Orders of the Day — Prices

– in the House of Commons at 12:00 am on 7th May 1973.

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3.52 p.m.

Photo of Mr Tony Benn Mr Tony Benn , Bristol South East

I beg to move: That this House has no confidence in Her Majesty's Government's policies for the control of prices; and condemns the abdication of Ministerial responsibility for price control to bodies not accountable to Parliament. I can summarise the Opposition's case very quickly for the House by saying that prices, especially food prices, are today the key political issue. The Government have tried over the years six different and contradictory policies for dealing with prices. All of them have failed, and the present one is a fraud and a smokescreen behind which wage control can be imposed.

The rate of inflation has reached unprecedented levels under this Government. The Government have blamed everyone but themselves, and they are now shielding behind all sorts of agencies, boards and inspectorates to avoid responsibility. They have dismantled democratic control in certain key areas and laid the foundations for a system such as exists in corporate States. All these policies have been justified by reference to the need to achieve economic growth, which in itself is extremely shaky and there are signs that it may not be able to survive.

This is a motion of censure on the Government, and there is no complacent amendment put down by Government Ministers. Our charge is that of a complete failure to control prices and an abdication of ministerial responsibility. The Government's complacency was typified by the Chancellor of the Exchequer, who said on the radio yesterday that the only problems facing the country were "the problems of success". This debate is about some of those "problems of success".

We have concentrated on prices for three reasons. First, many of the prices which have risen have done so as a result of deliberate Government policy and threaten the living standards of working people and their families, especially the lower-paid and pensioners, and this year the situation will get worse. Secondly, in the control of prices wage increases to meet them or subsidies to neutralise them will be the key to any national agreement on policies to beat inflation. Thirdly, we remind the Government that they were elected in the General Election less than three years ago on a clear and solemn promise to achieve actual and immediate price reductions. Everyone knows that if the Prime Minister had told the people the truth in 1970 he would not now be Prime Minister. That is the background against which this debate takes place.

We are told by Ministers that they are just at the beginning of phase 2 and talks about phase 3. On the radio today, no doubt because of today's debate, the announcement was made that talks would begin. If we are to get the record straight, we have to realise that Government policy on prices has already gone through six different stages and we are about to enter not phase 3 but stage 7 of Government thinking on prices. I will remind Ministers who will be speaking in this debate what those stages of Government policy have been.

I must start by taking them back to the attitude of the Conservative Party before and during the General Election, and the policy on prices on which they were elected. That policy was characterised by three elements. One was that all inflation was the responsibility of the Labour Government and there was no recognition of world factors although they applied when Labour was in power —world factors which are now most strongly stressed. Secondly, as candidates in the election, present Ministers, including the Secretary of State for Trade and Industry, associated themselves with a manifesto which took a very sympathetic view of wage increases, wages chasing prices up in a desperate and understandable attempt to improve living standards ". That was the basis on which they spoke of wages. Thirdly, of course, there was the Prime Minister's famous "at a stroke" statement. That was the first stage of policy taking us up to 18th June 1970.

Policy number 2 was adopted immediately after the election. Then all inflation was blamed on wage claims. The unions were asked to accept full responsibility, and the Industrial Relations Act was seen as one of the instruments by which the bargaining power of the unions would be dealt with. In a famous interview on television, which I am sure most hon. Members saw, on 24th September 1970 the Prime Minister was asked by Mr. Alistair Burnet at 10 Downing Street: Do you still reject the idea of any direct control of wages or prices? The Prime Minister replied: Yes, indeed—yes. I have always made it plain that we were not going to have legal control of wages and prices; and I have said that we are going to carry through the reform of industrial relations. An attack on the trade union movement through the Industrial Relations Act was seen by the Prime Minister at that time as a better way of breaking the bargaining power of the unions than any form of prices and incomes control. Now that policy, policy number 2, has been entirely abandoned, first because since November we have had a freeze and inflation cannot be blamed on wage increases for there has been none, and, secondly, the Industrial Relations Act has been recognised to be a disaster and is, in the sense in which it was put forward by the Minister who is now responsible for consumer affairs, a failure, and the policy of controls has been introduced.

Policy number 3 began in the summer of 1971 when the CBI produced its voluntary prices policy and the nationalised industries were gradually jollied and bullied along by the Government to keep prices down. Of course the consequence of that policy was that we ran into the position we are now in in which Government subsidies to nationalised industry are running at perhaps £500 million a year. Through policy number 3 there were renewed attacks on the unions and at the same time two new policies were introduced which had a major effect on price increases. One was the Housing Finance Act, which was forced through Parliament, and the other was the thoroughly bad terms of the Common Market entry negotiations. After the fiasco of the last few weeks, no hon. Member can honestly say that the terms negotiated by the present Secretary of State for the Environment and approved by the Prime Minister and the Cabinet were good terms for Britain.

Policy number 4 began at Chequers and Downing Street last autumn. Here we were told by Ministers that they were seeking a voluntary policy. During those talks the unions were very forthcoming in their proposals. No one who read Mr. Scanlon's speech at the Lobby lunch or, indeed, what he said at the special Trades Union Congress will have any doubt that as far as he was concerned the unions were seriously engaged in discussions at Chequers and Downing Street. But the Government rejected the possibility of a voluntary agreement. Why did they do that? It was because the unions were asking for certain things to be done concerning housing, rents, food subsidies and food price control, which the Prime Minister said in the House were political questions upon which he was not prepared to negotiate.

That policy number 4 has been abandoned in two respects: first, we have a freeze; secondly, we are now told by leaks from Whitehall that the Government have in mind all sorts of negotiations which they are prepared to have with the trade unions covering a very wide range of what six months ago were called political issues.

Policy number 5 was the freeze itself, the Counter-Inflation (Temporary Provisions) Act. As we now know, though wages were tightly frozen, prices have not been frozen. I shall give the figures shortly. There is no control of the price of fresh food and no stopping of council house rent increases; and the common agricultural policy came into effect on 1st February, during the so-called freeze.

Policy number 5, the policy I have just described, is phase 1 copied straight from President Nixon's policy. I hope that it is the only thing that the Government copy from President Nixon.

Policy number 6 began last week. This is a permanent control. In the Committee on the Counter-Inflation Bill we had a long talks about this matter. The Secretary of State for Trade and Industry did not think it important enough to make available to the Committee one of his Ministers, though he has endless Ministers in his Department. When the freeze came to an end we had the first announcements of the increases. The price of steel was to go up by 9½ per cent. Why? That was because of the EEC. Petrol was to rise to 8s. a gallon. That, admittedly, was announced by the Minister himself, though not in a way that exactly endeared him to the House as the guardian of our prices administration. The price of food is rising, there is the fiasco of the butter for the Russians, and there is now a real possibility of cuts in living standards this year.

Policy number 7 is to be announced today, if Fleet Street is to be believed —a butter subsidy. There is to be 8p off the price of a pound of butter per month, it is rumoured, for those on supplementary benefit. Old Stanley Holloway's "tuppence per person per week" is to be the Government's answer on butter. There will be administration costs of £750,000 for £4 million of benefit. We shall have to wait to see whether that is announced, but that is what is rumoured. It is the first break on the food subsidy line for Minister who have rejected it for so long.

The Government should clearly answer this question. Is it true that since the common agricultural policy came into effect there have been import duties on Australian butter and Canadian cheese at a time when butter prices are rising towards the French price for best butter, quoted in Paris, of 12s. 6d. or 62p per lb? That is the beginning of policy number 7.

Policy number 8 is what is sometimes called phase 3. Policy number 8 is to be discussed against the background of price increases which will be breaking through like water through flood-gates. We believe that steel prices are to rise again by 5 per cent. to 6 per cent. in the autumn. There is a very strong rumour —perhaps the Minister of Agriculture will brief one of the Government speakers today—that bread prices will rise by lp after the metropolitan elections are safely out of the way; just as we believe that mortgage interest rates will go to 10 per cent. as soon as the whole group of spring elections is out of the way. Postal charges are expected to go up, as are electricity and coal charges and fares.

The CBI survey which sent the Chancellor into such a fit of excitement contained a forecast in the statement that 43 per cent. of the firms replying expected to raise their prices in the next four months, compared with 23 per cent. in the last four months. The cost of tin-plate is to rise by 12½ per cent. That is likely to put ½p on every tin of food. There is the VAT fiasco and the explosion of price increases we may expect later.

So much for the six or eight policies pursued so far. What has the record actually been? Why should not we vote on the motion almost unanimously in favour of what the Opposition recommend? The record of price increases under these different policies is there for all to read.

The annual average rate of inflation under the Labour Government was 4½ per cent. From June 1970 to March 1973 the index of retail prices rose by 24 per cent. The annual rate of inflation was running at 7·6 per cent. last November, but it is over 8 per cent. now and is expected to gain momentum during the year. Regarding individual prices from June 1970 to February 1973, the cost of new houses rose by 85·5 per cent., old houses by 75·9 per cent. and modern existing houses by 72 per cent. The cost of fish rose by 52 per cent. Meat and bacon prices are 46 per cent. higher. Fares are 42 per cent. higher. Coal and coke prices have risen by 39 per cent. Fruit prices rose by 43 per cent. Postage and telephone charges rose by 33 per cent. Milk, cheese and egg prices rose by 33 per cent. The total rise in food prices has been 29·7 per cent. I could continue.

Taking the increase in food prices from November 1972 to April 1973, during the period of the so-called freeze, all items of food rose at a rate of 12·1 per cent., compared to 1·3 per cent. for a comparable period a year earlier before the freeze was introduced. That is a rate of increase nine times as great for food, under the so-called freeze, as that of a year earlier before the freeze was introduced.

It is a fraud which the Government are seeking to impose upon the people of this country, including the trade union movement.

Turning to housing, which is singularly appropriate considering that the Secretary of State for Trade and Industry, in another manifestation, did this special bit of damage there, from February 1972 to February 1973, housing costs, covering rents, mortgages, rates and repairs— which, after food, rank highest in the family expenditure budget—rose by 14 per cent. in a single year. That is nearly double the retail price index rise of 7·9 per cent. over the same period. This year, 1973, an average of 50p is to be added to council house rents, raising the average rent from £3·20 to £3·60 per week. That is a 12½ per cent. increase in rents in stage 2, compared with an 8 per cent. increase in wages, represented roughly by the £1 plus 4 per cent. formula.

Applying the general statistics to two workers in industry, I take for example the average British engineering worker, married with two young children, earning £35 a week in June 1972. He would need an increase in his gross pay this June of 13 per cent. simply to keep up with the increases I have described. The £1 plus 4 per cent, would give him a maximum of about 6½ per cent., which is half the minimum increase needed. It represents a real cut of about 6 per cent, in his income.

An engineering labourer who is supporting a family on £25 a week, caught in the wage trap of means-tested benefits as well as of income tax rates, would be even worse off with his £2 a week increase, losing 60p in additional tax, 9p in additional national insurance, 50p on additional rates, 34p on rents and 87p on free school meals. He would have a total loss of more than the £2 he would be receiving.

These figures explain what happened last week, when many thousands of engineering workers came out on 1st May to protest at the Government's policies. The right hon. Gentleman the Secretary of State for Trade and Industry is probably one of the few men in British politics who can laugh at those 1½ million people. His Department and our national economy could not manage or survive without the work of those skilled men who came out last week because of these figures I have given which are affecting their lives directly.

Against this background of changing policy and rising prices, why should the House believe what Ministers say to us about their counter-inflation policy? They have abdicated their responsibility in the way in which they have sought to tackle these problems. They have used the deepening economic crisis to weaken the democratic control of the economy. They began with the attack upon the trade union movement. The Industrial Relations Act was designed to replace control of the unions by members with control of the unions by the courts. The sub judice rule was used by Ministers to protect themselves from answering questions in Parliament.

Then there was the Common Market. They drafted the European Communities Bill in such a way—and it need not have been so drafted—that Ministers can now hide behind the Commission and not answer questions about price increases in the House of Commons. When one of my hon. Friends put down a question about steel prices, the Minister refused to answer about steel prices. He would only accept a question about the effects of steel prices because he argued that the prices themselves were no longer for him.

When the Minister of Agriculture came back from Luxembourg last week, he reported an agreement which could not be ratified in any way by parliamentary action. He did at any rate have the honesty to say something of this, according to the Financial Times, on 5th May: Of course, prices in Britain had still to rise a long way to reach Community levels. Mr. Godber told his audience of farmers. He was talking about the five-year transitional period during which our prices had to be raised very substantially, he said, to reach European levels. This was in marked contrast to what the Leader of the House said in a radio broadcast in June 1971: Over a period of time, the cost of food will decrease. Of that I am absolutely convinced. Why should we believe what is to be said to us today when time after time Ministers have misled the House, misled the unions and misled the country and then expect to force through, by their parliamentary majority, some new fraud upon the public?

Take the Housing Finance Act. I am talking about the abdication of democratic responsibility. If one leaves aside the rent increases, to which I have already referred, the real offence here was to strip local councillors of the right to fix rents in areas whose people they were elected to serve. Take value added tax. Apart from the increase in the tax, the Government have off-loaded their responsibility on to the Customs and Excise or weights and measures inspectors, or whoever, and will not accept responsibility for what they have done. The Pay Board is now putting advertisements in the newspapers trying to recruit staff. A figure of £90 a week was mentioned for industrial relations experts who arc to do the job which the trade unions should be doing in negotiating on behalf of their members.

We can also take the case of the Price Commission. The chairman of the commission, Sir Arthur Cockfield, in allowing a petrol increase, made the marvellously naïve statement that it was less than the petrol companies asked for. Do the Government seriously believe that international oil companies, knowing all the tricks of the trade, would put in the actual price they wanted as their bid for an increase, after the experiences of Roche in relation to drugs and Kellogg in connection with cornflakes? Are we to believe Sir Arthur Cockfield when he said "We got them down a bit."?

When we ask the Minister about it, what is his remedy, as the Secretary of State accountable to Parliament? He says that any complaints about the operation of price increases can be referred to the Price Commission. He is hiding behind a creature that he established by the use of his parliamentary majority—unlike the last Labour Government, who had their Prices and Incomes Board, but whose orders were made by Ministers and were carried through Parliament after proper debate.

We needed the Chief Secretary to the Treasury to give us the clearest answer on the policy of price control. He said on 2nd May: I say again—it was said often enough during the passage of the Bill upstairs—… that to fail to observe the code does not of itself constitute an offence. It is right that this should be made clear. There must be no doubt about it."—[OFFICIAL REPORT, 2nd May 1973; Vol. 855, c. 1345–6.] The truth is that no offence is created by raising prices but that if the Secretary of State is asked about prices he says, as does his office, "Ring up the Price Commission."

That is the Government's policy—to blame the unions while they can get away with it, to blame the common agricultural policy, to hide behind the Industrial Relations Court, to hide behind the Pay Board, to hide behind the Customs and Excise and the Weights and Measures Inspectorate, to put in a housing commissioner if they cannot get democratically-elected councillors to do what they want, and to hide behind the Price Commission. Ministers wash their hands in public of responsibilities that they sought to acquire by public election and leave Members of Parliament as spectators of these great decisions which affect their constituents.

At best, this policy is an abdication; at worst, it is laying the foundations of a corporate State, in which democratic control by trade unions, by local authorities, by this House and by Ministers is eroded by measures introduced by the Government. I must warn the Secretary of Slate that an unjust social system frozen by law, administered by commissions, boards, officials and inspectors, in which democratic rights have been eroded, creates a very dangerous situation. When the Government reach the point at which they have to imply that 250,000 of their own civil servants have somehow been infected by militancy, they should ask themselves again about their own policy and see whether the fault does not lie in the administration of that policy and the way in which it is being carried out.

No doubt the right hon. Gentleman has, in his speech notes, his justification for what has happened—that it has achieved growth. The CBI tells us, the Government say, that the economy is going up "like a rocket". The Chancellor says that the only problems that we face are "the problems of success". I wonder how much he knows of the problems of the people of this country if he can say that. Ministers publicly pledge themselves to keep their nerve as they go through the difficult months that lie ahead.

But the truth, as everyone knows, is that the economy's growth is not soundly based. There is serious overheating, with a balance of payments running, on the basis of the last quarter, at a deficit of £750 million a year, and consumption is rising at an annual rate of 11 per cent., according to the last quarter's figures— rates that cannot possibly be sustained if there is to be investment, which last year, of course, fell by 10 per cent., and if there is to be any shift of emphasis into exports. There is borrowing at nearly £4,500 million and a serious threat that when the Prime Minister goes to Paris to see President Pompidou there will be pressure to abandon the float, which is the one little bit of flexibility that the Government bought at the cost of increasing the rate of inflation.

Far from our only problems being problems of success, this country faces, after three years of this Government and eight different policies on inflation, serious economic and political crises and something of a constitutional crisis. They say that talks will take place, but talks solve nothing unless they lead to a change of policy. After all, the Prime Minister advertised himself for years on the posters when he was in Opposition as a man of "action, not words". Whenever the crisis deepens we are told that talks will take place.

If those talks are to be effective, they must include the control of food prices, subsidies for essential foods, permanent controls over prices and profits, repeal of the Housing Finance Act and an expansion of house building. They must include a redistribution of wealth and income—which is now frozen into a pattern which is unacceptable and which is now embodied in legislation—an increase in pensions of £10 a week for the single person and £16 for the married couple, and real attempts to raise investment in new plant and equipment and to tackle the problems of regional policy at any rate by maintaining the regional employment premium.

These axe of course the policies—some of which the Government may be driven to accept—agreed between the TUC and the Labour Party and published in February. They offer an alternative to a situation in which prices are rising and wages are being held and the Government are seeking to batten down the normal processes for resolving social discontents and wage negotiations.

In recommending the motion, I ask the House to reject both the injustice and the complacency that this Government have shown in the last three years, to recognise what is happening and to make it clear that we demand a change of policy.

4.22 p.m.

Photo of Mr Peter Walker Mr Peter Walker , Worcester

The interesting point about recent speeches by the Labour Party, including that which we have just heard, is how relatively little attention they now give to the whole problem of economic growth. The right hon. Member for Bristol, South-East (Mr. Benn) interestingly analysed the historic phases of the development of what he considered to be the Government's policy during this period. It would be interesting for him and for others if he did a similar analysis upon the development, over various stages of recent political history of the Labour Party's thinking on this issue. That would show that a party which originally, in 1964, very much committed itself to growth and analysed the basic problem of the British economy as the failure to achieve growth, has, during and since the Election, left this aside as a relatively unimportant factor.

The right hon. Gentleman knows this because he certainly tried as a Minister —there is obvious dispute as to the degree of success—to introduce various changes and innovations which he considered would bring about substantial economic growth. He quoted a figure for the cost of living during the six years of Labour Government, but I do not think that he would be so proud of the growth during that six years. That must have been one of the major disappointments of the last Labour Government.

That being so, I suggest that the Labour Party cannot brush aside the importance of real standards of living, and the important achievements of this Government in terms of standard of living which have been and will be attained, because, unlike our predecessors, we have been successful in attaining a high rate of growth.

When the CBI, the TUC and the Government discussed the possibilities of obtaining some voluntary agreement, the one point on which they agreed was that there were three main objectives—first, to maintain a high rate of growth, second, to improve the position of the lower-paid and the pensioners and, third, to moderate the rate of cost and price inflation. Whatever disagreements there are on implementation of policy, there is agreement between both sides of industry and the Government as to the three primary objectives.

I should like to review the achievements to date in these spheres and the prospects for the future. The right hon. Gentleman brushed aside phase 1 on the basis that food prices had substantially increased during that period and that therefore it was a complete failure. I do not think that he intended to do so —it was probably a mistake—but the percentage figure that he gave for food prices was in fact the percentage figure for seasonal foods and not for the whole food index, which, of course, was substantially lower. The overall position as far as phase 1 is concerned is that the price index went up by 2·4 per cent. while food prices, which are a component of that, went up by 7·3 per cent. That means that prices, apart from food prices, went up by 0·8 of 1 per cent.

It must be recognised that the biggest single factor in any increase that took place was that factor which, as the Government themselves made perfectly clear from the beginning and as previous Governments have made clear in similar circumstances, it is impossible to control —that is, the very substantial increase in import prices during that period.

The success of phase 1 can be illustrated in another way. As far as manufacturers were concerned, the import costs of their raw materials and fuel during that period went up by 15 per cent. whereas their prices went up by only 1½ per cent. For food manufacturers, their raw materials went up by 16 per cent., whereas their prices went up by only 2 per cent. Therefore there is no doubt at all all as to the impact that phase 1 made during this period.

This is more classically illustrated in the complete transformation of Britain's rate of inflation compared with that of virtually all our major international competitors. Everybody knows that at the moment, for a wide range of reasons, the prices of raw materials are rising far faster than they have for a very long time. As the right hon. Gentleman knows from his period in Government, and as he said in his speech, these impacts affect a Labour Government as well as a Conservative Government. It is interesting to look at the rise in the cost of living in the last six months of the Labour Government and to compare it with the rise in the past six months. They are almost identical. In the last six months of the Labour Government the cost of living went up by 4·1 per cent. and in the past six months it has gone up by 4·2 per cent. [HON. MEMBERS: "There is a freeze."] There is a freeze and has been since November, but during part of that time there was not a freeze.

But the important point is that although, as the right hon. Gentleman quite rightly says, during this period there has been a freeze, a major part of that increase of 4·2 per cent. was the increase in import prices. If the increase in import costs is eliminated, in the last six months of the Labour Government prices went up very much faster than at the present time. One of the difficulties of the present situation is that there has been this very substantial worldwide increase, which has nothing to do with the British economy. This is reflected in the fact that all the other industrial nations are being affected by a high rate of inflation. Indeed, this country is being affected less than almost any other.

Photo of Gerald Kaufman Gerald Kaufman , Manchester Ardwick

Would the right hon. Gentleman tell me how this extremely intricate and interesting analysis helps the housewife in Stockport Road, Manchester, who tries to buy eggs, meat, cheese, butter, and all the other essentials and finds that on her husband's frozen wage she cannot manage it?

Photo of Mr Peter Walker Mr Peter Walker , Worcester

Taking the position of the typical housewife in such a situation, presuming her husband has passed on the increases he has had over the past 12 months, on the available figures for the 12-month period earnings have gone up by 15 per cent. while prices have gone up by 7·9 per cent. The typical housewife to whom the hon. Gentleman refers is substantially better off.

The fallacy in all the right hon. Gentleman's pleadings is that the gap over the past 12 months between increase earnings and increased prices is substantially more in favour of earnings than in any single period of 12 months under a Labour Government. That is why the real standard of living is in fact increasing.

In an aside during his earlier remarks, the right hon. Gentleman said that the expansion of the economy is shakily based and is not likely to last, and later he tried to develop themes to suggest that the whole basis of our present expansion was badly placed and that it was not a lasting form of growth. He did all he could to cast gloom and to shake confidence in the potentialities for expansion. But he knows that all the evidence of those making the decisions in British industry is against him on this. He knows that at present we are in a phase of substantial growth such as was never achieved at any time by the last Government. The current prediction of the EEC is that this year we shall enjoy a 6 per cent. growth rate and that this will be shared by only one other country in the Community.

The surveys of the CBI and the Financial Times survey today, which the right hon. Gentleman cast aside as being optimistic sounds, in fact represent a very real analysis of what is happening in the economy because they show exactly what type of boom this is. A vital ingredient of this boom, as regards both figures achieved and figures developing, is the considerable concentration on exports that is taking place. Taking, for example, the past four months, for every industrialist reporting decreasing export orders, five have reported increased orders. Turning to the projection for the coming four months—and it would be quite impossible for industrialists to make this projection if they were not pretty confident that our anti-inflationary policies were enabling them to be competitive—for everyone expecting fewer export orders, no fewer than eight are expecting an increase.

In the first quarter of this year exports were up by more than 20 per cent. on the same quarter of last year, and, from all the predictions that are being made by every sector of industry, we can expect that there will be a substantial increase in exports.

The position in respect of imports during the past three months—in which there has been a substantial growth of imports—reflects the growth that is taking place in the economy. For the increases compared with last year are totally reflected in two factors: one is a substantial increase in the import of raw materials and the second is the increase in the import of plant and machinery. This is the very type of increased imports that is desired and needed during the development of a substantial period of sustained growth.

Photo of Mr Tony Benn Mr Tony Benn , Bristol South East

The House is listening intently to what the right hon. Gentleman says. Can he confirm that, if room is to be made for exporting on the scale he now believes to be within our grasp and for investment to make up for the terrific drop in investment in the two years the Government have been in office, phase 3 will have to be much sharper in its control of consumer spending, prices and wages—if this boom of which he now speaks has any prospect whatsoever of being sustained?

Photo of Mr Peter Walker Mr Peter Walker , Worcester

I believe that the substantial potentialities for faster growth are such that real living standards at home can best be improved through our export achievement. In phase 3, it depends on a wide range of things. There are few industrialists or trade unionists who would not consider that the substantial potential for a very fast rate of growth exists providing world markets are created.

I hope that both sides of the House will recognise—and I am not making a political point here—that for the first time since the war there is a range of opportunities in world markets. Both Labour and Conservative Governments have sometimes been frustrated in their efforts to obtain growth by hitting a bad world market situation. At the present time we are doing better because of the Community and because of being a member of the Community, which is expanding. The United States, too, is in for a period of very substantial growth. These have always been our two major markets. But allied to this, South-East Asia, a number of Commonwealth markets, and our relationships with China and the Soviet Union are presenting us with an export opportunity which we have never previously enjoyed. It is therefore of immense importance, if we are to take advantage of this situation for everybody's sake, that we are successful to the maximum possible extent in curtailing prices and in our anti-inflationary policies.

There will be people obtaining very substantial improvements in their pesi-tion as a result of our economic expansion. There has been a drop of 253,000 in unemployment in 12 months. On the last figures available—I believe that future figures will show a much greater increase —overtime working has gone up by 25 per cent. In all these areas there will be opportunities for increased earnings. Of course, it is vital that in phase 2 we should recognise that both prices and wages will be increased.

The Government have never pretended that phase 2 would result in no price increases. It would be easy for the Opposition to mention each price increase as a failure, but phase 2 is a period in which allowable price increases can and will take place. It is also a period in which a substantial increase in wages can take place, although to listen to the Opposition one would find it difficult to accept that. The 4 per cent. plus £1 amounts to a rate of wage increase which is equal to anything done in any year of the Labour Government. The rate of increase of 7½ per cent. compares more than favourably with some Labour years and is as good as almost any of them

In addition we have made other provisions for the lower paid—and that was the second objective of the TUC, the CBI and the Government. We have sought a range of objectives in this respect. Of course, we recognise the sensitivity about food prices. Here the Government have incorporated in phase 2 far stricter measures to deal with profit margins of retailers and distributors than anything done during the second stages of the Labour Government's freeze policies. We have also ensured that there are no direct taxes on food. My right hon. Friend the Minister of Agriculture has endeavoured by a series of policies, for some of which he has obtained agreement in Brussels, substantially to increase agricultural production as a long-term measure to meet this problem.

