gentleman's difficulty. Can he explain to us, because I think that there is a conflict here, why he called just now for the suspension or abolition of the value added tax? This House approved provisions relating to VAT. If the Government are now to say that they intend to go back on that decision because that is what Mr. Vic Feather or Mr. Campbell Adamson wants, surely it is indisputable that they will be giving priority to those gentlemen over this House.

Photo of Mr Reginald Prentice Mr Reginald Prentice , East Ham North

My right hon. Friend the Member for Leeds, East (Mr. Healey) has drawn my attention to the provision in paragraph 4(1) of the Schedule: This Act, and any provision made under this Act, shall have effect notwithstanding anything in any other Act or statutory provision passed or made before this Act. The point is that this House having passed certain legislation can then amend that legislation, and the Government having decided that they need to change their policy can ask this House to change it. This Government have had a lot of practice at bringing forward measures contradicting earlier policies. They should not do it, in the words used by the hon. Member for South Angus (Mr. Bruce-Gardyne), because Mr. Vic Feather or Mr. Campbell Adamson asked them to. They should do it because the situation demands it.

With respect, it is not I who am in difficulty. It is the Prime Minister. He said: They are not matters which directly affect the discussions which we have been having."—[OFFICIAL REPORT, 6th November, 1972; Vol. 845, c. 630.] That is the most absurd statement that one could possibly make. Of course the discussions were about inflation, and of course VAT and the Housing Finance Act affect prices and, therefore, inflation. They could not possibly be kept out of the discussions.

If the Government themselves have been pursuing policies which stoke up inflation and if they now want a new approach to the problems of inflation, they have to make the first moves. They should have made them when starting the discussions. They should have announced the changes of policies and then gone to the CBI and the TUC asking for their co-operation. Then there would have been a background against which trade union leaders might reasonably have asked their members for a degree of sacrifice. Every one of us would have supported an approach of that kind. But if trade unionists are expected voluntarily to forgo wage increases that they could have obtained through negotiation with their employers, if people on average wages or lower than average wages are asked to forgo voluntarily what they could have attained, there have to be major economic and social policies which set the scene for making an appeal to them to do so.

I give one more quotation to the Committee. I take it from the article in today's Daily Mirror by Mr. Geoffrey Goodman. I hope that hon. Gentlemen opposite will recognise that the Daily Mirror has been very kind to them—perhaps too kind—throughout this controversy. Mr. Goodman wrote: In fact, ultimately, it was the Government who couldn't deliver the goods—not the TUC. It was the Government who couldn't deliver a political deal which might have made some modest inroads into the position of wealth and privilege in Britain. They couldn't deliver it because, in the end, the Tories are understandably sustained by wealth and privilege. That is the key to the argument between the two sides of the Committee. If the Government were to create a climate in which they could get the co-operation of trade unionists throughout Britain, they had to abandon some of their most basic doctrinaire objectives—

Photo of Mr John Pardoe Mr John Pardoe , North Cornwall

The right hon. Gentleman will recall that this is not the first occasion on which a Government have tried to institute a prices and incomes policy and to do a deal with the TUC. Why were his Government unable to do this deal? Was it because they were committed to the wealthy elements in society—or perhaps to other elements in society?

Photo of Mr Reginald Prentice Mr Reginald Prentice , East Ham North

There are a number of points to make. One is that the policy pursued by the Labour Government was partially effective for some time. I choose those words deliberately. It was not as effective as those who designed it wished it to be. But it was an attempt worth making and it had some effect on the rate of inflation—probably as much effect as any attempt made by almost any other Government in the free world in recent years. When the Conservative Government came to office there were, for example, the National Board for Prices and Incomes, the Consumer Council and many other instruments which could have been used effectively if the Government had had the will to continue the fight against inflation. However those instruments were abandoned by the Conservatives. The Conservative opposition to our policy on prices and incomes was totally negative and destructive. In these debates we are puting forward constantly the need for an agreed policy and suggestions of constructive alternatives which should be followed to get an agreed policy.

We suggest in this amendment that the Bill should not operate for at least 30 days while a further attempt is made to get agreement, and we suggest in outline many of the shifts of policy required if such an attempt can be expected to succeed. But it means that, if Ministers were to do something of this kind, they would have to stop some of their doctrinaire policies and start to govern in the interests of the whole nation. Perhaps that is too much to expect of a Conservative Government.

That is the real test that the Government face. If this Bill goes through in its present form and, in a month or two, we have before us a longer-term statutory policy put on the Statute Book without the agreement of the TUC and the CBI, we are afraid that the very serious situation that we face at the moment will go from bad to worse in the months ahead.

[Sir ROBERT GRANT-FERRIS in the Chair]

6.0 p.m.

Photo of Mr Geoffrey Howe Mr Geoffrey Howe , Reigate

In view of the variation in the grouping of the amendments which has meant that we are discussing all five together, it will probably be for the convenience of the Committee if I respond immediately to some of the points made by the right hon. Member for East Ham, North (Mr. Prentice).

So far as the right hon. Gentleman spoke about the subject matter of the amendments, he spoke reasonably enough, the subject matter being concerned with the timing and duration of the standstill. In that context, it is important to be clear that the Government put forward this legislation specifically as a temporary Measure, in order to provide time in which to bring forward the longer-term policy about which the right hon. Gentleman asked.

The provisions about duration in Clause 1 are no more and no less than are necessary to meet that limited purpose. The duration of Clause 2, which is the heart of the Bill, is limited in the first instance to 90 days from the date on which the Bill is passed, but it can be extended up to a total of 150 days.

It may help if, for the sake of argument, I outline what will happen if the Bill passes through all its stages by the end of the month. In that event, the 90 days will start from the end of November and, unless an order is made, will end at about the end of February. If it becomes necessary to extend that period, an Order in Council will have to be made at least 30 days previously and will have to be approved by affirmative Resolutions of both Houses. On that timetable, the extension cannot extend beyond the end of April.

These provisions relating to the 90 days and the option of a 60-day extension have not been plucked arbitrarily from the air. They follow from the circumstances which make the Bill necessary, and I suggest that they are entirely consistent with its purpose.

I should explain what the five amendments, if accepted, would do. Amendment No. 1, to which the right hon. Member for East Ham, North (Mr. Prentice) principally spoke, would insert a deliberate gap between the enactment of the Bill and the coming into force of its provisions. If that Amendment were accepted, a period of at least 30 days would elapse between enactment and coming into force. Indeed, the coming into force might be postponed indefinitely so as to enable a voluntary agreement to be concluded with the Confederation of British Industry and the Trades Union Congress. I suggest that that reflects a total disregard of the circumstances in which the Bill has had to be introduced, following the breakdown of discussions between the Government, the TUC and the CBI. It is precisely because those talks, sustained and carried on over a period of months, unfortunately ended in disagreement on 2nd November that the Government considered that it was necessary to introduce statutory measures, in particular this Bill, as a means of securing an immediate standstill.

Amendments Nos. 2 and 3, which are also being considered, are more modest. They accept the need for an initial period of standstill with statutory backing and seek in different ways, which I will not try to analyse, to shorten its length.

Amendment No. 3 does that by making the initial 90-day period start from 6th November, not from the date of enactment. To remove any possible misunderstanding, I should remind the Committee that the standstill is already in operation, as it has been since my right hon. Friend's statement. The 6th November is the base line by reference to which it operates and by reference to which the powers in Clause 2 are expressed. Therefore, Amendment No. 3, which would write 6th November into Clause 1, would not affect that aspect of the matter one way or the other. It would mean that in the computation of the 90 days we would have to subtract the period occupied by the Bill's Parliamentary progress. So, in different ways, Amendments Nos. 2 and 3 would have the effect of seriously limiting the time available for the preparation of the second stage of the policy.

Photo of Sir Sydney Chapman Sir Sydney Chapman , Birmingham Handsworth

Does my right hon. and learned Friend agree that if Amendment No. 1 is accepted, and thus the Act does not come into force until 30 days after enactment, and Amendment No. 2 is accepted so that it can last initially for only 30 days, and Amendment No. 3 is accepted, which says that the period shall begin from 6th November, 1972, then, taken together, these must be considered wrecking Amendments because Amendment No. 3 makes nonsense of Amendments Nos. 1 and 2? It is saying that we must wait 30 days and the 30 days will be up.

Photo of Mr Geoffrey Howe Mr Geoffrey Howe , Reigate

I accept the way in which my hon. Friend puts the matter. If Amendments Nos. 1, 2 and 3 were taken together they would have the effect of virtually eliminating the standstill period altogether.

Photo of Mr Reginald Prentice Mr Reginald Prentice , East Ham North

I should be happy if the right hon. and learned Gentleman would make a judicious selection. He does not have to take them all. He may take whichever he prefers so that he can get back to having talks with the TUC and the CBI.

Photo of Mr Geoffrey Howe Mr Geoffrey Howe , Reigate

I will come back to that point. I thank the right hon. Gentleman for having proffered these Amendments as alternatives. I shall explain why I cannot accept any of the proffered alternatives.

Amendments Nos. 2 and 3 would go far towards making an extension of the 90 days inevitable if we were to accept them.

Amendment No. 4 is directly related to the second stage and seeks to require that details are published before an extension can be sought.

Amendment No. 5 would remove the power to prolong the standstill.

It is in that context that I turn to the crucial question of the prospects for a resumption of the tripartite talks on which the right hon. Gentleman spent some time. The circumstances of the breakdown in the talks, in the Government's view, are not and were not of the kind which would preclude their resumption at a future date. The Prime Minister, towards the end of the talks, put forward far-reaching and imaginative proposals, designed to help the lower paid and to restrain inflation.

They included a commitment to 5 per cent, growth for two years, a threshold provision, to some extent overlooked, which would largely have safeguarded employment incomes against a rise in the cost of living; action on pensions and rents, which helps those who most need it; direct action on nationalised industry prices; control on dividends; and a system of tripartite control, if necessary with statutory back-up power, of pay and prices at levels which would help to reduce the rate of inflation and benefit the lower paid. I suggest that is a package which would bear any impartial scrutiny. But the trade unions' representatives at the talks felt unable to accept this for continuing discussions. As my hon. Friends have pointed out, they seemed to want the Government to reverse policies—indeed, the right hon. Gentleman has argued in the same sense—in industrial relations, rents, and, indeed conditions of Community membership, if not the principle of Community membership. All those provisions, which were being required at that stage in the talks, related to matters specifically approved by Parliament only a short time before.

Photo of Mr Denis Healey Mr Denis Healey , Leeds East

The right hon. and learned Gentleman will be aware that the Schedule specifically provides that this legislation shall override any earlier legislation passed, including the European Communities Act and the Housing Finance Act, should this be relevant, as it certainly would be, if, according to the timetable, the other 60 days were asked for, carrying the Bill's effect well beyond the beginning of April next year when the second series of rent increases under the Housing Finance Act is required. We cannot understand why the Government should have wrecked the talks with the TUC by refusing to consider the matter, only to introduce a Bill which overrides all the legislation which at that time the Government refused to discuss.

Photo of Mr Geoffrey Howe Mr Geoffrey Howe , Reigate

The right hon. Gentleman has got it wrong. The Government did not wreck and accepts no responsibility for wrecking the talks with the TUC. The talks were conducted on all sides in an attempt to arrive at agreement. It is not helpful to go beyond what I have said, save that the right hon. Gentleman points out that the Bill provides for setting aside those matters of contention to which I have referred. The Bill does no such thing. Paragraph 4 of the Schedule contains the power, by Order, to make changes of that kind; but it does not follow that the Government would have been right at that point in the talks to reverse those legislative provisions which had been specifically and rightly approved by the House only a short time before.

The right hon. Member for East Ham, North suggested that the talks broke down, quoting Mr. Geoffrey Goodman, because the Government could not deliver—I quote him without having his exact words before me—and had created policies deliberately designed to put up prices. That is an astonishing and unacceptable argument to have advanced by the Oppo- sition when we recall that at the moment when the Labour Government introduced legislation designed to secure a standstill, so far were they from being able to deliver conditions which would restrain the cost of living that they were simultaneously introducing large increases in taxes across the board—a penny on a pint of beer, fourpence on a gallon of petrol and a 10 per cent, increase in purchase tax. It hardly lies in the right hon. Gentleman's mouth to advance that kind of argument in the context in which he did. I suggest that the Prime Minister was rightly and understandably unable to accept the pre-conditions then being attached to the talks, and I am confident that the great majority of the people believe that at that point in time he was right.

Photo of Mr Denis Healey Mr Denis Healey , Leeds East

This is a very imporant matter. The right hon. Gentleman suggested that paragraph 4 of the Schedule provided simply that previous Acts and provisions should be overridden by Order. It does, but it also states: This Act, and any provision made under this Act, shall have effect notwithstanding anything in any other Act or statutory provision passed or made before this Act". In other words, in so far as the Housing Finance Act or the European Communities Act lead to price increases which are inconsistent with the provisions of the Bill, those price increases would not take place. If that is not what it means, what does it mean?

Photo of Mr Geoffrey Howe Mr Geoffrey Howe , Reigate

What it means is that, in so far as the Bill has that kind of effect, it has the effect set out in the first part of paragraph 4 of the Schedule. The right hon. Gentleman must not impute too much to the measure itself. The relevant provisions begin to operate under Clause 2(5): The appropriate Minister may apply this section—". The scope and impact of the legislation is defined by orders that will be made under those provisions. That is broadly the pattern, and that is why I made the qualification when the right hon. Gentleman first put the point to me.

Photo of Mr Denis Healey Mr Denis Healey , Leeds East

I just want to be absolutely clear that the Government are now giving themselves the power to override any sections of Acts regarding rents or of the European Communities Act which could be contrary to their desire to reduce inflation. These are precisely the powers the Government refused to discuss when they had the discussions with the TUC. Whatever the Government may say, the TUC made it quite clear in the statement published after the breakdown of the talks that it regarded that as the issue on which the talks broke down, and it said so.

Photo of Mr Geoffrey Howe Mr Geoffrey Howe , Reigate

The right hon. Gentleman is confusing two quite different arguments. There is the question of what in fact, as a matter of law, the Bill renders possible or does not render possible. There is the separate question of policy as to what was or was not under negotiation at the time of the talks until 2nd November, and what is or is not under negotiation in the future. To say that because the Bill contains a certain provision as a matter of law, therefore the Government are making a dramatic change of posture in relation to policy, is to misrepresent what is going on. [HON. MEMBERS: "Oh."] Indeed it is. The legal effect of the provisions in paragraph 4 of the schedule is to make it clear that no earlier Act would preclude the making of an order on the giving of the appropriate notice. The way in which, and the extent to which, those powers should be used as a matter of policy is a separate matter. I have outlined the position that we reached in the talks as they ended on 2nd November, and I shall come in a moment to how the matter should be approached in the future.

The need for provisions of the length laid down, with the extension that is possible, is the reason why it would be wrong deliberately to defer the starting date of the standstill by reference to the possibility of resuming tripartite talks, as the amendment suggests. It is the Government's intention that the standstill should be as short as practicable, but the whole object of the exercise would be frustrated if the powers to enforce the policy were postponed for a moment longer than was strictly necessary. The Bill must be enacted, and its powers must be made available with all deliberate speed. That is precisely why, with almost breakneck speed, the House accepted a time-table Motion earlier this afternoon. To delay the commencement of the Bill's coming into force would prejudice the prospect of working out fair and longer- term proposals, which the right hon. Gentleman recognises to be necessary. It it our intention and our confident hope that the standstill will be observed on a voluntary basis.

A great deal of co-operation has been forthcoming from all those concerned—the CBI and the retail consortium of the trade associations covering the manufacture and distribution of food products. On the very day that the standstill was announced, representatives of the retail consortium assured my Department that they would urge their members to cooperate fully with the policy, in the recognition that such action would best serve the objective to which the retail trade attaches high importance, as we all do, namely, moderating the rate of inflation. Obviously the Committee recognises that the retailers are in the front line, in a sense. The standstill involves the acceptance by them of substantial obligations and involves them in meeting inquiries from members of the public, and the overwhelming majority of them have responded magnificently.

Many manufacturers have stated publicly their understanding of the objective of the policy, and they, too, are cooperating. A number have withdrawn price increases that were in the pipeline.

6.15 p.m.

It remains essential that the standstill policy should be put at the earliest possible date within the appropriate statutory framework that the Bill provides. The powers must be brought in as soon as possible, and they must be available for a reasonable period if they are to achieve their objective. First, there must be time for the important long-term questions to be resolved. Second, the standstill must be clearly established to assure those concerned that we are finally breaking away from the spiral of continued inflation.

The right hon. Member for East Ham, North (Mr. Prentice) asked about the prospect of talks now and in the future. Talks are important, certainly. The Prime Minister made that clear last night. The position was outlined in the White Paper, and it remains as it was there set out. The Government concluded that it was necessary, in the absence of agreement, to bring in statutory measures, and that, because the main legislation would take time, there would be a standstill for an interim period. One has then the first statement necessary in the absence of agreement.

The Prime Minister repeated last night the Government's continued readiness to embark on talks, so there is no question of our being urged to bridge any gulf. We are anxious that no gulfs should be wider than they are. There is no question of our needing a lifeline, but the prospect of talks must be looked to, in conjunction with the need for a firmly established statutory foundation for the present standstill policy. The Bill is the first essential stage.

The sponsors of Amendment No. 1 cannot expect us to postpone action to an indefinite date in the hope of a resumption of talks spread over several months. Beyond the initial 90 days it is not possible to lay down a detailed time-table That is why we have the provision for an extension should that prove necessary. I assure the Committee that the provisions of the Bill will be continued no longer than is needed to present and secure acceptance of more enduring arrangements.

I was asked to say something about the nature of the next stage of the policy. The Government will give Parliament and the public their proposals for the second stage as soon as possible. These proposals are now being urgently developed. The standstill and the Bill are an essential foundation for that further stage, giving time to consult and work out the longer-term measures. I assure the Committee that progress will be as speedy as possible.

I appreciate the objective of Amendment No. 4, which seeks to bind the Government to make public their proposals before the initial period is extended. It would not be right for the Government to accept amendments which might possibly put the longer-term policy at risk by requiring it to be completed in undue haste. It would be wrong for our hands to be tied in that way.

It is not possible for me, at this stage of our proceedings on the Bill, to say more about the second stage or the detailed machinery that it might involve. However, I remind the Committee—this is by now well known—that the objectives will be those which are common to all parties in the tripartite talks. They are not far from the objectives to which the right hon. Gentleman referred earlier—the maintenance of a high rate of growth, an improvement in real incomes, moderation in the rate of inflation, and a relative improvement in the position of the lower-paid and the pensioners.

Photo of Mr Tam Dalyell Mr Tam Dalyell , West Lothian

On a purely factual question, is the Minister aware that the very efficient manager of a Department of Social Security office did not know until 48 hours ago whether the pensioner's lump sum included payments to widows or was confined to old-age pensioners? Was any consideration given to lump-sum payments to widows, many of whom feel themselves to be in just as considerable need as old-age pensioners are?

Photo of Mr Geoffrey Howe Mr Geoffrey Howe , Reigate

I note the hon. Member's point. I canot say what is the state of knowledge of the person of whom he is speaking, but I shall look at the matter. To sum up, the Government greatly regret the breakdown in the tripartite talks. We believe, and still believe, as the Prime Minister made clear last night, that voluntary agreement is superior in every way to statutory control.

If, therefore, the other parties wish the talks to be reopened the door remains open. We are prepared to recommence whenever it appears fruitful to do so. We cannot delay the Bill or our preparations for the future in the simple hope that there can be a resumption of talks, as Amendment No. 1 urges us to do. That would be totally inconsistent with our responsibilities and it would be unjustified in the light of what has been said so far.

If the Government are to govern, as they have been doing in the interests of the nation, it is imperative that, having failed so far to reach a voluntary understanding on controlling the rate of inflation, we must now take prompt—I emphasise "prompt"—action to achieve the agreed objectives and to secure the growth which is in everyone's interests. It is on that basis that I invite the Committee to reject the amendments.

Photo of Mr Alex Lyon Mr Alex Lyon , City of York

We were not in the least surprised to hear the Minister reject the amendments. Since he came to the House in 1970 the Minister has been in charge of a number of controversial Bills and it seems almost a perpetual motion that he should be replying to the debate. As far as I can recollect he has not yet acceded to any Opposition amendment.

Photo of Mr Alex Lyon Mr Alex Lyon , City of York

Indeed, or from the Government side. If he persists in his present style he will soon have the reputation of Mr. Never Know How. It would be unfortunate if that kind of reaction was likely to greet considered proposals from the trade union movement on the future of any incomes policy arising from our present impasse. We recognise that this Bill is a delaying action until the Government can produce proposals for a long-term incomes policy.

Equally, we all recognise that an incomes policy cannot be acceptable, or accepted, unless it is widely accepted by the trade union movement as a whole—not just the negotiators in Downing Street and not just the TUC. The entire trade union movement must feel that it is basically fair. Whether an incomes policy is called a statutory policy, a voluntary policy, or a voluntary policy with some kind of legislative back-up, it will not be successful unless the broad range of trade unionists is prepared to accept it. It is in that light, therefore, that we should discuss Amendment No. 1.

Is it possible for any particular policy to be acceptable if the Government's general policies antagonise trade unionists instead of reconciling them to any kind of moderate agreement? That is why the Opposition believe that the Government should remember their general legislative programme since 1970, when wanting to do a deal with trade unionists which involves the unions in a measure of sacrifice.

There is no constitutional impropriety in saying that if there is to be a voluntary agreement it should be considered in the context of the whole legislation which has been enacted since June, 1970—legislation which has antagonised so many trade unionists, and has contributed to the overall increase in the cost of living which they and their wives have to meet.

The Minister did not appear to appreciate that point in relation to rents. which will present a major problem to any housewife whose husband faces a wage freeze. If there is to be a further increase next April under the fair rents scheme, this is clearly one of the issues which she and her trade unionist husband will be forced to consider and which will dictate whether she and he can give a measure of acceptance to the Government's proposals.

From my reading of paragraph 4 of the schedule I had thought that the Government were at least prepared to concede that it might be necessary either to postpone or simply to cancel any increase of rent rendered necessary under the fair rents scheme. However, the Minister rejected that idea, and almost suggested that there was no disposition in the Government to reduce the level of rents or at least to sustain them at their present level. Faced with that kind of attitude, we cannot even begin to achieve an incomes policy. There must be a measure of give and take if a coherent policy is to emerge from our discussions.

I turn now to another aspect of the policy which arises on the amendment. The key issue on which the Downing Street talks broke down was the question whether it was right that there should be a voluntary policy in respect of incomes but a legislative framework in respect of prices. The TUC, for reasons which will be well known to the Committee, said that it was in no sense illogical that there should be a statutory prices policy and a voluntary incomes policy. The Government were unable to accept that view, claiming that it was impossible in a modern State to adopt a prices policy which could be effective. Yet, following the breakdown of talks, they have introduced a Bill one aspect of which relates to the control of prices for a period of up to 180 days. Thus, they are proposing to do, albeit for a limited period, what they had previously claimed was impossible in a modern State.