The Labour Party will realise the difficulty of food subsidies. When the Conservative Government originally abolished them in the early 1950s the Labour Party pledged itself to bring them back, but during its period of office it never did so. The Labour Government must have considered the possibility when they were drawing up their freeze policies. The reason was that where the cost of food had risen because of world shortage, to subsidise that food would simply increase demand and therefore the shortages. But even if there were no shortage, a subsidy, which by itself would merely increase demand, is of its nature open-ended and is one which no Government could contemplate without serious consideration.

Neither of these basic drawbacks to food subsidies applies to butter. Here, as is well known, in Europe a large surplus of butter has been built up during the years of the EEC before Britain became a member. That is why the Council of Ministers of the EEC felt able to authorise the butter subsidies announced by my right hon. Friend the Minister of Agriculture on 1st May. The Council of Ministers has decided to authorise member countries to introduce from 14th May a subsidy of up to £46·94 per ton on all butter intended for retail sale. Half the cost will be borne by Community funds. The Government will introduce this subsidy on the starting date of 14th May at the full rate—and I understand that we are likely to be the first member country to do so. The subsidy will be paid at the stage at which butter is packed or imported, and will be administered by the Intervention Board for Agricultural Produce.

The subsidy is equivalent to about 2p per lb. Butter prices are now in the range of 21p to 25p per lb.—about 6p to 7p less than a year ago. The subsidy may give rise to price reduction initially, and the net effect should be to prevent any increase in the average retail price this year. The total cost will be around £18 million a year, of which one-half is paid by Community funds. The subsidy is designed to increase consumption and to tackle the problem of the butter surplus. It falls into a completely different category from meat and cereals.

Of course, as the House well understands, one of the drawbacks of subsidies of this kind is that they are indiscriminate, helping everyone irrespective of need. It is because the Government are determined to pursue the policy of giving the greatest help to those in greatest need that we have decided, in addition to this general butter subsidy of 2p per lb, to take advantage of the EEC regulation which enables butter to be supplied at reduced prices to recipients of social assistance. The subsidy will apply to families receiving family income supplement, supplementary pensioners and other recipients of continuing supplementary allowances and their dependants. About 5 million people will be eligible and the concession, if fully taken up, will be worth about £3 million, which will be paid from EEC funds.

In accordance with the current Commission decision, which runs until 31st December 1973, each beneficiary will be able to buy 1 lb of butter per month at the subsidised price on production of a voucher. If the full Community rate of subsidies remains unchanged the subsidy payable in the United Kingdom will be 10p per lb.

Detailed arrangements are being made and announced as soon as possible, and my right hon. Friend the Secretary of State for Social Services is arranging for the majority of the beneficiaries to be able to collect their vouchers on completion of a declaration which will be provided at post offices for those who receive the qualifying benefit by order book.

Photo of Mr Tony Benn Mr Tony Benn , Bristol South East

We are grateful that the right hon. Gentleman has made this announcement in the House. Will he answer a few questions? Are there now import duties imposed on Australian butter since the CAP came into effect? What will be the administrative cost of issuing vouchers? How many people will benefit and how much will this work out per month?

Photo of Mr Peter Walker Mr Peter Walker , Worcester

I have given the figures on which the answers to the last two questions can be calculated. The subsidy is 10p per lb. I have also stated how many people will benefit. I do not know the answer to the question about import control but I will arrange for it to be dealt with in the winding-up speech. As for administrative costs, we have examined this matter and believe that it will be a relatively small amount in view of the advantage to be gained. I do not know the exact figure.

Photo of Mr Douglas Jay Mr Douglas Jay , Battersea North

Does the right hon. Gentleman deny that the Government have imposed a major import duty on butter imported from Canada and Australia this spring?

Photo of Mr Peter Walker Mr Peter Walker , Worcester

I hope that that matter can also be dealt with later in the winding-up speech. I do not know the correct answer.

Photo of Mrs Renée Short Mrs Renée Short , Wolverhampton North East

The right hon. Gentleman has given the possible number who will benefit from the subsidy. Is he not aware, however, that pensioners and families on family income supplement have long ago given up buying butter because they cannot afford it? Even if it is 2p per lb. cheaper it will not be possible for them to buy it. Has he researched the take-up among these groups and is he in a position to say how they will benefit from the concession?

Photo of Mr Peter Walker Mr Peter Walker , Worcester

The price of butter is already reduced upon last year by about 6p or 7p and this subsidy will produce a reduction of 10p per lb. That will make a substantial difference in the price of butter.

I should like to correct a figure which the right hon. Member for Bristol, South-East gave. He said that the increase in tinplate prices would increase the price of canned food by ½p per tin. When we originally looked into the question of the steel price increase I asked the manufacturers to give me some indication of what the cost would be and they said it would work out at ·075p per tin, which is substantially different from the right hon. Gentleman's figure.

Photo of Mr Tony Benn Mr Tony Benn , Bristol South East

The right hon. Gentleman gave exactly the same reply on petrol. He said the increase there would be ½p a gallon and it has increased by lp per gallon. My figures show that the tinplate increase will have a substantial effect on the price of tinned food.

Photo of Mr Peter Walker Mr Peter Walker , Worcester

The increase in oil prices amounts to ½p over the whole range of products. For tinplate the right hon. Gentleman's figure is 0·5p, but the figure given to me by the industry is·075p, which is a substantial difference.

Photo of Mr Robert Brown Mr Robert Brown , Newcastle upon Tyne West

It is all very well for the Minister to talk about manufacturers having said that the increased cost per tin will be ·075p. Is the Minister naïve enough to believe that the manufacturers will absorb it? If he believes that, he is living in cloud-cuckoo-land. If he does not, he must accept that the manufacturers, in common with everyone else, will impose not a ½p increase but at least a lp increase.

Photo of Mr Peter Walker Mr Peter Walker , Worcester

If the hon. Gentleman had bothered to examine the legislation that has been passed he would realise that because of the control over profit margins that scale of increase would be impossible. This is where the legislation is so much tougher and more effective than legislation passed by the Labour Government when they were trying to make some progress.

As for the lower-paid groups, I liked the way in which the right hon. Gentleman spoke of the pensions increase he would like to see. No commentator or critic will disagree that there has been a substantial increase in pensions under the present Government. When the new increases take place pensions will have risen by 55 per cent. during the lifetime of the Conservative Government which is a substantial improvement in the real standard of living of those pensioners. During the various phases of our counter-inflationary policy, we have taken every possible action to see that pensioners and people on family income supplements are protected.

The right hon. Gentleman suggested that the discontentment of the people was illustrated by the demonstration on 1st May, which we gather he proposed that the Labour Party executive should support. If he considers that the all-important factor was that 1½ million people protested after the TUC recommended the demonstration, he should note that 14 people did not protest for each one who did. He should also note the attitude of the Ford workers yesterday when they were urged to go on strike in support of another wage claim.

The question of parliamentary accountability has been raised as one of the major issues by the Opposition.

Photo of Mr Reginald Freeson Mr Reginald Freeson , Willesden East

What action is proposed to restrain any further increase in house prices, which have gone up by more than 70 per cent. in the past two years? When do the Government intend to introduce control over business rents?

Photo of Mr Peter Walker Mr Peter Walker , Worcester

The freeze on business rents will continue during phase 2, but the detail of future policy is being prepared by my right hon. and learned Friend the Secretary of State for the Environment. A whole range of proposals has been announced by my right hon. and learned Friend to deal with house prices.

I return to the question of parliamentary accountability. The right hon. Gentleman gave the impression that under the policy pursued by his Government Parliament was continuously in touch with the situation, that it was watching every price increase, that there was direct responsibility on the Floor of the House. I suggest that he examines just how much time was given by the previous Parliament to the activities of the National Board for Prices and Incomes. He will see that hardly any discussions took place on its proposals or findings. As to the board's direct effectiveness and impact, only one major order was made by the then Government. The board made an annual report that could be discussed, although there was no statutory obligation to report.

We have approached the problem in a much better way—better for Parliament and better for industry. We have set out in a code the clear, objective criteria that will be applied by the agency concerned. The agencies' job is very much the executive one of seeing that those criteria are applied effectively, and reporting upon them.

Parliament, through the Minister, is completely responsible for the appointments to the agencies. Parliament has been responsible for approving the code. Parliament can ask at any time that it wishes for the code to be changed. Parliament will have to make any desired changes. In addition, there is provision not for an annual report but for a quarterly report to be made to Parliament, a report which can be debated. The first report of the commission's activities will be made after the first two months in which it has been in being.

I believe that it is better for industry to know that instead of each decision being made after a parliamentary debate, upon individual political views of an isolated price increase, there is a clear-cut code which will be applied by an independent body of able people in whom it has confidence and on whom the House can rely. There will be every opportunity to discuss in the House the workings of both the agencies concerned. The quarterly reports will probably result in more time being devoted to debate in the House on the work of the two agencies than was ever devoted to the work of the Prices and Incomes Board.

Photo of Mr Charles Loughlin Mr Charles Loughlin , Gloucestershire West

Is the Secretary of State not aware that if complaints were made about what were assumed to be unjustified increased retail prices, such as the prices of petrol and other items, it has been declared that no sanctions can be placed upon anyone until the returns for the trading period are in? In other words, the agency is completely ineffective.

Photo of Mr Peter Walker Mr Peter Walker , Worcester

That is not so. The agency has the right to ask for immediate figures. The trade reports are coming quarterly from those who have to make a quarterly return. There are the three categories. There will be an examination by both agencies to see that the code has been complied with.

Certainly, industry has always tried to follow the wording of the law to date. I have no reason to believe that it will do otherwise on this occasion. The powers to investigate and obtain information are far greater than have previously been available. I believe that this method will prove to be of importance to the House.

There is another very important factor. As the Minister, I have the right to ask for specific types of detail to be put into the report made quarterly by the various agencies. Therefore, it is up to me to say "The House would be interested in this or that information", and to see that it is made available to the House at regular intervals.

We have an expanding economy, expanding far faster than we have witnessed for many years. British industry is more efficient than it has been for a very long time. The substantial increase in our export orders and, perhaps even more important, the substantial increase in our prospects for orders, should give the House and the country the confidence that at last we have the opportunity to break through to the high levels of growth that many of our major industrial competitors have enjoyed since the war.

The one thing that would jeopardise that would be our failure to have a sensible and rational policy on prices and incomes. We have completed phase 1. We are now embarking upon phase 2, which lasts until the autumn. We have asked the CBI and the TUC to come to us with any ideas, suggestions and views they may have upon the next phase of our policy. But it is vital to the country that those ideas are sensible and rational and are based on our at least achieving the sustained economic growth that can bring real prosperity to all our people.

4.55 p.m.

Photo of Mr John Pardoe Mr John Pardoe , North Cornwall

The Secretary of State's speech was hardly an adequate reply to the attack on the Government's prices policy and prices effect made from the Opposition Front Bench by the right hon. Member for Bristol, South-East (Mr. Benn). I hardly dissent from one word uttered by the right hon. Gentleman in his general attack on the Government's record on prices.

To understand the situation, it is necesary only to glance through the Conservative Party manifesto for the last General Election, particularly those parts on prices, and remind ourselves of the glorious, confident phrases of 1970, when the Conservatives castigated the Labour's Government's record on prices and implied that they themselves would have a marvellous record.

We read remarks such as We have become resigned to the value of the £ in our pockets or purses falling by at least a shilling a year. What price a shilling now? Would not we all like to get back to the shilling a year?

Then we read: We utterly reject the philosophy of compulsory wage control". That is but one of the phrases we know only too well. Throughout the document there is a steady attack on the Labour Government's record of price control. On page 11 we read: The cost of living has rocketed during the last six years. Prices are now rising more than twice as fast as they did during the Conservative years. What price that "twice" now?

The Secretary of State's reply to the attack and to the motion was inevitably pretty weak, because there is hardly a reply to them.

I have one reservation about the early stages of the speech of the right hon. Member for Bristol, South-East, when he said that there could not be one hon. Member who did not now believe that the terms negotiated for our Common Market entry were bad for Britain. I imagine that there are still a large number of right hon. and hon. Members who sit behind the right hon. Gentleman, if not alongside him, who still think that the terms were the best that could be obtained. The best that could be got were admittedly not perhaps ideal, but they were the best after a period of disastrous government by both Conservative and Labour Governments.

The right hon. Gentleman was rather short of alternative policies. Even when one is in the full flood of attack and the Government's record is as abysmal as it is, I believe that there is a duty on an Opposition spokesman to answer the question that must be in the public's mind, if not in his own: "What would you do if you had to deal with the situation?"

Recent opinion polls and the notable lack of any major advance by the Labour Party in local government elections— indeed, a swing away from it since last year—tend to indicate that the public have no great confidence in the alternative policies that were being put forward [Interruption.] That is interesting. The Labour Party has not done its calculations. At the last local government elections there was a swing of 2·5 per cent. against Labour compared with the pre- vious elections, and on Thursday this week we shall see an even bigger swing.

The Opinion Research Centre poll—the poll that the Labour Party always quotes, because it actually got it right -which was published in the Evening Standard last week showed that the Liberal vote had gone up to 22 per cent., against Labour's 41 per cent. Therefore, there are now fewer than two Labour voters for every one Liberal voter. Twenty-two per cent. of the vote would give us between 70 and 100 seats, even without proportional representation. The extraordinary thing is that with all (he ammunition that is there for it to beat the Government over the head with, the Labour Party is not making very good headway. The Liberal Party, of course, is making excellent headway. I shall not make heavy weather of that.

1 dissent from the gloomy view of the right hon. Member for Bristol, South-East about the economy in general. This is not the time for Jeremiahs, whether they come from the Opposition Front Bench or from the pages of The Times. The Times is not helping the economy to rocket or boom. The signs for exports and investments are now better than at any time during the last decade. By a bit of good luck, for which the Government can hardly claim the credit, exports and investments will rise as consumer expenditure falls and makes room for them.

We are now on the verge of one of the biggest booms that we have had. Whether it is a continuing boom is another matter. I shall not hazard a guess, but it may continue as long as the Government hold their nerve and do not do anything completely bonkers. That is a big "if". The indications are that we shall be in the midst of a mighty boom even by the time that the General Election is held. There is no need to be too gloomy about the general trend of our economy.

We are endeavouring to control inflation in a situation where the economy is booming. The right hon. Gentleman made it sound as though we had never had inflation in any other conditions. That is often the view of the right wing of the Tory Party when it talks about public expenditure and the money supply. There was wage inflation, excessive inflation and excessive price rises, which were particularly embarrassing, during the time when the Labour Government were trying to squeeze the economy and to raise taxation and so to control the money supply.

Therefore, there is no reason to suppose that inflation occurs only on the verge or in the midst of a boom. There is also no reason to suppose that our old-fashioned deflationary policies will deal with the situation. Whether or not we have a boom during the next two years, we shall have to face inflation. That inflation will probably be as bad as we have had or perhaps even worse. To know that we need look no further than poor President Nixon, whose anti-inflationary policy the Government have been desperately following some 18 months behind. President Nixon expected that there would be a rate of inflation this year of about 2½ per cent. He had most of that in the first quarter; and the annual rate has been in excess of 7 per cent. based on the first three months of this year.

There is no reason to suppose that the British version of the Nixon policy will be any more successful. I am not surprised by the prices which we have had, bearing in mind the policies which the Government have produced. I do not see any possibility that the alternative policies adduced by the right hon. Gentleman would have any greater effect on the inflationary spiral.

It is wise to distinguish, in formulating policies, between cost-push and demand-pull inflation. I do not for one moment pretend that an incomes policy can do anything about demand-pull inflation. At best such a policy can do very little about such inflation. An incomes policy can do absolutely nothing about world prices and it cannot do much about the money supply. Many of the prices for which the right hon. Gentleman was rightly castigating the Government are due to nothing which one could call wage-inflation. We must consider what we should do about prices which are clearly not caused by wage inflation. I think I know, and the Government seem to think that they know, what to do about prices that are caused by inflation.

The Opposition are very much in two minds, if not three. If we consider prices which are not caused by wage inflation, we must consider commodities. There is no doubt that commodity prices have in recent months increased significantly. Perhaps there is some advantage to be gained from that. The price of commodities, and the price that is paid by us for our raw materials, is income for the underdeveloped countries. There is no doubt that when those prices go down all the aid that we give will not bolster up the desperate turn in the terms of trade. It is good to know that countries such as Zambia are now getting a fair price for their copper, whereas a year or six months ago that was not the position. Such countries may well be able to pay off many of the debts which they incurred during the last year or the last six months as a result of the new prices.

It might be possible—various suggestions have been put forward—to peg commodity prices at some so-called fair level and give the underdeveloped countries a fair return. To do so would require a huge international effort. I cannot see that the world is so organised. Indeed, it will not be so organised. It will not be organised in such a way for the foreseeable future. Therefore, it will not be possible to peg the prices of commodities in that way.

Then there is the problem of food prices. The right hon. Member for Bristol, South-East and the Labour Party in its joint TUC-Labour Party document are committed to a policy of subsidies. I do not accept that it is good enough for any Government to hold their hands in despair and say "There is nothing that we can do about food prices because food, or that part of it which we buy from abroad, is beyond our control."

If we are prepared to subsidise steel and commuters travelling into London, there is nothing essentially wrong with subsidising food. But to subsidise food would be a retrograde step. I suspect that to subsidise rail fares is probably a retrograde step as well. Subsidies inevitably tend to distort the market, and to get rid of them is extremely difficult. Of course, they have to be paid for by the ordinary—this is very important—taxpayers. It must be remembered by those who argue for the policy of an expensive food subsidy that if such a policy were to have any effect it would inevitably be hideously expensive. It would cost substantially more than the cost of subsidising commuter fares.

We are now in the position of having to argue for increased taxes for the broad spectrum of taxpayers. That means that the average industrial engineering worker that the right hon. Gentleman was talking about who earns £35 a week will have to pay more. How much more a week will that man have to pay in income tax in order to bring down the cost of food? Is there any advantage in doing it that way? There are, of course, advantages for the lower-paid. But would not it be better to help the problem of the lower-paid through increased family allowances, an even more generous credit income tax scheme than we have before us and increased supplementary benefits and pensions? That seems to be a far more sensible way of dealing with the problem of food prices.

One of the biggest disadvantages of a subsidy is that it is never possible to get rid of it. I cannot imagine the day when the Government will be able to get rid of or at least have paid back the subsidies which are put into the steel industry and other nationalised industries such as British Rail. I imagine that eventually the subsidies which the Government have paid to such industries will have to be written off. It will be extremely difficult to say at any time that those industries can recoup their losses from the market.

There is one policy which the Government should consider seriously when considering food prices during phase 3. I make no apology for having introduced the matter before. However, I fear that it will not be introduced by either the Conservative Party or the Labour Party. This is why it would be far better to guarantee the wage earners against the rise in the price of food. I do not believe that there is any sensible way in the long term of stopping food prices from going up. I certainly do not think that for a country more or less 50 per cent. dependent on overseas food supplies it is possible, although Sweden can do it because it is in a very different situation in relation to food supplies. But, having accepted that one can do very little to hold food price rises down, and having accepted that subsidies are possibly not the best way to go about it, it remains for the Government to guarantee all income earners against the rise in the price of food.

I do not suggest that the Government should guarantee everyone against the rise in all prices. It would be nonsensical to write into our wages system an automatic increase for the increase in the price of colour television sets. Food is the essence of the thing, and, while no Government need guarantee people against a rise in the price of colour television sets, a Government who did not offer some protection from rising food prices would be asking for trouble.

There is no reason why we should not introduce a wages system which automatically raises everyone's wages when food prices rise by more than a certain amount. This would be a variation of a threshold agreement in that it would be confined specifically to food prices. The best way to do this would be to calculate every six months, perhaps, the effect of rising food prices on the purchasing power of the average industrial earner— say, the man on £36 a week with two children. If it was found that he needed another £1, for example, to pay these increased food prices, that amount would be added to everyone's wages, not by the Government or by the taxpayer but by the employer. It would be a flat-rate increase, and, of course, it would therefore substantially benefit the lower-paid. A similar food price adjustment should be made to all social security payments and national insurance benefits, because if we cannot stop the price of food rising —and we cannot—we should learn to live with it as best we may.

Photo of Mr Charles Loughlin Mr Charles Loughlin , Gloucestershire West

I have been trying to work this out. The hon. Gentleman says that the Government should ensure that there is a £1 addition to the wage packet in the illustration which he gives. How would this be done, bearing in mind the multiplicity of industries and wages agreements? Would it be done by a compulsory Government order? If so, how far would that affect the normal wage negotiations?

Photo of Mr John Pardoe Mr John Pardoe , North Cornwall

The Government have announced that they are prepared to allow increases of £1.

Photo of Mr John Pardoe Mr John Pardoe , North Cornwall

The hon. Gentleman raises the question of "allow" in the sentence. We should all know from experience of chocolate rationing that when one rations something people take up the minimum, and if the minimum is the maximum they take that up. Very few industries will get away with less than £1 plus 4 per cent. What I am suggesting is that, instead, we write in an automatic food price guarantee. That £1 would be a variable feast, not just one for six months or a year or whatever it may be, but calculated each six months according to the rise in the price of food.

The official Labour Party view, as far as I can see it, is that general statutory price control alone will do the trick. This is contained in the joint TUC-Labour Party document, which does not mention a voluntary incomes policy. That is a basic flaw in its thinking, but it is a political and not an economic flaw. I accept at once that in economic theory the Labour Party's idea would work. It would contain inflation. If, for instance, the Government were rigidly to control price rises and stood by that policy, no firm would be able to increase its wages by an excessive amount because it would not be able to look to the market for the money to pay them. It would therefore go bust—or would it?

Let us suppose that a major employer of labour under a future Labour Government was put into this position. Would that Government say "All right—go bust"? They would not. They would do what the present Government finally had to do in the case of the Clyde shipyards and eventually in the case of Rolls-Royce. The taxpayer would have to foot the bill because the Government could not be put in the political position of having it said that through their prices policy they had closed down a major employer of labour. So the answer would be the same—we would be subsidising the wage increases as if we had started off in the first place to do so.

It therefore seems to me that we have had no real alternative policy from the right hon. Member for Bristol, South-East. We have to accept also that the Government's reply to his attack on rising prices was inadequate because the Government have no alternative policy either. The only thing that the Secretary of State was able to say was that he was open to suggestions by the TUC and the CBI. I only hope that he is also open to suggestions from this House. It would be nice for once to get a reply to one of one's speeches on prices and incomes. One rarely gets such an opportunity. I hope that in the Government's reply we shall get some reaction to the idea of guaranteeing wage earners against the rise in food prices.

5.16 p.m.

Photo of Mr Robert Redmond Mr Robert Redmond , Bolton West

I welcome the opportunity to follow the hon. Member for Cornwall, North (Mr. Pardoe), because I feel that his speech was rather like the curate's egg—very good in parts. I think that he was entitled at the beginning to have his cock-a-doodle-doo about the Opinion Research Centre poll. But perhaps he had better not count his chickens too soon.

The hon. Gentleman was right to say that the Opposition, in dealing with inflation, will go on talking about the terms of entry into the European Economic Community. He is also right in saying that the terms we got were as good as any Government could have got this time, and that later they would have been worse.

The hon. Gentleman was also right to say that this is not a time for Jeremiahs. I shall not go into the figures of what the growth rate may be or what it may mean, but many firms in my constituency and elsewhere are telling me that there is a boom. Orders are coming in very much faster than they have been doing.

Just before I entered the Chamber today, a gentleman of the Press asked me, as one with some industrial knowledge, whether I thought a 5 per cent. growth rate was attainable. I said that as one who had been engaged in small business for most of my working life, I had not the faintest idea what a 5 per cent. growth rate would mean to the man in the board room of a small business, because he looks for a full order book, which gives him confidence. When the order book thins out, it is a slump, and there is no growth rate. I am not interested in whether a 5 per cent. or a 4 per cent. or a 4½ per cent. growth rate is attainable. What I am interested in is that the board rooms of our small companies should see the orders coming in, because that gives them confidence— far more confidence than any economist writing in The Times or any other newspaper may do. Indeed, with full order books, boards of small companies will not be taking a great deal of notice of what The Times says today.

But for some of the dismal Jeremiahs over the past few months, people in the boardrooms might have been ordering more machine tools and looking forward to greater demand and therefore to the need for greater productivity, and we might have had the boom going very much more quickly. We have reason to complain about what some of the economists have been writing.

I agree with the hon. Member for Cornwall, North that subsidies distort the market. He mentioned the subsidising of fares. If we subsidise London fares, all we do is put up the price of houses in the commuter belt. We cannot win with subsidies, whatever we do.

The Secretary of State touched upon an important point about inflation when answering an intervention by the hon. Member for Manchester, Ardwick (Mr. Kaufman). The hon. Member had asked about the housewife in Stockport Road, Manchester. That could easily be the housewife in Deansgate, Bolton. He asked how the housewife would cope with price, increases. My right hon. Friend talked about the wage increases that had taken place and said that it depended on whether the husbands had been passing on those increases to their wives. We have to accept that that does not happen in all cases. This is surely vitally important.

Unless we deal with this, the pressure of wage demands will continue because the housewife will say that she is not getting enough money. The husband is used to spending whatever it is he spends. That pressure from the housewife leads to a wage increase because of what I call the "housekeeping money lag". I do not believe that there is any argument about that. It goes on. The Government ought to be considering what they can do to legislate about this. I cannot think of the answer or of what form the legislation would take but there is certainly trouble ahead on this point.

We have seen something of that trouble in the petitions presented to this House by various housewives' organisations concerning the tax credit scheme and family allowances [Interruption.] The hon. Member for Ince (Mr. McGuire) may laugh but he must know people in his constituency who are not telling their wives exactly what they earn.

Photo of Mr Michael McGuire Mr Michael McGuire , Ince

I have no knowledge of this at all. If the hon. Member is saying that all the unrest today arises from the fact that husbands are becoming more skilled at concealing their true wages from their wives or that they are doing it more viciously, then he, like the hon. Member for Cornwall, North (Mr. Pardoe) is bragging on a pair of deuces. We want some authentic evidence, not just the assumption that the cause of the trouble is that men are getting more skilful in concealing the amount of their wages and are not handing over increases—which they have been denied under this Government and which are still severely limited.

Photo of Mr Robert Redmond Mr Robert Redmond , Bolton West

I do not want to prolong the point. I am not over-stressing it. I said that it was an important factor. I can think of two men living in the constituency of the hon. Member for Ince who told me what they were giving their wives for housekeeping and who when I suggested that, out of the wage I knew they were earning, they could give a bit more, said, "It's as much as she can spend." It is a contributory factor and no more. We have seen proof of it in those petitions concerning the tax credit scheme.

Photo of Mr Michael McGuire Mr Michael McGuire , Ince

May I ask, in the best ministerial style, for full details?

Photo of Mr Robert Redmond Mr Robert Redmond , Bolton West

I will certainly have words with the hon. Member in the Lobby. Someone asked me to name the people protesting about the tax credit scheme as it affects family allowances. I suggest that they have a word with the right hon. Member for Blackburn (Mrs. Castle), who presented a petition. She will have the names and addresses.

The right hon. Member for Bristol, South-East (Mr. Benn) spoke about the Industrial Relations Act. We must stop the Opposition from describing this as a failure when seven-eighths of it are working extremely well. The other eighth seems to contain all the parts which the TUC does not like. If seven-eighths of such an Act are working well it is hardly a failure.

If hon. Gentlemen think that it is a failure may I ask whether they have been in the House when I have mentioned the 12 shop stewards in my constituency from the engineering union—

Photo of Mr Leslie Huckfield Mr Leslie Huckfield , Nuneaton

I always go out then.

Photo of Mr Robert Redmond Mr Robert Redmond , Bolton West

—who have seen me individually and privately? None of them knew that the others had seen me but each asked me how they could form a breakaway trade union so that they could be registered under the Act and avoid wasteful strikes in which they did not believe.

Photo of Mr Leslie Huckfield Mr Leslie Huckfield , Nuneaton

The hon. Member persists in talking about discussions which he had in confidence with other people. Would he like to tell the House openly which seven-eighths of the Industrial Relations Act he feels are working?

Photo of Mr Robert Redmond Mr Robert Redmond , Bolton West

I hardly think that you would agree, Mr. Speaker, to my going through every section in the Act now. Perhaps I am wrong in saying it is seven-eighths. Perhaps it is eight-ninths or six-tenths. What I am trying to say is that these 12 people have seen me confidentially in my constituency. It would be wrong to disclose their names. I have always advised them to attend their union branch meetings and to make their point known there.

If anyone says that the strike on 1st May was popular he ought to bear in mind the fact that the shop stewards are speaking to someone like me about this. We have had a good example of what the Ford workers really thought about it. The right hon. Member for Bristol, South-East quoted an engineering worker earning £35 a week and gave the figures for what he would get through the £1 plus 4 per cent. under phase 2. Surely the important point about the phase 2 proposals is that £1 plus 4 per cent. is not necessarily applied to each individual worker. It is £1 plus 4 per cent. taken over a firm or nationalised industry. The Civil Service seems to have given a lead in this. For my own part I would like to see the lower-paid given more help. The better-off ought to be making a contribution.

On an occasion such as this the Opposition ought to be presenting an alternative policy. I did not hear much of that in the right hon. Gentleman's speech. There was no mention of the fact that in the first year of this Government the rate of increase in the cost of living was showing signs of falling. Two things happened to our de-escalation policy. We had the Chrysler settlement for 18 per cent.— [Interruption.] I cannot see what the hon. Member for Nuneaton (Mr. Leslie Huckfield) finds funny about the Chrysler workers settling for 18 per cent. about two years ago. After that the de-escalation policy began to fail. That settlement was followed by the National Coal Board and railway settlements. Confidence in the future of the de-escalation policy failed.

The second thing that happened was a change in the terms of trade, which went against us. Exports began to fall, imports began to rise. As the pound fell in value the inevitable happened— our import prices rose. I said that I am not an economist—

Photo of Mr Robert Redmond Mr Robert Redmond , Bolton West

I do not believe that the hon. Gentleman is an economist either, but at least I admit it. It does not need an economist to know that if the pound falls in value our import prices rise. Raw materials go up, the prices of our manufactured goods rise and we are on the inflationary spiral. If our manufacturing prices could begin to stabilise or to fall the pound would begin to rise in value, imports would cost less and our manufacturing prices would begin to fall or wages could be increased without increasing the price of our products. It is vital that industrial relations should improve so that our export prices can stabilise. I am sure that that is the right way to stabilise the cost of living.

We had a strike on 1st May. It was not very successful but the foreigners began to think that we had gone "bonkers" again. The pound fell in the market on that day and the next. Thus a strike protesting about rising prices helped to increase prices. There is a lesson there for everyone.

I should like to study what my right hon. Friend said about butter subsidies. I know from contacts in my constituency that there are demands for the Government to subsidise food prices. I make no bones about it: I could not support general food subsidies because, although popular, the argument for subsidising food prices is a specious one. While I am prepared to pay taxation to help those who are less well off than I am, I see no reason to pay taxation to help the better off. I do not see why people who are less well off than I am should pay taxation to help keep down my costs. A lot more could have been done to help the lower paid and those who cannot earn or cannot demand higher wages, and I sincerely hope that before stage 3 we shall have a measure of agreement with the TUC on this matter.

For more years than I can recall I had been totally opposed to threshold agreements on the ground that they take away people's interest in the rising cost of living so that no one cares whether or not there is inflation. I have now begun to doubt that I am right. I was interested in the suggestions made by the hon. Member for Cornwall, North. The only point that worries me is the sacred cow of the differential, but a flat rate of increase to cover the increased cost of food sounds an attractive suggestion which might be taken into the discussions between the Prime Minister and the TUC.

The reason why I have changed my mind about threshold agreements is that, far from being concerned about inflation, too many people are enjoying it. It is feeding upon itself. People are entering into hire-purchase agreements and living on borrowed money in the hope that the next wage increase will help them to meet the bill.

I think I am right in saying that the life of the average mortgage is between seven and eight years before it is paid off and a new house is bought. A newly married man who buys a house for the first time with a 90 per cent. mortgage and who sells that house seven or eight years later—presumably moving either into a bigger one or a more expensive one in a different district—tends to put the great increase in equity he has had from inflation into some other form of investment and to ask for a 90 per cent. mortgage on the second house.

The result is that building societies are being led into paying out more and more money on mortgages and having to find more money from the market. It is reasonable that building societies should look carefully at a second or third mortgage to make certain that the purchaser of the new house is putting into that new house at least the same amount of equity as he takes out of his old one. That would save the building societies being forced to chase money and to put up their interest rates. Building societies would still be an attractive investment for some people if they offered a lower rate of interest than is offered on the general market. In that way people would be prevented from bidding up the price of houses and we should get some form of stability.

I know that the Government are doing all they can to get more land released, but with the desperate shortage of building workers I do not see how very many more houses can be built. I hope that the Government and the building societies movement will look seriously at my suggestion and consider whether something of this sort can be put into operation.

At the weekend I had a letter from a constituent who asked whether I was seriously worried about inflation. He said that inflation destroyed democracy in Germany after the First World War. I have never heard that suggestion made seriously before. It shows the measure of alarm in the country about the rate of inflation and the recognition that it is time we stopped making party points about it.

I sincerely hope that the Government and the TUC in their talks will reach a consensus. It would help a great deal if the Opposition would stop pushing wage claims, feeding on inflation and at the same time complaining, and tried to get the country back to the form of de-escalation we had originally when the Government came to office and which worked extremely well until it was wrecked.

5.35 p.m.

Photo of Mr Leslie Huckfield Mr Leslie Huckfield , Nuneaton

I shall not endeavour to follow the hon. Member for Bolton, West (Mr. Redmond) around some of the backyard businesses of Bolton. When I was a lorry driver I delivered goods to some of those backyards and was not impressed by the wages and conditions of the men employed there. If those are the small businesses which the hon. Gentleman speaks up for in this House, he has nothing of which to be proud. It was in those backyards that I saw men with blood on their hands through handling pulley blocks. That is not the kind of thing I am accustomed to seeing in my part of the country.

Nor do I intend to follow the speech of the hon. Member for Cornwall, North (Mr. Pardoe). It savoured of "community politics"—namely, find out where the council repair gang is going that morning, then go along that street, knock on the doors and claim credit for it. The Liberal Party discovered that at last the Government may possibly be going in the direction of threshold agreements and that is why the Liberal Party this week is coming out with that line.

Photo of Mr John Pardoe Mr John Pardoe , North Cornwall

I made that speech three months ago.

Photo of Mr Leslie Huckfield Mr Leslie Huckfield , Nuneaton

Perhaps the hon. Gentleman even more eagerly anticipated it.

All the statistics that have emanated from the Government Front Bench have been irrelevant because they exclude food and import prices. If the Secretary of State thinks that the statistics he gave are relevant to the ordinary working class family he cannot know what he is talking about when he says that prices since the freeze have gone up by only 0·6 per cent.

I wonder where the right hon. Gentleman and his hon. Friends do their shopping. For example, have they found out that they often cannot buy an apple for less than 5p? Have they found out the price of eggs, the price of a tomato, and of an orange? Right hon. and hon. Gentlemen claim that all these prices have been increased because of the rising cost of imports over which they have no control. But the complaint of the average housewife is that since the freeze, when food prices were supposed to be frozen, fresh food prices have gone up 30 per cent. Since the Government came to office in June 1970 all prices have gone up by 30 per cent. Those are the official figures.

When we and the trade union movement complain about it, we are labelled as wreckers, militants, and violent revolutionaries. I have taken part in several protests in my constituency and in the Precinct in Coventry. Every time protests have been held that favourite bastion of the workers Press, the Coventry Evening Telegraph, labels the protesters as industrial militants doing down the country. The first demonstration in which I took part was in protest against the unemployment figures, the second was in favour of increased pensions and the third was in favour of increased pay for hospital ancillary workers. On May Day in Birmingham we had the biggest May Day demonstration that we have seen since the General Strike. Because we demonstrate in favour of the least-well-off sections in society and those who are least able to help themselves, we are automatically branded as wreckers, militants, and violent revolutionaries.

I hope that the Conservative Party will discover what it is that many people are protesting about and what real injustices this Government have created in our society. We are protesting because, although wages have not been allowed to go up, local councillors who do not put up the rents of council houses face imprisonment. Any worker who strikes against the fix on wages can be sent to prison. At the same time, local councillors who do not increase local authority rents can also be sent to prison. Then the Government spend £15 million trying to keep down mortgage rates. As a result of that the Labour Party gains control of every single metropolitan county in the country on 12th April. In my view that was £15 million well spent.

We have heard a number of references today to mortgages. We now have a situation where in the South-East the average price of a new house is £14,000. Anyone in the South-East applying for a mortgage will be told by the building societies that they want to see a household income of £4,000 a year. That is what young couples contemplating house purchase are asked to face. While this is happening the Leader of the Conservative Party is getting tax concessions of £6·20 a week as a result of the recent Budget. The right hon. Gentleman has just spent £45,000 on a yacht. Jim Slater and Sir Kenneth Keith are involved in a £1,500 million bank merger. What do they know of the feelings of working class people about price rises in the shops, about being kept down to £1 and 4 per cent. and about being told that they cannot have wage increases?

If one complains to the Department of Trade and Industry one gets three standard excuses. First, it is food prices —so we never intended to control them; secondly, it is import prices—so we cannot possibly control them, because they are dependent on the terms of trade; thirdly, it happened before 6th November —so we cannot touch it, anyway.

I hope that the Secretary of State will not forget that all the price increases about which hon. Members on both sides of the House complain very often come on top of the most fantastic price increases as the result of decimalisation. Let the right hon. Gentleman look at a list of price increases since decimalisation on goods costing under £1. He will find that it has not been 10 per cent. or any of the other stupid figures which members of his party bandy around. Since decimalisation and taking VAT into account, the increase has been more like 100 per cent. Items which cost threepence or fourpence in old money now cost 3p, 4p and 5p.

The Government reckon that with the Price Commission they have at last some idea of how to keep a fix on prices. But look at the recent petrol increase. Every single garage which had even made the most scanty reading of the national Press knew that the Price Commission was about to let them get away with an increase. As a result they bought up all available stocks of petrol and oil at the old prices, knowing full well that an increase was about to be allowed. When the Price Commission said, "Very well. We know that you wanted a bit more, but you can have ½p a gallon", every garage in the country increased its petrol prices by a full lp a gallon with the excuse that the petrol had been delivered that weekend, when they had done their damnedest to obtain all the old stocks of petrol that they could and to make the biggest profit that they could. If the Price Commission cannot control a price increase like that, what chance do we stand in the rest of phase 2 and in phase 3?

We have some consolation in the fact that VAT will bring down the prices of gold watches, fur coats and jewellery. Those whom I represent will be relieved to hear that. Every single time a working man buys his wife a pram, every time he goes to a football match, gets his haircut, or buys a cooker—items which no working class home can do without—he finds that the price has gone up by at least 10 per cent. I say "at least" 10 per cent. We all know the fiddles that have been going on.

I have been assiduous in pursuing price increases with Government Departments. The replies that I have received are most ingenious. When my own party was in power I remember wanting to know why we could not have discs displayed on car windscreens showing that vehicles had been MOT tested. I was told by my own Government that the reason was that the Department could not think of a suitable ink which would stay the course sufficiently to be overprinted on licences displayed on car windscreens. But this Government beat that.

In the past two weeks I have submitted a complaint about a price increase in respect of saccharin tablets. I came across a complaint from an old-age pensioner in my constituency living in Bedworth. He told me that the price of a thousand saccharin tablets had been increased from 16p to 24p. The Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food came up with a most ingenious excuse. It was that the shop concerned had two suppliers of saccharin tablets. Those costing 16p came from the supplier with the lowest price, and those costing 24p had come from the supplier charging the higher price. I saw my constituent at my surgery on Saturday morning. He showed me all the bottles. They are precisely the same all the way along the line. That is an example of the daft reasoning that we get from the hon. Lady.

I received another complaint from a shop steward at the Jaguar car works in Coventry. He had ordered some doors from the Magnet Joinery Limited in Keighley. I wrote to the firm pointing out that in March 1973 the price of the doors had been £17·64, and that my constituent had a telephone call confirming that the doors were on the way to him by lorry and that all that might hold them up were "delivery difficulties". The doors did not arrive until April by which time, as the firm explained to me, the March 1973 price of £17·64 had had added to it a price increase of £1·58 and 10 per cent. value added tax of £1·92, making a total charge of £21·14. According to the firm and the Government that is all quite permissible.

I had another ingenious exchange of correspondence with my own laundry which in 1969 was telling me that it had been obliged to pay £178,138 in selective employment tax. This is the Coronet Laundry, owned by National Sunlight Laundries Limited, Broughton Road, Fulham, SW6 2LD. The laundry was writing to me—or so it seemed—telling me that prices were going up because of SET. Following the introduction of value added tax I wrote asking the company why. if I had had to pay all these increases in SET, I now had to pay the full 10 per cent. of VAT since the company would no longer have to pay SET. I received a letter dated 19th April saying: We have now had further discussions with an official of the Weights and Measures Department, and have agreed with him to refund our customers the balance of the SET saving for the month of April by reducing the price of one or two articles for a period of four weeks …At the end of the four weeks … prices will revert to normal. It was SET that in 1969 had cost the Coronet Laundry £178,000, and all that it is to give us is four weeks' reduction.

The writer says: I might mention that the article chosen at Coronet Laundry is pillow slips. Perhaps I had better stop there.

The most ingenious part of the latest letter written by Mr. Corteen, the managing director, is where it seems that he has suddenly discovered that this is a low-wage industry and says: We have about 4,000 employees and wage increases given under phase 2 are costing the company approximately £3,000 a week". In other words, is this company trying to tell me that it has paid out almost its total saving in SET by giving wage increases? That is absolute and utter eye-wash, but it is the kind of rubbish that Government Departments are being told.

Photo of Mr Joe Ashton Mr Joe Ashton , Bassetlaw

And they believe it.

Photo of Mr Leslie Huckfield Mr Leslie Huckfield , Nuneaton

It is the kind of stuff that my constituents are being told and that I am getting from Government Departments when I write to them. Frankly, it does not show any improvement on the daft replies that I was getting when the Labour Government were in power. In fact, I suspect that the civil servants who drafted these replies are those who knew nothing about the subject when we were in power.

The Price Commission is an absolutely rotten, stinking fraud. Weekend after weekend I get grumbles and bellyaches from the clubs and pubs of Nuneaton and Bedworth about the fiddles that have been going on despite the freeze, through value added tax, and so on. We still have the CAP to come. Whatever happens as a result of the Brussels negotiations, prices must go up.

We are told that about half the big firms in this country have proposed price increases before the Price Commission. The only sure defence that the working class have against that kind of thing is free collective bargaining. In the trade union movement throughout the country we shall do our darnedest to maintain the right of free collective bargaining, but we shall get a substantial increase in the living standards of the working class only when we have a genuine statutory control of prices and no messing about with the daft excuses that we get from this Government. We must have a genuine, long-lasting and enforceable statutory control of prices. We must have meaningful controls of food prices, particularly of commodities like butter. We must have food subsidies. The Government cannot proclaim that they are giving us a real subsidy by granting a concession of 10p off 11b. of butter a month. Is this what the Government call a food subsidy?

The only defence for working people is to have free collective bargaining, statutory control of prices, food subsidies, and, please, no more of the rubbish and silly excuses that we keep getting from this Government.

5.53 p.m.

Photo of Mr Wyn Roberts Mr Wyn Roberts , Conway

I shall follow the arguments of the hon. Member for Nuneaton (Mr. Leslie Huckfield) only in the sense that if we are to have statutory control of prices, that of itself means control of wages, because increased labour costs contribute to increased prices.

Photo of Mr Wyn Roberts Mr Wyn Roberts , Conway

So statutory price control automatically implies wage control as well.

We seem to be at one of those junctures in our lives in this House when hon. Members on both sides appear to be living in two different worlds.

Photo of Mr Wyn Roberts Mr Wyn Roberts , Conway

This division is not limited to hon. Members here. People outside are apparently just as divided on the state of the economy. The CBI has said that the economy is going up like a rocket. Mr. Jay, in The Times, says that the boom is going to bust, and Professor Kaldor pours even colder water on the idea of the boom in the economy.

We have had references this afternoon to all kinds of future gloomy prospects, such as an adverse balance of payments, the Government coming under pressure to fix the parity of the pound, and so on. But let us look at the facts as they are. What is there to encourage a reasonable optimist such as myself? The fact is that unemployment is down. We have heard a great deal about the problem of the 1 million unemployed. Let us be grateful that that figure has now considerably diminished and that work opportunities, unfilled vacancies, are on the increase.

We have no reason to doubt that the economy is growing at a faster rate than ever before and is likely to continue on this course. There is no doubt in my mind that the rate of inflation has been moderated. We have only to look at the consumer price index to see that. There was an increase in 7·4 per cent. in 1972 as a whole compared with an increase of only 4·9 per cent. between October 1972 and January 1973. On those figures alone, there has been a moderation in the rate of inflation. I believe that this moderation will continue under phase 2, and I see no reason for the gloomy prospects that have been bandied about.

Photo of Mr Joe Ashton Mr Joe Ashton , Bassetlaw

Will the hon. Gentleman tell us why he and his colleagues always quote the cost-of-living increases and not the cost-of-food increases? Clearly everything is frozen except food, and food still has to be paid for from wage packets. Why not give the true food increases?

Photo of Mr Wyn Roberts Mr Wyn Roberts , Conway

Food is part of the consumer price index. We had the figures this afternoon. The figures that I took down as my right hon. Friend was speaking this afternoon were 2·4 per cent. for all items, including food, between November and March and 0·8 per cent. without food.

Looking to the future, the Labour Party is not interested in fighting inflation. We have not had much help in our battle against inflation. I do not blame the Opposition, because clearly inflation is in their political interests.

We have had comparisons between the Government's counter-inflation measures and those taken by the Labour Government. I must drum home the basic fact that the difference between our counter-inflation measures and those of the Labour Government is that we are now clearly in a period of growth. The Government increased the money supply partly to reduce unemployment. The great problem of our time is how to increase the money supply and attain growth without undue inflation. I believe that the people of this country has realised that if we are to provide the money for growth we must seek to ensure that that money does not go into increased prices and wages.

I pay tribute to the trade unions for the success of the Government's counter-inflation measures. The trade unions have been extremely reasonable. Once they realised that we had moved from the stage of a voluntary incomes policy to a compulsory incomes policy they very soon understood and buckled down to it. We are seeing signs of their agreement to these measures even today with the Ford workers and others. The unions have behaved reasonably well and we should not underestimate the part that their good behaviour has played in encouraging investment in this country. I believe this sign of a change of attitude on the part of the unions has contributed more than anything to the growth of investment confidence.

Photo of Alan Williams Alan Williams , Swansea West

In view of the tribute which the hon. Member is paying to the trade unions, will he accept that any price increases there have been during the freeze have not been attributable to the unions?

Photo of Mr Wyn Roberts Mr Wyn Roberts , Conway

I see the point the hon. Member makes, but let us face the fact that we cannot isolate prices during the period of the freeze—which, after all, was brief—and say that they were directly related to the lack of wage increases in that period. But I am the first to concede that wages having been frozen, there is no doubt that this had a beneficial effect on prices.

Those of us who have studied the course of the American phase 2 will know that to be successful counter-inflation measures have to appear to be very strongly against price rises, rather more so than against wage increases. If there have been errors in the past few months they have been basically because wage increases have been stopped while prices have risen. During phase 2, when the increase is to be £1 plus 4 per cent., we must ensure that price increases are kept very severely within bounds. It must appear that there is rather more bias against rising prices than against rising wages if this policy is to be successful.

We are now looking forward to phase 3. Again, I think we can learn from the American parallel. In the American phase 3 there was too sudden a relaxation of controls, prices bounded forward and were sky high during the last few months. Clearly we must take extreme care as we approach our phase 3 and not commit the same error as did the Americans.

6.4 p.m.

Photo of Mr Joe Ashton Mr Joe Ashton , Bassetlaw

I shall try to speak to the motion and specifically about prices because that is what this debate is about.

I thought that perhaps we were slightly premature in having the debate now because the Price Commission has been in operation for only about eight days, but in view of what happened on the Sunday before last in regard to the price of petrol, it seems that we were right to have this debate now. I was not a member of the Committee which studied the White Paper on the code of conduct, but anyone who consulted that Paper and did not realise that there were massive loopholes in the regulations laid down by the Price Commission must have been blind.

Take, for example, what happened about petrol. I understand that there were three categories comprising about 177 firms in the first division, manufacturing firms such as Shell and Esso; about 1,300 in the second division of wholesalers; and, in the third division, probably over 20,000 retailers. Those in the first division have to tell the Commission in advance that they will put up prices. The commission will look at the profits and costs and tell them not to raise prices, or give them permission to do so. Those in the second division do not have to ask permission but merely inform the commission that they will raise the price. Those in the third division merely have to record an increase.

On the Sunday, those in the first division went to the commission saying, "We want to put up the price of our petrol". Others in that division, such as VIP, Burmah Oil, and Gulf Oil and one or two smaller oil companies, did not request permission. The commission said, "You can put up the price by 0·6 of lp. It would have been easy to put up the price by ½p and to stop giving away Green Shield stamps to make up the other 0·1 per cent., but that was not done.

Some in the first division, such as Shell and Esso, put up the prices, and the garages put up the prices by lp. Then other garages under the franchise from Gulf, Burmah or VIP jumped on the bandwagon and put their prices up. When it was pointed out to them that they had not the permission of the Price Commission, those companies said, "We have not told our garages to put up prices, but the garages have put them up off their own bat." Nothing could be done about the garages because they are in the third division.

That is a massive loophole in the code of conduct. Presumably it does not matter if manufacturers in the first division are not given permission to raise prices because retailers need not have permission. Apparently a drug manufacturer can be refused permission to raise prices but the retailer of those drugs can raise the price. It is no good complaining to the manufacturer for he can point out that the retailer does not have to have permission or to notify an increase. All he has to do is to make a record of it in case the commission has a spot check. It is a total waste of time and a nonsense to have this Price Commission in operation. It is a device to kid the trade unions that there is control of prices.

Every country has scapegoats. In America and South Africa, negroes are scapegoats, and Hitler blamed the Jews for anything that went wrong. In this country the trade unions are blamed for everything wrong. For every piece of bad handling by the previous Government and this one over the last two decades, whether it was decimalisation, increase of rents or value added tax that caused the trouble, the trade unions have been blamed. The best thing about the present legislation is that no one can go on blaming the unions for price increases because it is apparent that they are not to blame. There is one simple economic lesson that the Government have to learn. It is that £1 of subsidy is worth £3 of wage demands. Hon. Members on the Government side do not seem to be aware of this because of their hatred of subsidies. If the Government decide to increase rents of council houses by £1, the trade union has to go not for £1 but for £1·35 to cover it. They have to pay tax on that £1·35 to keep the £1 to pay their rent. It is not £1 that goes on the price of the product but £1·35. When this gets further down the line, it progresses in a kind of snowball of inflation.

Inflation and wage demands started when the present Government took off subsidies on food, rents, and so on. What they had done then dawned on them, so they introduced a wages freeze and price control.

I have outlined one massive loophole in the rules and regulations as set down. What about the others? What about the price of coal and steel, governed by the EEC and not by the Price Commission? When the price of steel rises—it has been agreed by the Government—it will affect every consumer durable during phase 2, such as washing machines and British Leyland motor cars. There is a four months' waiting list for an Austin 1800, a British Leyland car. I have tried to get one. It is open to British Leyland to say that there is a four months' waiting list, a big demand, and that the price of steel has risen. What better excuse is there for a price increase? If the Price Commission refuses this increase, the category 3 dealers, who do not have to notify increases, or to ask for permission, can make increases. Thus up goes the cost of living again.

The loopholes are enormous. With the trade unions, it is a flat £1 plus 4 per cent. It does not matter by how much productivity has risen, or how many cars were turned out at Ford last year. It does not matter whether Ford's profits are soaring, provided that they are not the best of the past two years. If Ford made a 30 per cent. profit last year and a 17 per cent. profit three years ago, the two figures can be added, making 47 per cent., and that figure can be divided by two, making 23 per cent. Next year Ford's can be allowed a 23 per cent. increase. In talking of the £1 plus 4 per cent., it does not seem to matter what productivity the unions have created. That is supposed to be a fair policy.

There is no control of the self-employed. The army of people who work on the "lump" on building sites, bricklayers working at contract prices, perhaps, is not controlled. A bricklayer working for a local council on housing repairs, a member of a trade union, is controlled by the £1 plus 4 per cent. formula. If he leaves his job and goes on the "lump", on sub-contracts, he can negotiate his own price.

There is no control of tenders. If a firm tendered to build 20 houses for a council last year at a certain price and this year tenders to build exactly the same number of houses, perhaps on land provided by the council, no one states that the tender must be the same as it was last year or that increases may be only £1 plus 4 per cent.

The loopholes in the Price Commission and the way that it works, in the administrative set-up, and in everything laid down by the Government, are a total nonsense and a sham. Unfortunately, many trade unionists who have studied the matter have not been able to get it across to their members because the national Press do not want it to get across. Neither the Press nor television have made any attempt to outline even a view of the point I have just mentioned. If they did there would be a national outcry.

Many more people would have taken part in the strike last Tuesday. Last Tuesday, 1½ million people sacrificed about £7 each to protest against the Government. It is easy to scoff at them and to play it down, but 1½ million people gave up a day's wages as a protest. They had good reason. When they protested against the Industrial Relations Act, the Government dropped it. The Government have never used it since then. They have done so many U-turns on so much legislation that no one can blame the trade unions for protesting.

There are signs that when it comes to phase 3 the Government will do another U-turn. In the autumn, we shall be nearing the election year. There will be wage increases next year because there is likely to be an election towards the end of next year. So the rampant inflation is just being held back by a few months to show the smack of firm Government. But then, off will come the brakes next year and there will be more wage increases in order to pick up a few cheap votes. That is not a policy on which to run a country or to organise any control over inflation.