In my submission, that indicates the nature of the confrontation which took place at Downing Street. There was not effective preparation for give and take on both sides, but the Prime Minister went to the talks with the intention of putting a prepared package before the TUC, and, if the latter were unable to accept it, there could be no kind of agreement. The TUC, realising the rigid attitude which it had to face, decided that it could not take part in any meaningful negotiations. I agree.

I was rather worried that the Prime Minister in his speech at the Guildhall last night was still presenting that attitude. He said that the Government were prepared to hold discussions with the TUC at any time, and that they would be bringing forward proposals which would shortly be unveiled for the trade unions to consider. In short, the trade unions would then be required to react to proposals which had been concocted in Whitehall. No one can hope to achieve a voluntary incomes policy on that basis. It must be worked upon by all interested parties—the CBI, the TUC and the Government—and will emerge only when there is a real disposition to negotiate on that basis. Unless the Government are prepared to enter discussions with the approach which I have outlined, they may as well abandon the search for a voluntary incomes policy. Such a policy cannot be dictated from on high. It must emerge slowly from beneath. Therefore, nothing will be lost by the short delay implied by the Amendment if we begin seriously to seek for some kind of acceptance from the trade union movement of a moderate long-term incomes policy, which will not be an instrument of economic management but an attempt to regulate the way in which we share out the national cake. That is the only type of incomes policy that I believe is likely to work, or, indeed, the only kind to which I could agree.

6.30 p.m.

Photo of Mr Julian Ridsdale Mr Julian Ridsdale , Harwich

I welcome the Government's policy change, because at long last we have something which will act on prices and which will in particular help pensioners and the lower wage earners, of whom I have many in my constituency.

The weakness of the Opposition case, in which they ask for a voluntary policy, is that they—especially through their spokesman, the right hon. Member for East Ham, North (Mr. Prentice)—have not been able to answer to my satisfaction why, when they were in government, they themselves were not able to achieve a voluntary policy. The right hon. Gentleman knows perfectly well the difficulties of reaching agreement with the Trades Union Congress. I believe that agreement with the trade union leaders will only be reached when they realise that the country as a whole is demanding such a voluntary agreement.

I know the comings and goings taking place in the committee, and how the right hon. Member for East Ham, North, throws across to the Government talks about VAT and putting up the cost of living, and other political jibes. People are becoming sick and tired of this kind of talk. They want representatives who speak for the nation and not necessarily for the party. I am certain that when we have such a spirit in this House we shall achieve voluntary agreement, and not before.

It is pure hypocrisy for hon. Members on both sides of the Committee to think that we shall reach a voluntary agreement unless we have public support for it. In the short time since the policy we are discussing was introduced, I have found that there is public support for it. As public support grows for this policy, I have a feeling that some of the political issues made by hon. Gentlemen opposite will be made in a much quieter tone than at present. They will realise that the feeling in the country is, "We want to stop this inflation. We want to stop this continual rise in prices."

I look upon the Opposition amendments as wrecking amendments, and I am certain that the pensioners and lower paid workers in my constituency would also consider them as such. In supporting a prices and incomes policy, I have publicly stated that ultimately—

Photo of Mr Arthur Lewis Mr Arthur Lewis , West Ham North

Did the hon. Gentleman support the Labour Government?

Photo of Mr Julian Ridsdale Mr Julian Ridsdale , Harwich

—we may have to have a statutory policy. Nevertheless, I realise that everyone wants a voluntary policy if it is possible to achieve it. That is why I supported the voluntary prices and incomes policy in which the Government did their best to influence prices. Hundreds of millions of pounds have been spent in keeping prices down in the nationalised industries.

Photo of Mr Reginald Prentice Mr Reginald Prentice , East Ham North

Will the hon. Gentleman explain whether he voted for value added tax? Did he vote for the Housing Finance Act? Does not he agree that these measures have increased the very inflation which he says he is so anxious to remove?

Photo of Mr Julian Ridsdale Mr Julian Ridsdale , Harwich

I take up the right hon. Gentleman's comment about value added tax. I voted for VAT because I support going into the European Economic Community, and value added tax is part and parcel of European policy. I know that unless the Government are given the economic opportunities consequent upon entry into the Community, we shall not achieve the growth we require.

If we had not had the opportunity, as we shall soon have, of going into the European Economic Community, I fear that we should have had a severe restriction of money supply, a deflationary policy and not the growth that the Government now aim for. A policy of growth must go hand in hand with the prices and incomes policy, which the Opposition are opposing. That is hypocrisy, and it is why I am pleased to oppose—

Photo of Mr Harold Walker Mr Harold Walker , Doncaster

The hon. Gentleman keeps accusing the Opposition of hypocrisy. Why did he and his colleagues attack me and the Labour Government and vote against us consistently when we introduced similar legislation? Month after month I stood at the Dispatch Box, repeatedly assailed by the hon. Gentleman for doing what he is defending the Government for doing, and he has the nerve and impudence to accuse the Opposition of hypocrisy.

Photo of Mr Julian Ridsdale Mr Julian Ridsdale , Harwich

If the hon. Gentleman would refer to some of the speeches at that time he would not find a speech by the Member for Harwich opposing a prices and incomes policy. Such a policy is in the interests of the lower paid, the pensioner and growth.

I am sorry that in opposing me the Opposition have harked back to previous debates. We are now quieter in our industrial relations than we have been in the past two years—or I hope we are. At least we are moving into a new phase, and I believe that in doing so the Government will have the support of the country. When they do, we shall be nearer to achieving a voluntary policy—not a statutory policy—with the trade unions. It is for that reason that I regard these as wrecking amendments.

Photo of Mr John Pardoe Mr John Pardoe , North Cornwall

I find myself in difficulty about the whole group of amendments. Some of them merit support; but the amendment moved by the right hon. Member for East Ham, North (Mr. Prentice) does not. He admitted as much when at the beginning of his speech he said that the purpose of the amendments was to buy time for the search for voluntary agreement to be continued. That sounds sweetly reasonable. Is it not true that a voluntary agreement is better than a statutory policy? This seemingly obvious truth has been echoed backwards and forwards.

On Second Reading, the Chancellor of the Exchequer said: The statutory control of pay and prices is, in the minds of everyone in this House, a far less satisfactory way of managing our affairs than would have been a voluntary agreement."—[OFFICIAL REPORT, 8th November, 1972; Vol. 845, c. 1007.] Not every hon. Member would agree. I do not believe that a voluntary agreement is desirable, possible, or should be worked for, or is inherently better than a statutory policy, or is sweetly reasonable. That is dangerous nonsense, and I have always believed it to be so.

A voluntary agreement, had it emerged from the Downing Street talks, would have been a mere charade. A voluntary agreement among the CBI, TUC and any Government, Labour, Conservative or Liberal, would always be a charade. The idea that the talks should start again, as the right hon. Gentleman has suggested and as the amendment would allow, is an appalling prospect.

Attempts to get a voluntary prices and incomes policy are futile because of the conflicting interests of the parties to the agreement. Those interests are so strongly conflicting as to make any agreement completely useless.

The first duty of a trade union leader—and I speak as a paid-up member of the Association of Scientific, Technical and Managerial Staffs—is to obtain for his members the highest wages that his members' bargaining position will allow him to obtain. A voluntary agreement would be an agreement by a trade union leader to do less than that. Imagine a trade union leader saying to his members, I could have got you £10 a week or more, but, out of a combination of altruism, patriotism and my own desire to be thought to be a good bloke by the readers of the Sunday Express, I decided that you should make do with £5". What would his members say to that? What would I say to Clive Jenkins? I would throw him out.

We cannot ask trade union leaders to run with the hare and hunt with the hounds. The same applies to management, directors and the CBI. The CBI is not a very representative body of anything, but, in so far as it is representative, it represents management in the capitalist system, and the job of management in the capitalist system, whether we like it or not—and some of us do not like it—is to maximise profits. To ask management to do less than that is to put them in danger of schizophrenia.

Governments should not try to stop trade union leaders or management doing their jobs; they should seek to ensure that the power of their bargaining position is finite and not omnipotent. In other words, the Government should say to trade union leaders, "You may get what you can get, but if you get more than we believe the economy can stand, or more than the printing presses can keep up with, it will be taken back in higher taxes".

I do not wish to foreshadow arguments which I hope to deploy later in favour of a fairly large number of amendments tabled by myself and my right hon. and hon. Friends about fiscal penalties for breaking some of the provisions in the Act. Governments have always used taxes as a measure against inflation, but they have never used them in a selective manner. What we need is a selective tax on inflation and on those who cause it.

Photo of Mr Jock Bruce-Gardyne Mr Jock Bruce-Gardyne , South Angus

Has the hon. Gentleman noticed the recent report of the OECD, which shows a direct and precise correlation between tax increases and inflation in every country in Western Europe?

Photo of Mr John Pardoe Mr John Pardoe , North Cornwall

I agree. There is a direct relationship between general increases in the total level of taxation and inflation. There is also a direct relationship between certain taxes and inflation, such as purchase tax and value added tax at 10 per cent. VAT at 7½ per cent, would be unlikely to have any such effect. The hon. Gentleman should defend his Government's VAT policy rather better than merely saying that he supports it because we need it to get into the Common Market. We need it because it is a very good tax in itself, whether we go into the Common Market or not.

The choice has never been between a voluntary policy and a statutory policy. It was always plain that a voluntary policy without sanctions would be no policy at all. Therefore, the choice surely is, and always has been, between the statutory policy called by another name and one called by its proper name. In case anyone should think that this is a matter of dreaming up new policies to fit the situation, I would point out that it is not. Belief in a statutory prices and incomes policy is nothing new for Liberals; we have favoured such a policy ever since we advocated a planned devaluation by means of the "crawling peg" in 1966. I see it today as a sine qua non in the floating of the pound, and I hope that the pound will continue to float for a very long time. We voted for this principle under a Labour Government, and we shall vote for it again under a Conservative Government, if necessary.

A great deal has been bandied backwards and forwards about hypocrisy, and the fact that some hon. Members opposite said one thing when the Labour Party was in power and say another thing now. I propose to do precisely the same. I well remember an amendment—discused on 25th June, 1968—to the Labour Government's Prices and Incomes Bill. It sought to wreck the Bill. The Conservative Party, allied with the left wing of the Labour Party, destroyed that policy. We voted against the wrecking amendment, and I was accused in my constituency by the present Secretary of State for Trade and Industry of voting in that way because I was afraid of a general election and its consequences. After that vote, my right hon. Friend the Leader of the Liberal Party said: Positive Government intervention on pay and productivity backed by realistic sanctions is the proper price to pay for full employment. That is a view which I hold totally to this day.

I believe that the choice is between a statutory policy and no policy at all and that if we have no policy we shall drift to disaster. I am an advocate of a floating pound, but we must recognise that if we float the pound and allow internal inflation the consequences will be totally disastrous in terms of overseas trade. I spent four days last week—and I make no apology for this—at the Kwangchow Trade Fair in China renegotiating contracts which I had made in sterling in the spring in RMB, the people's currency, because the Chinese do not even want to split on the British currency. It is a salutary experience for any hon. Member to realise that the pound is held in such low regard as that.

6.45 p.m.

Those of us who have supported a floating pound must support a tough and statutory prices and incomes policy to ensure that we control inflation at home. Disaster is almost already here, because hourly wage rates are 17 per cent. higher than they were a year ago. If they are left to climb freely without statutory control, they will surely by about January reach about 20 per cent. higher than they were a year ago. That would inevitably lead to price inflation of at least 14 per cent. a year rather than the present 8 per cent. That would mean that a person retiring at 60 years of age with a pension of £1,000 a year would find that his pension was worth £60 in purchasing power on his 80th birthday. That is what it will do to savings and to pensioners, and it will do something to the political system of this country.

Inflation always has political consequences. It is not true to say that it destroys civilisations, but it does destroy democracy. There is always at a time of raging inflation a cry for strong men and strong measures. I do not think that the Left should be too optimistic that it will be its strong men and strong measures which will be called for.

In the name of social justice for the lower paid, in particular, and in the vital cause of stemming the tide of inflation, a statutory policy is absolutely essential. For that reason, I shall oppose the amendment, which still seems to be saying, "If only we could achieve a voluntary prices and incomes policy". That would be the most disastrous thing we could achieve.

Photo of Mr Christopher Tugendhat Mr Christopher Tugendhat , Cities of London and Westminster

Before I entered the House I earned my living as a professional journalist. One of the most ego-boosting things which has happened to me since I came here is to realise the extent to which hon. Members on both sides sometimes depend upon the Press. I listened with particular interest to the speech of the hon. Member for Cornwall, North (Mr. Pardoe). It would have been charitable if, in addition to presenting the consistency of the Liberal Party, he had paid some tribute to the Economist, which provided most of the figures and examples which he produced. However, journalists often find that their work goes unattributed.

Photo of Mr John Pardoe Mr John Pardoe , North Cornwall

I have already had an argument with the deputy editor of the Economist about the origin of these ideas. They stem from a pamphlet produced by Professor Michael Fogarty, who is the economics adviser to the Liberal Party, which was published before the first article appeared in the Economist on this scheme.

Photo of Mr Christopher Tugendhat Mr Christopher Tugendhat , Cities of London and Westminster

If the hon. Gentleman had listened to what I said, he would know that I was not talking about ideas but about figures and examples. He will find that what I say about figures and examples is true. I should not dream of entering into an argument about the origin of Liberal ideas.

Although I do not intend to delay the Committee long, I will put before it a small batch of facts and figures which are relevant to this subject. One of the critical elements underlying any debate upon the Bill is one's interpretation of why the Downing Street talks broke down, not only in the immediate short term but in the background to them. Obviously it is a complex problem and this is not the time or the place to go into a full discussion of all the facts surrounding those events. However, it is important to understand the nature of the pay proposals which the Government were offering.

The pay proposals of £2 and £2·60 have come in for a great deal of attack from some Opposition Members and some members of trade unions. The adequacy or inadequacy of the proposals is a source of debate. Therefore, it might be interesting to compare what the Government were offering in the Downing Street negotiations with what the trade unions have been accepting during 1972.

The source of my figures is the Library. I am extremely grateful for the research that it managed to do in a short time. I asked the Library to examine all the settlements that have been made between January and November, 1972, which have been settled on a pounds/pence basis rather than on a percentage basis. When one sees what the trade unions have been accepting during 1972, one realises that what the Government were offering was as attractive a package as the Government claimed it to be.

The figures which I shall give are very simple. They relate only to minimum basic wage rates on minimum earnings for adult male workers on a pounds/pence basis. Between January and November there were 48 settlements of £2 or under involving 10,000 or more workers. The total number of workers involved in those settlements was 3,975,000. The Committee will agree that that is a substantial body of people. Those settlements of £2 or under were apparently accepted contentedly.

I now come to the category of people who accepted settlements of £2 to £2·60. One finds in this category that there were 17 settlements involving 10,000 workers or more and the total number of workers involved was 2,504,000. Finally, there were 11 settlements between January and November at £2·60 or more, involving 2,234,000 people. Let us look at the figures. A substantial proportion of the settlements that took place during that period were for £2 or less, the majority of men involved—that is, 6,500,000 workers, or thereabouts if my rather sketchy arithmetic is right—accepted settlements of less than £2·60.

Photo of Mr John Grant Mr John Grant , Islington East

Does the hon. Gentleman accept that the magical figure of £2 was not a Government offer but a maximum? There would have had to be negotiations about that figure in many industries. There was no guarantee that everyone would get £2 or £2·60. Will the hon. Gentleman note that the TUC and the whole of Fleet Street—he may like to comment on this as a former Fleet Street journalist, as I am myself—was led to believe that £2 was negotiable up to the breakdown of the talks? That clearly was not an accident, it was design. That was crucial in the final talks.

Photo of Mr Christopher Tugendhat Mr Christopher Tugendhat , Cities of London and Westminster

The circumstances surrounding the Downing Street talks, as I think we both agree, are complex. I was not proposing to talk about whether the Government were offering something which was negotiable. I was endeavouring to put the Government's proposals, to use as neutral a term as I can find, in the context of what the trade union movement has been accepting. Regardless of the points which the hon. Gentleman makes, it seems that the £2 and the £2·60 were, on the whole, well in line with what the trade union movement, through the settlements which it has made during the year, has regarded as acceptable. The figures which I have produced put up a case which it would be difficult for trade unions who have made such agreements to dispute.

Photo of Mr Tom Cox Mr Tom Cox , Wandsworth Central

I listened with great interest to the figures which the hon. Gentleman has given. Does he agree that they make a mockery of the repeated attacks which the trade union movement has suffered in recent months in the House of Commons from the Prime Minister and the Chancellor of the Exchequer, who blame all our inflationary problems on the wage demands of trade union workers? The hon. Gentleman has sabotaged that argument completely.

Photo of Mr Christopher Tugendhat Mr Christopher Tugendhat , Cities of London and Westminster

I am flattered to be told that I am able to sabotage the arguments of the Prime Minister, but I am sure that is not the case. My impression of the Prime Minister's argument and my impression of inflation is that the wage push has certainly been an important element. But I should not dream of arguing that wages were the sole cause of inflation. I have never done so. I think that the hon. Gentleman will find that the Government have never held to that view. Wages are an important element in inflation. Given the extent to which wages enter into costs of production, it has always seemed to me self-evident, but the figures which I have given show what the trade union movement has been accepting—which is only part of the wider package which the Prime Minister was offering.

Photo of Mr Arthur Lewis Mr Arthur Lewis , West Ham North

The figures which the hon. Gentleman has produced show that the trade unions have been more than reasonable if they are correlated with the fact that during the same period the Government agreed to a £2,800 a year increase, which represented a 39 per cent. increase and 58 per cent. increase in two years, to none other than the chairman of the Horserace Betting Levy Board who is not so essential to the wealth of the country as the miners, bricklayers, carpenters and others.

7.0 p.m.

Photo of Mr Christopher Tugendhat Mr Christopher Tugendhat , Cities of London and Westminster

I agree that the Chairman of the Horserace Betting Levy Board is not as important to the country as the miners and the various other groups the hon. Gentleman mentioned. However, the person the hon. Gentleman has specified is only one, whereas there are—happily—a great many miners. I am sure that the hon. Gentleman would not suggest that the salary of the Chairman of the Horserace Betting Levy Board had the same impact on the national economy as a wage settlement for the miners.

Photo of Mr Arthur Lewis Mr Arthur Lewis , West Ham North

I am sorry that the hon. Gentleman challenges me. I go further. What about the Prime Minister's £20,000 a year plus his house, his car, his rent, and his rates? What about all the members of the Government and all the Members of Parliament? Now that we are going into Europe, tax-free expenses of £40 a day are to be paid to those going to the Prime Minister's European Parliament, to those who are lucky enough to get on to the band-wagon. Tax-free expenses of £25 a day will be paid to those who go to Strasbourg. Is not that inflationary? Tell the miners, the engineers, the old-age pensioners and the farmworkers that this Government and this Prime Minister who told them yesterday that they cannot get their measly few pounds will pay £40 a day tax-free expenses to all those Europeans that go to the European Parliament.

Photo of Mr Christopher Tugendhat Mr Christopher Tugendhat , Cities of London and Westminster

Fortunately, I am never at a loss for words. If ever I were, I should hope that the hon. Gentleman would be kind enough to intervene in my speech, because that would be a great way to keep it going. However, an intervention by the hon. Gentleman has the disadvantage that it is difficult to remember the point that one intended to make next.

We had been dealing with the kinds of settlement which the trade union movement has accepted during the course of this year. One hon. Member opposite asked whether the Government's package did not represent a reduction in real living standards during the course of the year. As journalists are being quoted rather a lot today, I draw attention to an interesting article in The Times last week by Mr. Peter Jay. Hon. Members will agree that Mr. Peter Jay, like his right hon. and distinguished father, is not known as one of the most enthusiastic supporters of the present Government and, indeed, has from time to time been critical of it.

Mr. Peter Jay produced some interesting figures in his column last week suggesting that, in view of the various considerations the Government are putting forward, the real disposable incomes of people would be rising at 5 per cent. to 6 per cent. on an annual basis during the coming year. I quote from memory as I had not intended to refer to this article, but I think I am right. That is not quite as rapid as has been the case recently, but it is an impressive rate. As Mr. Peter Jay demonstrated, the principal benefit of this would have been felt, had the Government's package been accepted by the trade unions, by the lower-paid workers.

Therefore, taking into account not only the settlements the trade union movement has accepted this year—I should be interested to hear how hon. Members react to those when they have had time to consider the figures—but also the wider implications of the Government's package, it can be said that it was an extremely attractive proposal in many ways and it is greatly to be hoped that the trade union movement will return to talks as soon as possible. This is an element which should be taken into account when the whole context of the Government's arguments are discussed on this Clause.

Photo of Mr Jim Sillars Mr Jim Sillars , South Ayrshire

One of my regrets is that the former Solicitor-General, the present Minister for Trade and Consumer Affairs, probably will not be in charge for the Government on a later clause. I am interested to hear the Government's reaction to the effect of that clause upon industrial relations.

The Government published a Code of Practice which was a central feature of the Industrial Relations Act. Paragraph 71, in the important section on collective bargaining, states: Freely conducted collective bargaining is a joint activity which establishes a framework for relations between management and employees. It requires from both sides a reasonable and constructive approach in negotiation, with due regard to the general interests of the community, and a determination to abide by agreements which have been made. I do not understand how the Government reconcile the Industrial Relations Code of Practice, in particular that portion which deals with collective bargaining, with the situation in which they place the farming industry. If the Government were to accept the amendment, they would have time to reflect upon the intensive damage they will do to industrial relations in the farming industry.

During the debate on the time-table Motion my hon. Friend the Member for West Lothian (Mr. Dalyell) read an astonishing statement from an official of the Scottish National Farmers' Union to the effect that throughout the negotiations for the recent wage settlement the public interest had been taken into account in response to Government pressures and policy statements. Thanks to this measure, the management side of the farming industry cannot honour the agreement it has made voluntarily in accordance with paragraph 71 of the Industrial Relations Code of Practice.

The Minister for Trade and Consumer Affairs laid great emphasis on the need to get an emergency measure through Parliament in the first place. The right hon. and learned Gentleman did not substantiate his case. In January of this year the Prime Minister, speaking in a major debate on unemployment and dealing with the problem of inflation and prices and incomes policy, said this in response to a cry from hon. Members on this side that he had joined the Tribune group in op- posing the Labour Government's prices and incomes policy: Yes, of course; that is why we have not pursued a compulsory policy. Later on he went on to explain that the Government were combating inflation: Six months ago, prices were rising at an annual rate of 11 per cent. Over the last six months, the rate of price inflation has been brought down to 5¾ per cent. For the benefit of those of us who could not understand arithmetic the Prime Minister gave this explanation— That is half as fast as it was a year ago…"— Later he said— We have succeeded in bringing this about withiout using the machinery of statutory controls which the Labour Government used—statutory controls which stored up so much trouble for the future, as hon. Gentlemen opposite below the Gangway said at the time." —[OFFICIAL REPORT, 24th January, 1972; Vol. 829, c. 1034–37.] That was a Tory Prime Minister endorsing the Tribune group. That was the position in January this year. When he went to the Tory Party Conference in Blackpool in October he did not at that time say anything greatly different from that.