The Government will never stop trying to kid the people, but it is time that they realised that they cannot kid all the people all the time. No prices and incomes policy will work over a long period with any success unless it is absolutely fair and covers the essentials such as food, rents, and so on, and unless it becomes apparent to the working man and to the trade unions that it is being operated fairly. This policy has not been operated fairly and we shall see this more and more during the summer.

6.16 p.m.

Photo of Mr Teddy Taylor Mr Teddy Taylor , Glasgow Cathcart

The hon. Member for Bassetlaw (Mr. Ashton) has made a very effective and thorough speech, such as we always hear from him. Despite his criticisms, however, and despite the rather violent criticisms contained in the motion, I think that the hon. Gentleman would accept that if we believe that a prices and incomes policy is an end which is worth pursuing, phase 2 has been remarkably successful, despite some of the great difficulties which have been encountered.

Looking at the experience of prices and incomes policies, there probably could not have been a more unfavourable atmosphere for starting such a policy. First, we have had the inflationary atmosphere resulting from a devaluation. We cannot forget that there has been a substantial devaluation of our currency, which inevitably has a marked effect on prices. Secondly, we have had a substantial rise in certain commodity prices, because of a general upsurge in world trading, and this makes it more difficult to control prices. Thirdly, we have had the effect of entry into the Common Market-admittedly only the initial effects, but there is little doubt that, apart from world shortages, the introduction of levies on certain foodstuffs has had a marked effect on the prices of certain foods. In these circumstances, it is certainly not the ideal situation in which one can hope to have a rather stable price situation.

Photo of Dr David Clark Dr David Clark , Colne Valley

I am particularly interested in the hon. Gentleman's point about the Common Market. Knowing his views, I am surprised to hear him say that the Common Market could contribute towards the increase in the cost of food, because the Government's latest estimate, I think, is that food prices will rise by only l½p in the pound per year, which is not very much.

Photo of Mr Teddy Taylor Mr Teddy Taylor , Glasgow Cathcart

If the hon. Gentleman looks at the experience we have had and at the recent negotiations, he will accept that it is very difficult to say how much of food price rises is related to world conditions and how much can be attributed to the Common Market. But the hon. Gentleman will accept that the Common Market has contributed towards a substantial or significant part of the increase in food prices. My point was not to repeat the Common Market angle but to say that we have been trying to operate a pay and prices policy in a situation in which we have had devaluation, commodity price rises and the effect of entry to the Common Market, and that that is not an ideal situation to start such a policy.

Considering those three disadvantages the policy has been remarkably successful. First, despite the difficulties, in 1972 we achieved an expansion in industrial output of about 6·8 per cent. in real terms. That is a remarkable figure. In fairness, the hon. Member for Nuneaton (Mr. Leslie Huckfield) must accept that the increase of 6·8 per cent. is about equivalent to the growth rate of 4½ years of Labour Government.

Photo of Mr Leslie Huckfield Mr Leslie Huckfield , Nuneaton

Does not the hon. Gentleman understand that in the years of the Labour Government very serious financial constraints were imposed upon the economy by a balance-of-pay-ments crisis? If the hon. Gentleman cares to look at the ramification of a floating pound, he will see that most of the Government's growth figures for production rest on the basis of having a floating pound. But for how much longer will that be so?

Photo of Mr Teddy Taylor Mr Teddy Taylor , Glasgow Cathcart

I have the growth figures here and I can show them to the hon. Gentleman. After five years in office one would have thought that the Labour Government should have been able to deal with its financial problems, no matter how serious. The hon. Gentleman will find that the growth rate for Britain was 0·2 per cent. in 1969, which is about the lowest figure on record. Although I accept that there were financial problems in 1964 when the Labour Government came to power—whether they were handled correctly or incorrectly is a matter of judgment—after five years of Labour Government the growth rate was 0·2 per cent. That is very small indeed.

The hon. Gentleman should at least accept that if we have a national growth rate of 0·2 per cent. it is impossible to provide more cash for real increases in wages, a real expansion of the school and hospital building programme and the rest, unless we have a savage increase in taxation, which is what we have had, and which is self-defeating, because it prevents a further growth in the economy.

The hon. Gentleman must also accept that the atmosphere in industrial relations appears to have been a lot better over the last few months than it was 18 months ago. If the hon. Gentleman examines the strike figures published by the Secretary of State for Employment last week, he will see that the figure for days lost in strikes in the first quarter of this year was substantially below the figure for the same period of last year. There was then, admittedly, a very serious situation.

The tendency is towards a more harmonious atmosphere in industrial relations. If the hon. Gentleman docs not wish to have proof from figures, there is the recent decision of the Ford workers, and many other workers not to strike. This shows, whether or not there is general acceptance of the Government's economic policy—I know that this is a matter of opinion—that there is now a greater reluctance by the working people of Britain to strike than there was last year, the year before, or the year before that.

The actual rate of inflation in this country over the last six months is much less than that of other countries in Europe. I can take the case of Germany —whose example, we are often told, we should aim to follow. Our rate of inflation, despite all our problems, is less than Germany's. Also, despite our problems, we have pushed through a great deal of consumer legislation.

I am not trying to claim that the prices policy has been remarkably outstanding and a complete success, but if the hon. Gentleman will be fair and consider the experience of our Prices and Incomes Board, bearing in mind the difficulties we have encountered, he will see that we have achieved a great deal. The important thing is that we have managed to increase the rate of growth in the economy, from which all things stem.

The terms of the motion are unfair, particularly when one bears in mind that the problems which we are discussing are not new. They are the same problems as were faced by the previous Government. The result of the policies of the previous Government was not a real restraint in prices—far from it. There was not real growth; growth became almost totally stagnant. There was not industrial peace and harmony, because the previous Government did not even achieve an agreed policy with the unions. The Labour Party is unfair in its criticism. When it encountered these problems it failed to resolve them.

However, there are some problems in relation to the motion which I wish to put to the Minister. I hope he will say something about them. First, there is a general problem about which I feel very strongly. In the last two years, real living standards in Britain have been growing faster than for many years. This has been achieved first, by a substantial increase in money wages paid to the average working man and, at the same time, a substantial increase in prices.

Taking prices and wages into account, everyone must agree that the official figures show that the average person is a lot better off and that real living standards are much higher. This has been achieved by a substantial increase in money wages and a less substantial increase in prices, resulting in the man of the house having a lot more cash in his pocket. The people who have had to face up to the problem of prices are the mothers and wives.

One of our problems at the moment is that the men of the house have more cash in their pockets and a fair proportion of the increase is not going to the wives and mothers who have to face up to the increases in prices.

Photo of Mr Leslie Huckfield Mr Leslie Huckfield , Nuneaton

I think that the hon. Member is still a bachelor, like myself— [HON. MEMBERS: "No."] Congratulations to him. If he is trying to offer this excuse about the husband holding back the increase in his wage packet, has he tried to do any shopping recently himself? If he does, he will find that all the increases in food prices that we are talking about are absolutely true and are certainly passed on by wives to husbands and are paid for by husbands. The hon. Member is talking nonsense.

Photo of Mr Teddy Taylor Mr Teddy Taylor , Glasgow Cathcart

The hon. Member may feel that I am talking nonsense, but over the last 12 months for which figures are available, ending in January, average weekly earnings in Britain rose by 15 per cent.——

Photo of Mr Teddy Taylor Mr Teddy Taylor , Glasgow Cathcart

Of course. The hon. Member will accept that tax this year is lower than it was last year. In every year of a Tory Government taxes have been reduced, whereas it is an unfortunate fact that in every year of a Labour Government taxes have been increased The average earnings before deduction of tax, which is less under this Government, have risen by about 15 per cent. in that annual period. Bearing in mind that we have: had a substantial increase in prices and that more and more of the menfolk are getting cars who did not have them before and finding out the costs of repairing and running a car, wives are not getting their fair share of cash increases——

Photo of Mr Teddy Taylor Mr Teddy Taylor , Glasgow Cathcart

This is something that I accept from my own experience.

In the next few years, when we have substantially rising money wages and prices, might there be a case for every wife knowing her husband's average earnings? This might help to ensure that wives do not suffer the main brunt of inflation because they do not know the facts.

Confusion exists about price increases. Probably most of this confusion, which we saw over the petrol price rise, is that there are two forms of control in the Counter-Inflation Act. The first is the strict and rigid controls under Clause 12, relating to VAT. Under Clause 12, if a shopkeeper, manufacturer or trader, small or large, increases prices by more than the amount of VAT or does not reduce them by the difference between purchase tax and VAT, he can be prosecuted. If anyone feels that any shop, however small, or a trading establishment, however large, has charged more than it should on this basis, he can bring this to the attention of the weights and measure inspector and a prosecution can be brought.

Because of the strenuous publicity efforts which have been made—the Government were rightly concerned about the fears that we would suffer exactly the same problems as at the time of decimalisation—the public have gained the impression, particularly from newspaper advertisements, that this control applies to all kinds of price rises. They do not appreciate that the general powers of the Counter-Inflation Act, as clarified last Monday by the Secretary of State for Trade and Industry, apply only to the very large companies and are not the same full powers as we see in Clause 12.

Because of this, and the publicity given to the petrol price rise, many members of the public do not know the powers available to control prices. It would help if the Minister made a statement clarifying this position. There is nothing worse than an aggrieved consumer taking up a complaint about an increase in prices only to be told that no powers exist to control it.

My third question relates to what will happen in phase 3. The motion says that the House has no confidence in the Government's policies and condemns the abdication of ministerial responsibility for price control. We can reject this utterly when we consider the experience and policies of the last Government, but it would be helpful to know precisely what will be the basis of the counter-inflation policy in phase 3.

I am very concerned that we might be in danger of making a mistake. For instance, will there be a basic norm, to which will be added an allowance for the increase in the cost of living? The impression given by Press reports is that the tight £1 plus 4 per cent. formula may be revised in phase 3 into a procedure for anything from a 2 per cent. to a 6 per cent. increase plus an allowance for cost of living rises. If we are to carry that kind of provision from phase 2 into phase 3, we shall interfere with the natural disciplines of the economy so much that it could be counter-productive.

There are far too many conflicting situations, as in the car industry. The Ford Company is a very good example of a successful company, which is highly productive and profitable, which is increasing its turnover, has reasonable industrial relations and is making the car the public want, being forced under phase 2 to pay the same wage rise as another car manufacturer that I would not like to name, which is not making profits or increasing productivity, has bad industrial relations and is not providing the car that the public want. Is it sound economic sense to say that both should pay the same wage rise?

In the short term, there may be a case for the phase 2 restraints, but in the long term, if we insist that the successful, profitable firms with good labour relations should pay the same annual wage rise as the unsuccessful firms with bad labour relations, that cannot be good for the economy as a whole and it will simply lead to ail kinds of ruses to get around the policy. It is remarkable how successful we have been in holding on to the norm of phase 2. I doubt whether this will be possible in phase 3, and it might damage the economy.

A far fairer way of proceeding is to have wage rises related, so far as practicable, to some other standard—perhaps productivity or the profitability of the firm. At the end of the day, there must be some alternative basis related to success and not just to an inflexible norm. I can appreciate all the problems which would arise from moving to any other basis, because, on the old system, it will mean that powerful unions will get large wage rises and that less powerful ones will not. But at the end of the day, the natural disciplines of our capitalist economy will sort this out.

The real problem will be precisely what we do in the public service. What is the fair and right way of assessing the wages of railwaymen, coalminers and other people in the public sector industries?

The only way in which we can make a fair assessment is by relating their wages either to average earnings in other industries, or—which I think might be more sensible—to a fair supply of the manpower which is needed for that industry. In other words, I believe that the right wage in the railways, mines, or any other industry is that which attracts all the people needed to provide an efficient service in that industry. It may sound blatantly capitalistic, but it is high time, in phase 3 to think of going back towards the normal disciplines which we were prepared to accept in the past.

I wish to make two final points, on our pay policy and, more definitely, our price policy.

So long as we have Government controls, advice or restraints on prices, and so long as we intend to give the public a rôle in this policy, it is essential that the public should have some source from which they can obtain advice. It is rather ridiculous to have the stringent and tight controls of Section 12 of the Counter-Inflation Act in respect of the VAT effect on prices yet, if one asks the average consumer precisely what these controls are, one finds that he does not know. If any consumers were prepared to take action I am afraid not many would know how to go about it, or where to go.

This problem and all the other problems relating to prices provide more and more proof of the need to have comprehensive consumer advice centres in every centre of population.

The hon. Member for Bassetlaw rightly referred to the effect of rents. Government supporters think that our new rent rebate scheme, particularly for private tenants, is a good one. But even those of us who support it know that many people simply do not know how to go about getting rebates. Those who do, and get the forms, often find it almost impossible to complete them. This may seem ridiculous. If one looks at a rent rebate form one may wonder what problem could arise, but many of the underprivileged and low-income families which have to apply for these and other benefits find it very difficult to fill up forms. They are utterly confused by much of the advice from the Government, in the form of Press advertising and radio talks. People of that kind need fully comprehensive advice.

Until the day comes when the average consumer looking for help on prices, protection from the weights and measures inspectorate, help on rent rebates and help with family income supplements can find, in each major centre of population, a place which will advise him, we shall not get anywhere near the full take-up of benefits which I believe is crucial to a successful prices and income policy. The Minister must be aware of many cases in his own constituency and elsewhere where people could obtain benefits but do not take them up. What is the reason for that? I am sure it is that many people in our community are terrified by official forms. If we look at the forms in connection with rent increases being applied to private property we get some idea of what is involved. Many people are a little confused by forms. They do not need new forms and pamphlets. They need a place where they can discuss the problems and not only get help and advice but also get the forms filled in on their behalf.

So long as we provide a comprehensive welfare system with all these new benefits, with any form of Government intervention in price control there must be one place where people can take their various problems and be directed to the proper offices. Hon. Members who take a constituency interest in the problems of people in connection with the gas boards, legal matters, and tax matters, know that it is terribly difficult for them to find the right place to go to. If we had a consumer advice centre in every area, in which there was one room for advice on tax problems, another for advice on legal aid problems, another for advice on rent rebate problems and another for weights and measures inspectorate problems and, in the middle, a place where people could go to be directed to the right office, it would be a great help to many people.

If the Minister ever experienced the problem involved in going to a public telephone kiosk, as many of my constituents have to do, and trying to get through to the right man at the gas board to deal with his problem, he would know how very difficult it is. The only answer is to have a comprehensive consumer advice centre in every area.

My final point concerns our future attitude to wage rises and strikes. Some people have suggested that the reduction in the number of strikes is due to an upsurge of patriotism in this country— that the workers of Britain want to let the Government know how much they support Government policies. I believe that this is over-optimistic and is not a fair reflection of society today. I suggest that the main reason why people are less prone to strike in recent months—the reason why we see an apparent improvement in industrial relations—is that for the first time for many years it appears that strikes are not paying. For the first time for many years there is a situation in which the Government have set a pay increase limit of £1 plus four per cent. and appear to indicate that they mean to stand firmly by it.

From my own experience of industry I believe that the only reason we have strikes is that they pay. The responsibility for the dreadful strike record in Britain can be placed fairly and squarely on the employers. Time and time again in my own industry of shipbuilding, decent, responsible trade union officials have come forward with a pay scheme and have been told, "Nothing doing". They have gone back to a mass meeting and told the men that there would be no wage increase. Then, two or three weeks later, after an unofficial strike led by some militants, the employers have conceded to them the very increase they refused the official trade union representatives through official procedures. This has happened many times with private employers.

I do not underestimate the problems of employers faced with tight delivery dates, but if they complain that the unions cannot control their members and have too many strikes, the main reason is that they have said "Yes" when they meant "No" and "No" when they meant "Yes". Governments also have been guilty of this in previous years, Labour and Conservative Governments alike, but we now have a situation in which it appears that the Government mean what they say.

I hope that for the future, with our inflation problem and our pay and prices policy, private employers in Britain will draw a lesson from this not always to say "No" to employees. If any wage concession is to be given and if they believe in a responsible trade union movement, such concession should be offered to official trade union representatives, through constitutional procedures, not just to militants after strikes. I believe that this is the only answer to the problem of industrial anarchy in Britain.

I am sorry to have spoken for so long but I hope the Minister has taken note of what I have said.

6.43 p.m.

Photo of Mr Charles Loughlin Mr Charles Loughlin , Gloucestershire West

I might strain the patience of the House if I took up all the arguments of the Member for Glasgow, Cathcart (Mr. Edward Taylor). However, I was very interested in his suggestion that we ought to review and reassess relative incomes.

The hon. Member referred to miners, engineers and one or two other workers. Why not take it a step further? I have never been able to understand how a situation can arise in which a bad solicitor can earn 20 times as much as a first-class engineer. If we are beginning to think in terms of reassessing the status and social values of occupations, the hon. Gentleman must not live in the past of 60 years ago and refer to reassessment of relative standards among industrial workers, We have to take the bull by the horns and ask ourselves why people who make a minimal contribution to the real wealth of society—including property speculators—should have a fantastic income whereas those who make a substantial contribution are the very people we are talking about today and the very people whom we are attempting to defend.

The hon. Gentleman has taken the progression of excuses one stage further this afternoon. Time and again we heard Ministers and Government supporters say that the problems facing us stemmed from the actions of the previous Labour Government. We had that excuse for a considerable time. During the first years of the Conservative Government's term of office, whatever the issue being debated, Ministers on the Front Bench or hon. Gentlemen on the back benches could, according to them, prove that the real problems stemmed from the policies pursued or not pursued, by the Labour Government.

That was followed by the excuse that the trade unions were to blame. Whenever inflation was debated, Ministers argued at the Dispatch Box—the Minister for Trade and Consumer Affairs no less than any other Minister—that price increases were necessary to pay for wage increases which had been granted because the trade unions were holding the nation to ransom. But eventually the Government discovered that the argument could not be sustained, and in this debate it cannot be said that rising prices are due to demands for wage increases.

I say that because, since the introduction of the freeze in November, food prices have risen by 8 per cent.—for seasonal foods the increase has been 20 per cent.—but the trade unions have not been able to negotiate comparable wage increases. Indeed agricultural workers, who produce 50 per cent. of our food— and that figure is true in terms of world prices—are receiving starvation wages in return for their labour. Agricultural and shop workers are inter-related in terms of wage costs affecting food prices. The fact is that both those groups of workers are receiving starvation wages. If they were unemployed and if, because of their family circumstances, the Supplementary Benefits Commission's scales were applied to them, they would receive more in benefits than they do now for working a 42-hour week.

The wage argument having failed, the Government put forward another story. No longer were prices due to the policies pursued by the Labour Government, or to the country's being held to ransom by the trade unions. We were told that world prices had brought about the present situation. We know that there are variations in world prices. Sometimes the terms of trade are in our favour and sometimes they are against us. But if world prices are the reason for increased food prices the Government still have a responsibility in the matter, because they have pursued policies which ensured that housewives had to pay more for their food.

The Government have virtually destroyed the Australian and New Zealand markets in Britain. They were the two countries which used to supply us with cheap food. If the Government divest themselves of their sources of cheap food and, in combination with others, adopt a policy which has as its basis the supply of dear food, they cannot escape their responsibility for the resultant increase in prices.

Apparently, however, we have moved away even from the excuse of world prices. There is now a new theory. The hon. Member for Cathcart argued that the real reason why the housewife is poor is that her husband is not giving her enough of his income. According to the hon. Gentleman, the primary reason for the housewife's difficulty in purchasing food is not that the Government have allowed food prices to rise, not that the trade unions are asking for excessive wages, and not that the housewife is paying the penalty for the policies pursued by the Labour Government of yesteryear. It is simply that her husband is not giving her sufficient out of his pay packet. Is that the depth to which Government supporters have sunk? Today's effort is a blatant attempt by the hon. Member for Cathcart to recapture some of the women's votes which he knows the Conservative Party has lost.

I have written many letters to the Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food on the question of increased prices. The hon. Lady always replied extremely courteously. She may even have improved the phraseology used by the Ministry in replying to letters. But after she has sent me these nice letters, and after she has explained all the difficulties facing the Government, she has had to admit that there is nothing that she can do, and nothing that the Government can do, either. That is the situation with which we should be dealing today.

We know that there has been a substantial increase in food prices. We know, too, that the Government first pursued a wage policy which precluded work people from having any increase in wages and followed that by restricting wage increases to £1 plus 4 per cent. A necessary concomitant was a restriction of price rises. Without that leg of the policy —because there are three legs to it— it was manifestly impossible to convince people that there was even a semblance of fairness in the incomes policy. What has happened? This afternoon the Minister was talking about an agency set up to vet prices. I intervened during his speech to ask by what method the agency could effect a reduction of retail prices, and the right hon. Gentleman had to admit that there was none. I invite the Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food to tell me how, when I discover what I think to be an unjustified increase in retail prices, I go about effecting a reduction.

The Ministry advises me first to deal with the shopkeeper. Having dealt with the shopkeeper, and possibly having to suffer his abuse, I then go to the weights and measures inspector. Will the hon. Lady tell me how many cases of price increases, considered by the Weights and Measures Inspectorate to be unjustified, have been followed up? I know she cannot tell me, because the answer is "None". The next stage is to go to the commission. The chairman of the commission, on television about a fortnight ago, admitted that the only way in which retail prices could be controlled was by providing power to examine the net margins of the retailer at the end of the accounting period. At that time action could be taken against the retailer if his net margins in that year were greater than in either of the two years chosen in the first instance.

This is all a farce. The Government have allowed lp per gallon increase in petrol prices. Motorists assumed that it meant they would have to pay lp a gallon more, once the price had been agreed, on new stock—not on old stock. However that was not so. The Government allowed 1p a gallon at the wholesale level —which has nothing to do with the retailers or the price at the pumps.

Photo of Mr Charles Loughlin Mr Charles Loughlin , Gloucestershire West

The hon. Member has just bobbed up and made that comment. I have dealt with the question of the world market. I am now dealing with the mechanism with which prices are to be controlled. Within two days of the announcement of the price increase in petrol I was returning from Blackpool. I called at the Ross Spur petrol station as I came off the motorway to buy petrol. I hope that the hon. Lady will take note of these facts. I bought four gallons and I was told that the price had gone up by 1½p, and not lp. No doubt it was old stock anyway.

Photo of Mr Charles Loughlin Mr Charles Loughlin , Gloucestershire West

I know that the hon. Member thinks this is very good, but that is because he is in the retail racket. No doubt he will do the same thing. I wonder what we shall find out when the accounting period comes to an end. I wonder whether we shall discover that this retailer has, in practice, increased his margins.

This is the sum total of the Government's powers. I should like to know how many units of distribution they will deal with at the end of the accounting period and how many inspectors they will have to do the job. We are talking not about 100 or 1,000 units but about more than 1 million. The Government will need many inspectors if they are to check every accounting period. The position is the same with retailers. We were told that an immense advantage was to be derived from the introduction of VAT. We were told that it would mean that we should be able to dispense with purchase tax and SET. This morning I had a letter from a constituent who went to one of Butlins' hotels at Blackpool over the Easter weekend. He wrote asking me if it was right that Butlins could charge the whole addition of 10 per cent. on the full board price, because he had understood the Government to say that there was bound to be an allowance for the abolition of SET.

I was able to write back and tell my constituent that I was at the Park House Hotel, Blackpool for the USDAW conference and every item on my bill —and I have it here for the hon. Lady to inspect if she wants it—included VAT. There is no reference to any allowance for SET. SET is of no consequence in terms of cutting prices. It is related to the £1·20 per adult worker. Relate that to the total turnover of the worker concerned and one sees that it is impossible to reduce the amount for SET.

The Chancellor said that he had repented and would exclude children's clothing and shoes from VAT. An article in the Sunday Times illustrated the difficulties of trying to exclude children's clothing. Everything depends upon the type of shop in which the clothes are sold, whether there is a ladies' department and a children's department, and in what part of the store the clothes are sold. There are many anomalies. In children's shoes the exemption is limited to size 3 and below. Many children of school age take larger sizes. Here again a con game is going on. The Government are conning people that various items are not subject to VAT when in practice, in the distributive trades, they are. Manufacturers and distributors have to make an allowance for it.

There has been a great increase in food prices and other prices. I charge the Government with pursuing policies which have meant inevitable and substantial increases in the cost of living for the average household, in not only food but other commodities. The most scandalous increases are in property prices. Not only youngsters are now denied the right to buy a home. In London nobody can find a house to buy at less than £10,000.

In my constituency dilapidated cottages are selling for £9,000. The total amount required for the deposit and the total amount of repayments, not only for mortgages but for other out-goings, is such that it is now almost impossible for youngsters to buy a home in which to start their married lives.

Another example of the Government's ineptitude, or indifference, is the increase in rents right across the board. It is no good Conservative Members telling me that poor people can get rebates of rent and rates, because the poor never want others to know that they are poor. They would rather not go to the council office and expose their nakedness to council officials and others who might not know. They would rather pay than ask for what they consider, rightly or wrongly, as charity.

Rent increases have affected both private and council tenants. Whom can the Government blame for that? Can they escape responsibility for their Housing Finance Act, which imposed additional burdens on people renting property?

We have had a rating revaluation. I should like the Government to investigate the increase in rates this year. Many constituents complain to me about substantial increases in rates. If that happens in my part of the world, heaven knows what is happening in some of the industrial centres.

The Government, despite all the apologies that Conservative Members advance, stand indicted for pursuing a food prices policy which has resulted in a substantial lowering of the standard of living of the British people. They offer butter subsidies of 2½'p per week. I do not know how, when we are selling the Russians £12 million worth of butter at 8p a 1b., Ministers have the nerve to announce that they are to subsidise butter for old-age pensioners by 2½p. How many old-age pensioners buy butter now? Very few.

The Government stand indicted on food prices, rents, rates and property. Those increases account for 50 per cent. of the total income of the low-income group. It is no good the Government's trying to blame anybody else. Let them for once accept the blame. It is their responsibility. For God's sake, let them go.

7.10 p.m.

Photo of Mr Cecil Parkinson Mr Cecil Parkinson , Enfield West

I listened with great interest to the hon. Member for Gloucestershire, West (Mr. Loughlin) who spoke with great sincerity and undoubtedly established a point that nobody has tried to argue about today— that we have national problems. But he offered no solution. All he did was to seek to stir up disgust, envy and dislike in our society. He talked about the poor and about charity. I am as aware as he is that many deserving and needy people do not receive help, but people such as the hon. Gentleman making bitter speeches about charity serve only to put people who need help off the idea of asking for it. The hon. Gentleman, by bandying about words such as "charity" is spreading the idea that he is theoretically supposed to deplore. I hope that he will stop it, that he will take some of the bitterness out of his speeches and start talking about our nation's problems constructively for a change.

Virtually every Opposition speech today has been about petrol prices and the impact of last week's application by six major companies for an increase of ½p a gallon. The hon. Members for Nuneaton (Mr. Leslie Huckfield), Bassetlaw (Mr. Ashton) and Gloucestershire, West went on and on about the petrol price increases. We heard that the petrol companies could put up their prices and that there was no restriction on the garages, which would enjoy a bonanza. The one thing known by anyone who buys petrol for his car is that there is cut-throat competition amongst garages on the petrol distribution side. Any garage that sought to put up its prices by more than the going rate would rapidly find itself run-ing out of customers.

We must never forget that competition is an element in price control and still exists, especially in the petrol industry. There is no more cut-throat competition than in that industry. It is not true that the garages cannot be controlled. If their increases are excessive, the Price Commission can make a roll-back order.

There is no point in exaggerating the impact of what happened last week, in trying to make too much out of it. The garages did not seek to make a killing out of it. The hon. Member for Nuneaton talked about the hoarding of petrol and the killing that was made as a result. If a garage owner had 10,000 gallons of petrol in stock on the day in question he made £50, but if he bought it in deliberately early with the express purpose of making a killing, by the time he paid tax on it—and it has to be handed over pretty quickly—there would not be much in it. There was no bonanza last week, and there is no point in pretending that there was. To do so is simply to create dismay and distrust when it is not necessary.

The hon. Member for Gloucestershire, West said that we always seemed to want to blame the Opposition for the situation we took over. Only this afternoon we heard Labour Members yelping about the 1964 deficit as the excuse for everything that happened during the Labour Government's period in office. We must all accept that the country does not stop and start when there is a change of Government. There is a continuity. We are the beneficiaries of some of the good things done by the Labour Government and an inheritor of many of the problems they left behind.

I have said many times that I am happy for Labour Members to take a great deal of the credit for the balance of payment surplus if they will accept responsibility for the wages explosion and prices explosion that were the basis of it. It is a little weak for the hon. Gentleman to say that it is very unfair of us, less than three years after we came into Government, to mention the situation we inherited, when they were still bleating six years after taking office about the situation they took over in 1964.

I was interested in the whole of the speech of my hon. Friend the Member for Glasgow, Cathcart (Mr. Edward Taylor), but I was particularly interested in one part. The rôle of our nationalised industries and the problems of wage control in that sector are at the heart of many of our problems. The nationalised industries and the unions have finally caught on to the fact that they simply cannot be allowed to go bust.

What drove an enormous hole in the Government's original incomes policy was the fact that the trade unions in the nationalised sector suddenly started abusing their monopoly position. In the coal industry, for instance, it was suddenly realised that they had the power to supply 75 per cent. of the requirements of the electricity generating industry. The National Union of Mineworkers' monopoly was working within a monopolistic coal industry to which we had reserved the right to supply the vast proportion of one of the key sectors of our economy, the electricity supply industry.

We had Wilberforce and the ridiculous adjustment factor wheeled out as an excuse to get the Government off the hook. The adjustment factor was the fact that the miners had been at the top of the wages table once, and no longer were, and that that was why they should go back. I did not hear it talked about when the hospital workers were discussed. Traditionally, they have always been at the bottom of the wages table, but I never heard anything about the adjustment factor then. It was not said that the situation had always pertained and therefore must continue.

At the heart of many of our problems is the fact that the nationalised industries are in a position to be a wages pacesetter. I do not blame people in the private sector who see huge increases in the nationalised sector, where the industries are not subject to normal commercial discipline, for becoming unsettled. Control of the wages in the public sector, and industrial relations in that sector, are among our key problems.

Unions that demand a monopoly position in national monopolies will have to accept a limitation on their right to strike and to take other industrial action. One of the weaknesses of the Industrial Relations Act was that it removed certain constraints that had been traditional in certain sectors of our nationalised industries. I hope that that matter will be examined when we think about revising the Act.

The Fourth Report of the Prices and Income Board stated that The point of a prices and incomes policy is that it obviates the need for a deep recession, and it tries to keep costs down ". It is very important to look, as my hon. Friend the Member for Glasgow, Cathcart did, at the situation that existed when phase 1 and the subsequent phase 2 became necessary. It was grave. The rate of wage increases was accelerating. Although prices went up by 7·4 per cent., hon. Members forgot to mention that wages went up by 15 per cent. There was no doubt a madness in the industrial air.

I found from my own experience that employers were accepting wage demands at the prospect of which they would have turned grey only a few months earlier —increases of 10 per cent., 12 per cent., or 15 per cent.—in the happy assurance that they would just pass them on. The consumer had become used to spiralling prices. The manufacturer met no resistance when he wanted to put up his prices. Everyone asked "Why not?", and then those formulating demands said that if prices were going up at such a rate, they must double their demands, because the next year's increase would already have been devalued by the time they received it.

We had the classic recipe for becoming that much-talked-about institution banana republic. We had a vicious inflationary spiral, and people were becoming used to living with it. It was accepted as part of life that manufacturers gave a big wage increase and handed it on in the form of higher prices.

Labour Members say that if we can control prices wages will inevitably stabilise. I remind them that we had a 17-month period of voluntary price restraint from the CBI. Many of the country's major industries restricted their increases to an annual rate of 5 per cent. over a long period. The price which they paid when phase 1 was introduced was a freeze.

Many of our major industries, during the time when the wage explosion was ripping, voluntarily subjected themselves to price restraint. Opposition hon. Members who suggest that all we have to do is to control prices and that the rest will stabilise forget that most major British industries restrained their price increases and that their reward was a record wage spiral.

Some Opposition Members try to back every claim for a wage increase. The right hon. Member for Bristol, South-East (Mr. Benn) seems to make a speech every day paying his obeisance to the trade union movement. It is time for the right hon. Gentleman to stop trying to make his number with the trade union movement and to stop trying to be the man of the people. It is time that he started to think about the nation's problems.

The right hon. Member for Bristol. South-East mentioned democracy three times this afternoon and immediately afterwards mentioned the trade union movement. The trade union movement is said to be synonymous with democracy. I can never forget what the hon. Member for Kingston upon Hull, East (Mr. Prescott), who is a representative of the National Union of Seamen, told us in the course of the debate on the Industrial Relations Act. He told us that his union keeps its elections open for six months so that all its members will have the opportunity to vote. It is reckoned that they all call back home at least once every six months. He said that less than 3 per cent. of the union's members bothered to vote and that the union's executive is chosen by a majority of 3 per cent.

There are probably many democratic unions. It is a fact that of the 7·5 million votes which are eligible to be cast at the Labour Party conference, 6·75 million of them are in the hands of the trade union movement on the basis of cash consideration. That is probably the idea of democracy which belongs to right hon. and hon. Members opposite. For the right hon. Member for Bristol, South-East to capitulate all along the line to the trade union movement—"No controls on you but controls on everyone else"— is not good enough. It is time that the right hon. Gentleman stopped it.

Last Friday, I went North and spoke at a conference of sixth formers. We were discussing the world food situation. During our discussion reference was made to the price of oil. Oil prices did not go up because some grasping, greedy oil companies decided that they wanted to make more money. They went up because the OPEC countries decided to put up their prices. The OPEC countries now have as their customers the United States, who were large exporters of oil as recently as 1970. The Japanese are importing in ever-increasing amounts. At the moment we have not one barrel of oil coming from the North Sea, and we have to pay for our supplies. It is inevitable that prices will go up.

There is no point in making a rod for the public to use to beat the next Government. It does not matter, in that respect, if the Labour Party becomes the next Government. It is useless to pretend that organisations such as OPEC do not exist. To pretend that we are independent of world trade is creating an illusion which serves no object. The only beneficiaries will be Members such as the hon. Member for Cornwall, North (Mr. Pardoe), who feasts on the public's disillusionment with the major parties.

I have figures which show that food prices are an international problem. There is not a country in Europe and there is hardly a country in the world which is not suffering from record prices. [Laughter.] Opposition hon. Members can laugh. But if they were sitting on the Government's benches they would have to tell exactly the same story. The sooner we stop trying to make short and cheap points about an international problem, the better for all of us.

It came through to me clearly on Friday that people are disillusioned with politicians. That is not because they make excuses. They are disillusioned because politicians pretend to be in control of situations which are beyond control. When they are in Opposition they pretend that such situations can be controlled and when in Government they have to admit that they cannot be controlled. I hope, for all our sakes, that we can have debates in future about the effect that a particular problem has on Britain. World food prices have rocketed. We, as big importers of food, are particularly vulnerable. We can take all sorts of steps. We can boost our home agriculture—that we are doing—but that cannot be done overnight. We are subject to world movements in prices. Except for direct subsidy, there is nothing which any Government can do about it.

I have a selection of quotations from speeches made by the right hon. Gentleman the Leader of the Opposition with which I shall not bore the House. The right hon. Gentleman said exactly the same thing over and over again. He was asked, "Why did not you control food prices?"—"Because I cannot." He was asked, "Why are not we doing this?"— "Because we cannot."

There are costs which go up and which must be passed on. The hon. Member for Gloucestershire, West complained about rates increases. I wonder whether the hon. Gentleman supported the local authority workers in their demands for higher wages? They happened to be a very low-paid section of the community. In fact, 80 per cent. of rates are represented by wages. Who is benefiting when people find it possible to support everybody who needs a wage increase and then to complain about the result if their activities are successful? Is it serving the hon. Gentleman's party if the Government of the nation push out weak, feeble points, which show a hearty disrespect for the intellectual standards in our society, in the hope that it will——

Photo of Mr Charles Loughlin Mr Charles Loughlin , Gloucestershire West

I hope that the hon. Gentleman will bear in mind that I supported the local authority workers, that I have advocated a complete reorganisation of the rating system and that I opposed the revaluation.

Photo of Mr Cecil Parkinson Mr Cecil Parkinson , Enfield West

King Canute stood by the sea and ordered the waves to go back. We have already heard from the right hon. Member for Coventry, East (Mr. Crossman) that he was in favour of postponing the revaluation in 1968 because he thought that it might do his party a bit of harm. We have had to pick up the tab for 10 years without revaluation. Short-term, temporary party political moves stood in the way of doing something that was necessary and right. If the hon. Member for Gloucestershire, West continues to put forward that sort of idea, he will do himself no good at all.

I would like to deal with another part of the speech of the right hon. Member for Bristol, South-East. The main body of his speech was a rehash of Mr. Peter Jay's article which appeared in The Times this morning. I found that article fascinating. Less than a year ago our problems were stagnation, lack of investment, and high unemployment. There were no signs of improvement. What now are the complaints? We have a record level of unfilled vacancies. That is said to be a very serious matter. We have unemployment coming down too fast—that is said to be a serious matter. It is said that we are in danger of overheating the economy and that the results will be serious. Of course the result would be serious, but I find such defeatist talk almost impossible to accept.

Earlier this year, I said—Opposition hon. Members and Peter Jay in particular remind me of this—that during my childhood, when I and other children sat on Morecambe Bay, we used to be told that if we looked across the bay towards the Lake District and were unable to see the hills it was because it was raining, and that if we looked and could see the hills it was going to rain. That was precisely the attitude of the Peter Jay article which appeared this morning. We are going ahead. We are expanding rapidly. We have unfilled vacancies at a record level. And that is said to be worse news than stagnation, unemployment and lack of growth.

My right hon. Friend the Chancellor of the Exchequer said in his Budget speech—and he made no secret about it —that going for growth was a national challenge and that there was an element of chance about it. However, my right hon. Friend came to the conclusion that it was a chance worth taking. I agree with him. By comparison with other countries our productivity is extremely low. Although we have seen some improvement recently, it is still very low. We started from a low level of capital utilisation. Our factories are still not working anywhere near to full pitch.

We are now seeing expansion in industrial investment. The nationalised industries, for instance, have been hoarding labour, and this is something I have never understood. Members opposite are always saying that there must be the slowest possible rate of redundancies in, for example, the steel industry, and that people must be able for as long as possible to work out their days in failing industries. Yet at the same time we are encountering shortage of labour. We have greatly extended the training programme; and we have very substantial pools of labour, in addition to the unemployed, which can be swung into action.

We have been so slow in transfers between industries and in movements into new jobs because we have attuned ourselves to a low rate of growth. We have said to ourselves, "There is going to be a low rate of growth and therefore we must have a high level of manning if we are to avoid unemployment." That is what has happened in the past. At the first obstacle to a high rate of growth, we have given ourselves up to having slow growth, a stagnating society and ever-increasing social problems with little increase in the resources available to tackle them.

I hope that hon. Members opposite will accept that, compared with only a few months ago, people nowadays have to consider very carefully before they put up their prices and that when unions demand wage increases they now accept that if they get a level of barely half of what they regarded as the minimum a few months ago they are doing reasonably well. If the Government's policy has done nothing else but break the vicious circle of expectation, it has justified itself.

I share the regret of hon. Members opposite that this situation has coincided with a time of fast-rising world food prices, but it has happened and the sooner we stop laughing at the truth politically and making cheap gimmickry remarks to take the place of the truth, the sooner this House and politicians generally will command the respect from the public which at the moment they have lost.

7.33 p.m.

Photo of Mr Robert Brown Mr Robert Brown , Newcastle upon Tyne West

It is not my intention to take up what was said by the hon. Member for Enfield, West (Mr. Parkinson) I am sure that he will be pleased that I do not intend to make any direct reference to petrol prices.

The feline frolics of the Secretary of State for Trade and Industry today fully justify the description I used last month, when I said that when it came to prices the right hon. Gentleman was about as productive as a neutered tomcat".—[OFFICIAL REPORT, 30th April 1973, Vol. 855, c. 801.] In the same context, the description could equally be applied to the Prime Minister, who was elected to power on the clear pledge to deal with prices at a stroke in order to counter inflation. For two years we have seen the Prime Minister presiding over the most devastating inflation this country has ever seen in peacetime. Worse than that, he has deliberately pursued policies which by design and not by accident, have raised the price of food, and have increased rents, fares, school meals charges, rates, prescription charges and mortgage rates.

The CBI made gallant attempts, for which I give it full credit, to hold down the prices of manufactured goods, but, of course, it was powerless over retail price margins, since these do not come within its remit. Manufactured goods play only a small part in the cost of living in the average working-class home. The Prime Minister seems to think that he has only to do a deal with a handful of union leaders to get peace and harmony throughout industry. He forgets that, having had a basinful of broken promises, the workers are in no mood to allow their leaders to do deals with a man who, out of his own mouth, stands condemned as a cheat and a liar.

The workers and their wives and families need more than sweet sounding words of reason with which to buy their daily bread. Even if it is a colloquialism it is nevertheless true that workers do not live by bread alone. A large part of their wages goes in rents or mortgage payments, and in rates and food. All these were outside the former remit of the CBI and were left outside the Government's anti-inflation legislation. The rent paid by many families represents half the family income, while in many other cases, particularly for old-age pensioners, a great deal more than half the income goes on food and heating.

I want to quote some food prices. The source is the Grocer. The figures cover three periods. The first is that of the so-called official freeze—from November 1972 to the end of April 1973. The prices of all foods rose by 12·1 per cent., those of processed foods by 2·7 per cent., and of fresh foods by 23·2 per cent. Within the fresh foods range, meat prices rose by 17·2 per cent., vegetable prices by 22·7 per cent., fish prices by 24·8 per cent., egg prices by 42·3 per cent., and fruit prices by 76·4 per cent.

The second period is the comparable six months of last year—November 1971 to April 1972. During that period, the price of all foods went up by 1·3 per cent. Processed food prices rose by 3·8 per cent., and fresh food prices fell by 1·8 per cent. Within the fresh food range, meat prices fell by 1·1 per cent., vegetable prices rose by 4·5 per cent., fish prices rose by 2·3 per cent., egg prices fell by 2·2 per cent., and fruit prices fell by 0·4 per cent.

The third period is from the General Election until the present time. The prices of all foods increased by 34·2 per cent., processed food prices rose by 19·2 per cent., and fresh food prices by 53·4 per cent. Within the range of fresh foods, meat prices rose by 56·4 per cent., vegetable prices by 24·8 per cent., fish prices by 88·5 per cent., egg prices by 512 per cent. and fruit prices by no less than 111·3 per cent.

According to the figures, prices during the so-called official freeze rose nine times faster than in the comparable six months of a year earlier. There was no attempt by the Government to control accelerating fresh food prices. Indeed, it is fair to say that fresh food prices are no longer accelerating—they are now in orbit.

If any Conservative Member feels that I have been quoting from a biased publication, let me now quote from the Daily Mail of 4th April. It says: How food bill goes up.Half the items in an average weekly shopping basket have gone up since the price freeze started on 6th November. We bought 38 items costing £9·68—an average list for a family of four—on 6th November and have been checking the same items each week since … we spent 60p more on the same items than we did in November. I hardly think that hon. Members will accuse me of quoting from a pro-Labour publication when I refer to the Daily Mail.

I turn now to the question of all prices and quote from a completely impartial publication—the Department of Employment Gazette of March of this year, the latest available date. I refer to the retail price index. The percentage rise since June 1970 to February 1973 for all items was 23·5 per cent. For fuel and light it was 25·5 per cent. for housing 30·5 per cent., clothing and footwear 20·5 per cent. and services 25·5 per cent. All of these, with food, go to make up the cost of living. Many of the items in the retail price index bear heavily upon working-class families. I mention only the cost of housing, which has risen since the election by no less than 30·5 per cent. across the country.

I talked last week to a 26-year-old school teacher. He is an honours graduate and has been teaching for three years. He took out a £5,000 mortgage in 1970. When the last increase was conveyed to him by his building society he had a letter from the manager telling him that in view of his financial circumstances it had been decided to extend his mortgage to a repayment period of 50 years. Because of his age it was said that the building society could not extend the repayment period beyond 50 years and therefore the society would have to increase his payment by £2·60 monthly. This is a person who could not get a mortgage for any house in this part of the world on a teacher's salary.

God willing, and if he lives long enough, he will be 73 before he pays off this £5,000 mortgage—if he can find a local education authority which will employ him until that age. If he cannot, it will mean that the Supplementary Benefits Commission will have to pay the mortgage. Such is the crazy situation we have reached in housing.

My hon. Friend the Member for Gloucestershire, West (Mr. Loughlin) referred to rent increases. I ask the Prime Minister—I am sorry he is not here —why, last September, when he wanted to discuss a package deal with the TUC and the CBI, he did not give an indication of his good intent and tell the trade union leaders, "I want your co-operation. I realise that nothing is more inflationary than massive rent increases. I will therefore stop the £1-a-week rent increase due under the Housing Finance Act. I will also stop the further 50p increase to be imposed next April." He did not need legislation to do that.

The same applies to VAT. Nothing could be more inflationary than the imposition of that tax followed by metrication. It is no good Conservative Members suggesting that VAT is a Common Market tax and had to be introduced.

Photo of Mr Robert Brown Mr Robert Brown , Newcastle upon Tyne West

It has been suggested over and over again that VAT is a Common Market tax. Italy is a founder member of the Community, but has still not introduced VAT. This is a phoney argument. If the Prime Minister had been serious about getting the co-operation of the trade union movement he could have said that VAT would not be introduced during this inflationary period, and that we would carry on with SET and purchase tax.

I quote now from an article in the Sun headed, "The Hungry Ones". It says: Soaring costs hit the bigger families.More than 1,500,000 of Britain's families are not getting enough to eat.The reason: the soaring price of food.Government statistics published last week also show that Britons are eating less food per head than at any time for nearly 20 years.This grim picture of the hungry seventies shows up in reports from the National Food Survey Committee of the Ministry of Agriculture, Fisheries and Food.They indicate that the 1,500,000 lower-paid families with three children or more are buying less food on average than the hunger line laid down by the Department of Health. If there is anything more condemnatory of this Government than that I would like to see it.

I fail to see how we have any hope of progress with a Government who propose that workers should lose their entitlement for 150 days—and they have done so— while at the same time profits and dividends are allowed unbridled rein. As we all know, the increases in pay lost to the agricultural worker during the freeze are lost for ever. At the end of the freeze, however, shareholders who have had to make do with last year's dividends will be well enough rewarded with bonus shares and an added dividend.

The hon. Member for Conway (Mr. Wyn Roberts)—I am sorry that he is not here—made a completely unwarranted remark in almost suggesting that Labour Members had a vested interest in inflation. It was a very unworthy comment and, on reflection, I hope that he will put it right. It is disgraceful to say that anyone in this House has a vested interest in inflation. The suggestion was that we had a political interest in it. Let me tell the hon. Member in his absence that no one cares more about inflation than those in the Labour movement.

We know only too well that it is the poor and the lower-paid who are the victims of inflation. By and large work-ingmen do not have any protection against inflation as do the property and land speculators. These people are getting deeper and deeper into the rich gravy in which they have wallowed all their damned lives while the Government stand idly by. The prattle of the Government has been "No exceptions in the area of wages". I have proved by the statistics I have given that this has not applied to prices.

The Government seem to have no honest intention and no will to tackle the question of prices. There can be only one solution for the country—a quick General Election and the return of a Labour Government pledged to a Socialist policy.

7.49 p.m.

Photo of Mr Piers Dixon Mr Piers Dixon , Truro

I was glad that my hon. Friend the Member for Enfield, West (Mr. Parkinson) referred to King Canute. It has to be remembered that King Canute was not a foolish man who believed that it was possible to resist the inevitable. On the contrary, he was a man so wise that, when flattered by his courtiers who said that he was a wonderful man who could do anything, he said, "Look, I will prove to you that I am human, like anyone else". He dragged his courtiers down to the sea and sat firmly on the sand. The waves came lapping up and he thereby demonstrated that he, like any other mortal, was entirely fallible. King Canute is too often produced as an example of an arrogant king, whereas he was a king of great humility who understood exactly how politics are managed.

Several hon. Gentlemen on the Opposition benches, particularly the hon. Member for Nuneaton (Mr. Leslie Huckfield), would like a 100 per cent. statutory control on prices, but I hope that the people of this country realise that this is not the official view of the leadership of the Labour Party—and it is certainly not the official view of the Conservative Party. On frequent occasions the right hon. Gentleman the Leader of the Opposition has said that it is completely impossible to have a 100 per cent. iron-clad statutory incomes policy.

The right hon. Gentleman and other Members of his party recognise that we live in a mixed economy. We on the Conservative benches recognise it. There can be few Conservatives—I am sorry that my hon. Friend the Member for Oswestry (Mr. Biffen) has just left the Chamber—who in the Britain of 1973 believe that we can have a classic exposition of the free market economy. Both parties—and I am sure the Liberal Party agree—recognise that we live in a mixed economy and that we all have to compromise.

The only difference we have seen in recent months is that measures which many disinterested observers might consider to be to some extent Socialist have been introduced, with a fair degree of efficiency and success, paradoxically by a Conservative Government. One may dispute endlessly on the merits of the party policies of the Labour and Conservative Parties but any disinterested observer would accept that if we want policies introduced and made effective our better bet is to choose a Conservative Government to implement those policies, whatever they are.

The fact is that phase 2 is working. I do not argue that it will work for all time, but it is clear that in recent months phase 1 and phase 2 have worked. That is accepted by many members of the Labour Party and, paradoxically, by even the most convinced monetarist in the Conservative Party. I am not a convinced monetarist but I go some way with my friends in the monetarist school, and they accept that for the moment phase 2 is working.

It does no one any good, as my hon. Friend the Member for Enfield, West said, to have Labour politicians running down Conservative politicians and Conservative politicians running down Labour politicians. It merely brings the whole political fabric of the country into disrepute. Many people must wonder when they hear parliamentary debates in which Members of Parliament endlessly accuse each other. How right was my hon. Friend when he said that we should spend our time much better by pointing out the good things the other side has done while accepting some of the bad.

It has been pointed out that inflation is a world phenomenon. Forgetting food prices for the moment, throughout the world there is inflation. This is back to King Canute. I do not believe that we shall ever return to the low rates of inflation which our fathers and grandfathers thought acceptable. There will always be some inflation. In Britain it is running at about 5 per cent., in France at about 5 per cent., in Italy at about 8 per cent. and in Germany at about 9 per cent. In a year's time those figures will no doubt alter. I cannot conceive that the Germans will continue indefinitely with an inflation rate of 9 per cent. Throughout the world we shall continue to have inflation during our lifetime. Therefore, we merely make people depressed and give them a completely false idea of the country in which they are living if we attempt to make political capital out of reminding them that prices are rising at a faster rate than they did in the time of their parents and grandparents.

One or two of my hon. Friends have perhaps avoided the issue of food prices, but we should bring the matter out into the open. My hon. Friend the Member for Conway (Mr. Wyn Roberts) said that non-food prices had risen since the freeze started by about 1 per cent. I am the first to agree that food prices have risen by 7 per cent. Hon. Gentlemen on the Opposition benches said 8 per cent. We all know that food prices have risen bringing considerable hardship to some people.

The Labour Government in the White Paper of 1966 accepted that it was impossible to control the price of food and other imported raw materials. That is one of the facts of life. I remind the Labour Party that, broadly speaking, during the period of the Labour Government international commodity prices and international food prices remained level, apart from slight ups and downs. Yet, during that same period food prices in this country rose by over 25 per cent. I recognise that since the Conservative Party has been in power food prices have risen by considerably more than that, but we should be perfectly clear in our minds that, even in a period when world food prices and world commodity prices were, broadly speaking, level, it was perfectly possible for our food prices to rise by 25 per cent.

The reason for the large rise in food and other commodity prices has nothing to do with our going into the Common Market, as has been suggested. The real reason is that prosperity throughout the world is increasing so considerably that, for example, the Italians who used to eat pasta now prefer to eat beef, and the Japanese—we are always being reminded of the Japanese economic miracle—who used to eat rice and a bit of fish are now eating meat. Many people who used to be much poorer than we were now have approximately the same standard of living as ourselves, and others who still have a lower standard can afford to buy the more expensive types of food of which there is a limited world supply.

When hon. Gentlemen on the Labour benches, who claim to be so concerned about the conditions in other countries, examine the rise in food prices in Britain they should not forget that it is partly because the standard of living in countries which used to be poor countries has risen.

We cannot escape the fact that the terms of trade for us as a nation have deteriorated, especially in the past few years. If they have deteriorated against us and therefore precipitated a rise in food and other commodity prices, we may be the losers and it may be that we can do little about it. But it is clear that, if we are the losers, others are the beneficiaries. I have always felt that the problems of the poor two-thirds of the world would never be solved by our handing out aid in loans or grants. The way in which the poor countries can increase their standard of living is by being able to sell food and other raw materials at higher prices. This is a phenomenon that we have seen generally for some time and particularly in the past two or three years. Although it is sad that we in this country are confronted by sharp rises in food prices, we should acknowledge that that is so— certainly the Labour Party should acknowledge this since it has a strong tradition of compassionate interest in other countries—and also be glad that that is so.

A number of hon. Members have mentioned value added tax. I have never heard my right hon. Friend the Prime Minister say that the reason why VAT was introduced in this country was that we had entered the Common Market. The hon. Member for Newcastle-upon-Tyne, West (Mr. Robert C. Brown) sought to demonstrate the validity of his claim that the introduction of VAT and our entry into the Common Market were in some way connected by citing the example of Italy as one country which had not introduced' VAT. That seemed to be a curiously ineffective way of proving that a country could belong to the Common Market only if it had a properly functioning VAT.