The Government have not, on this amendment, said that the Prime Minister's forecast of January has suddenly gone all wrong, or at which point it went wrong, or why the trend of which they were so very proud has suddenly turned into such a disastrous condition that they should go back on a fundamental part of their manifesto and introduce statutory controls of wages and not so much of prices.

Photo of Mr John Pardoe Mr John Pardoe , North Cornwall

They were blown off course.

Photo of Mr Jim Sillars Mr Jim Sillars , South Ayrshire

That remark takes me back to my Navy days. I think probably the Government have been in a force 8 gale and that the winds are getting worse for them.

The amendment is a generous one, and I am not too happy about its being generous to this Government, but it gives them maximum flexibility to try again for a voluntary policy.

I am not going now to develop my argument against the philosophy of the spokesman for the Liberal Party, the hon.

Member for Cornwall, North (Mr. Pardoe), for probably later on we can come to that, but I disagree with him, in that we head for disaster if, in a capitalist society, we go for a statutory incomes policy of the strong, tough kind which he advocated.

Photo of Mr Jim Sillars Mr Jim Sillars , South Ayrshire

If the hon. Member raises the question of prices I would say that there is a difference between the costs involved in prices and costs of labour. Prices are about inanimate entities, but wages affect a man's personality and his attitude to society, as well as his livelihood. If in a capitalist society we go for a statutory wages policy we inevitably involve ourselves in a totalitarian regime leading to totalitarian practices. That is the only way in which we could implement a statutory incomes policy.

Millions of people like me think that it is immoral to interfere with one's basic right to sell one's labour, because, in the end, we have nothing but our labour to sell to make a living.

Photo of Mr John Pardoe Mr John Pardoe , North Cornwall

While the hon. Member has every right to sell his labour in the market place for as much as he can get, does he think that he is right to combine with others to create a monopoly to do so?

Photo of Mr Jim Sillars Mr Jim Sillars , South Ayrshire

That is a question we shall come to in greater detail during this Committee. It is one which raises fundamental questions which have to be answered, but one of the things the hon. Member does not seem to understand about the trade unions, and workers' assessments of themselves, is that we hold very dear our right to sell our labour. There are limiting factors, because there are subjective judgments which we make in relation to others in society. I am a fireman by trade. I have gone through the process of negotiating wage increases, and there has always been a subjective limitation on the price we put on our labour; at any given time we have been affected by what other people think is fair or unfair in relation to the wages paid to firemen. So while theoretically I retain the right to sell my labour for as much as I can, there are important subjective factors which tend to limit us and which tend to fit us into the jigsaw of civilised society.

Photo of Mr Thomas Torney Mr Thomas Torney , Bradford South

Would my hon. Friend not agree that the word "monopoly" is misused here? Would he not agree that there is a very real difference between monopoly in capitalism as we know it in this country, with mergers and monopolies of markets to gain fantastic profits for a very few individuals, and the practice of working people of joining together in trade unions to try to get a decent standard of living, decent wages, decent hours and decent fringe benefits? I would not call that monopoly, but if anyone does call it monopoly I agree with it.

Photo of Mr Jim Sillars Mr Jim Sillars , South Ayrshire

I do not call that monopoly, either, in the sense that the spokesman for the Liberal Party used the word. However, we seem to be on a different tack altogether at the moment. None the less, that is a very important question which will be raised, perhaps, when we come to phase 2, and when we get the White Paper and the fuller measures we can discuss this important and philosophic question posed for Government and Parliament. We are discussing only an amendment to a Bill for temporary provisions just now.

[Mr. E. L. MALLALIEU in the Chair]

7.15 p.m.

As I was trying to say before I was sidetracked, if the Government were to accept this amendment they would have time to think again and could start renegotiating with the TUC.

A lot of nonsense has been talked about the offence to parliamentary government by the Government's negotiating with the TUC and the CBI. We are told Parliament is thus left out of this equation. As I understand it, the Government, when making up their mind when drafting legislation, negotiate with outside bodies; even when legislation is going through the pipeline, they continue to negotiate with outside bodies. In the reorganisation of the National Health Service in Scotland the trade union movement was consulted and negotiated with, and the doctors were consulted, before the legislation was published. Last night we debated here the subject of Northern Ireland; the Government will negotiate in detail with a number of bodies which have no direct representation here. So it is a lot of nonsense to say that negotiating with the TUC and the CBI somehow or other offends the instinct of parliamentarians. In the final analysis it is the House of Commons which will determine whether the results of the negotiations are acceptable or unacceptable.

If the Government were to start to renegotiate, the prerequisite would be recognition on their part of the responsibility they have for the present difficult situation we face. During Committee on the Industrial Relations Bill we were often referred to speeches made by Labour Party spokesmen, by my right hon. Friend the Member for Blackburn (Mrs. Castle) and my right hon. Friend the Member for Huyton (Mr. Harold Wilson). It would be very good for the Government to reread their immediate pre-election speeches, and also the speeches and policies set out in the House immediately after 1970.

The Prime Minister, in the flush of victory, and understandably so, at his Tory Party Conference in 1970, after he had won the election, said, after mentioning what the Chancellor of the Exchequer was going to do: On top of this will come an announcement of the details of our policy in connection with the redistribution of public expenditure—our policy on housing, on education, on social security and on relief of poverty. We shall announce our proposals on defence. Later he described these as of "major consequences". This is the point I am trying to make to the Government—that they were of major consequence and that their effects on the attitude of many people are still working through today. The Government know better than anyone that just prior to the General Election the argument they used, and it was in their manifesto, was that wages were chasing up prices. They told people that they, the Government, would concentrate on prices, but they made very little mention of wages.

I dug out the election address of a man whose career I follow with great interest, the hon. Member for Glasgow, Cathcart (Mr. Edward Taylor) who is well known in the Conservative Party in Scotland. In his election address he mentioned prices control and he said: Labour promised control of prices. What has happened? Ask any housewife or pensioner. The biggest single cost is the £3,000 million extra tax burden plus the effects of devaluation. What can be done? By cutting taxes, by stopping waste and extravagance (abolishing the Land Commission and other spendthrift bodies) and by encouraging real competition we can control Mr. Rising Price. No mention there whatever of the supposed rôle of wage increases in an inflationary situation.

It was only after the election was won that the Government shifted to saying that wages were an extremely important factor. The Government had stoked people's expectations that the return of a Conservative Government meant control of prices—and with not so much emphasis on wages. The mental attitude which has given rise to many of our problems was created by pre-election propaganda and immediate post-election propaganda.

Photo of Mr Raymond Carter Mr Raymond Carter , Birmingham, Northfield

Is my hon. Friend aware that the hon. Member for Glasgow, Carthcart (Mr. Edward Taylor) was constantly inspired by the then Leader of the Opposition? Is my hon. Friend also aware that on 5th June, 1970 in Birmingham at the height of the Election campaign the present Prime Minister said: When four years ago the compulsory wage freeze was first introduced I said, 'We believe that compulsion is wrong and we want to move along the path of voluntary action, of consultation, of encouragement for the individual'.

Photo of Mr Jim Sillars Mr Jim Sillars , South Ayrshire

The quotation which my hon. Friend has made fits the strategy of the Conservative Party at the General Election, which was to concentrate on voluntary price restraint and not to mention wages or, if one did mention them, to say that wages were chasing prices. The quotation is helpful to my speech.

We have had unfair Budgets, divisive social policies and insecurity created by rising unemployment. All these factors have emerged from Government policy in the last two and a half years. The Government should ask themselves whether they are partly responsible—I will be generous and not say entirely responsible—for the situation they are now trying to tackle, and, if it means making new political decisions in the light of changed political circumstances, they should alter their current policies. This applies particularly to rents. Unless the Government remove the rent increases which have been imposed under the Housing Finance Act, especially in Scotland, they will get nowhere with a prices and incomes policy. The downfall of the Labour Government's prices and incomes policy can be traced to the Labour Government forgetting all about rents until it was too late. If political circumstances change, political decisions have to be changed.

We are trying to give the Government an opportunity to look again before launching themselves into a permanent prices and incomes policy. However comprehensive, just and sensible the second-phase long-term legislation may be, peoples' attitudes to it will be conditioned by their experience of the Counter-Inflation (Temporary Provisions) Act, as it will be. If the Bill we are considering tonight is grossly unfair, and if people have to pay higher rents while their wages are pegged, the Government will be faced with mounting hostility to the long-term programme. We are trying to see that the Government do not commit suicide in the next two or three months. We are saying that as parliamentarians, although, as a Labour politician, I do not mind. What is important is not whether Labour gets power or the Conservatives keep power; it is that ordinary people will be hurt by this legislation. If life can be made better for the ordinary working-class family by persuading the Government not to commit suicide, it is my duty, as a Socialist politician, to say so.

I ask the Government not to commit suicide but to make life a little better for the people we represent. The next round of talks may be more fruitful, especially if the Government recant their previous policies.

Photo of Mr Patrick McNair-Wilson Mr Patrick McNair-Wilson , New Forest

The last occasion on which I had the pleasure of following the hon. Member for South Ayrshire (Mr. Sillars) was after his maiden speech. I enjoyed his speech tonight just as much as I enjoyed his maiden speech. He is, however, picking up a habit—which, unfortunately, many of us in this building have—of having rather better memories than judgment. In considering the Bill we must be objective. We are talking about one more attempt to solve a problem which has baffled governments since the war, certainly the Labour Government and, to an extent, this Government.

We may ask ourselves why the problem is so hard to solve and whether there is not something wrong with the whole economic and monetary system of the world which makes human beings slaves of money rather than making money the slave of human beings. Be that as it may, we can play only with the cards that we are dealt, and we are faced tonight yet again with trying to find a solution which will basically increase prosperity without destroying the economy.

When Mr. Harold Macmillan was Prime Minister he spoke of trying to establish a plateau and from that plateau going to even greater prosperity. We have had brakes, accelerators, freezes and so on, but no Government have been able to say truthfully that they have fulfilled all their pledges and promises because, sooner or later, they have had to grapple with this problem which seems to be endemic and so far has defied solution.

The amendment would merely postpone taking action, and we cannot afford to make that postponement. The tragedy of inflation is that not only does it eat away prosperity at home but it also has disastrous effects on the esteem in which the country is held throughout the world. Whether we like it or not, the £ sterling has had a terrible few weeks, and the health of the £ will not be improved by inspiring further doubt in people's minds. We have to take some hard measures quickly, and to accept the amendment would merely perpetuate that doubt which would rapidly be reflected on the foreign exchanges. From that point of view we must make an early decision.

It may be asked why we have to have the Bill at all. It is sterile ground to go back on what was written on whose tablet of stone because no one can put his hand on his heart and say that he has met his electoral promises. The root fact is that the structure and management of our society are today totally different. There are essentially two order systems, the one order system which is "work or starve" and the other which is "work or go to Siberia". Ever since I have been an adult I have been searching for the middle ground which provides both the opportunity and the framework in which to operate. The two order systems have been overtaken. Capitalism has been overtaken by events, and we reject Communism. We have therefore had to try to find another way of controlling our society. I do not find it strange that the Government should rely on the law to do that. Indeed, the Government's whole ethos since they came to power has been on the basis of an agreement between two adult individuals being binding in law. That was the credo behind the Industrial Relations Act and it has been behind much other Government thinking. I do not, therefore, regard the move towards law to regulate the economy of the country as anything to cry about. Indeed, I regard it as a natural way of managing what is now a highly sophisticated and complicated society. But this legislation in itself has only a fairly short life.

For this reason I believe that the Opposition amendments would be dangerous. We have the problem of doubt and uncertainty and also the problem of making the legislation something more than the very temporary attempt that it should be.

7.30 p.m.

The hon. Member for South Ayrshire used the words "rough justice". I do not entirely disagree with him since I believe that, in a way, this is rough justice—but it is quick and it is necessary. However, it must not be allowed to continue indefinitely, for a number of obvious reasons. For example, the effect it will have on the nationalised industries will be traumatic. Already our steel industry, whose prices have for some years been interfered with, is producing the cheapest steel in the world and yet is making a loss on almost every ton it sells. Therefore, the effect on industry in terms of the economy—and also the effect of the Community rules which will have to be adhered to when we join the EEC—make the measure essentially a temporary one. We look forward later to the perhaps longer-term solutions to be produced by the Government to take account of the effect on nationalised industries.

The Bill faces reality. It faces the fact that the order system on which societies have been built no longer exists. We must try hopefully to find an agreement which takes account of everybody's views. Governments, of course, have a duty to govern. They do not have to apologise for their policies. We go to the country and put forward our policies, and if people do not like them they can do the other thing—and frequently they do. But, when elected, we have the responsibility to discharge our duties as a government.

This Government is faced with a difficult, perhaps even critical, situation. It is not the first Government to have been faced with exactly the same situation. After all, when the right hon. Member for Birmingham, Stechford (Mr. Roy Jenkins) was Chancellor of the Exchequer he had to introduce an extremely deflationary Budget. Let us remember that deflation is as unattractive as inflation. Therefore, I believe that the sooner we get started with this legislation and the sooner it becomes operative the better. The people of this country have asked for action and they deserve to get it.

Photo of Mr Tam Dalyell Mr Tam Dalyell , West Lothian

The hon. Member for New Forest (Mr. Patrick McNair-Wilson) raised a taboo subject, a subject which has been in the minds of many of us; namely, whether we should be having this discussion at all were it not for the position of the pound in the money markets of the world. Since the hon. Gentleman raised this subject, perhaps I could make a few comments—though I appreciate that one must be careful, discreet and guarded when talking of these matters.

Many of us are extremely interested in the work which has been given to the Committee on which all the countries of the world are represented under the chairmanship of the Executive Director of the Bank of England, Jeremy Morse. It is not irrelevant to say that, perhaps in the long term, the results of the Morse Committee will determine whether we go on having this kind of discussion every two or five years, or whatever the period might be.

Since this question has been raised I should like to ask the Chief Secretary what representations the Government have made to the Morse Committee. It is also relevant to ask whether that committee which is considering international finance is looking at the kind of problems which have given rise to this Bill. I put that in the form of a question and leave it there.

Many hon. Members wish to speak in this debate, and I wish to take up the topic on which I intervened in the speech of the Minister for Trade and Consumer Affairs. I refer to the situation as it affects widows. The right hon. and learned Gentleman on several occasions referred to action in respect of pensioners. I am asked by widows, during my weekend surgeries, "Action is being taken to give £10 to old-age pensioners. Cannot widows also be given some protection?" We all have our views on whether the sum provided for old-age pensioners is adequate, wise or just, and some of us would like to see the pensioner protected far more.

I should like to ask the Government whether the situation of those who draw widows' pensions was also considered. Should they not also be protected? If not, why not? I do not wish to carp too much, but I was a little shocked when I asked this question to find that no clear answer was given. Perhaps this is an indication of how hastily the Bill has been spatchcocked together. It is an emergency operation. This is the kind of question which the Government Front Bench should be able to answer fairly easily. I will give way now if the Chief Secretary wishes to intervene.

Photo of Mr Patrick Jenkin Mr Patrick Jenkin , Wanstead and Woodford

Since the hon. Gentleman's question dealt with national insurance, obviously my right hon. and learned Friend felt some hesitation in trying to answer it off the cuff. I will deal with the subject of the widows when I wind up.

Photo of Mr Tam Dalyell Mr Tam Dalyell , West Lothian

I did not mean to be tortuous about the matter, and I look forward to hearing in the wind-up a clear exposition on whether widows will get some kind of lump sum in December, and, if not, the reasoning behind it. If old-age pensioners deserve to be protected, then so do other categories, of whom the widows are the largest. I will leave the matter there.

Photo of Mr John Biffen Mr John Biffen , Oswestry

I hope that it will not be thought to be a joke in bad taste if I indicate that I shall support the Government in resisting the amendment because, on the whole, I regard its terms as thoroughly bad. As the Minister of Trade and Consumer Affairs said, the amendment would make a substantial nonsense of the Bill, though I must admit that that would not be my major objection. My major objection is that these amendments seek to enthrone the desirability of Government consultation with the TUC and CBI as some major factor in setting the course of economic and social policy. I wish for a few moments to dwell on that consideration.

There is a widespread assumption that the Conservative Parliamentary Party was waiting anxiously for a successful conclusion to the Chequers-Downing Street talks, resulting in the Prime Minister bringing, in the words of the poet, the good news from Aix-la-Chapelle that some agreement had been secured. It was no doubt felt that the Prime Minister would tell the House, "I have an agreement authorised by Mr. Victor Feather and Mr. Campbell Adamson which will inaugurate a new era in the economic management of our affairs." I have no doubt that that news, just like the scrap of paper brought back by Neville Chamberlain, would have been greeted with widespread cheers and demonstrations in the House. Nonetheless, there would have existed tremendous unease on these benches, and it is right and proper that that unease should be given some expression this evening on the amendment, which is the most appropriate occasion for it to be expressed.

First, the reality of these talks lies in the fact that they are in the form of a discussion between the Government and the TUC. To all intents and purposes, in the power relationships which have to be weighed in these circumstances the CBI does not add up to a row of beans. It can be discarded. The Retail Consortium has charmingly allowed itself to be formed by a former Conservative Chief Whip, but even that body is not able to affect the outcome of these decisions one wit, compared with the weight and significance of the TUC. Therefore the first question that we have to ask ourselves is whether the six members of the TUC General Council who happen to be on the NEDC can answer for the General Council. The second question is whether the General Council can answer on behalf of its members.

The right hon. Member for East Ham, North (Mr. Prentice) spoke about the trade unionists' leaders asking for sacrifices. I wonder what conditions could have been negotiated at Chequers, at Downing Street or anywhere else which would have resulted in Mr. Clive Jenkins asking for sacrifices from his members. We live in a world of total unreality if we assume that there exists in the TUC a disposition or an ability to make the kind of deal which we are sometimes led to assume that it possesses. I do not believe that it is there. But I do not think that anyone can gainsay the ability of the Government to deliver their side of the bargain.

The reason why I have reservations about a return to the tripartite approach to the management of our economy is that, to quote Aneurin Bevan I do not have to look into the crystal; I can read the book. I can read how far they got in the Downing Street declaration of 26th September. That tells me what was in prospect.

I have to ask my right hon. and hon. Friends whether this is the kind of policy that they were elected to promote. Do they think that they were eleced to promote a policy which had to bear the imprimatur of Jack Jones and Hugh Scanlon? The concessions—I regard them as concessions—that were made in this direction are both substantial and, for me, unacceptable. Out of consideration of time and the fact that other hon. Members wish to take part in the debate, and out of consideration of the fact that this topic, if not eternal, may well be with us for some time and that probably I shall have future occasions when I can return to them, I name only three reservations.

First, let us consider what was proposed for the nationalised industries. Even my hon. Friend the Member for New Forest (Mr. Patrick McNair-Wilson), who was most generous if not authoritarian in his support for the Government's proposals, conceded that there was much to be objected to in the way in which we were proposing to continue with substantially increasing the operating deficits of the nationalised industries. I did not think that one was likely to see the day when the nationalised industries were subject to more direct political involvement and control from a Conservative Government that had ever happened under their predecessors. Yet though we may be silent in our witness to it, we know in our hearts that that is so. The finances and day-to-day control of the nationalised industries have been subject to more intervention from the Government over the past two years than at any time during the period in office of the preceding Government. That development, unacceptable to me, to Conservatives up and down the country, and certainly to many Conservatives in this House, was intensified by the decisions of 26th September.

I was given only the consolation prize, as it were, of discovering in the process that we had managed to get ourselves well and truly across our obligations under the European Communities Act and. being a person who at least travels hopefully, if he never arrives, I was glad to accept this small advantage which at least enabled the House to assert a further limit to its legislative competence than we had hitherto suspected remained with us. However, that was a modest consolation for the general proposition that as a result of the Downing Street declaration we were committed to further imprudent techniques in financing the nationalised industries.

Secondly, the whole principle of the Government, never mind what agencies they expect to undertake the unpleasant sub-contracting business, was to get themselves involved in having to continue to lay down the right pattern of rates of pay for various jobs in the economy. I have never been so attracted and fascinated by the skills of politicians in this House and of those who advise them in Whitehall as to believe that that was a subject to be conditioned by so much central direction and control. But it was evident for all to see that the measures elaborated in the Downing Street declaration of 26th September foresaw a situation of increasing Government intervention to determine the pattern of incomes in this country.

7.45 p.m.

One wondered whether 1966, 1967 and 1968 had all been in vain. Did we have to unsay and unthink everything that we had uttered throughout those years? Had the experience meant nothing to us?

I move from that second point of reservation to the third. Not merely was I unattracted by the prospect of Government intervention to determine incomes; it seemed to me that there was at least a serious question mark over the whole idea of concentrating wage increases at the lower end of the scale. I learned at least some of my politics at the feet of the late Iain Macleod. I can remember his arguing that, given a policy which had as its content substantial social objectives, it was far better to pursue those through the tax and the fiscal system than by trying to interfere with collective bargaining and wage determination. Therefore I believe that the traditional approach to the relief of poverty is still best directed through the fiscal and the tax system rather than through attempts to rig wage rates artificially.

I ask myself what will be the consequences for the National Coal Board, for British Railways or for other employers who largely for solcial reasons keep on ther payrolls large numbers of people whom, on strict economic analyses and criteria, they might be able to do without. If they are obliged artificially to raise their wage rates, many of those people will be rendered redundant. The experience of minimum wage rates in America leads one to the same conclusion. There was a question mark over the philosophy of deliberately rigging the wage rates pattern pre-eminently to the advantage of the lower-paid.

Therefore, armed with those reservations, I cannot say that I was heartbroken to learn that the tripartite talks had not come to a final conclusion. For them to have come to a conclusion there would have had to be even further concessions from the Government in directions which were inherently un-Conservative and contradictory to the polices on which this party was elected to office. Deriving from those overall observations, therefore, I am delighted that my right hon. and learned Friend resisted these amendments. I commend his resistance to the Committee.

Photo of Mr Sydney Bidwell Mr Sydney Bidwell , Southall

The Committee is always interested in a contribution from the hon. Member for Oswestry (Mr. Biffen). However, his intervention today had much more to do with nineteenth century Liberal-capitalist philosophy than with our present day and age. What is more, having listened to the hon. Gentleman, I am still at a loss to know why he can support the Government's rejection of this amendment so wholeheartedly. It does not necessarily mean that when we vote on the question as a whole the hon. Gentleman is committed. Of course, he and many of his hon. Friends may be persuaded that we must bring the Government back from the perilous path they are treading by following the sound advice contained in our amendments.

I agree with the hon. Gentleman's observation about strength. In terms of economic strength we must consider the power of the TUC. The hon. Gentleman detects a witness within the TUC structure and admits that there is much that is strong in it. But the handful of people on the General Council of the TUC have to persuade the membership, including unions like the ASTMS, that what they have tentatively agreed in principle at Downing Street should be accepted by the membership as a whole. I counsel the hon. Gentleman to bear in mind that within the TUC, unlike trade union movements in other countries, we have a special entity in the advanced political understanding of its leadership. There is also a profound commitment to the socialist idea throughout the membership and, indeed, some of those unions which are not affiliated to the Labour Party.

I suggest to the hon. Member for Oswestry, and to the hon. Member for Cornwall, North (Mr. Pardoe) who spoke from the Liberal Benches, that there is a climate of understanding, which would necessarily go forth under a Labour rather than a Conservative Government, that attends our scenery in this modern day and age.

The right hon. and learned Gentleman, who is quaintly called the Minister for Trade and Consumer Affairs—we got to know him better as the Solicitor-General—with his juggernaut enterprise, the Industrial Relations Act, has queered the pitch in the climate of feeling that the trade union movement must have towards the Government of the day—a Government who did not heed the necessary warnings and argument in this House, let alone from the trade union movement as a whole, which was consistently saying right across the board, left, middle and right, that this was not the way to do it. It was not just a handful of people on the left fringes of the trade union movement who were showing total opposition to these measures, which were not on, if the Government expected to grapple with the major question of inflation.

Listening to some hon. Members one would think that this was a joyous day for the Government. I refer particularly to the contributions by the hon. Members for the New Forest (Mr. Patrick McNair-Wilson) and Harwich (Mr. Ridsdale). One would think that this was a policy. It is not a policy. It is an impasse to which our amendments correctly call attention. It is a sad day for the Government, and a sad day for the Government is a sad day for the nation. This is acceptance of defeat. [Interruption.] I must qualify that. I am thinking in terms of the custodians of our national fortunes.

Whatever Government we have, we must address our minds to the perilous situation which we face. We may not end up with a current of opinion that rebels against this situation by re-electing a Labour Government. We might run into a rightward fascist development in such a state of economic turmoil. The proposals, virtually for a 180-day standstill or freeze, could have the total effect—perhaps the hon. Member for Oswestry would be inclined to agree with me here—of gumming up the whole process of the expected growth rate in the economy. The situation is so grave that the whole system might collapse. So, any Government must concern themselves not simply with this emergency measure which will deal unfair blows to many people, but with what comes next. Shall we have to continue in future with harsher, legalistic measures which might make the Industrial Relations Act look like a picnic, or shall we be able to draw back from the brink of that abyss and think intelligently in terms of carrying out the national discussion that needs to take place?

That discussion was beginning in Downing Street. I do not take the view of some of my hon. Friends in the movement—I am not suggesting that any of them are present, because I have not sounded them on this question—that trade union leaders should not talk in Downing Street. The question is: what they should talk about? Of course, that opens up certain criticisms about the agenda being pressed for by trade union leaders and what the Prime Minister was or was not prepared to discuss. The Prime Minister has said on several occasions that certain items were off the agenda because they were political. I believe that any and everything should have been on the agenda when considering an entity such as the trade union movement and trying to get it to consider seriously the impasse in which the Government have got themselves.

Here we come to the realities of climate. We have had two years of a Conservative Government that seemed wedded to the idea that there had to be a redistribution of wealth in favour of the rich. That philosophy attended their two Budgets. This is where climate comes in. I reject the central theme. The hon. Member for Cornwall, North does not think that climate has a rôle in these affairs. I believe that it has.

Photo of Mr Tom Cox Mr Tom Cox , Wandsworth Central

My hon. Friend's point about climate is being shown in this House today. Inner London and London Members generally, of whom my hon. Friend is one, are being lobbied by teachers who are already protesting at the early stages of this policy. This is the kind of attitude which is already conditioning people's minds. It is vital that the Government should take of my hon. Friend's point.

Photo of Mr Sydney Bidwell Mr Sydney Bidwell , Southall

I sympathise with that point of view. It underlines the gravity of the situation facing the Government and the rest of the country. Already I and other hon. Members are getting telephone calls from trade union officials drawing attention to wage increases negotiated some time ago. I have in mind a factory in my constituency where a £3·50 increase may be £5 or more with overtime, which the employers have not paid because of the prospect of the Bill. Thus, there is the ironic situation of employers acting in anticipation of current legislation. I find that a cart-before-the-horse attitude, as the amendment seeks to demonstrate, because it takes no account of the possibility of a vote in the House.

8.0 p.m.

I ask the Government to bear in mind that the workers are already beginning to ask what will happen to their delayed £3·50 a week. Is it to be shelved by the company concerned, to be stacked up in profit margins and distributed later as dividends after the brakes are removed? Or will it be used to buy new plant, machinery and other capital resources to make the leap forward that is desperately needed by the economy? We must know the exact position. At the conclusion of the 180-day freeze, when full freedom is restored once again, serious economic consequences will inevitably arise.

People are daily becoming more aware that the Government are all at sea. As I said earlier, they appear to be up the creek. They have had to stand many of their notions on their heads. Of course, many urgent matters must be taken aboard. For example, they must decide whether to take positive action on the Housing Finance Act which, in the present situation, will otherwise result in considerable industrial turmoil.

What, then, are the prospects which arise from this mess—likely to become even messier—on the return of a Labour Government, and the ability of that Government to grapple with these major economic problems? I do not intend to hark back to the past. As has become clear, both sides of the House have skeletons in the cupboard with regard to these questions. I would rather project my thoughts into the not-too-distant future, following the return of a Labour Government. In this connection, I agree with the hon. Member for Oswestry that the trade union movement will be the key to the resuscitation of the economy, which I do not believe can be achieved by the present legislation and the measures that must invariably follow from it.

I do not ask for sacrifices. When people talk about sacrifices, I tend to think of the severity of the worldwide capitalist economic crisis of the 1930–31 period, with mass unemployment. The situation here is bad enough, but there was colossal unemployment at that time, with economic collapse in the United States and in Europe. There was an enormous problem in Germany, which paved the way for the social conditions which led to the coming into power of Hitler.

We are not exactly in that kind of condition at the present time, but we must bear in mind those factors that have arisen in the past. We must also recognise that the trade union movement does not take second place—as Mr. Jack Jones, of the Transport and General Workers' Union, pointed out—in its patriotism. The movement is interested in beating inflation. That has been made absolutely clear. The argument is about the method to be adopted in beating inflation.

I recall a cartoon that appeared in Ramsay MacDonald's time. It showed a ladder half-submerged in water, with the unemployed worker's nose just above the water level, a few rungs up the ladder. The middle-class were on rungs high and dry out of the water, while the wealthy were far up the ladder, many rungs above the worker. We still live fundamentally in that kind of society.

The call then was for sacrifices from all; a call for all to step down one rung on the ladder. That was put forward as equality of sacrifice, which was complete nonsense because it would have led to the unemployed drowning and to the lower-paid worker arriving almost at the waterline. That cartoon was directed at a state of economic collapse, at which, fortunately, we have not yet arrived. There are all the signs however that that could occur on the perilous course on which we are now embarked.

I believe that it is possible for a Labour Government to confront the problem not on the basis of statutory controls—although in a crisis period such as we have now there would be a case for statutory control of essential prices, if we accepted that it was a critical situation. That is where the talks broke down or broke up—I do not believe that talks can ever completely break down between a Government of any kind and the TUC. It is a postponement of discussions, which must be continuous, because if they are not the future is perilous. I imagine that the Government realise that, otherwise they would not have started the exercise; and that they are prepared to continue the talks when they, and the TUC, consider the climate to be right.

Great lessons can be learned from the talks. If the Government thought that by inviting the fly to come into the parlour they would show the trade union movement in an unfavourable light, they have come unstuck. The country has realised that that is not the case. Those of us who have spent a lifetime in the trade union movement do not believe that the Government can successfully grapple with these problems. In the process of the workout on these proposals and others to come, that will be seen to be so. On the morrow the Labour Government will return and will draw upon the experiences, particularly of their previous six years in power, and will rouse the national spirit needed. They will make arrangements with the trade union movement, which wants to see a real growth rate in the economy, and will achieve that aim. They will achieve that aim because simultaneously with the growth in real wages we shall see a growth in the social wage, which is what socialism is all about.

Photo of Mr John Grant Mr John Grant , Islington East

I hope that the hon. Member for Oswestry (Mr. Biffen) will forgive me if I do not take up his vitriolic criticism of his own Government. I prefer to make my own criticism. I am sorry that the hon. Member for Cornwall, North (Mr. Pardoe) is not here, because I wish to express support for a voluntary incomes policy. The hon. Gentleman was all for a statutory policy and he seemed to be suffering because he was a perfectionist. Only members of the Liberal Party can afford to be perfectionists.

I support Amendment No. 1 and hope that the Government, even at this eleventh hour, will think again. From what the Minister said it seemed that the Government were not interested in grasping the olive branch. However, the time may come when they will rue the mild, quiet, soothing, almost soporific, bloody-mindedness which was displayed by the Minister in failing to grasp the olive branch.

The hon. Member for New Forest (Mr. Patrick McNair-Wilson) was clearly in favour of legislation—one had the impression that he was in favour of legislation on almost anything. Indeed, he typified the Government's approach. They are "bonkers" about the law. It was evident in the Housing Finance Act, and in the Industrial Relations Act; they are keen to pass every law they can to keep the working people in what they regard as their rightful place in society, and this latest piece of lopsided legislation fits into that pattern. It is lopsided because it is so much more repressive on wages than on prices. The Government are being almost laughably lax in their treatment of prices. Once again the Prime Minister is leading the British housewife up a blind alley.

We want the two sides of industry back around the table with the Govern- ment talking about a voluntary agreement. We could have a voluntary wages and incomes policy, while dealing to some extent with prices on a statutory basis. It has been done in other countries and it could be done here.

The TUC was prepared to concede that part of the package and it would not therefore be necessary to return to square one if talks were resumed. If the amendment were accepted—it is clear that it will not be—we ought not to go back to square one, because square one on wages involves blatant discrimination against public sector employees. Even while the Government were talking to the TUC and the CBI about voluntary arrangements, wage negotiations in some of the nationalised industries were stopped, although the electricity industry slipped through the net. The Government were almost certainly relieved that it did because that prevented them facing a full-scale confrontation which they would not have won.

In many other industries involving Government employees an instant deepfreeze treatment was applied. On 5th October the Civil Service Department issued instructions to all Departments of State ordering a halt to the making or authorisation of offers of increased rates of pay, allowances, reduced hours or leave, and telling the Departments to await further instructions. A circular to that effect was issued without prior consultation with the National Staff Side of the Civil Service Whitley Council, which is quite contrary to past practice and is a sad commentary on the Department's approach to industrial relations. The Department's explanation was that the issue of the circular was inadvertent. But some of us would regard that comment with suspicion.

We have been lobbied by representatives of the London teachers. There is doubt about where they stand under the Bill in view of the cost-of-living agreement made with local education authorities but delayed by the Secretary of State for Education. It would be helpful to London teachers if the Minister would clarify the position.

8.15 p.m.

A most important feature of this whole series of amendments is that they would allow for open-ended talks. They would need to be open-ended if the kind of job that needs to be done is to be done, and if the matters that should be looked at are to be looked at properly and in some depth—so that this legislation need never be activated. That is what the amendment is hoped to achieve.

The Government should look depth at what pensioners are to have, and not just buy them off with a sweetener, however desirable that may be as a short-term measure. They also need to look at the whole question of the £2 figure, which it has been said would help the poorly-paid, but which we argued earlier was always regarded, right up to the breakdown of the Downing Street talks, as a negotiable figure.

It is quite clear that the Government's propaganda machine was working overtime to make that point of view acceptable, and it succeeded in getting it accepted by the newspapers and the trade union right up to the last possible moment. It is not surprising in those circumstances that there was a good deal of pique, and indeed anger, on the TUC side over that.

The talks also need to be open-ended if they are properly to discuss the question of rents, which are clearly grossly inflationary at present. In my Borough of Islington there is to be an increase towards the end of November of an average of roughly 16 per cent., which is a grossly inflationary rent increase and ought to be reconsidered in the light of the measures the Government is introducing.

Finally, there is the question of land speculation. If the speculators are to be dealt with, this question cannot be ignored in any package that the Government introduce. In my constituency, in an area called Mildmay, seven houses have just been snapped up by a speculator for £24,000, and within six weeks, with no more cash changing hands than the 10 per cent. deposit, they have been resold for £45,000. That is an example of the kind of gain that is being made by speculators in the area I represent, and it is the kind of thing that cannot be ignored when dealing with the inflationary situation the Government hope to combat.

All these things should be dealt with and not be pushed out of sight, as so many of them were, under the Downing Street table. The climate is all-important. The sensible thing to help that climate would be to accept the Amendment, because if there is one thing which needs freezing at the moment it is this Bill.

Photo of Hon. Nicholas Ridley Hon. Nicholas Ridley , Cirencester and Tewkesbury

I apologise to the Committee for not having heard all of the debate, but I have heard enough, particularly from Opposition Members, to form a clear idea of the Labour Party's approach to the Bill and the whole subject. It falls conveniently into two. The first part is the natural and understandable attitude of Oppositions. Even though I think that in principle they support the freeze—I think more voices have been raised in support of the freeze than against it—they want at the same time to argue every special case which comes forward, which they will doubtless continue to do during the 90 days and the 150 days and the years of statutory control which strecth before us. For that I entirely exonerate them.

There is also another element—a new animal which has appeared on the political scene which is called, if I may quote a slip of the tongue of my right hon. Friend the Prime Minister, the TUCBI, a sort of stage horse. The trade union movement was always described as a carthorse by Lowe in his cartoons before the war, but now there are, as it were, two pairs of legs—one for the CBI and the other for the TUC. This afternoon I detect a third pair of legs walking along under the blanket, and those are the boots of the Labour Party, which crept into the stage-horse, and is making it the vehicle of its main political assault on the Government. That can so obviously be seen coming a mile off, speech after speech.

Of course the TUC had a right to break off the talks because the Government did not offer to come out of the Community, or to abolish the fair rents Act, or to nationalise the land, or whatever is the current Labour Party policy on these issues. Every speech from the Opposition benches says that the TUC should not agree unless we adopt the full gamut of socialist policies, and of course it is a golden opportunity for them. The policies which were rejected by the electorate suddenly seemed to be possible of achievement by climbing under the stage horse with the CBI and the TUC and assaulting the Government in the Downing Street talks from it.

My hon. Friend the Member for Oswestry (Mr. Biffen) was right in being a little suspicious, and I hope the Government will remember that we, who were elected with these Conservative policies before us, will expect to see them continue. Of course, there is no ultimate justice either way and all that we can do is to govern the country as best as we think fit, which was what we were elected to do, and not to govern the country as best the Opposition sees fit.

Photo of Mr Anthony Fell Mr Anthony Fell , Yarmouth

When my hon. Friend looks at HANSARD tomorrow, he will see that he included in his list of Conservative policies our entry into the Common Market. This was never a Conservative policy.

Photo of Hon. Nicholas Ridley Hon. Nicholas Ridley , Cirencester and Tewkesbury

It may not be my hon. Friend's policy but I personally, and I think the Conservative Party in general, advocated it in the last four elections. I have always been under the impression that there was no doubt that that was the Conservative policy, but I fear, Mr. Mallalieu, that it would be wrong to be drawn too far in pursuit of that point.

Photo of Mr Eric Heffer Mr Eric Heffer , Liverpool, Walton

Would not the hon. Gentleman agree that he is directing his remarks to the wrong quarter when he talks about the third pair of legs being the Labour Party? Am I wrong in believing that in fact it was the Conservative Government who nationalised part of Rolls-Royce? It is now the Conservative Government who are bringing in a prices and incomes policy through legislation, which they said they would never do. The Conservative Government introduced the Industrial Relations Act and made money available to help the so-called "lame ducks"—a policy to which the hon. Gentleman was bitterly opposed. Is not he directing his argument to the wrong place? Should not he be directing it to his own Front Bench?

Photo of Hon. Nicholas Ridley Hon. Nicholas Ridley , Cirencester and Tewkesbury

I frequently speak in this House. The direction in which my words go is for others to decide. The hon. Gentleman sees a fourth pair of legs underneath the horse, apparently wearing spats. It is for him to determine, but I can assure him that he will not see my pair of legs under this particular blanket.

I should like to express some doubts about the freeze. I support the freeze, reluctantly, because I think it gives the time the Government need to realign their economic policies and to try to come back to a sensible way of running the economy. I reject the Amendment because it would simply postpone the freeze.

Perhaps the Government would be kind enough to help me with several problems, the first of which concerns the Common Market. I understand that we are joining the Community on 1st January and that we have to abide by the rules of the Community. We voted for this throughout the last Session, but I remain firmly of the opinion that the freeze on the prices of steel and coal particularly, but also on all other prices, is inconsistent with the Treaty of Rome and the Treaty of Paris. Is it the Government's intention that there should be a waiver for the steel industry on 1st January, or is it not? That question needs a straight answer now. I am sure I have posed it in the wrong way—

Photo of Mr John Biffen Mr John Biffen , Oswestry

The question cannot he posed in such simple terms, I think.

Photo of Hon. Nicholas Ridley Hon. Nicholas Ridley , Cirencester and Tewkesbury

Perhaps my right hon. and learned Friend will both pose the question and answer it at the same stage. This is something which those of us who believe that we should behave honourably in Europe—that we should enter into the spirit of the Treaty of Rome—will want to have resolved for us before we get into the new year.

Photo of Mr John Biffen Mr John Biffen , Oswestry

Before my hon. Friend leaves this point, which is quite clearly the doubt over our obligations under the Treaty of Paris, will he not agree that he is not merely limited to provisions of the Bill, but that the matter must also extend to the Downing Street declaration of 26th September, which seemed to indicate that any increase in steel prices would be limited, as a result of Government initiative, to 4 per cent.?

Photo of Hon. Nicholas Ridley Hon. Nicholas Ridley , Cirencester and Tewkesbury

The Government have powers in Clause 2(6) to exempt various prices from the operation of the freeze, and all my right hon. and learned Friend has to say is that it will be used in relation to steel. It is almost as strong to say that what applies to steel and coal will also apply to all prices. This is something which, in the end, must be taken into account before we go further along the counter-inflation road, which this Bill still represents.

The second point arises directly from this, and concerns the financing of the nationalised industries. Contrary to what hon. Gentlemen opposite have been saying, to hold down the prices of products of nationalised industry and to subsidise them from the Exchequer is an inflationary, and not a deflationary thing to do, because the money people would have spent on paying the cost-level prices which nationalised industries would otherwise charge is available to them to spend on other things, thereby bidding up prices from labour and materials in other industries.

So it is not a contribution to the proper running of the economy to hold down prices, though I would support it perhaps for special reasons for a temporary period. It seems that when we get to the end of this temporary period the problem will be even more difficult and severe, because already we know that we are running at the rate of about £500 million a year subsidy, to take into account the loss of interest which the Treasury is suffering, and every year that will increase until the time will come when, if we ever wish to get back to realistic nationalised industry prices, the jump will be so steep that it will be politically impossible to achieve.

We are embarked upon a road which is permanently inflationary and it will be very difficult to get off it. Added to that, it is basically in direct contravention to our obligations under the European treaties. I suggest to the Government that in this area there are difficulties ahead which will cause great problems to the country in the future.

My third point concerns the relative ease or difficulty with which one can control prices or wages. The hon. Member for Islington, East (Mr. John D. Grant) suggested that the arrangements in the Bill for controlling prices were totally inadequate, but that the Bill bore very hard on wage earners. I do not want to talk about the merits of higher wages or redistribution, as in my Second Reading speech. I then conceded the case of redistribution of income as being something which is happening, which is inevitable, and which may well be proper and right. But I want to cross swords with the hon. Gentleman on this question of the relative ease of controlling prices and of controlling incomes.

8.30 p.m.

Surely all the experience of the Labour Government's prices and incomes folly was that that Government succeeded better in controlling prices than they ever did in controlling incomes or wages. Even though the difference was marginal, they failed abysmally on wages, shall we put it, and not quite so abysmally on prices. The result of that differential is always to reduce the margin of profit and therefore the amount available for investment.

Our investment record is deplorable. It is possibly running at a quarter per head of the population compared with Japan and at least half of what it should be compared with similar industrial nations. To achieve a position in which we shall succeed to any extent in holding down prices more than wages will be bad for investment and bad for the future employment of the unemployed. Therefore, although that line of argument is superficially attractive, I ask the Opposition not to pursue it.

The one thing which will restore full employment is investment, and the one thing which will jeopardise investment still further is a policy—whether a voluntary or a statutory policy—which was more effective on prices than wages.

I am surprised that anyone should believe that it is possible to control wages anything like as easily as prices. It is always possible to take a manufacturer to court, or to identify and deal with individuals who are responsible for fixing prices, because they are few. On the whole they are more likely to obey the statute law, or a Government Order. Then there are the hundreds of thousands of people, who may or may not be organised in trade unions and who may obtain wage increases unhindered.

The declared intention of union leaders, despite the terms of the Bill, if it becomes law, is to go ahead with this or that claim. They are the political union leaders. Those who have not declared such an aim may be equally resolved to obtain higher wages for their mem- bers, but are not keen to publicise the fact in advance.

In any event, taking into account the small groups of people in different trades, scattered throughout the country, who may obtain by some means a 5, 10 or 15 per cent. increase, how will the Government know of those increases, and how will they prevent them?

Thus, there is a strange blindness in the Opposition's demanding a "dial-a-diddle" service without considering a "dial-a-fiddle" service for wages. That is the logical consequence of controlling prices and, although I have little faith that it would work, I think that the country would be ill-served by a policy which succeeds in controlling prices but fails to control wages.

Having sought to illustrate the difficulties of what we are embarked upon, it remains for me to hope that the Committee will try to make of future policy, however it may emerge—and I am no friend of statutory policies—something that will be free from the fundamental danger—namely, that we should succeed in stripping the seed corn of the future by a more successful control of prices than of wages, which lies at the heart of this legislation.

Photo of Mr Ronald Murray Mr Ronald Murray , Edinburgh Leith

I support Amendment No. 1. For reasons which the Committee will understand, it is framed in formal terms, but its object is that the Bill should be suspended, so that a voluntary agreement satisfactory to the three parties involved may be achieved.

The right hon. and learned Gentleman who spoke for the Government in reply to my right hon. Friend the Member for East Ham, North, (Mr. Prentice) failed to grapple with the real intent and object of Amendment No. 1. It is not merely a formal matter. A question of substance is involved. The right hon. and learned Gentleman referred repeatedly to the failure of talks. If he considers again what my right hon. Friend said in moving the amendment, he will realise that behind it lies a pressing question which goes to the root of the Government's good faith in introducing the Bill.

The Government's good faith is in issue because it is conceivable that at some point one of the three parties to the talks, the CBI or the TUC—let us take the two non-Government bodies—may come up with an idea which could bridge the existing gap. It might be the TUC, it might be the CBI. Let us suppose that, when this bright new idea is being considered by that body, it communicates it to the other body, the CBI to the TUC, or vice versa. They both agree that it is a bridging concept which will do the trick, that the Downing Street fiasco need not have occurred, and that the new idea can repair the damage. The idea is then communicated to the Government. Would the Government then seriously drag on with the Bill? That is the question behind the amendment which the right hon. and learned Gentleman failed to answer.