It has also been said that VAT has contributed to the rise in prices. However, there is a very large body of independent academic opinion which agrees that the abolititon of SET and purchase tax and the introduction of VAT before the measures brought in by my right hon. Friend the Chancellor of the Exchequer this spring would have increased the cost of living by about 1 per cent. and that with the Chancellor's removal of VAT on children's clothing, children's shoes and certain foods, the effect will be neutral. I do not think that any dispassionate commentator will seriously dispute that the effect will be broadly neutral. We all know that some prices will go up and that others will come down. But for the average family the effect will be neutral.

It is argued that although the average family may find that prices in the shops will come to about the same now as they were before—isolating the VAT argument—none the less the introduction of VAT is in some way regressive. All the evidence that I have seen is that, if anything, the replacement of SET and purchase tax by VAT on the contrary is progressive.

It has been argued endlessly today that the less privileged members of our society spend a great proportion of their incomes on food. But that is the one item where it can be proved without any theorising that there used to be a small amount of purchase tax and an element of SET on food, and we now know that on no single food item will there be any VAT. So let us hear no more about VAT being a regressive tax. We use these long terms in this House but in our constituencies it does no one any good to say to people that VAT will make the poorer members of our society poorer still. It may be that the poorer members of our society are poorer for other reasons which I do not debate now. But VAT of itself will not have that effect.

I was glad that my hon. Friend the Member for Glasgow, Cathcart (Mr. Edward Taylor) referred to real incomes. In the end that is what matters. We all wish that prices were not rising. But in the end what matters for the broad mass of the people is that wages after tax more than keep pace with the rise in the cost of living.

I do not believe that many Opposition hon. Members dispute the fact that the standard of living between 1964 and 1970, however measured, went up by only about 1½ per cent. a year for the average person. No doubt there are good reasons —the balance of payments and many others. In 1971 the increase was about 3 per cent. In 1972 it was about 7 per cent. This year it may not be quite as much. It would be nice if it were 7 per cent. again. But no one can get away from the fact that in the past two or three years, despite the rise in prices, there has been a very great increase in the standard of living—in wages, after tax, adjusted for the rise in prices.

We must decide whether it is better to have the situation that existed until 1970, where admittedly prices did not go up nearly as fast as they have risen recently, but in which prices were still rising at about 3 per cent. a year, wages by 4½ per cent. and therefore the real standard of living by 1½ per cent. a year. Is that the best situation, or is it better to have the situation that we have had recently where money wages have gone up by 10 per cent. a year, prices by 5 per cent. and therefore the average person has been 5 per cent. better off? I should always choose the second alternative.

The ideal situation would be one where money wages went up by 5 per cent. and prices were static. If we cannot have that, I should prefer a society where wages went up 10 per cent. and prices 5 per cent., so giving a net gain of 5 per cent., to one where there was a lower rise in prices but where people's standards of living went up by only 1½ per cent. a year.

8.8 p.m.

Photo of Mr George Wallace Mr George Wallace , Norwich North

I shall not take up many of the matters raised by the hon. Member for Truro (Mr. Dixon), because he adopted a scientific, professional and almost professorial approach. I want to be a little more down to earth in the sense that I want to discuss some of the problems that people face.

I suppose it is a coincidence that today's debate takes place almost exactly two years after a debate on a motion on prices and consumer protection which I was fortunate enough to table and which this House accepted against the Government's advice. Subsequently the Government brought in some form of consumer protection and some degree of price control. However in both directions their attitude and their action have been woefully inadequate.

Price control and general price increases are probably the most crucial issues in the country's domestic affairs. On their successful treatment depends a successful economic resurgence and an acceptable wages policy. I am convinced that if there is seen to be firm action to deal with the prices of food, homes and many other essentials of life, there will be strong support for an acceptable wages policy.

Prices are probably the most talked-about subject amongst my constituents and the people whom I meet when I go shopping, as I did this morning.

Last Saturday one of my constituents came to see me. I should like to relate his case. He is Mr. C. B. Lane, of Norwich, a baker by profession. He is a lucky man because he bakes his own bread at home. When he told me that my mouth watered, because there is nothing more delicious than home-baked bread. He complained of a price increase on the flour he purchases to bake his bread. He told me that when he went to buy 3½ lb. of wholemeal flour recently he found that it had gone up from 15p to 20p—an increase of 5p. He also told me that white flour had gone up from 15p to 19p—an increase of 4p. On my quick mathematical calculation, which might not be too precise, I reckon that the price of white flour has risen from about £4·80 to £6·08 per cwt.

Before seeing me, my constituent had complained to the weights and measures inspector, who certainly did not know what to do about it, but did his best and eventually, after some delay, came up with the answer that the Ministry of Agriculture, Fisheries and Food had given permission for it. My constituent is still annoyed. I have the details of his complaint and I shall be putting the matter in the Minister's hands.

Whatever might be said by hon. Gentlemen opposite and, to some extent, by some of my hon. Friends, I believe that VAT is a big factor in price increases. But VAT and its effect on prices is controllable. The Government, by their action, can deal with any effect that VAT is having on increased prices.

I should like to give an example of how VAT affects the average person. Recently I went to my local hardware shop to buy a metal draining board for which I had to pay an additional 25p VAT. The shopkeeper, who is the owner of a not-too-small, reasonable-sized business with a few assistants, was very worried. His customers include a large number of old-age pensioners. He told me that the previous week he had banked £130 for VAT taken from his customers, whereas previously—he was very angry about this—SET hardly had any effect on his customers. He said, "I have had to take this money from my customers as I have had to take 25p from you this morning."

Photo of Mr Piers Dixon Mr Piers Dixon , Truro

What was the purchase tax?

Photo of Mr George Wallace Mr George Wallace , Norwich North

I cannot give the figure for purchase tax on a draining board that one fits oneself. The fact is that the price included an additional 25p for VAT. That was an increase to me of 25p which, in old money, is 5s.

A worse case of VAT—I raise it here because it may be cleared up and ease a certain amount of anxiety—concerns some of my Old Contemptible constituents —I mean that in the old ex-Service sense —a dwindling army, who are shortly making a pilgrimage to Flanders. They are taking wreaths to lay on the graves not only of their old British comrades but of German soldiers, because they feel that the time has come for that kind of action. The rotten part is that they have been told that they must pay VAT on British Legion poppy wreaths. The money for the wreaths, £200, has come from local business people. The Old Contemptibles are annoyed at having to pay VAT on British Legion poppy wreaths. I dare not repeat their comments, because Mr. Deputy Speaker would certainly have to deal with me in no uncertain fashion.

Another point which is irritating many people—many of them are elderly, old-age pensioners, I nearly said like myself— concerns the environment issue of the small gardens of Britain. What has happened in this instance. Garden tools, equipment, and seeds now incur VAT. Like many others, I grow my own plants. A 10p packet of flower seeds now bears VAT of lp, which, in old money, is over 2d.

There is not the slightest doubt that Government policy on VAT has set up an irritating sore on the price issue, but, as I have said, it is an area where the Government can apply soothing and healing ointment if they choose.

I cannot give the exact figures for another commodity which many people buy, but my experience, coming back to food, is that there has been a large increase in the purchase of bacon pieces. My wife was on the telephone to me about this matter earlier today. One factor is an increase in the price of bacon. Bacon pieces are the cheapest form of bacon purchased, but, since the freeze, short back bacon has gone up from 42p to 54p per pound.

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

That is the most expensive bacon.

Photo of Mr George Wallace Mr George Wallace , Norwich North

That is true. To give a fair example one can go down the scale. There has been an increase in the price of this commodity. It may be that international prices have something to do with it, but there is an argument for more production of home killed and cured bacon.

One of the biggest factors of inflation is the price of property and houses. I live in a suburb in South-East London. House price increases in my area are almost too ridiculous to be true. It is impossible for a young couple to buy a house if their income is under £2,500 a year. Efforts are being made in some quarters to try to ease this situation. I understand that the Norwich City Council is thinking of bringing in a system of graduated mortgages. That means giving a mortgage of 100 per cent. with a gradual increase in repayments based on estimated wage increases due to the individual over a certain number of years. It is a difficult assessment to make, but it has to be made. It is a good idea, but an idea which is being forced on people at a time when house prices are at a ridiculous level. Something must be done in this area where there is a hopeless battle facing the majority of our young people.

I have a son who one day—I hope it will not be too long—will get married. The biggest factor worrying him is the possibility of being able to purchase a home. This factor is worrying not only him but his parents. We are wondering what we can do to help. Thousands of parents throughout the country are in this position. This is not only a practical monetary problem, but a social problem because it devalues marriage as a sacred institution to which people should subscribe. There is a lamentable lack of faith in marriage today, based mainly on the greatest difficulty facing young people—namely, that they cannot start married life at a reasonably young age in a home of their own, whether it be to let or for purchase.

The Government—I do not want to be too critical—have gone back on their election pledges so much that surely a drastic reversal on prices should be a simple matter for them to carry out.

I should like now to refer to a political advertisement that I helped to draft 15 years ago. The subject is the "Villain of the Piece". We show that, rightly or wrongly, the Tory Government were forcing up prices and the Tory Party was blaming the trade unionist and his increasing demands for higher wages for putting up prices. That was 15 years ago, but that political advertisement, which I helped to draft and put out, is applicable today.

There is no doubt that Government policy has had an upward effect on prices. It is no use blaming the trade unionists. Behind every trade unionist is a housewife, and the average man knows that when his wife cannot make ends meet she turns to him and he must either get more money or find another job. This leads to a great deal of upset. Behind the average trade unionist is a housewife who is trying to make ends meet. The problem we face is that of helping her to make ends meet. Towards this the Government can make a considerable contribution.

8.20 p.m.

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

I am sorry, but I did not understand any of the last three Opposition speakers. They gave me the impression, which I so often have in this House, that some hon. Members live entirely in a world of their own. The hon. Member for Gloucestershire, West (Mr. Loughlin) virtually called for lower food prices at the expense of the developing countries. I wonder how he and his colleagues would square those remarks with international Socialism. Those countries can raise their standard of living only if we pay a decent price for their products.

The hon. Member for Newcastle-upon-Tyne, West (Mr. Robert C. Brown) made great play with what was printed in the weekly trade paper the Grocer. He should have read it more deeply, because he would then have found that, irrespective of Government controls, profit margins on the retail and wholesale trades have been virtually a constant percentage of sales. In the natural order of things, in practice, those margins are fixed by the laws of economics, which are far stronger and tougher than the laws of this House. The hon. Member could produce figures from some supermarkets which showed that they were doing better percentage-wise but only because they started to sell foods—which, by the same economic laws, give higher margins.

This House has much regard for the old people, but many hon. Members and Lobby journalists ought to get out and meet some old-age pensioners. I would not dare to call most old people in my constituency old-age pensioners. I would rather call them "retirees". They are well dressed, look well after themselves and have a very good life. They are the first to tell me that, and they do not tell me en masse, but as individuals. I am a retailer and I ought to know how well they are doing. It will never be good enough for politicians; we want them to do better still.

The hon. Member for Gloucestershire, West said that old-age pensioners do not eat butter. That is just not true. The House may be amazed by the figures I shall quote, but they are produced every month in a survey of food prices. It is in the Library every month, year after year, and I never tire of quoting it. No one believes the figures, because they say, "We spend more than that on food. If one goes into a grocery store one finds a lady buying tights, dog or cat food, toothpaste, toilet rolls, and a hundred and one things which nobody ever eats.

These figures refer to food only. At the last count, on the March figures, the average old-age pensioner spent £2·49 a week on food. Before anyone exceeds that he has to have an income of £53 a week. The statistics are contributed from 8,000 households in 44 constituencies. I have checked this in my constituency and I find that the pensioner spends 35 per cent. of his income on food and the average person spends 25 per cent. Food is becoming less important as part of the household budget. Hon. Members who do not know that never go shopping.

Photo of Mr George Wallace Mr George Wallace , Norwich North

I do not entirely agree with the hon. Member's remarks. I have been shopping this morning and I shall go again with my wife on Friday. I am on the other side; I am a customer and he is a grocer.

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

I shall refer to the figures quoted by the hon. Member for Newcastle-upon-Tyne, West. If they are checked it will be found that from November last year until now prices of food over the whole range have been quite effectively frozen. On fresh food, however, that is not the case and I should like to go into detail about flour. There may have been a special offer the week before. There are many extenuating circumstances. I accept that the price of flour will rise in the immediate future, but let us regard the retirees as they are and not as the imagination of some journalists and politicians suggests that they are.

I will tell the true story of a great pal of mine—Tony Heagney. One day in his food store in Southbank he saw two ladies, who were in curlers, having a discussion in front of his cooked meat counter. One said, "I think I shall get two ounces of ham for the old man, and the kids will have to have luncheon meat." In the club that night he saw the same two ladies. Their hair was out of curlers and they were with their respective husbands. The husbands walked up to the bar and said, "Two gin and oranges, and a couple of whiskies" and, to the barmaid, "What will you have, luv?" This kind of thing is true about our society. The same people grumble to the grocer and his staff about a ½p increase on a pound of butter but tip the barmaid every time they buy a drink. We have got the position about food prices totally distorted. We never have this element of truth in our debates.

The common agricultural policy, as everyone knew is not final; it is a passing phase and will be changed. It would have been changed even if we had not gone into Europe on 1st January. It will be reviewed, and my judgment is that the time-scale on the alteration was that if we had not gone in the review would have started next year, but our entry has brought the review forward by one year.

There was a most interesting article in the Financial Times about a week ago. It was written after Roche, the chemical firm, was told to reduce the price of its tranquillisers. I have always been interested in breaking monopolies. This was a very thoughtful, intellectual article. It said that perhaps the only way that countries will eventually control prices, or make sure that they are competitive, is to have very tough retail organisations. I do not mean the political side; I refer to the establishments in retailing and distribution. When one examines the arguments, one finds that the big stores make the big profits, but that they also have the pressure that acts on manufacturers to get prices down. This angle should never be forgotten.

Many economists believe that food prices will peak out this year. But weather is involved. Let us all hope that China, Russia, India and Australia have good crops.

We are talking about food prices. Is not it a delight to know that food was taken from capitalist countries to Communist countries? That is success from capitalism to the miseries of Communism. That food, thank God, was able to move; otherwise, possibly millions of people would have starved to death. How is that for being an international Socialist? This cost us money, not to put our hands into our pockets and give to Oxfam but over the grocery counter every week.

The fact that the Communists had to go to the international market to buy grain pushed up the prices. It is obvious that the Labour Party does not have a glimmering of an idea of the intelligence of housewives. Housewives probably sit in front of their televisions more than Members of Parliament. They have seen stories of starvation in other countries. They understand it. They know that there is a drought in India. They can appreciate the world context of these rising prices.

I come now to a definite and precise idea. I am delighted to tell my hon. Friend the Minister for Industry that it will save between £10 million and £11 million for this country annually on food alone, and £62 million a year in a Common Market context. It is a simple idea, like all good ideas. It is to establish within the grocery field a national commodity code. Electricians have already done this in Britain. It facilitates the use of computers.

In America they have what is called a Grocery Industry Universal Product Code. This started in America on 31st March, and it was expected that in a full year it would save 100 million dollars. I have scaled the figure into a European and British context. Here it would be a National Commodity Code. It is no more difficult than deciding that one should have lamp sockets of a certain size and screws of a certain thread. It is only a national code, such as establishing something like a telephone book for all items of groceries. By this method one can bring greater efficiency into wholesale and retail distribution.

I have received a letter from the National Computing Centre. It is from the senior consultant in this country, who states: There is plenty of talk in the U.K. but not much action. I hope that you will find the information useful. Perhaps you can use it to start things moving. The National Computing Centre is right. The Americans have had to set up a council to do this. It already exists in the grocery industry in Britain in the form of the Institute of Grocery Distribution. Only last week, Viscount Watkinson, the President of the Institute —who was once in this place but is now in another place—made a speech at the annual conference which was full of common sense. This outfit exists. It is an amalgam of manufacturers, wholesalers and retailers. It is exactly such a body that the Americans have had to set up. Within three years we could have national codes which would bring great efficiency to the distribution of food. If the American figures are correct and if it were on the same scale, it would save about £10 million a year to give a few hundreds of thousands of pounds under the Industry Act to the Institute of Grocery Distribution, or some other body, to get a move on so that we can reach this more rapidly. Inevitably we shall have this national code. If we can have it a few years sooner we shall achieve the savings more rapidly.

Much play has been made of VAT. I agree with my hon. Friend the Member for Truro (Mr. Dixon). In our party manifesto we said that we should be moving over to VAT whether or not we entered Europe. We did not have a chance of getting into Europe until Charles de Gaulle died. Everyone knows that, if he has any memory of the chronological order of events.

I am a retailer. In one store, when the £15,000 stock was taken for the changeover to VAT and the purchase tax was deducted and VAT added, it made a difference of only 75p. In supermarkets, VAT is virtually neutral. It is difficult to find anyone in the street who wants to talk about VAT. Hon. Members of the Labour Party have long bleated about consumer durables and luxuries. Has it not crossed their minds that by reducing the price of some very desirable things, such as record players, tape recorders and gramophone records, which the change to VAT has meant, we have brought some of those so-called luxuries to the lower-paid. That is exactly what I want to see. I want everyone to have a better life. But that idea always seems to escape Labour Members. Another of my hon. Friends made some remarks about the nationalised industries. He was right to do so. The Minister got a wigging from the Economist at the weekend which stated that he was not going to be tough enough. I do not know whether the Economist's assessment is right, but 1 would agree with the Economist theory in this.

As for employment, there is a record number of vacancies. The niggers in the woodpile are the nationalised industries. We can take, for example, the production of a ton of steel or a kilowatt of electricity, in which we are below the best in every modem industrial country. If we are to hit bottlenecks of labour. I counsel my right hon. Friends on the Front Bench to get the nationalised industries to shed their surplus labour while there are jobs for these people to go to. It is only human for people not to wait for a possible change in the future.

Much play has been made during the debate with the question of rents. I cannot understand why members of the Labour Party have not written to their local housing officers about this, as I have. A remark which I heard today was even more dramatic in this context. The number of rents which have gone down in Liverpool is nearly twice the number that have gone up. This has also been the case in my constituency. I challenge members of the Labour Party to check in their own constituencies and I also advise them to stop saying things which are not correct. If all Members of the Opposition made checks in their own constituencies they would find that more council house rents had gone down than had gone up. If they find that the situation is the reverse then they must represent extremely prosperous constituencies.

Another part of the debate has been about wages. I have always believed in a high wage economy. This might sound like wierd logic when I support the present prices and incomes policy, but one can support a policy without liking it. Everyone knows that wages were going through the roof. Talking to people in one's own constituency shows that they were frightened of this inflationary increase. I have always believed in the policy which has now before stage 3 of the counter-inflation proposals. It should be entitled "More Pay and How to Get It". If we can get intelligent bargaining and get the labour to where it is required for growth industries then more pay will accrue to everyone and the gross national product will go up.

I have another idea which is worth examining. There will be no school-leavers this year and labour shortages are now showing. This will be the best year to get rid of the earnings rule which applies to old-age pensioners. This is the best time politically to do this —there is nothing wrong with being a politician— but it would also be the best time economically. No one can calculate the cost to the GNP of getting rid of the earnings rule. Some economists believe that there would be a great plus to the gross national product if old-age pensioners were able to carry on working. If Labour Members talked to constituents aged between 65 and 70 they would find that there is a reserve of people who are perfectly willing to work. To enable these people to work would also be the best social service we could do. To chop a man's career off at 65 is the cruellest and most inhumane thing our society does, and it is time that we stopped it.

One Sunday paper, I think the Sunday Telegraph, suggested that the Prime Minister would introduce minimum wage legislation. The last time that I was in the House, I nearly brought forward a Private Member's Bill on minimum wage legislation. What I had in mind then, translated into modern terms, was 25p an hour. I have gone through several thought processes since then. Minimum wages have been tried in Holland and in the United States of America and they have never been a tremendous success. But perhaps this is the time to introduce them.

Some economists theorise that this legislation will mean unemployment for those with the least marketable skills. I do not think that that would happen in our present situation. At the moment minimum wage legislation makes jolly good sense. About 5 million people in this country, many of them in my industry, earn less than £20 a week. Such legislation would have economic difficulties, but it would be accepted with delight by huge numbers of people, no matter what their incomes, because they would believe it to be fair.

8.41 p.m.

Photo of Mr Frank McElhone Mr Frank McElhone , Glasgow Gorbals

The hon. Member for Brighouse and Spenborough (Mr. Proudfoot) made a wide-ranging speech. One can support his code of practice for the consumer world and his proposal for a minimum wage, but his remarks about old-age pensioners and unemployment were hopelessly out of touch with reality. I do not know the situation in his constituency, but in my part of the world, Glasgow and Scotland generally, it is rents and jobs that are causing the most hardship.

There was a distressing report published last week in Glasgow by the housing manager, which showed that, over the last two years, the number of people who have had to abscond because of difficulties with rents has doubled. This can be attributed mainly to the Government's present policies. The number of those ejected after court actions also rose substantially.

So the hon. Member's talk about well-dressed old-age pensioners, people buying double gins and old people saying how happy they were with this Government was absolute nonsense. I have done surveys among elderly and disabled people in my area and have found real poverty and an absence of proper nutrition. The hon. Member should ask hospital boards how many people are being taken to geriatric units and what the waiting lists are for geriatric beds. Many af these old people, through lack of proper food and heating, have degenerated into vegetables.

I am surprised that the hon. Member for Brighouse and Spenborough and the hon. Member for Enfield, West (Mr. Parkinson) should have misled the House in this way. I only hope that their speeches are reported in the Press, so that it can be seen how hopelessly out of touch this Government are with the people.

In my part of the world, private tenants are receiving claims for between 400 per cent. and 500 per cent. rent increases. Under Labour legislation, an increase in a private house rent had to be accompanied by a qualification certificate. Now, private rents can rise to these levels with no guarantee that the houses are habitable. That situation will get worse as a result of Government legislation.

Large council estates in the city of Glasgow suffer from this. As a result of the Government's Housing Finance Act, most of the young families who are earning reasonable wages are being forced out by higher rents and find it cheaper to buy a house, even with inflation. We are going to see a situation in which the disabled, the pensioner and the long-term unemployed will remain in these housing schemes. This will create social ghettoes, and the social consequences stemming from that must be serious for any Government.

May I say a word or two about cheap butter. I can think of nothing more insulting than for people on supplementary benefit to be told that they can get a pound of butter a week at 2½p reduction. Can anyone remember the indignity suffered by people who had to wear the special clothes to go to school before the war? I had to wear them because of the conditions at home at the time, and people who had to wear them were like the inhabitants of Dachau or Belsen. Think of the indignity of a woman or a man going into a post office for a form to claim l0p a month off the price of butter. It is absolutely disgraceful and shocking for a Government giving away £300 million in surtax rebates, mainly to people who supported them and put them into power, and it shows the unreality and injustice that prevails in society today.

I hope the Minister will reply to this. The whole question of giving this type of subsidy to a family, along with the type of legislation we have had recently —family incomes supplement, a rent policy which means that nearly 50 per cent. of council tenants will have to seek a rebate—will have immense effects on the social fabric of families in Great Britain. The Government should ask themselves what the social consequences will be of destroying the fabric of family life by creating situations in which people are forced to accept that type of indignity, to be identified as receiving family income supplements, to be forced to claim a rent rebate and, if they want buttter, to be forced to go to the post office for a special form. The Conservative Party, as a Government, are totally unaware of the social problems this could create for families in the future.

Hon. Members opposite, particularly the hon. Member for Brighouse and Spenborough and the hon. Member for Enfield, West, talk about the new position in the country in job opportunities. They have told us tonight about the number of unfilled vacancies. What they do not realise, obviously, is the position in the regions of this country. In the Glasgow travel-to-work area we still have 10 per cent. male unemployed and 2,000 unemployed school leavers. Then people wonder why there is so much vandalism and discontent within the community.

It is an absolute nonsense to talk about the growing number of unfilled vacancies. In certain sectors, that may be true. In the south-east and Aberdeen this may have an effect on the job position. But in most parts of Scotland, and certainly in Wales and the northeast, the job position is very serious. There is certainly no cause for complacency by the Government when we still have 800,000 unemployed and when these people, because of the rising cost of food prices, are having to live well below the poverty line.

The Government must take into account the fact that, if prices continue to rise and people do not have the opportunity of earning enough money to sustain their families, they will give support and credence to the anarchistic elements that are growing in society. If any further such elements grow in this country, the Government will have only themselves to blame. The day is long past when people were prepared to accept the kind of inequalities that one finds now. There is a much better educated working class than existed pre-1939, and the Government must take that into account if there is to be a stable society.

I said that my remarks would be brief because other hon. Members, particularly on this side of the House, wished to take part in the debate. They have sat here for most of the day and are hoping to make a few comments. I am sorry that my comments have to be brief, but I hope that when the Minister replies he will not respond with the usual platitudes that we hear from the Government Front Bench.

The Opposition motion expresses real concern. What we are saying, in effect, is that the Price Commission, in particular, is a sham and a fraud because it does nothing to control food prices, which are the basic element of any working-class family's way of life. Unless the commission can control food prices the Government should do what is said in the motion and take responsibility from that Dispatch Box. If they cannot do that, they should do the honest and decent thing and go to the country in a general election. If they do they will find that the confidence of the electorate which they had in 1970 has disappeared.

8.52 p.m.

Photo of Mr Robin Maxwell-Hyslop Mr Robin Maxwell-Hyslop , Tiverton

The hon. Member for Glasgow, Gorbals (Mr. McElhone) concluded by referring to food prices, and I want to say something about them because I remember how the "little Neddy" set up by the previous Government to deal with agriculture recommended that there should be an injection of about £200 million worth of capital into the agriculture industry so that it could increase the proportion of food produced in this country. I remember, too, that the then Government accepted the recommendaion, but did precisely nothing about it.

The reason why today we have come up against reality with a bang on the question of food prices is that in the past, with our deficiency payment system, we as consumers paid the world price for home-produced food, and the world price itself was not the cost of producing food in other countries. It was the marginal price for surpluses and that was, in a sense, artificial.

The reason why the people of Argentina did not eat meat was not that they did not want to eat it. The reason was that they could not afford to buy it. Now, throughout the world, apart from the effect of the population explosion itself, rising standards of living have enabled countries which used to export their surpluses to us to consume at home the food which previously they could not afford.

We have not moved out of a world of reality into a world of unpleasant illusion: we have moved out of a world of illusion into a world of reality that will be with us for the predictable future, whichever Government is in power in Britain. Of that I am convinced, and to me it is not entirely unwelcome that people in the countries which once had massive surpluses are now able to eat properly. To me that is not something that is disgraceful or utterly undesirable.

We are now meeting the reality of the true cost of producing food, and how can we expect it to remain stable? Britain produces slightly more than half of the temperate foodstuffs which she consumes. Fuel prices are rising, and will continue to rise. How can we expect the producing countries whose only asset is oil not to increase prices, when we charge more excise duty on it after it has arrived here than they charge for losing it for ever? Of course fuel prices will continue to rise, and electricity and fertiliser prices have increased dramatically.