The right hon. and learned Gentleman has a new office, and he is to be congratulated on that. But he has not changed his Committee-stage technique. We should like a specific reply to that question. What would the Government do if one of the other two parties came up with an idea which would resolve the crisis which we face? If the Government are acting in good faith about the Bill, they should drop it at once. That is the point of the amendment. Will they agree to drop the Bill and postpone their measures for the sake of voluntary agreement?

My second observation is that it is clear, not only from the contributions made in the debate but from articles in the Economist, which have been much quoted, and in other journals which have dealt with the problems created by the publication of the Bill, that the problem of controlling prices and incomes is one which no one has been able to solve—neither in this country nor anywhere else. The nearest one can get to a solution is to rely upon the methods which ordinarily work in a well-ordered society and economy. On the trade union side those methods include bargaining by unions; on the other side, various other processes determine prices, including the limitation of monopolies and—I want to be fair to the other side—the encouraging of competition. Such factors taken together in a well-ordered society and a well-ordered and healthy economy can do the job better than any academic. formal, or dogmatic interference. That will be agreed by both sides of the Committee.

Why, therefore, is there suspicion about the Government's good faith in introducing the Bill? One reason is that the Government's good faith can be challenged over the situation in which the Bill came to be published. Suspicion has been aired, not only from this side of the Committee, that the real motive and purpose of the Bill is to provide a catalyst of some sort for entry into the Community on 1st January, 1973. Suspicions arise that the mechanism of the Bill may be directed to that end. Another suspicion which has been aired is that the Bill is intended to deal with the problem of ending the floating of sterling. The true motivation might be connected with that.

The Government's good faith is very much at issue in these matters. It will not do for them merely to say that there is a crisis, because the suspicion may exist that the form of the crisis is of their own creation, and that the Bill was introduced not to solve the immediate problem but to provide a standstill, a smokescreen behind which the Government could reorganise their disorganised forces.

If the Government are to convince the Committee that the aim of the Bill is more important than that, and that it has a substantial rôle to play in the economic recovery of this country, they owe to the Committee, either now or later, some indication of their thinking beyond the Bill. It would, I agree, be premature for them to disclose in detail their present thinking on phase 2, but, unless they tell the Committee the broad principles which lie behind their thinking on phase 2, even if it be only preliminary thinking, they are not being honest to the parliamentary system, and they are not disclosing the true motives behind the Bill. I hope that that point will be taken seriously and that the Government will disclose the broad objectives which they have in mind.

Only if something better is to emerge can the Government justify a standstill of 90 or 150 days. They must justify that in relation to Amendment No. 1, because of the way in which it has been framed. I dare say that the Opposition will be merciful and allow them to reply to the point later in the debate; but it runs right through the whole Bill and, if their good faith is called in question on Clause 1, it will be called in question throughout.

One of the reasons why the effort to stop inflation is bound to be subjected to the most careful scrutiny by the Labour Party and by the trade unions was powerfully put by my hon. Friend the Member for South Ayrshire (Mr. Sillars). He pointed out that, when a working man seeks to obtain a fair wage for his work, it is not simply an economic commodity that he is putting on the market; it is his whole life. In considering prices, one is dealing with something material and objective, something in regard to which there is a mathematical quantum but no feeling, involvement or human relationships. But with the working man and his wage matters are entirely different, and this must not be ignored.

If, therefore we are to have a structure of wages and prices to stop inflation and achieve a better distribution and increase in the real wealth of the people of this country, we have to recognise that, if wages are treated as something to counterbalance prices, an essential element of any successful equation is that of the humanity which lies behind the struggle for a fair wage by the working man. His family life and whole way of life are involved.

8.45 p.m.

Achievement of a mathematical parity is the temptation in legislation of this kind, and it is why previous attempts to achieve a fair prices and incomes policy have run into difficulty. It has always been the same difficulty: that apparent mathematical parity looks fair, but behind that apparent mathematical parity there is always the human reality of the wage-earner. The result is that the working people, the trade unionists, are bound to be suspicious of any superficial apparent mathematical equality which is offered to them.

They are suspicious for two sound reasons. The first is an economic one: they are bound to bargain as best they can for the best bargain they can obtain. That is part of the ordinary system of the capitalist economy as we know it, and they are entitled to do that. Secondly, and far more seriously, they are entitled to ask, "Is what is being proposed socially fair and just to the people we represent? Will it achieve the kind of progress they are entitled to in this 20th century?" That is where their suspicions may be justified, because time and again when questions like that are asked, the answers given are found to be doubtful or inadequate.

This is the cutting edge of any attempt to legislate against inflationary spirals, and it will not do for the Government to suppose that any kind of statutory provision of this kind will satisfy that aspect of the trade union movement and the working-class movement. The wage earner and the trade unionist will not be satisfied with a statutory arrangement which does not offer the chance of genuine progress in the future of his living standard and the quality of his life.

There is nothing in the Bill to indicate that. There is nothing to give any hope to the wage earner or the trade unionist that there will be a change in the future or the hope of progress in the future. There is no incentive to him to participate in this kind of development. It is for that reason that this side of the House believes that a voluntary agreement between the CBI and the TUC and the Government is not only the only hope but the only reality in the present situation.

The TUC, representing the wage-earners, must be genuinely satisfied that what is offered is more than merely economically viable. That is the first thing the TUC has to stand for, because it is an economic body, but it must see beyond that and be satisfied that the economic bargain it is getting also contains the potentiality of social progress for the wage earners and the trade unionists it represents. It can be satisfied of that only by argument and careful consideration of detailed proposals, not by woolly promises, not by declarations of intent, and not by legislation of this kind.

For these reasons, the debate we have had on this amendment is crucial for the whole Bill. I see great difficulties in the Committee's making a great deal of progress on the later Amendments unless we have some disclosure from the Government of what their real thinking about the matter is.

Photo of Mr Don Concannon Mr Don Concannon , Mansfield

The guillotine will make it difficult.

Photo of Mr Ronald Murray Mr Ronald Murray , Edinburgh Leith

I am grateful for that reminder.

One is tempted in dealing with legislation covering prices and incomes to go into a great deal of detail, even in this first preliminary debate. One is tempted to consider in a comparative way the provisions of the Labour Government's Prices and Incomes Act of 1966. It bears very favourable comparison with this Bill. I must not be tempted into that detail, although I should very much like to do it, simply because of the guillotine of which I have been reminded.

The dialogue which is essential is that between the wage earners and trade unions on the one hand, and the Confederation of British Industry on the other. That dialogue could be assisted best by the presence of an objective body, genuinely seeking to discover the facts—a difficult task in itself.

Journals such as the Economist, and other learned journals and newspapers that have produced helpful articles since the freeze was announced by the Government, make it clear that the task of discovering why we are subjected to inflationary pressures is far from easy. HANSARD of last week bears eloquent testimony to that. Nobody knows the answer. University departments have been working on the subject, and they do not know the answer. Research departments of the CBI and the TUC cannot find the answer.

In that situation, is it not plain that the greatest assistance that could be obtained would be to discover the true causes of the present inflation, to devote the necessary research and funds to discovering why it is there, with the necessary power to collect information. Such a body would be useful not only in discovering the facts and disclosing them publicly, but in enabling the three sides involved in the tripartite discussions to find common ground. It would provide them with means of discourse and with material for dialogue.

I have described the Prices and Incomes Board, the very body that the Government abolished, along with the Consumer Council. It will not do for the Government, standing on their heads, to maintain that they can proceed with legislation of this kind when they have destroyed the only means giving a prospect of a solution.

Photo of Mr Michael Grylls Mr Michael Grylls , Chertsey

I listened to the right hon. Member for East Ham, North (Mr. Prentice) with great interest. At the forefront was a proposal for firm State control of key prices. Secondly, he suggested that there should be a fairer system of taxes and more taxation of higher incomes; in other words, replacing some of the taxes removed by the Government in the past two years. Thirdly, he talked about the reform of the fair rents Act. Lastly, particularly in the context of VAT—he did not say this outright, but there was a hint of it, and I hope that he will correct me if I am wrong—he spoke of going back on the whole of the EEC Act.

The issue concerning both sides of the Committee is food prices, which bear most heavily on housewives' budgets. Perhaps it is that factor that starts an inflationary trend. When the right hon. Gentleman talks about firm State control of prices, does he mean returning to a full subsidy system with excessive subsidies to reduce the price of imported food? That would mean not just extra taxation for a few, but massive extra taxation for almost everybody. The right hon. Gentleman did not make that clear.

In the initial debate on the Prime Minister's statement there was much criticism of the Government for not doing more to keep down prices, particularly food prices, a feature about which we are all worried. As my right hon. Friend the Prime Minister said, because so much of our food is imported, it is impossible to do anything to keep food prices down.

What the Government proposed in the package they put to the CBI and the TUC was to an agreement among the retail trade not to increase gross margins beyond a certain level, and to see that price rises were kept under a general 4 per cent. maximum. I do not believe that the right hon. Gentleman's proposal for total State control of prices, attractive as it may sound—it may sound superficially attractive even to many of my supporters in my constituency—is a practicable solution.

The right hon. Gentleman mentioned increases in taxation. Above all, the Government have been determined to continue with growth in the economy and they believe that excessive taxation has been a problem under which everybody has laboured for a long time. Taxation has been more than a problem for a relatively unimportant few. The general level of personal taxation has now been reduced, and that is a major contribution by the Government to tackling inflation. It has not solved the problem, but it has helped. To increase taxes as the right hon. Gentleman suggests is merely to give another twist to the inflationary spiral's roots.

The most controversial suggestion was the right hon. Gentleman's proposal about fair rents. He said that in his negotiations with the TUC and CBI, the Prime Minister should have been prepared to say that he would withdraw that policy, and there was an exchange during the right hon. Gentleman's remarks with hon. Friends on this point. If one accepts the fair rent scheme which originated in the fair rent concept introduced by the Labour Government, it is a contradiction in terms to propose to take it back, to say that it would be fairer if the levy were abolished.

What of the 300,000 tenants in private accommodation, many with low incomes? What of the people who stand to get rent allowances? Are they to be told that they cannot get their rent allowances and that their rents have to stay relatively high? Is that to be true of many hundreds of thousands of council tenants, too? Many of them have low incomes and expect their rents to be reduced by the Housing Finance Act.

Above all, the pensioners stand to gain most from this reform. They would not be pleased if it were taken back by the Prime Minister.

The one subject the right hon. Gentleman did not mention, not altogether surprisingly, was what it was proposed to do about wages. It is one thing to have statutory permanent control of prices. But what is to be done about wages? He did not suggest that we should have statutory control of wages and I should not like to see it on any permanent basis, because it would not work.

Photo of Mr Reginald Prentice Mr Reginald Prentice , East Ham North

I resisted the temptation to break in earlier because the right hon. Gentleman was commenting on several of my observations. The tenor of my remarks was that if the Government would shift their policy on a number of the issues that he has just mentioned, so as to reduce the impact of the inflation which they have generated, they would have a basis on which to go back to the TUC and CBI and ask for their co-operation on a voluntary agreement to keep inflation in check. An important part of my case was that the wages strategy would fit in, if these other considerations were looked after first.

9.0 p.m.

Photo of Mr Michael Grylls Mr Michael Grylls , Chertsey

I appreciate what the right hon. Gentleman says. It is a question of degree, because in the negotiations the Prime Minister went some way by increasing the needs allowance and in respect of the calculation of fair rents and the rent allowances and rebates. That was a help. It was on the table and was part of the negotiation.

Throughout the debate there has been a certain hopelessness in the Opposition's case—and I say that in the kindest possible way. I was not a Member in 1966 or 1968, but, like the majority of hon. Members, I feel that I have been here before—that I am going over ground that we have frequently debated in the past, and that the Opposition are opposing something which the majority of people believe is right. People applaud the Government for having taken a firm decision.

When we were discussing the timetable Motion and quoting precedents, I thought how irrelevant the debate was. It is said that Members of Parliament are out of touch with public opinion. Instead of talking about the nub of the matter and trying to achieve a fair prices and incomes policy, all we did was to discuss whether there should be a guillotine and what were the precedents for it. I am not particularly interested whether this has happened before. The fact that it happened in 1966 and 1968 is history.

I believe that the majority of people want the Government to take fair and immediate action to deal with the problem of inflation. That is what the Government were elected for. Whatever history says, the Government are determined to solve the problem. We should, perhaps, remember the old adage that it is a mark of good action when it appears inevitable in retrospect. We may well look back In retrospect and say, "Why did we not do this earlier?"

I believe that the freeze will be temporary. Right hon. and hon. Members opposite have often chided the Government for not doing things "at a stroke". They have no grounds for complaint when the Prime Minister deals with this matter at a stroke. The public want immediate action to be taken, and that is exactly what the Government have done.

The second and perhaps most important strand running through the debate has been the need to get back to the negotiating table and try to reach an agreement with both sides of industry. That is what almost every hon. Member wants. The Bill is only a temporary measure. Whatever else may be said about the package which the Government have left lying on the negotiating table, large parts of it were very good, and I believe that both sides of industry accept that they represent a considerable advance. Emphasis on help for the lower-paid workers and talk about the redistribution of income were major factors in the package.

The Minister for Trade and Consumer Affairs mentioned the question of threshold agreements. It would have been a very big step forward if agreement could have been reached on that matter. I hope that in the next stage we shall be able to do so. I believe that the package goes a long way to meet the arguments of the TUC and the CBI. It contained, as the hon. and learned Member for Edinburgh, Leith (Mr. Ronald King Murray) said, some very helpful proposals. I agree with much of what the hon. and learned Gentleman said in the earlier part of his speech, although not what he said, when he began his peroration. The hon. and learned Gentleman talked about what was socially just, which is what an incomes policy must be. He also referred to hope for the future, with which I also agree.

There can be no hope in a statutory situation; it must be voluntary. The statutory position will give the Government the pause which they need to get on with a voluntary agreement. The package, when studied as a whole, can be seen to offer hope. Obviously it is not perfect, otherwise it would have been accepted. However, it offers considerable hope for a socially just incomes policy, to which the hon. and learned Gentleman rightly drew attention.

I hope that we shall have as little delay as possible in getting the Bill through. The sooner we do so the sooner we can move out of the statutory period and into a voluntary agreement, which we all want. A constructive prices and incomes policy which is achieved by consent is something that every country has for years struggled to obtain. Despite our party divisions and battles, it is surely something that the Committee is working hard to achieve.

Photo of Mr Thomas Price Mr Thomas Price , Westhoughton

During the last two hours I have listened to a number of interesing speeches, especially from the Government benches. There has been the sort of dialogue that we have had on many previous occasions, as one of our newer Members has just reminded me. The fact that he has just come into this kind of dialogue and debate in no way alters the fact that there is a deep division on matters of principle and of solution between the two sides.

My heart almost bled for some hon. Members opposite, such as the hon. Members for Oswestry (Mr. Biffen) and for Cirencester and Tewkesbury (Mr. Ridley). They are wrestling with their own theological preconceptions about what the Government should be doing. If any of my hon. Friends are suffering under the policies of the Government, their suffering is small compared to some of the suffering that hon. Members opposite will have to ensure in watching their colleagues on the Front Bench perform their gymnastics and change their policies from day to day.

That is not to say—I do not wish to make a polemical point—that I would stand here with a sense of responsibility and deny that the country is passing through a serious crisis. It is a serious crisis and I believe a grave crisis that we are threatened with this inflation. A great deal of the social reform that has been created by generations of active work by people like my hon. Friends and I, and people in the trade union movement, is at risk if there is endemic inflation which cannot be arrested. That inflation would be partly due to the disastrous policy embarked upon by the Government 2½ years ago. Let us never be ashamed of repeating that.

The policies on which the Government took up their mandate were policies which could not endure in the advanced society in which we live. They were policies which demanded an open confrontation, and a return to the free market economy of John Stuart Mill and all the laissez-faire economists of 150 years ago. That is why the hon. Member for Oswestry is suffering so acutely.

There are some Members, including the hon. Member for Oswestry, whose opinions I always respect and always like to hear expressed. The hon. Member is suffering, along with his hon. Friend the Member for Cirencester and Tewkesbury, who is a more archaic survivor than he is in these matters. I say that not with malice but as a reaffirmation of my belief that all the great professors and economic pundits have misled Labour and Tory Governments in their efforts to diagnose the sources of inflation, and its endemic condition in society, which is always causing instability and industrial unrest.

I am the least dogmatic person in the House of Commons, as everyone knows. I express my views tentatively and not dogmatically. However, I have no hesitation in telling the Chief Secretary that the sources of inflation in our society are always avoided by the Government. They were sometimes avoided by my colleagues when they were in government some years ago. The sources of inflation are largely linked with the artificial inflation of real property and land values, which is at the root of all inflation in every Western society.

During the period of the last Labour Government when my friends were suffering acutely from the situation prevailing then, I referred in the Chamber spontaneously—without any preparation and without reference to the Library—to a very great man called Henry George, who wrote a book called "Progress and Property". I quoted Henry George appropriately and fairly in support of my argument. Henry George, who was not a Socialist but an American economist of distinction, made the most penetrating analysis of the relationship of land values to the community's activities that has ever been written. On that occasion I was supporting the Government with reservations, not attacking them.

On leaving the Chamber after that debate a very senior member of the Labour Government said to me, "Who the hell is this Henry George?". That was a piece of heresy to me. Some members of the present Administration who have come from all the best prep schools and the older universities, and who have been appropriately primed to occupy the high offices they now occupy will be no doubt familiar with the line of country that I am referring to.

The hon. Member for Chertsey (Mr. Grylls) showed by his reference to the spiral being started by food prices that he has given no thought to the situation. In this latest splurge of inflation which so terribly concerns the Government and everybody else, what troubles us is the fantastic inflation of real property values during the last two-and-a-half years. The economic pundits who draw up the statistics and the graphs and record all the facts so far as they can be recorded say that in the last two-and-a-half years real property and land values have appreciated by at least 57 per cent.

Land is a very subtle thing, because all wealth starts from land. Any House of Commons which forgets that all wealth comes from the land forgets the real purpose of all social activities, which is to exploit a country's real wealth in its land and all the fruits which come from it. Real property, in terms, for example, of houses, has certainly increased in price by over 50 per cent. in the last few years.

[Sir ROBERT GRANT-FERRIS in the Chair]

9.15 p.m.

Despite that, one of the most Olympian and bland Members, the hon. Member for Cirencester and Tewkesbury—I am sorry to refer to him when he is not here, though he has been here a long time—made some remarkable statements about our deplorable investment record. He is quite right in saying that it is a deplorable investment record. It has been particularly so during the last two-and-a-half years. We were hoping to create a climate in which industry would be encouraged, by the policy which we on our side were trying to carry out, plough more profits back into productive capacity and increase the real wealth of the country. I believe in that. Does anybody suppose that that is done by prudent investors of the kind who handle the great levers of power in the financial world, who control the banks and the financial institutions, the property trusts, the investment trusts and the unit trusts, and who fill the weekend papers with columns of advertisements very expensively displayed, advertisements saying "Double your money in four years by putting your chips into our investment bonds"?

Why did the Prime Minister go to Guildhall last night and make one of those ceremonial speeches which every Prime Minister is expected to make? First, and traditionally, he spoke about foreign affairs. During the installation of a new Lord Mayor of the City of London, whoever he is and whatever political jackets he wears, the Prime Minister is called upon to make one of those ceremonial speeches. I have not with me the text of the Prime Minister's speech, but in the latter part, before all those assembled financial experts who grace those occasions, and wearing their tailcoats and white ties, he very properly made reference to inflation and said that in this situation of inflation through which our country is passing no section of the community should seek to avoid the consequences of it—or words to that effect. I hope I am right in assuming that he was not only speaking to Jack Jones's transport workers and other workers who are charged with being the cause of inflation because of wage demands; I hope he was also sneaking to the property tycoons in the City of London who have inflated land prices at a criminal rate of exploitation, which is having the most serious consequences.

My support of this amendment is based on more fundamental ground than any merely tactical opposition to what the Government are doing. It is based on the ground that till this Government take some decisive step to stop the exploitation of property by land racketeers the ordinary people who are asked to abate their demands will not do so, because they will have no confidence in the good faith of the Government. It is as simple as that.

I conclude my contribution to this debate, which will not get us anywhere except the Division Lobby, by asking how can we have a serious debate on a matter so grave for the future of our country if the Government avoid and duck the main question, which is the scandalous inflation in property and land values? This Government cannot honestly ask for my support for their steps to reduce inflation while they allow a free run to the property racketeers and bond washers who are so active in the City of London.

I might have left it at that, but I would add a rider. Many sentimental speeches have been made in this Chamber. People often wear their hearts on their sleeves and say that they want one nation. That is when the nation is in trouble. When it seems convenient for the people who have the power to exploit that power unduly they do not want one nation: they want a free market.

The Prime Minister has called for a united attack by all sections of the community on the menace of inflation. He has said that the Government will pay special attention to low-paid workers and pensioners—the people who suffer most from inflation. In the distributive trades between two and three million workers employed in humble jobs behind shop counters and in little cafés do not get £20 or even £15 a week. Some do not get even £10 a week. If the Government are sincere in what they say, let them declare that all those groups of low-paid workers who feel the full blast of inflated prices shall be excluded from the operation of the Bill. If the Government do not do so we shall continue our attempts to delay and hamstring the Bill. The Government must not blame me if people less responsible and less middle-of-the-road than I am supposed to be counsel millions of people to take action to the disadvantage of the country.

I do not wish to see a settlement by industrial strife or conflct, any more than I wish to see an international conflict solved by war. I prefer to appeal to people's reason and common sense. That appeal will be infinitely stronger if the Government give evidence that as a first priority they are prepared to tackle property racketeers and give relief to lower-paid workers.

Photo of Mr David Madel Mr David Madel , Bedfordshire South

I think we should probably all agree with the first part of the speech of the hon. Member for Westhoughton (Mr. J. T. Price) about the dangers of continued inflation, particularly to the low paid and those who do not have strong bargaining power. This debate has once again shown the three attitudes to an incomes policy that exist across party boundaries.

Eloquently proposed by my hon. Friend the Member for Oswestry (Mr. Biffen) was the view that the Government should have no incomes policy at all and should leave bargaining between trade unions and management unfettered. But we must remember that not everyone is a member of a trade union, and, if matters are left to a slogging match between unions and management, many people will get hurt in the process.

Secondly, there is the view put forward by the hon. Member for Cornwall, North (Mr. Pardoe) that there should be a permanent statutory policy for incomes and prices. The majority of us do not go along with that view. It would merely take away the whole raison d'être of trade unions and management, and there would be general resentment at the Government year after year laying down the level of pay settlements.

The third view put forward was that we should continue along the lines of a voluntary incomes policy. A voluntarily incomes policy has worked only once since the war, and that was between 1950 and 1951, when, by sheer force of personality, Sir Stafford Cripps persuaded everyone to make a sacrifice. If, in a voluntary incomes policy, outside economic factors are disregarded, the whole policy is wrecked, as it was for the Labour Government in 1951 by the enormous rise in raw material prices brought about by the Korean War. A voluntary incomes policy has to be extremely flexible and I hope that during the 90 days—which I hope will be wisely used—the Government will emphasise the importance of flexibility in a future voluntary prices policy. I hope that the Government will also stress that the freeze applies to salaries as to wages and that management will also be expected to make sacrifices.

The main point that concerns us is how to use the 90-day freeze. Machinery must be set up quickly—a body similar to the National Board for Prices and Incomes on which the three sides, trade unions, management and Government, will get used to working together and considering the levels of pay settlements and prices. If we can achieve this aim, the situation will not be perfect. The reason that a voluntary incomes policy so often fails is that both the public and both sides of industry expect too much from it to begin with. No voluntary prices and incomes policy can be perfect; certain people will drive a coach and horses through it. However, we can gradually build up a system in which the three sides work together and so that the system can be seen to be fair. This can then lead to a voluntary incomes policy.

I support the Government in their 90-day freeze because I believe that it will provide a breathing space and give time to set up the system that is needed, but if the 90-day period is wasted and if we do not achieve normal consultation we shall find tremendous difficulty when we move away from a statutory to a voluntary policy.

It is always a psychological problem in trying to get people to take a little less. The hon. Member for Cornwall, North asked how one could expect Clive Jenkins to say to his members, "I have negotiated for less than I could have got." The situation will depend upon whether other trade union leaders are negotiating for less and whether management will make some concessions; it will depend upon whether there will be greater consultation in industry. The deadly English disease is indifference or shyness on the part of management in not taking trade unions into their confidence.

Therefore, I hope that during the 90-days they will improve their conciliation and consultative machinery. If this happens, the Government will be well placed, having set up a body like the National Incomes Commission, to enable a voluntary policy to succeed. I hope that the Chief Secretary will continue to emphasise that with the existence of the freeze, and in aiming at a voluntary policy, it will be against the background of a high growth rate and falling taxation. Without these factors we shall never get a policy which will succeed.

Photo of Mr William Small Mr William Small , Glasgow Scotstoun

I enter into this debate seeking some sign of a change in Government policy. This is a Government who are clothed in borrowed plumes, but the style of this debate and the sort of attitude to industrial matters comes as something of a surprise. I believe that at the end of the day these discussions will all add up to an alibi for an increase in unemployment and that employers will find reasons to reduce their labour force.

The Prime Minister ought now to be riding on a fanfare of trumpets on achieving his desired entry into the Common Market, but in Britain he must face the fact that he has missed a good chance to bring about a consultative troika between the CBI, the TUC and Government. Unfortunately, it was a missed opportunity. The hard-line approach adopted by the Prime Minister has resulted in this legislation because he would not give away 1 per cent. The psychology of the arguments at 10 Downing Street was to control prices to 5 per cent., which so far as the CBI is concerned is a rational aim, but in respect of the nationalised industries it would mean that some 40 per cent. of the economy would not be under any control. The impact on the equilibrium of the nationalised industry prices would be a depressing one. Therefore, I believe that at the end of three months or so the stresses and strains and the flood which will result will be worse than they have ever been.

As I see it, the Prime Minister and his team have not attempted to measure up to the requirements of a mixed economy, and it is Britain's mixed economy which is the problem. If we are to try, after many years of free collective bargaining, to enter a period of restriction by having a written constitution, that constitution will not be understood fully by either side and the Government will rue the day that they adopted this policy.

9.30 p.m.

Photo of Mr Thomas Torney Mr Thomas Torney , Bradford South

I commend these amendments to the Committee, since they will result in postponing the decision about a freeze and give the Government a period of leeway in which to understand the trade union movement and its wage negotiating machinery better than they do today.

In attempting to bring about a freeze by legislation and to blame the trade union movement for the failure of the recent Downing Street talks, the Government and the Tory Party appear to me to have a complete lack of understanding of the trade union movement and its workings. The only other possible explanation is that the policies and utterances of right hon. and hon. Gentlemen opposite about the trade union movement are a sham, which is intended to draw a shadow over the incompetence of their policies.

It is no use right hon. and hon. Gentlemen opposite saying that they do not entirely blame higher prices on wage demands and the trade unions. I can remember Questions being placed upon the Order Paper over many months past, and I can remember the Chancellor of the Exchequer, the Prime Minister and the Leader of the House, when Minister of Agriculture, telling us that the reason for the higher prices was that the nasty, wicked trade unionists were demanding such high wage rates. They were said to be the real cause of the trouble.

We hope that these amendments will give the Government an opportunity to think again. Perhaps they will see that the people are not as prepared to accept the freeze as many right hon. and hon. Gentlemen opposite have said. The news media can do a great deal to whip up public fervour, so much so that right hon. and hon. Gentlemen opposite believe some of their own propaganda which is echoed by the media to the extent that they really think that they know the will of the British people.

I venture to ask the Committee to consider how an agricultural worker will accept the Government's policy. I am sure that no one will suggest that agricultural workers are over-paid. How will a hospital worker, or someone employed in one of the distributive industries, accept the policy? In this connection, I must declare an interest. For many years I worked as a trade union officer on behalf of those employed in the distributive industries. Their pay level is about as low and as rotten as that of agricultural workers and hospital workers.

I hope that the media will give as much prominence to telling the people that there is another side to the coin as they have given to covering up the complete somersault of the Tory Government and their Prime Minister. I hope that they will give as much prominence to the other side of the coin: that all trade union leaders are not wicked Joneses or Scallions. That description is not mine; it is the kind of description that has been given by the Press and Tory speakers over the last year or two.

The great majority of trade union leaders are moderate men, but the effects of this freeze may cause those moderate men to become a little immoderate—and it will not be their fault. I do not know whether the Minister who is to reply has read this morning's Guardian. I have not got it with me, so I cannot quote from it; but a very moderate trade union leader, my own, Alfred Allen—certainly not a wild man who could be accused of bringing the country down by his demands for high wages—is reported as speaking bitterly of the fact that workers in the food trade, earning only £14 a week in 1972, are to have their wages frozen. Bargains have been honourably negotiated in the shop and distributive trades by employers and trade unions, whereby, instead of continuous negotiations, the workers are to get increases year after year under a three-year agreement. This freeze will hold up such increases for members of the Union of Shop, Distributive and Allied Workers, who are not always holding the country to ransom but are merely asking for a just and fair deal.

Coming back to the charge of inflation being blamed on workers' wages, I should point that food prices have been persistently and continuously rising since the Government took office. One hon. Member talked about "strokes". We did not invent the "stroke". The Prime Minister invented the "stroke" to win the election. Now that he has won it, the "stroke" will, quite rightly, continue to be rammed back at him.

How can the Government possibly place the blame for rising food prices on workers in the food industry. Agricultural and shop workers are among the lowest paid in the country. Therefore, how can their wage rates be factors in rising food prices?

For nearly the whole time that this Government has been in power, Ministers have been saying, "If the unions did not demand high wages, prices would not go up." How can that be balanced against the fact that food trade and agricultural workers are existing—not living—on a mere pittance?

To most workers in the distributive and allied trades wages mean what they take home. The vast majority of shop and distributive trades workers are not able to work overtime to inflate their earnings in the way that other sections of workers do.

I was extremely interested in the long list of wage increases which the hon. Member for the Cities of London and Westminster (Mr. Tugendhat)—I am sorry he is not present; this is not a critcism of him for not being here—told us that trade union leaders had accepted in the past 10 months or so. It was very interesting. He listed them. He told us that many had accepted less than £1, a lesser number had accepted less than £2, while a very small number had accepted more than that. In the light of the Government's change of front, the somersaults of the Prime Minister and the Front Bench, the hon. Gentleman might well be promoted to Cabinet office, since he has seen clearly what the Government have apparently not seen—hence the freeze that my right hon. and hon. Friends are seeking in the amendments at least to delay—that trade union leaders are not such unreasonable fellows. He has proved to us that, in his own words, trade unionists are hard bargainers. They are people who are very conscious of their responsibility. Much of the strife of the past two years has been largely due to the policies of confrontation that the Government have consistently pursued.

As a result of long years of work as a trade union officer, I know the importance of establishing an atmosphere during negotiations. Conservative Members who are employers, and who have taken part in negotiations, will be aware of the importance of atmosphere during trade union negotiations, and will know that little can be accomplished without trust and understanding between the two parties.

The analogy which I am trying to draw is this: how can the Government expect to establish a healthy atmosphere of decent trust and understanding between themselves and the trade union movement when they have confronted during their period of office the miners, the railway workers and the Post Office workers? Time and again they have told us, in this House, of our wickedness in dragging the country down. Let the Government, therefore, adopt the opportunity offered by the amendments to postpone the operation of the freeze.

The hon. Member for Cities of London and Westminster also gave the House a lucid explanation of the various rates of pay that trade unions had secured or failed to secure. There are various types of agreement in trade union negotiations, all of which—including, I suspect, some of the lowlier ones—stem from what is known as a Wages Council order. Those of us who have worked a lifetime in the trade union movement do not regard Wages Council orders as trade union agreements. However. I have no doubt that they would be included as such in the list drawn up by the hon. Gentleman. They are probably the worst type of agreement, because they are drawn up with the assistance of appointed members—in other words, the Government have a say in the agreement.

The trade union officer is not always in a position to demand. It is not always a question of holding the country to ransom. The majority of trade unionists are decent, responsible citizens, and what they want is a decent, fair standard of living. To freeze wages for workers who are on the lowest possible rates of pay is nothing less than criminal.

The Government have been courting the trade unions, trying to establish a better relationship. They expected to be able to do that in 30 days, or in the period when they realised that their policy of confrontation had failed—when they realised that their policy of always saying, "Blame the trade unions for our economic plight", had failed only a few short months ago. They apparently expect relations to be so improved that we should accept the kind of offers that they have made. But in the light of all their retrograde policies and their own contributions to raising the cost of living, it just is not on and it will not work.

9.45 p.m.

We say in these amendments, "Go back once more. Postpone the Bill. Learn something about the trade union movement, and about the real impact of your actions on the people, and not what the mainly Government-backed and supported Press tells you. Find out what the impact will be on the low-paid workers when, by your own direct action, the wages they sorely need to maintain a reasonable standard of life are to be withheld". I come back to the point that I made earlier. How can the Minister reconcile the increases in food prices and other commodities with the disgustingly low rates of pay for agricultural workers and workers in the retail food and distributive trades? In all fairness, as their wages are so low that they cannot have contributed to the inflation from which they suffer, the Minister should give an assurance tonight that he will agree to the wage increases already negotiated for the agricultural and retail food and distributive trade workers. If the Minister gives those assurances, we may feel a little more friendly disposed towards his pernicious freeze.

Photo of Mr Peter Trew Mr Peter Trew , Dartford

I disagree with the hon. Member for Bradford, South (Mr. Torney) when he says that the Government's present measures do not have the overwhelming support of the British public. On 15th August, last year, a Republican President of the United States of America, dedicated to private enterprise and to the principles of the free market, introduced a similar measure. He did so with the overwhelming support of the American public. I have no doubt that that action caused great theological difficulties for his supporters in the Republican Party, just as the Government's measures are in principle repugnant to many of their supporters.

However, I believe that the President of the United States was responding to what may be the most important political theology of all, namely, that in the last analysis a Government must govern. Perhaps the most important of all duties with which a government is charged is the creation of wealth, because without the creation of new wealth no political party can carry out the social programme to which it is committed. When the ability to create wealth is impaired, possibly permanently, by a dangerous rate of inflation, the Government have no option but to take quick and decisive action.

Not only is it important to create wealth, but the way in which that wealth is redistributed is also important, and it is right that all sections of the community should express their opinions on how it should be done, none less than the TUC and CBI. It is not surprising that views on how wealth should be redistributed entered into the Downing Street talks. However, we must be absolutely clear on what lies within the prerogative of the TUC and CBI and what lies within the prerogative of the House.

There can be no question that when it comes to matters of Government policy, such as taxation, industrial relations, housing finance, legislation in connection with the European Economic Community, the prerogative rests with Parliament. I do not believe that the Government can or have the right to strike bargains with organised industry, or the trade union movement, in respect of those matters without recourse to Parliament.

It is perfectly legitimate for the TUC and the CBI to express their views on these matters and to say how they might affect their ability to carry out any bargain that is struck. They can legitimately put their views to Parliament, and in the time we shall have as a result of the freeze, it is right that we should devote a great deal of thought to this and to the measures that will follow the ending of the freeze. But there is no doubt that the British public want the freeze now and because the amendment seeks to delay it, I shall oppose it.

Photo of Mr Neil McBride Mr Neil McBride , Swansea East

The hon. Member for Dartford (Mr. Trew) says that he knows the British public support the freeze. That statement is hypothetical, because the British public has not been consulted. To relate this argument to the American model is, in essence of relativity, futile.

These amendments are relevant and necessary. It is imperative that no obstacle be placed in the way of a voluntary agreement being reached by the TUC and CBI. I commend to the House the powerful arguments contained in a brilliant speech by my hon. and learned Friend the Member for Edinburgh, Leith (Mr. Ronald King Murray).

How can a Tory Government declare that it is their policy to combat inflation when before next spring there will be a rush of price rises to cancel out any advantages of the freeze? The Bill was conceived in haste, and the Government do not have a clue. Their attitude shows a political bankruptcy; they are playing things by ear from day to day. I repeat the challenge made by my hon. Friend the Member for Edinburgh, Leith: what will a Tory Government do if either the TUC or CBI emerges with an idea that looks like solving the crisis? Clearly they would have a duty to the nation and to the House to let us know if that were to happen. Fundamentally the freeze is a fragile effort: the legal framework bears all the signs of fragility.

The proposals in the Bill have not the active, voluntary co-operation of retailers and manufacturers, and will collapse completely. The Government cannot say that they have co-operation. All their promises are based on co-operation that they have not secured. In the retail trade the special offer device shows that the intentions of the proposed legislation can be defeated. The Sunday Times of 12th November said: Last week we bought 25 special-offer goods which could all rise for this reason. They are all popular products, likely to be found in any home: Heinz Baked Beans (1½p off); Lyons' Coffee (5p); Birds Eye Fingers (1½p); Kiwi Shoe Polish (5½p); Omo (5½p); Squeezy (2½p) Macleans toothpaste (4p), and so on. Altogether the 25 items cost us £4.14½p.… we could find ourselves having to pay £5.20½p.… that is 18 per cent. more—…". That cannot be denied, because the Bill cannot prevent it. The Government will allow products to return to their previous price, and this shows that despite legislation the actual prices paid by shoppers for groceries will rise as special offers end.

Consequently, prices will rise, and inflation will occur in this field as a result. It will be in addition to the rise of 21 per cent. in food prices since this Government came to power—something infamous for which they can blame no one but themselves. Even here the Government shirk responsibility. They should act as the watchdog, and not devolve this responsibility onto the housewife, who has a difficult job in combating ever-increasing prices.

Photo of Mr John Pardoe Mr John Pardoe , North Cornwall

The hon. Gentleman says that because there are reductions on the manufacturer's recommended price, retailers will be able, even under the terms of the Bill, to increase the price up to the full manufacturer's level. There is nothing in the Bill that allows that. Clause 2 deals with it. If the hon. Member reads subsection (1) of that Clause 2 he will see that it would be impossible to do that.

Photo of Mr Neil McBride Mr Neil McBride , Swansea East

It is my view that it would not, and I state it again.

A fundamental weakness of the Bill was pinpointed in a statement by the Department of Trade and Industry when it said that it could not police more than a handful of companies dealing with each product. To combat inflation, guarantees against price increases must be given principally on food prices, rents in the public and private sectors and mortgages. On 6th November I questioned the Secretary of State for Wales about the evils here.

I think that VAT will contribute substantially to inflation. School meal prices will go up, a declared policy of the Government. These prices will increase, and no one can deny that they will contribute towards an inflationary situation. House prices and mortgage repayments are both rising, and 4 million families paying off their mortgages will have to pay ½ per cent. higher interest from 1st January next year. The cost of an overdraft will soon rise by ½ per cent. Will not this contribute to inflation? Is not it wrong? Is there no control here?

Clearly the Amendment is necessary. When the Minister of Agriculture. charged with the administration of the freeze regulations affecting our food prices, declares that the cash margin rule will be exremely difficult to enforce, a Government Department is openly confessing inability to control what it is supposed to control.

Photo of Sir Raymond Gower Sir Raymond Gower , Barry

Can the hon. Gentleman explain how the Amendments will lessen the inflationary tendency? How will they reduce the number of price increases?

Photo of Mr Neil McBride Mr Neil McBride , Swansea East

Clearly, the Amendments are directed at securing an agreement with the CBI and the TUC, and agreement in the fields which I have mentioned would clearly help.

10.0 p.m.

The hon. Member for Barry (Mr. Gower) is trained in the law, and logic is a prerequisite of that training. Council house rents should have been stabilised at the level of 30th September, 1972. The increases in the Housing Finance Act should not have been implemented, because that measure is harmful on two counts. It is at once inflationary and certainly conducive to the generation of massive wage demands.

The hon. Member for Chertsey (Mr. Grylls) declared that the Tory Government package represented hope. I remind the hon. Gentleman, who, unfortunately. has departed, that the council house tenants in my constituency can see no hope reflected in the increased rents that they will have to pay in Swansea, nor will any of the five million council house tenants in the country feel that way. The hon. Member for Barry will recall the arguments made against the increase.

Millions of £s are being taken from the purchasing power of housewives, and no one will deny that wage demands are made in the kitchen. If the housewife needs more money, she says that she needs more, and says it forcibly. That demand goes on to the trade union branch, and so wage demands are generated. Those who do not know the trade union movement or the working class will be ignorant of this, but I am proud of belonging to both, and I know.

Once again the Tory Government create a situation that will breed inflation. When trade union leaders reflect the wishes of their trade union members—here I declare an interest, being a member of the Amalgamated Union of Engineering Workers—who make their wage claims in the branches, those leaders reflect the receipt of these claims by lodging wage demands on their members' behalf.

It matters little who is the person making the wage claim; he is making it on behalf of, in my case, over a million fellow members, and he reflects the mood and opinion of his fellow members. These trade unionists must make their words plain in order to meet the cost of living and to maintain the standard of living; they are justified in so doing if both these things are attacked, as the Government are attacking them.

Yet when the trade union leader put forward these wage demands, hon. Members opposite label them as extremists. How many times have I heard that term? Who will deny it? Right hon. and hon. Gentlemen opposite should have a care; they are prisoners of their own words. Everyone of them has made that charge.

A consumer watchdog will be of dubious value because manufacturers will probably get permission to increase prices as the prices of imported materials rise. The Government face problems of a nightmare nature in making their short term measures work—and after the freeze they will have to face the upsurge of prices that will occur.

Pressure from all sides forced the Prime Minister to declare that he would give the pensioners the £10 gift before Christmas. The Government were not originally prepared to do it. Even so, this £10 sop to the pensioners is an affront to their dignity. They want, and should have, an increase in their pension. The Government should attack and control general price increases, the level of rents for council and private houses, the price of houses, and land prices, ending all speculation in land. They are not doing enough. The nation now sees inflation as occurring at the hands of those who promised firm Government. The Government are weak, inefficient, politically bankrupt, and give no hope to the nation.

The hon. Member for Dartford (Mr. Trew) said that one should kick a little less. That is all right when one has a lot, but right hon. and hon. Gentlemen opposite have voted against the agricultural workers receiving an increase. Those who voted against it should remember that. On all counts, the Government should consider seriously the arguments for the amendments. Clearly, the Government have made a mighty error. They are a weak Government and they have failed the country. We must do all in our power to rescue them from the mess. The tragedy is That the nation may have to wait some time before the Government have the courage to go to the people. Meanwhile, the country can survey the Goverment's lack of achievement—a lack of achievement which will merit their complete rejection.

Photo of Mr George Proudfoot Mr George Proudfoot , Brighouse and Spenborough

I should love to follow the hon. Member for Swansea, East (Mr. McBride) in detail, and to deal with the prices which he quoted. Obviously, he knows nothing about retail distribution. More amazingly, the hon. Member for Bradford, South (Mr. Torney)—I am sorry he is not here—who claims to have been in the business all his life, also knows nothing about it.

Retail distribution is nothing more or less than a pipeline. Water goes into one end of a pipeline and emerges as water at the other and that is how the distribution business functions in this country. Retail margins earned by the retailers, particularly in the food industry, over the last 25 years, have fallen. If any hon. Member can point to a store in which they have increased, I shall immediately tell him why. It is because that store has widened its lines of merchandise. The hon. Member for Bradford, South, therefore, was right in saying that the lowest paid workers in the community worked in retail distribution. The farmworkers, the nurses and others today are unable to get along without an emotional noise such as was made about the cinema musicians. In my lifetime, cinema musicians captured the people's hearts when the talkies were introduced.

No trade union should be put in that position. I heartily support the freeze. I believe in a free market economy, but the Government are taking the only course possible at present. However, any hon. Gentleman who wishes to question the facts about the retail trade should do so. The truth is available.

The one aspect of the policy which I dislike is that once again the Government appear to be blaming the poor old shopkeeper. Anyone who borrows from the Library the "History of Retailing" will discover that retailers' backs are broad—they have suffered this treatment since the beginning of time.

It is not long since it was illegal in London to sell anything which one had not produced oneself. There is a world history of legislative bodies knocking retailers. Thus, I implore the Committee not to single out the retailer for criticism. He is merely a pipeline through which the goods reach the customer.

Photo of Mr Edward Leadbitter Mr Edward Leadbitter , Hartlepools, The

While the hon. Member is making accusations about the Opposition—and I agree with much of what he has said— will he note that even the Prime Minister has told the housewife to watch the retailer? Will he not concede therefore that the Prime Minister is the nigger in the woodpile?

Photo of Mr George Proudfoot Mr George Proudfoot , Brighouse and Spenborough

I am prepared to accept that. He picked the best bunch of people to police his squeeze Bill. When the Trade Descriptions Act became law the complaints were incredible and I could recount many complaints which I have heard during the past few days. Nevertheless inflation is with us and we must attempt somehow to stop it.

I attended a Conference in July when many of our leading economists lectured about inflation for 10 minutes at a time, under the auspices of the Institute of Economic Affairs. We were five storeys up. They had all been so gloomy that at, the end of the day, I felt that I should leave by the top window and not by the lift. Not one of those lectures had the full answer. Many spoke in the terms which my right hon. Friend the Member for Wolverhampton, South-West (Mr. Powell) and my hon. Friend the Member for Oswestry (Mr. Biffen) would have used. I am basically a monetarist, but I am also a politician, who was born not in Birmingham, or in Wolverhampton, as my right hon. Friend was, but in a distressed area. I was born in a coal mining town where 30 per cent. of the workers were on the dole.

If Parliament were elected for 10 years at a time—which, thank heaven, it is not—we could go ahead and all be monetarist. But how on earth we should contain the revolutionary attitude of people outside the House by being pure monetarists I do not know. For my right hon. Friend the Member for Wolverhampton, South-West to pretend that the war against inflation can be won with one weapon is like imagining that the Ancient Britons went to war with one weapon. They had spears, swords and catapults; and a modern army has many weapons.