Modern grain prices have increased dramatically. The Russians are increasing the price of the timber they export by 30 per cent. this month, and the rest of the timber from Scandinavia will go up by between 10 per cent. and 15 per cent. this month. So, the cost of agricultural buildings will go up. The cost of agricultural labour will go up, and who is there in this House who would deplore that? The cost of producing food will go up therefore. This is a reality, and those who deny it are denying a reality that will not go away.

I believe that the pains we are suffering from the increased food prices today are pains which we should have suffered seven or eight years ago, but the Government of the day then and in the intervening period did not have the courage to face up to the problem. Now reality has come. If the last Labour Government had had the courage to accept the recommendations of its own "little Neddy" we would be less dependent today on imported food, and would therefore be paying less for our food.

May I enter a word which will not be universally popular on either side of the House on resale price maintenance. Not a single Member on the Labour benches voted against the abolition of RPM. I did. RPM was abolished in a glorious sort of miasma which assumed constant prices and perfect competition, although we all know that we live in an era of constant inflation, and imperfect competition. Although a Government of any complexion may be able to reach a voluntary agreement with a few thousand large manufacturers, I do not believe that any Government could ever reach a voluntary agreement with hundreds of thousands of retail outlets. That is why in abolishing RPM both sides of the House abolished the only means of making voluntary price control work.

To me the great gap in the prices side of the policy is housing. We cannot help the cost of food increasing. There have been cost increases in housing; but far more than cost increases have been the price increases, the price of land and the price asked for houses. I heard today of a firm building a housing estate in my constituency, in Tiverton—Devon Contractors Ltd. Through estate agents it was negotiating the sale of bungalows, which were almost complete, with many would-be home owners at a price of £8,400. Two Saturdays ago someone notified them that all the negotiations must stop. The bungalows are now on offer at £9,250—an increase of £850 per unit. It is not to me immediately apparent why, if the price of a BMC Mini cannot be increased without referring it to the Price Commission, an estate of new houses, advertised at £8,400, can be withdrawn from the market and re-offered at £9,250 without any intervention by the Government, or any reference to the commission.

I urge on my right hon. and learned Friend the Minister that if we are to make a prices and incomes policy convincing we must control the price of housing where we can, particularly on new units where there is an advertised price, and where an increase can be detected. We must be completely honest with the public on the price of food and bring home to them that there never will be stable prices when the cost of producing the food is increasing, and that they will have to pay more for it. Let us live in a world of reality.

With those words I end by exhorting my right hon. Friend who is winding up the debate to put this message to the country: where real costs are increasing, more money will be paid by the consumer. Where costs are not increasing as fast as prices, the Government are determined to control prices, and this must include housing because we all know—and there is not a person in the House who does not know—that housing is the most conspicuous sphere in which prices are increasing out of relationship to the cost of supply. Therefore we must grasp the nettle if our voluntary policy which is to follow the compulsory policy is to be convincing.

9.2 p.m.

Photo of Mr Ronald Lewis Mr Ronald Lewis , Carlisle

It has been said that the general public are absolutely disillusioned with politicians generally. I I have listened to most of the speeches delivered in the House today. Having compared those from the Government Front Bench with the speeches Conservative Members made during 1964 and 1965, I think that it is no wonder people are disillusioned with politicians.

I have only three minutes, so I shall be brief. The Government are responsible for prices. There has been a great increase in prices during the freeze period in my constituency. I refer to the Carlisle and District State Management Scheme, and the sell-out. The moment the firms took over, although it was during the freeze, up went the prices, some by as much as 2p for a bottle of lager, which is 5d. It is no wonder that at my surgery I was inundated with people of all shades of political opinion and letters protesting against the increase in prices when the freeze was in operation.

I ask the Minister to look into the immediate raising of prices by those firms that bought out the Carlisle and District State Management Scheme, on the first day of their take-over—so much so that my constituents have complained. I hope that the Minister will act.

9.3 p.m.

Photo of Mr Peter Shore Mr Peter Shore , Stepney

We have had an interesting and well-informed debate on a matter which is obviously of the utmost importance to people throughout the country. That concern has been reflected in the back-bench speeches from both sides of the House.

What the House and the country wanted to hear in the debate, particularly after the massive and detailed indictment with which my right hon. Friend the Member for Bristol South-East (Mr. Benn) opened it, was convincing explanations by the Government of the manifest failure of their counter-inflationary policy so far. Still more, they wanted to hear convincing reasons for believing that in the period ahead that policy will be more successful. Those expectations have been seriously disappointed.

Instead of the firm smack of Government policy on the matter of prices we have had the soft pat of surplus Community butter. The Secretary of State tried to weave that somewhat improbable ingredient into the substance of his speech, and found it rather embarrassing and a little difficult to deal with.

I hope that we can hear from the Minister for Trade and Consumer Affairs a little more about the remarkable social subsidy for butter, which, rather unusually, appeared in the right hon. Gentleman's speech and was not made the subject of a separate statement, which we had been led to believe last week would be made. In particular, we should like to know such things as how many people drawing supplementary benefits are consuming butter today, and how many are likely to increase their consumption if they already use butter rather than margarine.

Are the Government satisfied that to issue vouchers to about 5 million people receiving supplementary benefits is the best, or only way in which to make the scheme operate? What my hon. Friend the Member for Glasgow, Gorbals (Mr. McElhone) said was correct. There is something rather offensive about a person's having to go to the post office, to prove to begin with that he is a recipient of supplementary benefits and therefore entitled to a voucher, and to go around the shops producing his voucher, and to qualify for what?—for l1b. of butter reduced by 8p a month.

Photo of Mr Peter Shore Mr Peter Shore , Stepney

The other 2p is available to consumers generally.

Photo of Mr Peter Walker Mr Peter Walker , Worcester

The other 2p is in addition to the l0p.

Photo of Mr Peter Shore Mr Peter Shore , Stepney

If I have misunderstood what the right hon. Gentleman said, and it turns out to be 2½p a week rather than 2p, I stand properly rebuked.

What we have heard so far is that about £3 million a year will be spent on this social butter scheme. If that is the cost for the coming year, it rather suggests that the rate of take-up is not expected to be very high. If the subsidy is l0p per person per month rather than the 8p I had previously thought, it will obviously be more than £1 a year per person, and if 5 million people are entitled to it the scheme should cost £5 million. If the right hon. Gentleman is budgeting for £3 million, it must be a much smaller take-up— [Interruption.] The right hon. Gentleman can give his explanation in greater detail later. If he thinks that I am wrong, it is up to him to explain why.

What I and the House and the country find most interesting about the scheme is that it should have been put forward at all. The authorisation of this social butter scheme in its broadest outlines is to be found in the Official Journal of the European Communities in an EEC regulation of the Commission, No. 349/73, which simply says in Article 1: Member States may at their request be authorised to sell at reduced prices butter or to grant aid for butter …for the purpose of the direct consumption in the Community as concentrated butter of a quality to be specified of the butter in question. I can find nothing in the regulation about who is to benefit from the scheme.

Is the scheme, which in our view most unhappily identifies social benefit recipients, one that the Government have introduced and put to the Commission for its approval? Or is there a scheme worked out in some other Community regulation which they have simply had to apply along with other countries to help with the disposal of surplus butter?

That is not the only aspect of the Community butter situation about which we have heard. We heard about another Community butter subsidy which, in a way, is a strange one. We find that butter generally for the consumer is to be subsidised by 2p a pound. Far from that leading to any reduction in the price of butter, it is simply being introduced to prevent an increase in the price of butter as a result of the basic arrangements of membership of the European Community. We are able to reduce the price of butter because the Community now offers us a subsidy.

With the one hand, under the Community scheme, we reduce the price of butter by 2p a pound, and with the other hand, under the Treaty of Accession, we have raised the price of butter in order to bring ourselves more into line with the prevailing prices on the Continent. At the end of the day, the British consumer neither gains nor loses and pays exactly the same price for butter as he did before.

We have dealt with two categories of Community butter—namely, the surplus social butter and the Community butter. We must not confuse those categories with the third category which is possibly the best. That, as we all know, is Russian butter. Russian Community butter is that which has attracted by far the most generous reduction. There has been nothing like 2p a pound reduction for Russian Community butter or a reduction of 8p or l0p a pound which will apply for social butter. If it is Russian butter. one pays only 6p a pound for it in the first place.

That is a remarkable deal. The whole situation simply illustrates the great problem which the Government and the Community face in dealing with the great surplus of butter and the best method of disposal. If the right hon. Gentleman thought that the announcement in detail of the social butter scheme and the Community butter scheme met the indictment that my right hon. Friend the Member for Bristol, South-East made of the Government's counter inflationary policy, he does not know where he is.

The other aspect of the Secretary of State's speech which I found disturbing— it was an extraordinarily complacent speech—was that he virtually dismissed the problem of inflation. He did not go quite so far as his hon. Friend the Member for Truro (Mr. Dixon), who has left the Chamber, who dismissed the problem altogether. The hon. Gentleman suggested that it is a very secondary matter compared with growth and that the more important thing is growth. However, the right hon. Gentleman came near to saying that.

He gave us a great paean of self-praise. He told us how the economy was now growing and, even more important, he delivered himself of the judgment that that growth was going ahead and that there was nothing to worry about. I found that unconvincing and complacent. Any fool of a Chancellor can engineer a boom or a slump. What is unusual is for the same Chancellor to engineer both. The aim of economic management—this is why the House found what the right hon. Gentleman said so extraordinary—is neither to have booms nor slumps but to produce a sustainable growth of the economy which is consistent with a reasonable out-turn on the external account.

The manner in which the right hon. Gentleman dismissed the evidence of a raging balance-of-payments deficit without giving the matter any thought was irresponsible. His contribution to the debate has not been a serious contribution. On the failure of the policy of price stabilisation there is no dispute. The right hon. Gentleman confirmed that between 14th November 1972 and 20 March 1973 —that is the latest date for which the cost of living index figures are available— which is the first four months of the freeze, the retail price index rose by just on 2½ per cent., or at an annual rate of just under 7½ per cent. Within this total in the same period, as the right hon. Gentleman at least made clear, food prices rose by 7½ per cent., or at an annual rate of 22½ per cent. All the evidence is that in the following month, to mid-April, the rate accelerated rather than slowed down.

It is true that there has been very considerable restraint on incomes in the same period, at least on wages and salaries. The index of wage rates and earnings has risen less than 1 per cent. But to recall these facts is to underline two main features of the Government's policy since the freeze began—first, that the so-called freeze on prices has been very partial, if a freeze at all, and, secondly, that consequential on the continued rise in prices, a gap has opened up between the restraint on incomes, which is effective, and the restraint on prices, which is not. The result is a cut in the standard of living, and it means a continuing cut for the great mass of people, with a substantial cut for those average-to-lower-paid workers with families to support.

All this is beyond dispute. What we have to consider now is not just what has happened but why it has happened. The short answer is the Government's decision last November at the very start of the counter-inflationary policy to exclude from price restraint a number of key components in the cost of living. The Prime Minister in his statement shortly after the breakdown of the talks at Downing Street with the TUC said: I would like to make one fundamental point. In these talks we have been discussing issues which affected prices and incomes and the relationships between the two. These are matters in which all three of us are concerned.Certain matters which have been raised are essentially matters of government responsibility. These are what might be called policy matters, such as accession to the European Community; the introduction of a fair rents system … the Industrial Relations Act and so on. That "so on" covered a number of things that affected prices. Thus, from the first day of the freeze, there has been excluded from price restraint virtually all foodstuffs, all prices directly linked with the Treaty of Accession and those other Government policies, principally rents, rates, housing and land prices and mortgages, which in the Government's view were not the business of the TUC and should not be discussed with it. In other words, about 40 to 50 per cent. of the spending of the average family was to be exempt from price control.

Since then, of course, various attempts have been made by the Government to justify these extraordinary omissions and the fact that prices have gone up virtually unchecked. In particular, the great increase in food prices has been explained away as best as the right hon. Gentleman could do it on the ground that world prices were rising steeply and could not be controlled.

It is true that some world prices have been rising, but no serious student of affairs can doubt that the Common Market itself has been a major cause of food price increases. Certainly it would not be denied that bacon, sugar and other commodities have been directly put up in price and affected by the consequences of Common Market membership. Further, if it were a simple matter of world shortage putting pressure on prices, as it was in 1951, we could all expect a considerable fall in prices within the next 12 months, but this will not happen even when shortages pass away, as they will. On the contrary, the Government have been steadily raising the floor prices under the common agricultural policy, eliminating our deficiency payments and thus making certain that, when these world prices do fall, they fall to a new high base level erected by the Government as part of their commitment to the EEC. The Government cannot get away with that.

As for prices which are well within their competence—housing, mortgages and rents—the Government have simply sought to dodge the central question of their responsibility. They have made a few gestures here and there. Nothing can obscure the simple fact that these prices have risen directly or indirectly as a consequence of Government policy.

So much for the period up to the present. What of the future? No one having listened to the Secretary of State could have the slightest doubt but that the Government's policy will be no more effective in phases 2 and 3 than it has been in phase 1. Phase 1 was at least designed to be a freeze. Phase 2, which opened a week ago, clearly envisages substantial though measured increases in prices—not just in food and housing, which will remain virtually uncontrolled, but this time in the manufacturing goods sector and transport and other services which have hitherto been controlled.

Perhaps we shall hear tonight how many increases we can expect before the month is up. Perhaps the Minister for Trade and Consumer Affairs can tell us whether, following last week's increase in petrol prices, he has allowed the application for price increases on behalf of the nationalised industries to go forward.

If he has allowed the National Coal Board and the British Transport Commission and the other nationalised industries to make application to the Price Commission, has he power any more to intervene if the commission decides that those prices should rise? Will he tell us whether the forthcoming mandatory increase in council rents this October is to be postponed or yet again to be forced through? Can he give us—we have not had the figure yet—his estimate of the average increase in domestic rates that will be paid in the year beginning 1st April? Is it 10 per cent. or more?

I come now to the impact of VAT. It has been in force for only a very relatively short time. A number of papers have conducted their own inevitably partial initial investigations into what has happened. They do not suggest that it will work out in the neutral way which the Government led us to believe. The Business Section of the Sunday Times did a survey and reported that one in five expected price decreases were not taking place. The Daily Mirror conducted its own investigation and found that: A significant number of items, especially services generally, went up by too much. I do not take this to be anything like the last word. However, I do not find any reason for believing that VAT will be anything other than an additional factor in pushing up prices in future.

Can the right hon. and learned Gentleman confirm that following the downward floating of the pound the import price of goods coming into this country will be on average 10 per cent. higher on the present exchange rates and values of the pound?

It is against this background of known measures, all of which are tending to increase prices, that it is impossible to believe that the rate of inflation will be arrested in phase 2. On the contrary the greater likelihood is that at best, price increases will be equal to the 7½ per cent. to 8 per cent. average increase in incomes following the £1 plus 4 per cent. formula and at worst, particularly when we consider not gross income but net income, the increases will be considerably in excess of this. This will mean a further fall in the standard of living of the great bulk of the nation. The Government know this as well as we do.

It is not that uncontrollable forces are forcing prices up and they can do nothing about it. It is not even that the machinery of price control, weak as it is in places, is a major cause of their failure to halt inflation. For the real reasons we have to look a little more deeply.

First, where the Government are helpless, they have made themselves helpless. There has been an abdication of control over prices as over many other aspects that affect the British economy. The most outrageous occurred in the course of the European Communities Act under which the Government abandoned effective control over food, agriculture and prices in Britain, turned the Ministry of Agriculture, Fisheries and Food into little more than a branch office of the Brussels Commission and left the determination of food prices and our whole farm support system to those with little knowledge and no real concern for what happens here.

It is not just food. Consider for a moment what happened with steel. As we all know, everything is to be controlled in phase 2, everything is to go before the Price Commission and to be examined by it, except the products of the British steel industry. The reason for this was made plain by the Chief Secretary to the Treasury in Committee on the Counter-Inflation Bill earlier this year when in dealing with this question he spoke of … the effect on steel prices of our recognition that our community obligations are to take effect and that they will not be interfered with by any power or action taken under the Bill. It is not for me to speculate about the future of steel prices in this country. That is a matter which will have to be determined in accordance with the rules and will be subject to the operation of the markets."— [OFFICIAL REPORT, Standing Committee H, 15th February 1973; c. 761.] He accepted the full obligations of the ECSC, and it will be its system that determines the level of steel prices here.

Only two or three weeks ago, with effect from 1st May, we had the announcement of the first tranche of steel prices—and not because the Government thought it right that those prices would go up. There could be a case for it, but it is no stronger in steel than it is in any other nationalised industry that is running a deficiency. The price went up because the Government had abdicated their power to do anything else but allow it to go up. A 10 per cent. increase in steel prices was announced on 1st May and the Government know that there may be more to come before the year is out. This will impart an inflationary impulse into the whole economy.

The second basic reason why the Government are not containing inflation can be traced back to the management or mismanagement of the whole economy. Having provoked cost inflation of the most appalling kind, quite unprecedented, the Government are now adding to it, largely through the mammoth borrowing requirement of this year, an immense surge of demand inflation as well. All this is taking place against the background of a floating pound, and the pound in these conditions is not just a floating pound but can only be a sinking pound.

That is why I am in agreement with someone I do not usually expect to agree with—the hon. Member for Cirencester and Tewkesbury (Mr. Ridley) who in the debate on 2nd May addressed these remarks to his right hon. Friend: I cannot accept that we can blandly declare that increasing prices caused by overseas suppliers' prices rising has nothing to do with us, that it is outside the control of the Government and that we are innocent of what is happening.Why are overseas prices rising? They are rising because the value of the pound is sinking relative to other currencies…. We must look to the economic causes of present inflation. We can no longer blame the trade unions; in my humble submission we can no longer blame foreigners."—[OFFICIAI REPORT. 2nd May 1973; Vol. 855, c. 1363.] That left only one possible party whom he could blame. He left it silent, but they are sitting before us on the Government Front Bench, smart, complacent, utter failures in their policy.

I end by addressing a few remarks to them about what they should do. We all read the speech of the Leader of the House at Cambridge this weekend. Apparently the right hon. Gentleman was addressing the TUC. He said: Anything can be raised. Anything can be examined … Anything that will defeat inflation. That is a remarkable change from what his right hon. Friend the Prime Minister said to the TUC last November. Then the TUC was told all the things that could not be discussed.

As the Leader of the House has issued the invitation, I end by giving him five pieces of advice. First, let the Government put the housing subsidy Act in cold storage. Let there be no mandatory increase in council rents this October. Second, let them reverse the recent decision to phase out the bacon and sugar subsidies; let them stop further increases in the prices of basic foodstuffs, including bread, and if need be introduce subsidies to keep them down. Third, let the Government tell the Brussels Commission that in terms of food and steel prices the Treaty of Accession is now in suspense and that these commodities will be subjected to as stringent a price scrutiny as all other commodities in Britain. Fourth, let the Government increase family allowances along with pension and other social security benefits at the earliest moment. Fifth, let them look again at the economic forecasts and have the courage and wisdom to take these measures that the situation demands.

While we express in our motion our total lack of confidence in the Government's prices policy and while we shall ask the House to vote with enthusiasm on it later, as I am sure it will, we have great confidence in the ability of the country and its people, properly led by a decent Government, to overcome the difficulties that we face.

9.31 p.m.

Photo of Mr Geoffrey Howe Mr Geoffrey Howe , Reigate

I noted the way in which the right hon. Member for Stepney (Mr. Shore) appealed for and looked forward to the enthusiastic sup- port of his right hon. and hon. Friends. So far it has not been much in evidence. This is a motion of censure brought before the House as a matter of intense urgency. One might have expected it to be supported with overwhelming enthusiasm, but of the aggrieved ranks of Tuscany there is no sign.

The lack of enthusiasm is explicable when one notices the somewhat fanciful manifesto with which the right hon. Gentleman ended his speech——

Photo of Mr Ronald Lewis Mr Ronald Lewis , Carlisle

Will the right hon. and learned Gentleman give way?

Photo of Mr Geoffrey Howe Mr Geoffrey Howe , Reigate

I am always prepared to give way to the hon. Member for Carlisle (Mr. Ron Lewis). I shall do so when I am a little way towards getting into my stride.

As I was saying, the right hon. Gentleman closed his speech with a somewhat fanciful manifesto, including the remarkable Delphic utterance which was his clarion call for action asking the Government to look again at the economic forecasts and have the courage to take whatever action the situation demanded. That was about as elucidatory as anything that I have every heard from the right hon. Gentleman.

The note on which the right hon. Gentleman closed was a little strange. He expressed himself as speaking in alliance with, or in reliance upon, observations by my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley). I have the greatest admiration for my hon. Friend. But when I find an alliance between him and the right hon. Member for Stepney beginning to manifest itself at that stage of the right hon. Gentleman's speech I begin to wonder how valid the argument can be.

I turn to the analysis of the right hon. Gentleman about the causes of the inflation with which we have to contend. I begin with the fact that before the standstill was imposed on 6th November— whatever the right hon. Gentleman may say—two major pressures were pushing up the rate of inflation. It is in no sense an excuse to identify factors which were operating in that direction.

The first of them, despite all that the hon. Member for Gloucestershire, West (Mr. Loughlin) asserted in his speech, was the consequence of accelerating cost-push —the consequence of accelerating increases in basic rates of earnings measured by the fact that in October of last year hourly wage rates were up, on average, 18 per cent. on the year previously——

Photo of Mr Leslie Huckfield Mr Leslie Huckfield , Nuneaton

Shop workers? Farm workers?

Photo of Mr Geoffrey Howe Mr Geoffrey Howe , Reigate

They are the people who, in comparison with those who were getting much larger wage rates, were likely to suffer most as a result of con-tiued wage inflation. It was in their interests that our action was taken. But undoubtedly the rate at which pay settlements were being reached at that time was making a very substantial contribution to the rate of price inflation.

The second factor, about which several of my hon. Friends have reminded the House, has been the rate of increase in world prices. My hon. Friend the Member for Truro (Mr. Dixon) crisply pointed out that the facts and features of inflation are world-wide. The truth is that during the 12 months to last autumn, commodity prices generally had risen by 20 per cent. In consequence of those two factors, world prices and accelerating pay settlements in this country, the rate of inflation in Britain that autumn was running at a higher figure than in most of our major competitors, and higher than all but one of our fellow members of the EEC.

It is unarguable that one of the most significant causes was the rate at which commodity prices were rising last autumn. Compared with the year before the price of wool had risen by 128 per cent., hides by 122 per cent., wheat by 20 per cent. together—as my hon. Friend the Member for Tiverton (Mr. Maxwell-Hyslop) pointed out—with many other commodities, such as fertilisers, grain, timber and meat. Hon. Gentlemen opposite may sigh and moan, but they sigh and moan at the facts of the economic world in which we have been obliged to live.

Photo of Mr Robert Mellish Mr Robert Mellish , Bermondsey

Right hon. and hon. Members opposite sneered at world prices when we were in power.

Photo of Mr Geoffrey Howe Mr Geoffrey Howe , Reigate

One of the privileges that the Labour Government had was that world prices were scarcely rising. We will examine later the Labour Government's record on oil and petrol prices which have taken so much of our time recently.

Notwithstanding those increases in prices, the rise in input prices for nonfood manufacturers at the rate of 15 per cent. between the beginning of the standstill and March, and the rise in input prices for food manufacturers in the same period of 16 per cent., there have been the most modest increases in the level of prices coming through on to the market.

Photo of Mr Peter Shore Mr Peter Shore , Stepney

The right hon. and learned Gentleman has referred to world prices rising, as they certainly have during the last year, and particularly the latter part of last year. How much does he attribute to that, and how much does he attribute to the depreciation of sterling, which I understand fell by at least 10 per cent., so that import prices must have risen by that amount?

Photo of Mr Geoffrey Howe Mr Geoffrey Howe , Reigate

Any significant change in the value of sterling must be attributed largely to the rate at which price and wage inflation was proceeding in this country. For that reason it was imperative for the Government to act to restore confidence in the value of sterling. The right hon. Gentleman raises that point, but the inescapable factors at work are the actual change in world prices and the variation in the value of sterling due to the rate at which inflation was proceeding in this country.

Photo of Mr Tony Benn Mr Tony Benn , Bristol South East

Will the right hon. and learned Gentleman tell us for what part of the management of the economy, if any, the Government accept responsibility?

Photo of Mr Robert Mellish Mr Robert Mellish , Bermondsey

The Housing Finance Act.

Photo of Mr Geoffrey Howe Mr Geoffrey Howe , Reigate

—the rate of unemployment falling rapidly, the rise in real living standards—up by 8 per cent. in the last 12 months—and the achievement of the highest rate of growth in this country in the last 10 years. These are all matters which escaped the right hon. Gentleman and his colleagues when they were in Government. I am content to meet him on any of those grounds.

A striking measure of the success of the standstill is that despite those huge increases in input prices the wholesale price index for non-food manufactures went up by less than 1 per cent. during the first four months of the policy and the retail price index, excluding food, went up by only 0·8 per cent.—[HON. MEMBERS: "Excluding food."] Of course hon. Members say, "Excluding food". I expected Members of the Opposition to respond to that. Food prices have risen at a higher rate during the first four months of the standstill but, again, as those hon. Members know perfectly well, this is attributable dramatically and overwhelmingly to the change in world price levels of all these commodities. Indeed, the rate of increase on seasonal food was higher in 1968, 1969 and 1970, due to fluctuation of prices of that kind, which were uncontrolled by the last Government and by this for the same reason.

Photo of Mr Peter Shore Mr Peter Shore , Stepney

And to entry into the EEC.

Photo of Mr Geoffrey Howe Mr Geoffrey Howe , Reigate

I am talking about the increase in prices of seasonal food from November to March. The right hon. Member knows as well as anyone that accession to the European Economic Community had no connection with those prices.

The Opposition have sought to maintain that Government policy will reduce, and is designed to reduce, the real living standard of the people of this country. The facts wholly belie that. In February 1973, only three months ago, average earnings were 15 per cent. up on the level of 1972. That means a growth of 7 per cent. in average real income during the 12 months. It is quite untrue to say, as the Leader of the Opposition has asserted, that the plans of the Government comprise a deliberately planned reduction of the standard of living of the average family. That is absolutely contrary to the truth.

I am sure that some hon. Members of the Opposition will not have forgotten, even if the Leader of the Opposition has, the measures which his Government took in July 1966, at the time when their first standstill was proposed. The standstill of that administration was accompanied by a massive deflationary package designed to curtail growth and to raise unemployment, and it had precisely that effect. There was a 10 per cent. surcharge on beer, wines and spirits, and on hydrocarbon oils, which had a marked effect on petrol prices—and there were increases in petrol tax designed to reduce consumer spending by £500 million.

I listened with little enthusiasm to the hon. Member for Nuneaton (Mr. Leslie Huckfield) talking as though he and he alone, or members of his party and his party alone, were sensitive to the impact of rising prices and rising unemployment on living standards of the people. In his rather arrogant style, he said of the Government side, "What do they know about the impact of these things?" It was absurd. No monopoly of concern rests with Members of the Opposition about the standards of living of our people.