The Government must use several weapons. Already, to my satisfaction, they have started to turn down the money supply. But this stop to vigorous wage increases had to occur. I hate it. I think that Clive Jenkins is behaving exactly as my right hon. Friend the Member for Wolverhampton, South-West would do if he happened to be leading that trade union. And I should be doing the same as Mr. Jenkins if I were in his place. But the House has the duty to protect the people of our country from monopolists.

Both sides of the House whoop it up when we have a go at the capitalists or at private enterprise. The Government are to propose further legislation against monopolies. I am delighted by that. I once said in the House that I would gaol the men who broke the monopoly laws passed by Parliament. But the Opposition are now supporting the monopoly attitude of the trade unions. We have come to a juncture in our history when trade unionists have realised that they have monopoly power. Eventually, it will worry the Opposition just as much as it will worry the Government side.

How do we curtail or contain the monopoly power of the trade unions? It seems to have escaped the notice of most hon. Members that on 1st January we shall have a tariff cut of 20 per cent. That is probably the only practical way of doing anything to deal with the problem. Within 90 days of 1st January, when we enter the European Economic Community, we shall have that tariff reduction.

The problem facing the House is that of trade union monopoly power. One hon. Member said earlier that the trade union leaders were castigated by the Government as Left-wing revolutionaries and militants. I do not think that that is right. They can only keep office and moderate their own militants further down the heap. If he asks my hon. Friends he will find that is right.

With the 90-day freeze I am convinced that the Government are on the right tack. I am sure we have got to have this clean karate chop on prices and wages so that the whole of the community has time to think. The trade unions have been shouting for bigger wage increases and at the same time saying that it is the Government's fault that the pensioners are not looked after. I implore the trade unions to think of the rest of the community when they seek higher wage increases.

[Mr. E. L. MALLALIEU in the Chair]

10.15 p.m.

During the talks at Downing Street, my right hon. Friend the Prime Minister offered a rise of £2. The hon. Member for Bradford, South must know that that would be the biggest wage increase that men and women in the distributive trade had ever received. The Prime Minister said we must look at the poorer people in the community and we are. I fully support the idea of a 90-day freeze.

Photo of Mr Leslie Huckfield Mr Leslie Huckfield , Nuneaton

I shall not attempt to follow the hon. Member for Brighouse and Spenborough (Mr. Proudfoot) on his thrilling seminar on the retail trade; nor shall I attempt to follow his false analysis of the so-called monopolies of the trade union movement. Most objective economists would say that if the trade unions are acquiring any elements of monopoly power, that is the kind of power that they need to deal with the monopoly power of the employers.

What we are seeing is not the development of monopoly power by the trade union movement, but the development of countervailing power. If we are getting an increase in the bargaining power of the trade unions—and it is a thesis that I can hardly support—it is the kind of development that employers have been encouraging for years by their own monopoly tendencies.

I occupy a unique position in the Committee on the subject of prices and incomes policies. Had it not been for the attempt of the last Labour Government to introduce a prices and incomes policy, I should not be here. My predecessor had strong views on a prices and incomes policy. The General Secretary of the Transport and General Workers' Union—my own union—also has strong views, which I share.

I was one of those who originally bought the Labour Government's idea of a prices and incomes policy, because we were told—and I then believed sincerely—that that was the way in which we could do something about the wages of the lower-paid workers. Indeed, that was the line on which the Labour Party of the day sold its policy.

But I have learnt, as I hope many of my colleagues have, that we have a situation in which the earnings of lower paid workers are not helped by prices and incomes policies, and precisely the way in which the Government are carrying out this freeze shows directly and deliberately that lower-paid workers are not helped by this type of legislation. Indeed, if the Government want to show the country that they genuinely intend to help the lower-paid workers, there are two prima facie cases before them at the moment. I refer, of course, to the wages of the agricultural workers and to the hospital ancillary workers. From the experience of the Labour Government, and from experience of the way in which the Government are now applying the freeze legislation, I repeat that legislation of this kind will not help the lower-paid.

The other lesson which the Government do not seem to have learnt is that the people of this country cannot be conned all of the time. Minister after Minister has appeared on television telling us what moderate men they all are. They are trying to convince us that they are out for the good of the country as a whole, that they do not pursue private profit, that they do not pursue sectional interests, that they are doing it only for the good of the country, and that it is the nasty trade union militants who are letting the country down.

I am sure that the vast majority of people do not buy that line, because the vast majority of people know that if trade unionists are militant, if trade unionists put in for wage increases, they are only responding to the price increases which the wives of trade unionists face in the shops every week. What is a trade unionist supposed to do when his wife complains, when he finds that bus fares have gone up, when food prices have gone up, when his rent has increased? Is he supposed to take it all lying down and let inflation march over him?

If trade unionists put in wage demands, if they are militant, it is because they find that the whole atmosphere, the whole environment of prices and inflation, is running away faster and faster in front of them. The only ingredient which might be successful and might lead to any kind of prices policy is a statutory control of prices. That is the only kind of precondition which might even be acceptable as a bargaining beginning for the trade union movement.

If the Government tell the Committee that price freeze legislation will not work, that statutory controls will not work, let them follow the example of the Dutch, the French, and the Swedes who, from time to time, have all had examples of direct price control legislation. For the Minister to tell the Committee that price control is impracticable, having had so much legislative experience in Common Market countries, is a nonsense. If we are to create any kind of climate for any kind of moderation of wage demands, for the slowing down of inflation, statutory control of prices is an absolute precondition and is the only precondition that would be possibly acceptable as a start for bargaining for the trade union movement.

As a Member of Parliament, what right do I have to ask my constituents to hold in check their wage demands when, as a deliberate result of the Government's legislation, their council house rents will be increased? What is right about that? What social justice is there in that? What equity is there in that? What sense of decency, what sense of fair play?

What right has any Member of Parliament to ask his constituents to hold in check their wage demands when, by the same token, by a second piece of legislation, the Government are deliberately raising rents? What right has any Member of Parliament to ask his constituents to hold in check their wage demands when, at the same time, that Member of Parliament, a member of this honourable House, is bound to know that any kind of dividend freeze can always be recouped afterwards, because a dividend postponement, which is all it can be, is something which can be given out in additional dividends later?

On the other hand, a wage increase forgone is a wage increase forgone for ever. So here we are again with another piece of completely unjust, completely unfair legislation, which the Government are putting before the House. Again, the Government ask that trade unionists should restrain their wage demands when they adimt that they are to do nothing about controlling food prices. What social justice, what kind of fair play, what kind of decency is there in such claims?

That is why I cannot ask my constituents to restrain their wage demands. I cannot ask my fellow members of the Transport and General Workers' Union not to put in for wage increases when, as a deliberate result of the Government's policies, rents, prices, particularly food prices, and dividends are to rise regardless.

The answer from the Government, the answer that the economic analysts have been giving, is that wages make up about 60 per cent. or 70 per cent. of the gross national product and, consequently, it is that 60 per cent. or 70 per cent. upon which we have to concentrate. Although wages might make up some 60 per cent. or 70 per cent. of the gross national product, the political significance of that 10 per cent. of GNP which is dividends—it may even be 4 per cent.—and payment of incomes in rents is far greater than that 4 per cent. or 10 per cent.

For Ministers to say that we have to concentrate on that 60 per cent. of the gross national product is completely to ignore the far greater significance of the remaining percentage in political terms. I say again to Ministers that they must come to terms with the fact that it is unjust, unfair, indecent in many ways to tell the Committee that only one section of the community is to be penalised, which is what this freeze asks.

The Government have put the blame for the failure of the TUC-CBI talks on the trade union movement. I hope that the TUC will go on asking for a freezing of council house rents and food prices and for a legal freezing and statutory system of price controls. Those are the preconditions on which I should be prepared to talk about any package like this. That is the only system which the trade union movement will accept. It was the fault, not of the TUC, but of the Government that the talks broke down.

Photo of Mr Patrick Jenkin Mr Patrick Jenkin , Wanstead and Woodford

We have had a thoughtful debate. In some senses it has been more like a Second Reading debate. Major issues have been raised, and I shall discuss some of them later. I will deal first with the amendments—which have been mentioned from time to time by hon. Members.

Amendment No. 1 proposes that there should be a delay in the operation of the standstill after the Royal Assent for 30 days or for such longer period as might be decided. I cannot advise the Committee to accept the amendment. It has been recognised on both sides of the Committee that the need is for an immediate standstill in order to hold the position pending the proposals which the Government will put forward as Stage 2 of the operation. The right hon. Member for East Ham, North (Mr. Prentice) said that the Bill made the resumption of the tripartite talks more difficult and therefore less likely. I do not accept that, but even if it were so the Government would have to weigh that disadvantage—if it were a disadvantage—with the need to protect the situation in the interim and to halt the rising spiral of costs and prices. Therefore, we believe that an immediate standstill is an essential precondition to the working out of Stage 2. I cannot accept the further delay which the amendment suggests.

Amendment No. 2 suggests that the period, instead of 90 days as in the Bill, should be 30 days. In my view, that would be unrealistically too short a period to evolve the Stage 2 proposals. and to engage in the necessary consultations and to make them effective.

Photo of Mr Robert Maclennan Mr Robert Maclennan Shadow Spokesperson (Defence)

If the hon. Gentleman considers 30 days to be too short a period to work out the Stage 2 proposals, why did the Government, in the Downing Street talks, give the trade union movement only seven days?

Photo of Mr Patrick Jenkin Mr Patrick Jenkin , Wanstead and Woodford

The talks had continued for over three months. That perhaps makes the hon. Gentleman's suggestion a little unreal.

Amendment No. 5 suggests that the power to extend for 60 days is not necessary and should be removed from the Bill. But we need to guard against the risk that the working out of the Stage 2 proposals may take longer than 90 days.

Amendment No. 3 suggests that the Bill should cease to have effect 90 days from 6th November. In the Bill, we are following entirely the precedent of the Labour Government's 1966 freeze when the 12-month period ran from 20th July. which was the date of the then Prime Minister's announcement.

My right hon. and learned Friend dealt with Amendment No. 4, which relates to the publication of the proposals before extending the period. I must advise the Committee to reject the amendments which we are debating.

I will now deal with the many specific points which have been raised in this lengthy debate. Rent increases were mentioned by the hon. Members for York (Mr. Alexander W. Lyon) and Islington, East (Mr. John D. Grant). I did not hear the whole of the speech of the hon. Member for Islington, East. Both hon. Members asked whether increases in rents which are due to be made on 1st April, 1973, for certain council houses will be cancelled if the standstill is extended into the 60 days after the 90 days.

The Bill provides for a standstill extending in the first instance to 90 days after enactment. We have every hope that we will be able to reach agreement in that period on the main objectives of the second phase of our programme and to introduce legislation, if necessary, to implement them. If we cannot, and if it becomes necessary to extend the standstill, a new situation will arise and we shall have to take account of it in formulating our proposals. There is no question of our repealing the Housing Finance Act and resiling from our intention that fair rents should apply to council as well as to private unfurnished tenancies, and that existing rents should progress to fair rents.

My hon. Friend the Member for Cities of London and Westminster (Mr. Tugendhat) developed an interesting argument based on some figures which he put to the House. I find it a little difficult to accept the conclusion that he drew from those figures. If, as my hon. Friend sought to argue, the majority of settlements since January of this year were between £2 and £2·60, I am bound to tell him that there would have been no need for tripartite talks, no need for the £2–£2·60 package and no need for the Bill. By September, with a rising trend of wage rates, the figure had reached 17 per cent. over a period of 12 months earlier. That, by any standard, is an alarming increase in the rise of basic wages rates. Perhaps the explanation of my hon. and learned Friend's figures is that they were limited to basic minimum wage rates or minimum earnings, whereas the total level is affected by the overall level of the rise in wage rates and earnings.

As my hon. Friend frankly said, his figures concentrated on the settlements expressed in percentage terms. He quoted the settlements which were arrived at in pounds/pence terms, and many of the percentage settlements were well over £2 or £2·60. I agree with my hon. Friend that the package would have been advantageous in the circumstances in which it was put forward, namely, when it was linked to moderation in the rate of price inflation and where it offered special help to the low paid.

The hon. Member for West Lothian (Mr. Dalyell) asked about the committee of 20 under the chairmanship of Mr. Morse and the representations that we have made to it. The hon. Gentleman will recollect that at last year's IMF annual meeting my right hon. Friend the Chancellor of the Exchequer put forward a substantial package of proposals for the reform of the international monetary system. The proposals were developed at this year's meeting of the Commonwealth Finance Ministers and were taken further at this year's IMF meeting. These proposals, together with others, are now under discussion through the committee of 20.

I hope that that answers that point. I am sorry if I misunderstood the hon. Gentleman's other point about widows. It it is in order, I will briefly state the position relating to the £10 bonus which is being paid to pensioners, including all the categories of widows who will benefit from that bonus. About 8 million people, all told, will be entitled to receive the payment. They include retired pensioners, including those receiving supplementary pensions, who account for about 7½ million.

In addition, the payments will be made to national insurance widows over 60; war widows over 60 without retirement pension on their own insurance; industrial death benefit widows over 60 without retirement benefit on their own insurance; war pensioners—over 65 if men and 60 if women—with unemployability supplement; industrial disablement pensioners with unemployability supplement invalidity pensioners aged 65 for men and 60 for women, and those in receipt of attendance allowances at age 65 for men and age 60 for women if not receiving one of the above benefits.

Photo of Mr Arthur Lewis Mr Arthur Lewis , West Ham North

The Minister will be aware that some of those people are, unfortunately, either in old people's homes or in hospital, and in the normal course must make a contribution towards their keep. If he cannot answer now, will he consider the fact that, as this is a bonus, these people should receive it complete and not have to pay some of it over to the hospital authorities or to the old people's home?

Photo of Mr Tam Dalyell Mr Tam Dalyell , West Lothian

If it is considered that old-age pensioners and the categories the Chief Secretary has mentioned need some form of protection, on what basis of logic is this protection denied to widows under 60, who may, as he knows, be in equal need?

Photo of Mr Patrick Jenkin Mr Patrick Jenkin , Wanstead and Woodford

There is always difficulty when lines have to be drawn. The logic is that a substantial number of the widows under 60 are in employment, whereas the numbers in employment over that age are much fewer.

In answer to the hon. Member for West Ham, North (Mr. Arthur Lewis), it is important that the right answer should be given. I do not have it to hand, so perhaps I can write to the hon. Gentleman.

Photo of Mr Patrick Jenkin Mr Patrick Jenkin , Wanstead and Woodford

The hon. Member for Islington, East also asked a question about the position of the London allowance for teachers. There was no question of the management side being prevented from making an offer. On the Friday before the standstill an offer of a revised allowance of £133 was made—an improvement of £15. The colleges of further education teachers accepted the offer. The other teachers' panel rejected the same offer. Therefore, further implementation of their claim will be subject to the terms of the standstill and must be covered by it. That follows inevitably from the general provision of the policy.

My hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley) asked what was the position particularly for steel prices under the European Communities Act and our obligations under the Rome and Paris Treaties. It remains our objective in the longer term to get the British Steel Corporation on to a sound financial footing. In the context of this interim Bill, as the White Paper makes very clear, the standstill applies to steel prices as to prices in other nationalised industries.

Our Community partners share our concern in combating inflation. Indeed, this was made very clear both at the Summit conference attended by my right hon. Friend the Prime Minister and, more recently, at the Finance Ministers' meeting in Luxembourg, attended by my right hon. Friend the Secretary of State for the Environment and myself, We have already had some discussions with the European Commission on the question of steel pricing. These will certainly continue, and there are good indications that they will prove constructive and that we shall meet with understanding. Although there are real problems I do not think that these should be exaggerated. My right hon. Friend the Secretary of State for Trade and Industry has assured the House that it will be kept informed of the progress of these discussions.

Photo of Mr John Biffen Mr John Biffen , Oswestry

Can my hon. Friend clear up one residual doubt in my mind following that interesting statement? During the period of the application of the Counter-Inflation (Temporary Provisions) proposals now before the Committee will the British Steel Corporation be using its existing price lists?

Photo of Mr Patrick Jenkin Mr Patrick Jenkin , Wanstead and Woodford

That is a separate question. The question of the price list is based on the basing points. Ministers at the Department of Trade and Industry have been answering question on that. I would not like to add anything to what they have said.

Photo of Mr John Biffen Mr John Biffen , Oswestry

My hon. Friend will appreciate that this is a point of very real and central concern. Will he appreciate that if the British Steel Corporation has to switch from its existing price list to a basing points system there will inevitably be winners and losers among steel users? As the Government are proposing to take powers to compel reductions in prices of those whose raw material costs may fall there are very serious administrative consequences, unless the Government are prepared to take consequential action to pass on those reductions.

Mr. Jeakin:

I very much appreciate the importance of what my hon. Friend is saying, but his questions are going further than those he raised in his speech, and I really do not want to add to what has been said by my right hon. and hon. Friends at the Department of Trade and Industry on this complicated and technical matter.

I turn to the speech by my hon. Friend the Member for Brighouse and Spenborough (Mr. Proudfoot), who talked about the problems that retailers have been facing and will face under the provisions of this Bill. I remind my hon. Friend that the Minister for Trade and Consumer Affairs made the point in his speech in the debate that retailers do indeed stand in the front line in this battle; and that the Retail Consortium has indicated that it is backing the policy of the White Paper and the Bill. He paid tribute to the retailers, of whom the overwhelming majority are ready and willing to co-operate and to play their part in helping to make the Government's policy work.

Finally, in the last two or three minutes I have, I would very briefly deal with the argument put by a number of Opposition speakers that somehow we are not entitled to ask for agreement in the tripartite talks. The right hon. Member for East Ham, North, quoted the statement put out by the TUC Economic Committee which suggested that there has been no significant advance on the proposals of 26th September. I just cannot accept that. The proposals which my right hon. Friend the Prime Minister put forward at the last meeting added to or developed the original proposals which had been put forward: on food prices by the proposal for having joint monitoring arrangements, and the food retailers' undertakings and by the Government's offer to use its best endeavours to moderate the upward trend of prices; on rents, by increases in the needs allowance for rent rebates and allowances and consultations with local authorities about moderating the increases in rates; on poverty surtax, by proposals for extending the periods for family income supplement, and free school meals and welfare milk; on pensions, by the proposal of a lump sum payment, and on taxation, by reiterating the Chancellor's promise to consider at Budget time the proposals in respect of indirect taxation.

I really cannot accept the argument put forward so often in this debate that the Government remained rigid, adamant and unyielding. On the contrary, we have always made it clear that the proposals we put forward were open to negotiation, and in the final package which my right hon. Friend put forward there were nine points of which I have mentioned some, which were put forward as a total package then available for discussion. The Committee will know that at that stage the trade unions indicated that it was not a basis for negotiation, and the talks broke down. I dealt on Monday night, a week ago, with the argument about taxation, social security and housing, and the argument by hon. Members opposite on those issues is wholly misconceived.

The vast bulk of tax reductions has gone to ordinary wage and salary earners. There is a whole new range of social benefits for those in the greatest need, the poorer families, and children, the disabled, the sick and the chronic sick; and there is the annual entitlement to pensions uprating and the national insurance benefits.

I really cannot accept the argument that we are not entitled to ask for co-operation in the fight against inflation. On the contrary, it is in the interests of all people, whoever they are, that the trend of rising costs and prices should be halted, and that we should all work together to achieve that.

Photo of Mr Thomas Price Mr Thomas Price , Westhoughton

Mr. J. T. Price rose

Photo of Mr Thomas Price Mr Thomas Price , Westhoughton

Mr. J. T. Price rose

The Deputy Chairman:

Order. The Minister is not giving way. The hon. Gentleman must resume his seat.

Photo of Mr Patrick Jenkin Mr Patrick Jenkin , Wanstead and Woodford

My right hon. Friend the Prime Minister said in his Guildhall speech last night: The Government is now working on proposals for the next phase to present to Parliament. And we shall stand ready to discuss them, and if possible agree them, with the two sides of industry, because they will be designed to work towards the objectives on which we were all agreed in the tripartite talks. It is because this amendment, by delaying the operation of the standstill and allowing inflation to continue to gather pace, would make it more and not less difficult to reach acceptable proposals for the next phase that I must ask the Committee to reject it.

10.45 p.m.

Photo of Mr Denis Healey Mr Denis Healey , Leeds East

Our debate this evening on Clause 1 has covered the central policy issue which will determine whether the Bill helps or hinders the cause of stopping inflation. The debate has been centred on the relationship between the freeze as a short-term expedient, with what the Minister for Trade and Consumer Affairs described as having rough edges, and the long-term policy for inflation which must follow and be capable of containing pressures far more powerful than those which now exist precisely as a result of the operation of the freeze.

The purpose of the first two amendments is to delay the introduction of the freeze until agreement is reached on alternative means of controlling inflation, and then to limit the length of the freeze to 30 days, which would give sufficient time to get legislation through the House if legislation is required.

The Minister for Trade and Consumer Affairs argued that the Government must have the right to continue the freeze until the end of April if necessary, in fact for a full six months from the date of the Prime Minister's initial announcement last week. The Minister said that this was necessary because it might take a full six months to prepare and carry through the follow-up legislation, and he clearly assumed that legislation would be required.

The public might be surprised that a Government which first threatened legislation providing for the statutory control of inflation as early as midsummer this year, and which put forward detailed proposals two months ago during the talks at Chequers, still have no legislation ready and still imagine that discussions inside the Government may have to continue for another four or five months. But the Opposition are not surprised. As has been suggested in many speeches today, a freeze is difficult enough, but it is child's play compared with a statutory policy for controlling increases in prices and incomes according to clear criteria.

How can the base on which increases are permitted be defined? On prices, how is protection to be given against changes in product design or quality? On wages, how can changes in the nature of the work done be coped with? How can the shifts from piecework to time rates which are taking place throughout industry be coped with? How can plant bargaining be dealt with? What sort of enforcement machinery is there to be and who is to apply it? Will it be mandatory or permissive?

One only has to think about these problems which all have to be solved in the follow-up legislation to realise that no long-term policy for coping with prices and incomes can work properly without the willing support of all concerned, and no long-term policy can work at all without at least the acquiescence of those concerned. The lesson that has been driven home by the experience of the 30 or 40 countries, including our own since the war, which at varying times have tried to control prices and incomes by legislation is that there must be acquiescence and willing support and understanding by those concerned.

The real trouble is that the Government are still totally confused about what they want to achieve in the legislation and how to get it. They are more than confused. They are deeply divided both on the ends and the means of a policy to control inflation. This is why, so far, we have had no argument from the Government Front Bench, either in the debates today or in the discussions in the last ten days, to justify or even to explain the complete somersault which they have executed in their attitude to a prices and incomes policy.

All we have had—repeated over and over again until one almost screams out —is the bald statement that it is the Government's policy in the national interest to say that what was black is now white, and that what was bad is now good. But we have had no argument whatever, indeed no explanation, why the Conservative Party now believes that what it has been saying over the last 10 years was wrong.