Photo of Mr Leslie Huckfield Mr Leslie Huckfield , Nuneaton

Since the right hon. and learned Gentleman has so unkindly quoted me out of context, if he cares to consult HANSARD tomorrow morning he will find that I was referring to the Prime Minister, who can afford to spend £45,000 on a new yacht, and also to the kind of people involved in banking mergers of at least £1,500 million.

Photo of Mr Geoffrey Howe Mr Geoffrey Howe , Reigate

That serves only to put the hon. Member's remarks still further in context. It is characteristic of him to select points of that kind, which have nothing to do with the argument, to imply that his party has a monopoly of concern. It is a distorting, unrepresentative and misleading argument, which ought to be dismissed as such.

If we consider international comparisons between our country and others since the standstill started we find an even clearer measure of the success of our policies. Over the period of the standstill the rise in prices in this country was the third lowest among competitors. Of the two countries which had a better performance, one—France—made substantial reductions in indirect taxes in December 1972, and, as the Economist pointed out in its issue of 28th April in headlines to an article: It is working. The Government's stages 1 and 2 have brought the rate of inflation in the United Kingdom down from one of the highest to one of the lowest in the industrial world. Far from stage 2 leading to unbridled increases, as the Opposition would have us believe, the Daily Mirror described stage 2 as: the toughest price control system since rationing. The same is true of the way in which the prices units and the system of control operate in the two Departments of my right hon. Friends.

As a result of inquiries and complaints made to both Departments during the period of the standstill, prices have been reduced in more than 2,000 cases, and a similar pattern of control has been at work during the period of changeover to VAT. The significant thing of that changeover is that the number of complaints is now showing a substantial and effective decline. There have been about 40,000 complaints since the beginning of April, but more than half of those were received in the first week, 30 per cent. in the second week and only 15 per cent. in the third week. The changeover has been proceeding as expected in accordance with the controls that we instituted.

Now the Price Commission is operating its own system of control. Its inquiry room and regional offices are operating. It is the Price Commission which will handle inquiries from the public about prices during stage 2. Weights and measures inspectors will continue to investigate inquiries which relate specifically to tax changes, but all other inquiries about price increases will be referred to the appropriate Price Commission office.

Photo of Mr Charles Loughlin Mr Charles Loughlin , Gloucestershire West

Will the right hon. and learned Gentleman say what the public can do in relation to an alleged unfair increase in prices, and what action the commission will take prior to the production of its annual return?

Photo of Mr Geoffrey Howe Mr Geoffrey Howe , Reigate

That is exactly the point the Member for Glasgow, Cathcart (Mr. Edward Taylor) asked about the rules, and how the system works. The position is that failure to comply with the code, as such, is not a legal offence, but all those—whether the commission, or people in trade or industry—who are concerned with the determination of prices are expected to have regard to it. A legal offence is committed when an order or notice is contravened.

Taking up the metaphor of the hon. Member for Bassetlaw (Mr. Ashton), this means that the same code applies to a division 1, division 2 or division 3 organisation. But in relation to a division 1 organisation, namely, an organisation which has to notify its increases in advance, failure to pre-notify a price increase is in itself a criminal offence. For the division 2 organisations—those which have to keep records and to provide information—failure to comply with the requirements to provide information or to keep records is also a criminal offence. For the division 3 organisations there is no criminal offence in altering a price, but the Price Commission has power, under Section 6 of the Act, to restrict any prices or charges for the sale of goods or the performance of services. That is a broad power, which it is entitled to use as appropriate for the purpose of ensuring that the provisions of the code are implemented.

If any organisation—retail, wholesale or anything else—raises a price in a way that appears to go beyond the provisions of the code, the commission, on the complaint of a consumer or anyone else, can investigate it and restrict it. The commission is entitled to discover whether the price increase that has been introduced is in any way likely to infringe the provisions of the code. [An HON. MEMBER: "It is not true."]. I am asserting what the position is. It is precisely the same as the powers I have had during the six months of the standstill in relation to any increase that appeared, without justification, to go beyond the standstill provisions, and has enabled either my right hon. Friend or myself to make an order requiring such increases to be restricted. In the face of that power, thousands of increases that would have gone beyond the provisions of the standstill have been withdrawn. The position is exactly the same for the Price Commission.

Photo of Mr Joe Ashton Mr Joe Ashton , Bassetlaw

Last Monday the Secretary of State said that he had no powers to intervene. That is totally different from what the Minister is now saying. There have been 200 complaints against garages of Texaco, VIP, Burmah and Gulf, none of which had permission to raise prices but all of whose garages did so. When will the Minister take action?

Photo of Mr Geoffrey Howe Mr Geoffrey Howe , Reigate

The hon. Member is confusing at least three different arguments

Photo of Mr Joe Ashton Mr Joe Ashton , Bassetlaw

Answer the question.

Photo of Mr Geoffrey Howe Mr Geoffrey Howe , Reigate

I will, if the hon. Member will give me the chance. My right hon. Friend was perfectly right to say that he had no power to intervene. It is for the Price Commission to intervene. The Price Commission has the power to require any organisation which appears to put prices up illegitimately or contrary to the code to give information about it. If it is found that it has infringed the code, the commission has power to make an order requiring it to be reduced. If the order is disregarded, then the organisation can be prosecuted.

I shall now deal with this point about petrol prices which has taken up so much time in the speeches of several hon. Members. A complaint has been made, as though it were a matter of a monstrous offence which the Government, by a stroke, could have avoided, at the fact that these prices have risen. As my hon. Friend the Member for Enfield, West (Mr. Parkinson) asked, what kind of world do Members of the Opposition think they are living in? Do they disregard the fact that there has been no rise in oil or petrol products during the standstill?

Photo of Mr Joe Ashton Mr Joe Ashton , Bassetlaw

There have been four in two years.

Photo of Mr Geoffrey Howe Mr Geoffrey Howe , Reigate

But there has been no rise during the standstill and increases allowed by the Price Commission represented no more than the actual cash increase in the cost of crude oil and of its transportation to the United Kingdom —[HON. MEMBERS: "Oh."] Hon. Members can bray in that way but they cannot escape the fact that there has been an increase in the prices paid to producer countries and an increase paid as a result of participation agreements and there has been an increase in the cost of ocean freight. The price increases allowed by the Price Commission fell short of the increased prices being paid by the oil companies since the beginning of the standstill. The price of petrol at the pump in Britain is lower than in any other country in Europe today—[HON. MEMBERS: "Wages are lower, too."] It is also true that the price of petrol in Britain, even without taxes, is lower than in any other country in Europe, with the exception of Belgium.

Members of the Labour Party have entirely overlooked the way in which their Government, when in office, dealt with the matter of petrol prices. During a period that the right hon. Member for Bermondsey (Mr. Mellish) failed to take into account, when oil prices were not rising on world markets, the last Labour Government, on no fewer than six occasions, deliberately raised the price by tax increases.

The Leader of the Opposition, speaking yesterday in a semi-biblical style, said: The oil barons knocked on the Price Commission's door: neither were they sent empty away. In the days of the last administration, the oil companies did not have to knock on anybody's door. There were laid on, by the action of the Government themselves, huge additional burdens of taxation, to prevent their going empty away. That is the measure of the contrast between the two approaches.

A number of hon. Members asked about the butter subsidy. My right hon. Friend explained the two types of subsidy. The first is the general subsidy which will become available from a little later this month. That is a subsidy— there was some misunderstanding about the relationship between the two—of 2p a pound on all pounds of butter sold in this country, which will serve to keep the butter price steady until the end of the year.

Photo of Mr Norman Buchan Mr Norman Buchan , Renfrewshire West

The Minister says that this will prevent the price of butter from increasing from now to the end of the year. I take it that that is a firm promise?

Photo of Mr Geoffrey Howe Mr Geoffrey Howe , Reigate

I said that it should serve to keep the price of butter steady until the end of this year.

As distinct from that, there is the social butter subsidy, which is in relation to I 1b. per month at the level of 10p per 1b. on top of the general subsidy.

The hon. Member for Glasgow, Gorbals (Mr. McElhone) and the right hon. Member for Stepney suggested that this was an insult which should be rejected out of hand. But it is a significant and substantial benefit amounting to an additional £3 million upon the basis of full take-up by the 5 million people entitled to it.

My right hon. Friend was asked about the duty or levy payable on Australian butter or Canadian cheese. A duty or levy is payable, although it has not yet been paid, because none of the commodities has yet come out of bond. It is at a very low level for the first year of the five-year transitional period.

Photo of Mr Peter Shore Mr Peter Shore , Stepney

I asked whether the social butter subsidy in this form was a British proposal or a Community proposal.

Photo of Mr Geoffrey Howe Mr Geoffrey Howe , Reigate

I am not sure when the idea was first put forward, but it was debated by the Council of Ministers in December last year at a time when we could not make proposals. It was during the transitional period and it was a Community proposal. It was obviously not in a form which either party in this House would have volunteered, but it would have been curious if the money, once available, had been rejected out of hand.

A number of Members, including the hon. Member for Cornwall, North (Mr. Pardoe), asked about the discussability of threshold agreements during the transition from stage 2 to stage 3. My hon. Friend the Member for Bolton, West (Mr. Redmond) said that he had begun to look with favour on this, though my hon. Friend the Member for Cathcart still does not view it with much favour. Whether or not the scheme of the hon. Member for Cornwall, North commands assent, it was made clear in the White Paper published in January, that, as in September, the Government were willing to discuss with both sides of industry the possibility of threshold agreements. That was reiterated in the January White Paper.

The Prime Minister said last week:

"Not only have we given it serious thought. In the first Chequers proposals put to the TUC and published, threshold agreements were a specific offer to both sides. It is fair to say that neither the TUC nor the CBI showed any great interest in threshold agreements, but we are perfectly prepared to discuss them with both sides in stage 3."

That is the basis upon which we can move forward now into a successful long-term policy.

We are achieving high and steady growth, industrial output is now rising at over 8 per cent. a year, we are achieving falling unemployment, with a quarter of a million less than 12 months ago. We are achieving increasing industrial investment, with all the indicators pointing to an upturn this year and an even stronger rise next year. We are achieving rising exports, up by 14 per cent. in value on the second half of last year. We are achieving rising orders and expectations of future orders.

We have a real prospect of getting inflation under control and we have introduced and mean to pursue to a successful conclusion firm policies to that end. It is a tragedy that those policies are not being supported by the Opposition, instead of taking the divisive line that they have tonight. Only a few voices in the Labour party tonight have preached restraint of the kind that the nation needs. That is why the House should reject this motion absolutely and utterly, and I call upon the House to do precisely that.

Question put,That this House has no confidence in Her Majesty's Government's policies for the control of prices; and condemns the abdication of Ministerial responsibility for price control to bodies not accountable to Parliament.

The House divided: Ayes 250, Noes 277.

Division No. 121.]AYES[10.0 p.m.
Abse, LeoBooth, AlbertCohen, Stanley
Allaun, Frank (Salford, E.)Bottomley, Rt. Hn. ArthurColeman, Donald
Archer, Peter (Rowley Regis)Boyden, James(Bishop Auckland)Concannon, J. D.
Armstrong, ErnestBradley, TomConlan, Bernard
Ashley, JackBroughton, Sir AlfredCorbet, Mrs. Freda
Ashton, JoeBrown, Robert C. (N'c'tle-u-Tyne,W.)Cox, Thomas (Wandsworth, C.)
Atkinson, NormanBrown, Hugh D. (G'gow, Provan)Crawshaw, Richard
Bagier, Gordon A. T.Buchan, NormanCronin, John
Barnes, MichaelBuchanan, Richard (G'gow, Sp'burn)Crosland, Rt. Hn. Anthony
Barnett, Guy (Greenwich)Butler, Mrs. Joyce (Wood Green)Cunningham, G. (Islington, S.W.)
Barnett, Joel (Heywood and Royton)Callaghan, Rt Hn. JamesCunningham, Dr. J. A. (Whitehaven)
Baxter, WilliamCampbell, l. (Dunbartonshire, W.)Dalyell, Tam
Benn, Rt. Hn. Anthony WedgwoodCant, R. B.Davidson, Arthur
Bennett, James(Glasgow, Bridgeton)Carmichael, NeilDavies, Denzil (Llanelly)
Bidwell, SydneyCarter, Ray (Birmingh'm, Northfield)Davies, G. Elfed (Rhondda, E.)
Bishop, E. S.Carter-Jones, Lewis (Eccles)Davies, Ifor (Gower)
Blenkinsop, ArthurCastle, Rt. Hn. BarbaraDavis, Clinton (Hackney, C.)
Boardman, H. (Leigh)Clark, David (Coine Valley)Davis, Terry (Bromsgrove)
de Freitas, Rt. Hn Sir GeoffreyKinnock, NeilProbert, Arthur
Delargy, HughLamble, DavidRadice, Giles
Dell, Rt. Hn. EdmundLamborn, HarryReed, D. (Sedgefield)
Dempsey, JamesLamond, JamesRees, Merlyn (Leeds, S.)
Doig, PeterLatham, ArthurRhodes, Geoffrey
Douglas, Dick (Stirlingshire, E.)Lawson, GeorgeRichard, Ivor
Douglas-Mann, BruceLee, Rt. Hn. FrederickRoberts, Albert (Normanton)
Driberg, TomLeonard, DickRoberts, Rt. Hn. Goronwy (Caernarvon)
Duffy, A. E. P.Lestor, Miss JoanRobertson, John (Paisley)
Dunn, James A.Lewis, Arthur (W. Ham, N.)Roderick, Caerwyn E. (Brc'n&R'dnor)
Dunnett, JackLewis, Ron (Carlisle)Rodgers, William (Stockton-on-Tees)
Eadie, AlexLipton, MarcusRose, Paul B.
Edelman, MauriceLoughlin, CharlesRoss, Rt. Hn. William (Kilmarnock)
Edwards, Robert (Bilston)Lyon, Alexander W. (York)Rowlands, Ted
Edwards, William (Merioneth)Lyons, Edward (Bradford, E.)Sandeison, Neville
Ell's, TomMabon, Dr. J. DicksonSheldon, Robert (Ashton-under-Lyne)
English, MichaeMcBride, NeilShore, Rt. Hn. Peter (Stepney)
Ewing, HarryMcCartney, HughShort,Rt.Hn.Edward(N'c'tle-u-Tyne)
Faulds, AndrewMcElhone, FrankShort, Mrs.Renée (W'hampton, N.E.)
Fernyhough, Rt. Hn. E.McGuire, MichaelSilkin, Rt. Hn. John (Deptford)
Fitch, Alan (Wigan)Machin, GeorgeSilkin, Hn. S. C. (Dulwich)
Fitt, Gerard (Belfast, W.)Mackenzie, GregorSillars, James
Fletcher, Raymond (llkeston)Mackle, JohnSilverman, Julius
Fletcher, Ted (Darlington)Mackintosh, John P.Skinner, Dennis
Foot, MichaelMaclennan, RobertSmall, William
Ford, BenMcMillan, Tom (Glasgow, C.)Smith John (Lanarkshire, N.)
Forrester, JohnMcNamara, J. KevinSpearing, Nigel
Fraser, John (Norwood)Mahon, Simon (Bootle)Spriggs, Leslie
Freeson, ReginaldMallalieu, J. P W. (Huddersfield, E.)Stallard, A.W.
Galpern, Sir MyerMarks, KennethStewart, Rt. Hn. Michael (Fulham)
Garrett, W. E.Marquand DavidStonehouse, Rt. Hn. John
Gilbert, Dr. JohnMarsden, F.Strang, Gavin
Ginsburg, David (Dewsbury)Mason, Rt.Hn. RoyStrauss, Rt. Hn. G.R.
Gourlay HarryMayhew, ChristopherSummerskill, Hn. Dr. Shirley
Grant, George (Morpeth)Meacher MichaelSwain, Thomas
Griffiths, Eddie (Brightside)Mellish, Rt. Hn. RobertThomas, Rt. Hn. George (Cardiff, W.)
Hamilton, William (Fife, W.)Mendeison JohnThomas, Jeffrey (Abertillery)
Hamling, WilliamMikardo, lanThorpe, Rt. Hn. Jeremy
Hannan, William (G'gow, Maryhill)Millan, BruceTinn, James
Harrison, Walter (Wakefield)Miller, Dr. M. S.Tomney, Frank
Hart, Rt. Hn. JudithMitchell, R. C. (S'hampton, Itchen)Tope, Graham
Hattersley, RoyMolloy, WilliamTuck, Raphael
Healey, Rt. Hn. DenisMorgan, Elystan (Cardiganshire)Urwin, T.W.
Heffer, Eric S.Morris, Alfred (Wythenshawe)Varley, Eric G.
Hilton, W. S.Morris, Charles R. (Openshaw)Wainwright, Edwin
Horam, JohnMoyle, RolandWalden, Brain (B'ham, All Saints)
Houghton, Rt. Hn. DouglasMulley, Rt. Hn. Frederick
Huckfield, LeslieOakes, GordonWalker, Harold (Doncaster)
Hughes, Rt. Hn. Cledwyn (Anglesey)Odgen, EricWallance, George
Hughes, Mark (Durham)O'Halloran, MichaelWatkins, David
Hughes, Robert (Aberdeen, N.)O'Malley, BrainWeitzman, David
Hunter, AdamOram, BertWellbeloved, James
Irvine, Rt. Hn. Sir Arthur (Edge Hill)Orbach, MauriceWells, William (Walsall, N.)
Janner, GrevilleOrme, StanleyWhite, James (Glasgow, Pollok)
Jay, Rt. Hn. Roy (Stechford)Owen, Dr. David (Plymouth, Sutton)Whitehead, Phillip
Jenkins, Rt. Hn. Roy (Stechford)Padley, WalterWilley, Rt. Hn. Frederick
John, BrynmorPalmer, ArthurWilley, Rt. Hn. Frederick
Pannell, Rt. Hn. CharlesWilliams, Alan (Swansea, W.)
Johnson, James (K'ston-on-Hull, W.)Pardoe JohnWilliams, Mrs. Shirley (Hitchin)
Johnson, Walter (Derby, S.)Parker, John (Dagenham)Williams, W. T. (Warrington)
Jones, Barry (Flint, E.)Parry, Robert (Liverpool, Exchange)Wilson, Alexander (Hamilton)
Jones, Rt. Hn. Sir Elwyn(W.Ham,S.)pavitt, LaurieWoof, Robert
Jones, Gwynoro (Carmarthen)Peart, Rt. Hn. Fred
Jones, T. Alec (Rhondda, W.)Perry, Ernest G.TELLERS FOR THE AYES:
Judd, FrankPrentice, Rt. Hn. Reg.Mr. James Hamilton and
Kaufman, GeraldPrescott, JohnMr. Joseph Harper.
Kelley, RichardPrice, William (Rugby)
NOES
Adley, RobertBanyan, W.Brown, Sir Edward (Bath)
Alison, Michael (Barkston Ash)Berry, Hn. AnthonyBruce-Gardyne, J.
Allason, James (Hemel Hempstead)Bitten, JohnBryan, Sir Paul
Amery, Rt. Hn. JulianBiggs-Davison, JohnBuchanan-Smith, Alick(Angus N&M)
Archer, Jeffrey (Louth)Blaker, PeterBuck, Antony
Atkins, HumphreyBoardman, Tom (Leicester, S.W.)Bullus, Sir Eric
Awdry, DanielBody, RichardBurden, F. A.
Baker, Kenneth (St. Maryiebone)Boscawen, Hn. RobertButler, Adam (Bosworth)
Baker, W. H. K. (Banff)Bossom, Sir CliveCampbell, Rt.Hn.G.(Moray & Nairn)
Balniel, Rt. Hn. LordBowden, AndrewCarlisle, Mark
Barber, Rt. Hn. AnthonyBraine, Sir BernardCarr, Rt. Hn. Robert
Batsford, BrianBray, RonaldCary, Sir Robert
Bell, RonaldBrinton, Sir TattonChannon, Paul
Bennett, Dr. Reginald (Gosport)Brocklebank-Fowler, ChristopherChapman, Sydney
Chichester-Clark, R.Howell, David (Guildford)Pym, Rt. Hn. Francis
Churchill, W. S.Howell, Ralph (Norfolk, N.)Raison, Timothy
Clark, William (Surrey, E.)Hunt, JohnRamsden, Rt. Hn. James
Clarke, Kenneth (Rushclilfe)Iremonger, T. L.Rawlinson, Rt. Hn. Sir Peter
Cockeram, EricIrvine, Bryant Godman (Rye)Redmond, Robert
Cooke, RobertJames, DavidReed, Laurance (Bolton, E.)
Coombs, DerekJenkin, Patrick (Woodford)Rees, Peter (Dover)
Cooper, A. E.Jessel, TobyRees-Davies, W. R.
Cordle, JohnJones, Arthur (Northants, S.)Renton, Rt. Hn. Sir David
Corfield, Rt. Hn. Sir FrederickJopling, MichaelRidley, Hn. Nicholas
Cormack, PatrickJoseph, Rt. Hn. Sir KeithRidsdale, Julian
Costain, A. P.Kaberry, Sir DonaldRippon, Rt. Hn. Geoffrey
Critchley, JulianKellett-Bowman, Mrs. ElaineRoberts, Michael (Cardiff, N.)
Crowder, F. P.Kershaw, AnthonyRoberts, Wyn (Conway)
Dalkeith, Earl ofKimball, MarcusRodgers, Sir John (Sevenoaks)
d'Avigdor-Goldsmid, Sir HenryKing, Evelyn (Dorset, S.)Rossi, Hugh (Hornsey)
d'Avigdor-Goldsmid, Maj.-Gen.JackKing, Tom (Bridgwater)Rost, Peter
Dean, PaulKinsey, J. R.Royle, Anthony
Deedes, Rt. Hn. W. F.Kitson, TimothyRussell, Sir Ronald
Digby, Simon WingfieldKnox, DavidSt. John-Stevas, Norman
Dixon, PiersLambton, LordSandys, Rt. Hn. D.
Drayson, G. B.Lamont, NormanScott, Nicholas
du Cann, Rt. Hn. EdwardLane, DavidShaw, Michael (Sc'b'gh & Whitby)
Dykes, HughLangford-Holt, Sir JohnShelton, William (Clapham)
Edwards, Nicholas (Pembroke)Le Marchant, SpencerShersby, Michael
Elliott, R. W. (N'c'tle-upon-Tyne,N.)Lewis, Kenneth (Rutland)Simeons, Charles
Emery, PeterLloyd, lan (P'tsm'th, Langstone)Sinclair, Sir George
Eyre, ReginaldLongden, Sir GilbertSkeet, T. H. H.
Farr, JohnLoveridge, JohnSmith, Dudley (W'wick & L'mington)
Fell, AnthonyLuce, R. N.Soref, Harold
Fenner, Mrs. PeggyMcAdden, Sir StephenSpeed, Keith
Fidler, MichaelMacArthur, lanSpence, John
Finsberg, Geoffrey (Hampstead)McCrindle, R. A.Sproat, lain
Fisher, Nigel (Surbiton)McLaren, MartinStainton, Keith
Fletcher-Cooke, CharlesMaclean, Sir FitzroyStewart-Smith, Geoffrey (Belper)
Fookes, Miss JanetMacmillan,Rt.Hn.Maurice(Farnham)Stodart, Anthony (Edinburgh, W.)
Fortescue, TimMcNair-Wilson, MichaelStoddart-Scott, Col. Sir M.
Foster, Sir JohnMcNair-Wilson, Patrick (New Forest)Stuttaford, Dr. Tom
Fowler, NormanMaddan, MartinSutcliffe, John
Fox, MarcusMadel, DavidTapsell, Peter
Fraser,Rt.Hn.Hugh(St'fford & Stone)Maginnis, John E.Taylor, Sir Charles (Eastbourne)
Fry, PeterMarples, Rt. Hn. ErnestTaylor,Edward M.(G'gow,Cathcart)
Galbraith Hn. T. G. D.Mather, CarolTaylor, Frank (Moss Side)
Gardner, EdwardMaude, AngusTaylor, Robert (Croydon, N.W.)
Gilmour, lan (Norfolk, C.)Maudling, Rt. Hn. ReginaldTebbit, Norman
Gilmour, Sir John (Fife, E)Mawby, RayTemple, John M.
Godber, Rt. Hn. J. B.Maxwell-Hyslop, R. J.Thatcher, Rt. Hn. Mrs. Margaret
Gorst, JohnMeyer, Sir AnthonyThomas, John Stradling (Monmouth)
Miscampbell, NormanThomas, Rt. Hn. Peter (Hendon, S.)
Gower, RaymondMitchell,Lt.-Col.C.(Aberdeenshire,W)Thompson, Sir Richard (Croydon, S.)
Grant, Anthony (Harrow, C.)Mitchell, David (Basingstoke)Tilney, John
Gray, HamishMolyneaux, JamesTrafford, Dr. Anthony
Green, AlanMonks, Mrs. ConnieTrew, Peter
Grieve, PercyMonro, HectorTugendhat, Christopher
Griffiths, Eldon (Bury St. Edmunds)Montgomery, FergusTurton, Rt. Hn. Sir Robin
Gummer, J. SelwynMore, Jaspervan Straubenzee, W. R.
Gurden, HaroldMorgan, Geraint (Denbigh)Vaughan, Dr. Gerard
Hall, Miss Joan (Keighley)Morgan-Giles, Rear-Adm.vickers, Dame Joan
Hall, John (Wycombe)Morrison, CharlesWaddington, David
Hall-Davis, A. G. F.Mudd, DavidWalder, David (Clitheroe)
Hamilton, Michael (Salisbury)Murton, OscarWalker, Rt. Hn. Peter (Worcester)
Hannam, John (Exeter)Nabarro, Sir GeraldWall, Patrick
Harrison, Brian (Maldon)Neave, AireyWalters, Dennis
Harrison, Col. Sir Harwood (Eye)Nicholls, Sir HarmarWard, Dame Irene
Haselhurst, AlanNott, JohnWarren, Kenneth
Hastings, StephenOppenheim, Mrs. SallyWells, John (Maidstone)
Havers, MichaelOrr, Capt. L. P. S.White, Roger (Gravesend)
Hawkins, PaulOsborn, JohnWiggin, Jerry
Hay, JohnOwen, ldris (Stockport, N.)Wilkinson, John
Hayhoe, BarneyPage, Rt. Hn. Graham (Crosby)winterton, Nicholas
Heath, Rt. Hn. EdwardPage, John (Harrow, W.)Wolrige-Gordon, Patrick
Heseltine, MichaelPaisley, Rev. lanWood, Rt. Hn. Richard
Higgins, Terence L.Parkinson, CecilWoodhouse, Hn. Christopher
Hiley, JosephPercival, lanWoodnutt, Mark
Holland, PhilipPeyton, Rt. Hn. JohnWorsley, Marcus
Holt, Miss MaryPike, Miss MervynYounger, Hn. George
Hordern, PeterPink, R. Bonner
Hornby, RichardPrice, David (Eastleigh)TELLERS FOR THE NOES:
Hornsby-Smith, Rt.Hn.Dame PatriciaPrior, Rt. Hn. J. M. L.Mr. Victor Goodhew and
Howe, Hn. Sir Geoffrey (Reigate)Proudfoot, WilfredMr. Bernard Weatherill

Question accordingly negatived.