The hon. Member for Oswestry (Mr. Biffen), as so often in the past, made a withering attack on the reversal in Government policy. He was honest with the Committee. He made it clear that he does not want a voluntary policy for dealing with prices and incomes. He admitted that he was glad that the talks in Downing Street had failed because, he said, a voluntary policy would only be possible if the Government were also to reverse their policy in other respects. He is quite right. That is why the Downing Street talks broke down—because the Government, who have reversed their policies and who on 90 per cent. of the issues have broken the promises on the basis of which they entered this House two years ago, are curiously reluctant to complete the process and to make sence of their new attitude.

The Government, as the Chief Secretary made clear in his speech tonight, and as the Prime Minister told the City at the Guildhall last night, want a voluntary policy. But the Government must realise that if they want the ends, they must accept the means. They must satisfy the natural and inevitable demands of ordinary men and women that, if they are to accept restraint on incomes, the Government should effectively control the cost of living as a whole. It is the rise in the cost of living as a whole which is fuelling demands on the shop floor throughout the country for increases in earnings. The cost of living, as a whole, for ordinary men and women includes food, housing, justice for their retired parents and reform of the Industrial Relations Act.

The Chief Secretary was more than disingenuous when he attempted to argue that the Government had made reasonable concessions to the TUC in the talks and that the TUC's attack on the Government for making further negotiation impossible was unjustified. The plain fact is, as has been made crystal clear by Ministers today, that the Government declared very late in the day, after there had been discussions on these issues at Chequers and Downing Street, that certain major items were to be outside the scope of negotiations. They included pensions, rents, the Industrial Relations Act and food, in so far as any effect on prices arose from the operation of the common agricultural policy.

What many hon. Members must find puzzling in the extreme is that a Government who were prepared to wreck the negotiations for a voluntary policy are now taking powers to do all the things which could have produced voluntary agreement and made the Bill unnecessary. They could override any earlier legislation, including the Housing Finance Act and the European Communities Bill, if Ministers felt it to be necessary. If they had indicated their readiness in Downing Street to do this, the talks would not have broken down. If they are prepared now to be honest with the TUC on these matters and only if they are prepared to make meaningful this paragraph in the schedule is there any chance of resuming the conversations and getting the sort of policy that Ministers still say that they really want.

It is vital that the Government should be prepared to override previous legislation if they are to have any policy which is to contain the sort of pressures which will have built up as a result of the operation of the freeze and the freeze lasts, as the right hon. and learned Gentleman insisted it must be able to last, until the end of April.

I was staggered by what the Chief Secretary told us a moment ago. As I understand it, he was suggesting that if the freeze continues until the end of April and wages remain totally frozen, and at the same time there is a totally ineffective freeze on prices, the Government will insist on carrying through the next round of rent increases at the beginning of April while the freeze is still continuing. If the Government do not mean that, they must make it clear at this moment to the House and to the country—[Interruption.] Unfortunately, a few words from the new Minister who is supposed to protect the consumer appear to have persuaded the Chief Secretary not to be bold enough to answer my question—

Photo of Mr Patrick Jenkin Mr Patrick Jenkin , Wanstead and Woodford

The right hon. Gentleman should not stoop to making that kind of remark. I stand entirely by the words that I used in my wind-up speech, which were very carefully chosen. I advise the right hon. Gentleman to read them again tomorrow, because they do not bear any relation to what he has just said.

Photo of Mr Denis Healey Mr Denis Healey , Leeds East

All that I can say to the hon. Gentleman is that we must thank God that, in spite of the guillotine, we have two more full days in which to probe the Government on these issues. I can assure him that my right hon. and hon. Friends who speak tomorrow will do so.

The right hon. and learned Gentleman wobbled, wriggled and was arcane and uncertain in what he said about steel prices. It was impossible for anyone to make out what will happen and whether the Government will use the powers that they are taking if they do not get what they want from the European Commission.

The same is true of food prices. Are the Government prepared to use their powers to prevent the increases in food prices which will begin before the freeze ends as a result of the operation of the common agricultural policy, if, as the right hon. Gentleman suggested, the freeze might go on until the end of April?

If the Government are prepared to make it clear that these matters are open to a change of policy and to negotiation, they can and should re-open the talks with the CBI and the TUC immediately. The right hon. Gentleman recognises that the freeze has rough edges. I warn him that the freeze has sharp edges which will cut to ribbons any possibility of a concensus if it continues for a full six months from when it was announced by the Prime Minister last week. I hope that Ministers took seriously the warning of my hon. Friend the Member for Bradford, South (Mr. Torney), who represents a very moderate union which is being driven to desperation by the way in which the freeze is operating against its members.

The Government have shown that they cannot control prices and will not try to control those prices which determine at least 30 per cent. of the cost of living for ordinary families.

The longer that the freeze lasts, the more it will sour the atmosphere. If it lasts until the end of April, the pressure built up will be terrifying. For all these

reasons, I ask the Committee to support these Amendments.

Question put, That the Amendment be made:—

The Committee divided: Ayes 266, Noes 303.

Division No.9.]AYES[10.59 p.m
Abse, LeoEdwards, William (Merioneth)Lipton Marcus
Albu, AustenEllis, TomLomas. Kenneth
Allaun, Frank (Salford, E.)English, MichaelLoughlin, Charles
Allen, ScholefieldEvans, FredLyon, Alexander W. (York)
Archer, Peter (Rowley Regis)Ewing, HarryLyons, Edward (Bradford, E.)
Ashley, JackFaulds, AndrewMabon, Dr. J. Dickson
Ashton, JoeFernyhough, Rt. Hn. E.McBride, Neil
Atkinson, NormanFisher, Mrs.Doris(B'ham, Ladywood)McCartney, Hugh
Bagier, Gordon A. T.Fletcher, Raymond (Ilkeston)McElhone, Frank
Barnes, MichaelFletcher, Ted (Darlington)McGuire. Michael
Barnett, Guy (Greenwich)Foley, MauriceMackenzie, Gregor
Barnett, Joel (Heywood and Royton)Foot, MichaelMackie, John
Baxter, WilliamFord, BenMackintosh, John P.
Beaney, AlanForrester, JohnMaclennan, Robert
Benn, Rt. Hn. Anthony WedgwoodFraser, John (Norwood)McMillan, Tom (Glasgow, C.)
Bennett, James(Glasgow, Bridgeton)Freeson, ReginaldMcNamara, J. Kevin
Bidwell, SydneyGalpern, Sir MyerMallalieu, J. P. W. (Huddersfield, E.)
Bishop, E. S.Garrett, W. EMarks, Kenneth
Blenkinsop, ArthurGilbert, Dr. JohnMarquand, David
Boardman, H. (Leigh)Ginsburg, David (Dewsbury)Marsden, F.
Booth, AlbertGolding, JohnMarshall, Dr. Edmund
Bottomley, Rt. Hn. ArthurGourlay, HarryMayhew, Christopher
Boyden, James (Bishop Auckland)Grant, George (Morpeth)Meacher, Michael
Bradley, TomGrant, John D. (Islington, E.)Mellish, Rt. Hn. Robert
Brown, Hugh D. (G'gow, Provan)Griffiths, Eddie (Brightside)Mendelson, John
Brown, Robert C. (N'c'tle-u-Tyne, W.)Griffiths, Will (Exchange)Mikardo, Ian
Brown, Ronald (Shoreditch & F'bury)Hamilton, William (Fife, W.)Millan, Bruce
Buchan, NormanHamling, WilliamMiller, Dr. M. S.
Hannan, William (G'gow, Maryhill)
Buchanan, Richard (G'gow, Sp'burn)Hardy, PeterMilne, Edward
Butler, Mrs. Joyce (Wood Green)Harper, JosephMitchell, R. C. (S'hampton, Itchen)
Callaghan, Rt. Hn. JamesHarrison, Walter (Wakefield)Molloy, William
Campbell, I. (Dunbartonshire, W.)Hart, Rt. Hn. JudithMorgan, Elystan (Cardiganshire)
Cant, R. B.Hattersley, RoyMorris, Alfred (Wythenshawe)
Carmichael, NeilHealey, Rt. Hn. DenisMorris, Charles R. (Openshaw)
Carter, Ray (Birmingh'm, Northfield)Heffer, Eric S.Morris, Rt. Hn. John (Aberavon)
Carter-Jones, Lewis (Eccles)Horam, JohnMoyle, Roland
Castle, Rt. Hn. BarbaraHowell, Denis (Small Heath)Mulley, Rt. Hn. Frederick
Clark, David (Colne Valley)Huckfield, LeslieMurray, Ronald King
Cocks, Michael (Bristol, S.)Hughes, Rt. Hn. Cledwyn (Anglesey)Oakes, Gordon
Cohen, StanleyHughes, Mark (Durham)Ogden, Eric
Coleman, DonaldHughes, Robert (Aberdeen, N.)O'Halloran, Michael
Concannon, J. D.Hughes, Roy (Newport)O'Malley, Brian
Conlan, BernardHunter, AdamCram, Bert
Corbet, Mrs. FredaIrvine, Rt. Hn. Sir Arthur (Edge Hill)Orbach, Maurice
Cox, Thomas (Wandsworth, C.)Janner, GrevilleOrme, Stanley
Crawshaw, RichardJay, Rt. Hn. DouglasOswald, Thomas
Cronin, JohnJeger, Mrs. LenaPadley, Walter
Cunningham, G. (Islington, S.W.)Jenkins, Hugh (Putney)Paget, R. T.
Cunningham, Dr. J. A. (Whitehaven)Jenkins, Rt. Hn. Roy (Stechford)Palmer, Arthur
Dalyell, TamJohn, BrynmorPannell, Rt. Hn. Charles
Darling, Rt. Hn. GeorgeJohnson, Carol (Lewisham, S.)Parker, John (Dagenham)
Davidson, ArthurJohnson, James (K'ston-on-Hull, W.)Parry, Robert (Liverpool, Exchange)
Davies, Denzil (Llanelly)Johnson, Walter (Derby, S.)Peart, Rt. Hn. Fred
Davies, G. Elfed (Rhondda, E.)Jones, Barry (Flint, E.)Perry, Ernest G.
Davies, Ifor (Gower)Jones, Dan (Burnley)Prentice, Rt. Hn. Reg.
Davis, Clinton (Hackney, C.)Jones, Rt.Hn.Sir Elwyn(W.Ham, S.)Prescott, John
Davis, Terry (Bromsgrove)Jones, T. Alec (Rhondda, W.)Price. J. T. (Westhoughton)
Deakins, EricJudd, FrankPrice, William (Rugby)
de Freitas, Rt. Hn. Sir GeoffreyKaufman, GeraldProbert, Arthur
Delargy, HughKelley. RichardReed, D. (Sedgefield)
Dell, Rt. Hn. EdmundKerr, RussellRees, Merlyn (Leeds, S.)
Dempsey, JamesKinnock, NeilRhodes, Geoffrey
Doig, PeterLamborn, HarryRichard, Ivor
Dormand, J. D.Lamond, JamesRoberts, Albert (Normanton)
Douglas, Dick (Stirlingshire, E.)Latham, ArthurRoberts, Rt.Hn.Goronwy (Caernarvon)
Douglas-Mann, BruceLawson, GeorgeRobertson, John (Paisley)
Duffy, A. E. P.Leadbitter, TedRoderick, Caerwyn E.(Brc'n&R'dnor)
Dunn, James A.Lee, Rt. Hn. FrederickRodgers, William (Stockton-on-Tees)
Dunnett, JackLeonard, DickRoper, John
Eadie, AlexLestor, Miss JoanRose, Paul B.
Edelman, MauriceLewis, Arthur (W. Ham, N.)Ross, Rt. Hn. William (Kilmarnock)
Edwards, Robert (Bilston)Lewis, Ron (Carlisle)Rowlands, Ted
Sandelson, NevilleStrang, GavinWellbeloved, James
Sheldon, Robert (Ashton-under-Lyne)Strauss, Rt. Hn. G. R.Wells, William (Walsall, N.)
Shore, Rt. Hn. Peter (Stepney)Summerskill, Hn. Dr. ShirleyWhite, James (Glasgow, Pollok)
Short, Rt.Hn.Edward(N'c'tle-u-Tyne)Swain, ThomasWhitehead, Phillip
Silkin, Rt. Hn. John (Deptford)Thomas, Rt.Hn.George (Cardiff, W.)Whitlock, William
Silkin, Hn. S. C. (Dulwich)Thomas, Jeffrey (Abertillery)Willey, Rt. Hn. Frederick
Sillars, JamesTinn, JamesWilliams, Alan (Swansea, W.)
Silverman, JuliusTomney, FrankWilliams, Mrs. Shirley (Hitchin)
Skinner, DennisTorney, TomWilliams, W. T. (Warrington)
Small, WilliamTuck, RaphaelWilson, Alexander (Hamilton)
Smith, John (Lanarkshire, N.)Urwin, T. W.Wilson, Rt. Hon. Harold (Huyton)
Spearing, NigelVarley, Eric G.Wilson, William (Coventry, S.)
Spriggs, LeslieWainwright, EdwinWoof, Robert
Stallard, A. W.Walden, Brian (B'm'ham, All Saints)
Stewart, Donald (Western Isles)Walker, Harold (Doncaster)TELLERS FOR THE AYES:
Stewart, Rt. Hn. Michael (Fulham)Wallace, GeorgeMr. James Hamilton and
Stoddart, David (Swindon)Watkins, DavidMr. Tom Pendry.
Stonehouse, Rt. Hn. JohnWeitzman, David
Adley, RobertDean, PaulHordern, Peter
Alison, Michael (Barkston Ash)Deedes, Rt. Hn. W. F.Hornby, Richard
Allason, James (Hemel Hempstead)Digby, Simon WingfieldHornsby-Smith.Rt.Hn.Dame Patricia
Amery, Rt. Hn. JulianDixon, PiersHowe, Rt. Hn. Sir Geoffrey
Archer, Jeffrey (Louth)Dodds-Parker, DouglasHowell, David (Guildford)
Astor, JohnDrayson, G. B.Howell, Ralph (Norfolk, N.)
Atkins, Humphreydu Cann, Rt. Hn. EdwardHunt, John
Awdry, DanielDykes, HughHutchison, Michael Clark
Baker, Kenneth (St. Marylebone)Eden, Rt. Hn. Sir JohnIremonger, T. L.
Baker, W. H. K. (Banff)Edwards, Nicholas (Pembroke)Irvine, Bryant Godman (Rye)
Balniel, Rt. Hn. LordElliott, R. W. (N'c'tle-upon-Tyne, N.)James, David
Barber, Rt. Hn. AnthonyEmery, PeterJenkin, Patrick (Woodford)
Batsford, BrianEyre, ReginaldJennings, J. C. (Burton)
Beamish, Col. Sir TuftonFarr, JohnJessel, Toby
Bennett, Sir Frederic (Torquay)Fell, AnthonyJohnson Smith, G. (E. Grinstead)
Bennett, Dr. Reginald (Gosport)Fenner, Mrs. PeggyJones, Arthur (Northants, S.)
Benyon, W.Finsberg, Geoffrey (Hampstead)Jopling, Michael
Berry, Hn. AnthonyFletcher-Cooke, CharlesJoseph, Rt. Hn. Sir Keith
Biffen, JohnFookes, Miss JanetKaberry, Sir Donald
Biggs-Davison, JohnFortescue, TimKellett-Bowman, Mrs. Elaine
Foster, Sir John
Blaker, PeterFowler, NormanKershaw, Anthony
Boardman, Tom (Leicester, S.W.)Fox, MarcusKilfedder, James
Boscawen, Hn. RobertFraser, Rt.Hn.Hugh(St'fford & Stone)Kimball, Marcus
Bossom, Sir CliveFry, PeterKing, Evelyn (Dorset S.)
Bowden, AndrewGalbraith, Hn. T. G. D.King, Tom (Bridgwater)
Braine, Sir BernardGardner, EdwardKinsey, J. R.
Bray, RonaldGibson-Watt, DavidKirk, Peter
Brewis, JohnGilmour, Sir John (Fife, E.)Kitson, Timothy
Brinton, Sir TattonGlyn, Dr. AlanKnight, Mrs. Jill
Brocklebank-Fowler, ChristopherGodber, Rt. Hn. J. B.Knox, David
Brown, Sir Edward (Bath)Goodhart, PhilipLambton, Lord
Brougnton, Sir AlfredGoodhew, VictorLamont, Norman
Bruce-Gardyne, J.Gorst, JohnLane, David
Bryan, Sir PaulGower, RaymondLe Marchant, Spencer
Buchanan-Smith, Alick(Angus, N&M)Grant, Anthony (Harrow, C.)Lewis, Kenneth (Rutland)
Buck, AntonyGray, HamishLloyd, Rt.Hn. Geoffrey (Sut'nC'field)
Bullus, Sir EricGreen, AlanLloyd, Ian (P'tsm'th, Langstone)
Burden, F. A.Grieve, PercyLongden, Sir Gilbert
Butler, Adam (Bosworth)Griffiths, Eldon (Bury St. Edmunds)Loveridge, John
Campbell, Rt.Hn.G.(Moray & Nairn)Grylls, MichaelLuce, R. N.
Carlisle, MarkGummer, J. SelwynMcAdden, Sir Stephen
Carr, Rt. Hn. RobertGurden, HaroldMacArthur, Ian
Cary, Sir RobertHall, Miss Joan (Keighley)McCrindle, R. A.
Channon, PaulHall, John (Wycombe)McLaren, Martin
Chapman, SydneyHall-Davis, A. G. F.Maclean, Sir Fitzroy
Chataway, Rt. Hn. ChristopherHamilton, Michael (Salisbury)Macmillan, Rt.Hn.Maurice (Farnham)
Chichester-Clark, R.Hannam, John (Exeter)McNair-Wilson, Michael
Churchill, W. S.Harrison, Brian (Maldon)McNair-Wilson, Patrick (New Forest)
Clark, William (Surrey, E.)Harrison, Col. Sir Harwood (Eye)Maddan, Martin
Clarke, Kenneth (Rushcliffe)Haselhurst, AlanMadel, David
Cockeram, EricHavers, Sir MichaelMaginnis, John E.
Cooke, RobertHawkins, PaulMarples, Rt. Hn. Ernest
Coombs, DerekHayhoe, BarneyMarten, Nell
Cooper, A. E.Heath, Rt. Hn. EdwardMather, Carol
Cordle, JohnHoseltine, MichaelMaude, Angus
Corfield, Rt. Hn. Sir FrederickHicks, RobertMaudling, Rt. Hn. Reginald
Cormack, PatrickHiggins, Terence L.Mawby, Ray
Costain, A. P.Hiley, JosephMaxwell-Hyslop, R. J.
Critchley, JulianHill, John E. B. (Norfolk, S.)Meyer, Sir Anthony
Crouch, DavidHill, James (Southampton, Test)Mills, Peter (Torrington)
Crowder, F. P.Holland, PhilipMills, Stratton (Belfast, N.)
d'Avigdor-Goldsmid, Sir HenryHolt, Miss MaryMiscampbell, Norman
d'Avlgdor-Goldsmid, Maj.-Gen. JackHooson, EmlynMitchell, Lt.-Col.C. (Aberdenshire, W)
Mitchell, David (Basingstoke)Rees, Peter (Dover)Taylor, Frank (Moss side)
Moate, RogerRees-Davies, W. R.Taylor, Robert (Croydon, N.W.)
Molyneaux, JamesRenton, Rt. Hn. Sir DavidTebbit, Norman
Money, ErnieRhys Williams, Sir BrandonTemple, John M.
Monks, Mrs. ConnieRidley, Hn. NicholasThatcher, Rt. Hn. Mrs. Margaret
Monro, HectorRidsdale, JulianThomas, John Stradling (Monmouth)
Montgomery, FergusRippon, Rt. Hn. GeoffreyThomas, Rt. Hn. Peter (Hendon, S.)
More, JasperRoberts, Michael (Cardiff, N.)Thompson, Sir Richard (Croydon, S.)
Morgan, Geraint (Denbigh)Roberts, Wyn (Conway)Thorpe, Rt. Hn. Jeremy
Morgan-Giles, Rear-Adm.Rodgers, Sir John (Sevenoaks)Tilney, John
Morrison, CharlesRossi, Hugh (Hornsey)Trafford, Dr. Anthony
Mudd, DavidHost, PeterTrew, Peter
Nabarro, Sir GeraldRussell, Sir RonaldTugendhat, Christopher
Neave, AireySt. John-Stevas, NormanTurton, Rt. Hn. Sir Robin
Nicholls, Sir HarmarScott, Nicholasvan Straubenzee, W. R.
Noble, Rt. Hn. MichaelScott-Hopkins, JamesVaughan, Dr. Gerard
Onslow, CranleyShaw, Michael (Sc'b'gh & Whitby)Vickers, Dame Joan
Oppenheim, Mrs. SallyShelton, William (Clapham)Walder, David (Clitheroe)
Orr, Capt. L. P. S.Simeons, CharlesWalker, Rt. Hn. Peter (Worcester)
Osborn, JohnSinclair, Sir GeorgeWalker-Smith, Rt. Hn. Sir Derek
Owen, Idris (Stockport, N.)Skeet, T. H. H.Wall, Patrick
Page, Rt. Hn. Graham (Crosby)Smith, Cyril (Rochdale)Walters, Dennis
Page, John (Harrow, W.)Smith, Dudley (W'wick & L'mington)Ward, Dame Irene
Pardoe, JohnSoref, HaroldWarren, Kenneth
Parkinson, CecilSpeed, KeithWells, John (Maidstone)
Peel, JohnSpence, JohnWhite, Roger (Gravesend)
Percival, IanSproat, IainWiggin, Jerry
Pike, Miss MervynStainton, KeithWilkinson, John
Pink, R. BonnerStanbrook, IvorWinterton, Nicholas
Pounder, RaftonSteel, DavidWolrige-Gordon, Patrick
Price, David (Eastleigh)Stewart-Smith, Geoffrey (Belper)Wood, Rt. Hn. Richard
Prior, Rt. Hn. J. M. L.Stodart, Anthony (Edinburgh, W.)Woodnutt, Mark
Proudfoot, WilfredStoddart-Scott, Col. Sir M.Worsley, Marcus
Pym, Rt. Hn. FrancisStokes, JohnWylie, Rt. Hn. N. R.
Ouennell, Miss J. M.Stuttaford, Dr. TomYounger, Hn. George
Raison, TimothySutcliffe, John
Ramsden, Rt. Hn. JamesTapsell, PeterTELLERS FOR THE NOES:
Rawlinson, Rt. Hn. Sir PeterTaylor, Sir Charles (Eastbourne)Mr. Bernard Weatherill and
Redmond, RobertTaylor, Edward M. (G'gow, Cathcart)Mr. Walter Clegg.
Reed, Laurance (Bolton, E.)

Question accordingly negatived.

It being after Eleven o'clock The CHAIRMAN proceeded, pursuant to the Order this day, to put forthwith the Question necessary for the disposal of the Business to be concluded at this hour.

Clause 1 ordered to stand part of the Bill.

Then The CHAIRMAN left the Chair to report Progress and ask leave to sit again.

Committee report Progress; to sit again tomorrow.