I beg to move Amendment No. 1, in page 1, line 8, after 'corporate', insert
'up to 31st July 1978, except that Her Majesty may, by Order in Council, which shall not be made unless a draft of the Order has been approved by a resolution of each House of Parliament, continue the Price Commission in being as a body corporate for a period which begins with the date on which the Commission would otherwise cease, and ends not later than 31st July 1980 and is not longer than one year'.
The purpose of this amendment is to limit the life of the Price Commision to three years at the most and to provide for a procedure during that period whereby there may be a review of the existence of the Price Commission. Its life may be terminated, under the amendment, in any year up to 1980 subject to parliamentary approval.
In Committee we sought to limit the life of the Price Commission to the duration of phase 3 of the pay policy. I make no bones about it: that is what we should still prefer. We believe that there can be no justification for vigorous price and profit controls outside the context of an effective pay policy, especially when there has already been a massive erosion of profits and when there is an urgent need to allow for a substantial recovery of profitability if even the most modest forecasts are to be met, and, above all, when there has been no evidence of widespread or rampant profiteering having taken place. The reverse is true.
In 1974, business and industry were subject to stringent price and profit controls at a time when there was virtually no pay restraint. They have never been given an opportunity to recover the lost profitability of that period. Prices have risen at an horrific rate over the past three years. That has caused, and is causing, a great deal of hardship. This has occurred for a number of reasons, many of which may be placed straight at the door of the Government but none of which can be attributed to widespread profiteering. It is not surprising that business and industry are desperately anxious to cast off the shackles of price and profit controls and to do away with institutions such as the Price Commission as soon as possible. We should be failing in our duty as a responsible Opposition if we did not voice that concern in the House.
In Committee the Secretary of State strenuously opposed our attempts to limit the life of the Price Commission to one year. His chief argument was rather curious. He said that it would be difficult to find people of the right calibre to take up posts in the Price Commission if they were appointed only for a short period. He followed that remark by appointing somebody for the limited period of two years. I subsequently inquired widely among my friends in business and industry, among people with authority, expertise and talent, and I was told that the reverse is true and that people of this type in business and in industry would have been far more attracted to such a position if it had been for a temporary period or on secondment. Those people might have done it far more cheaply. However, the people of whom I inquired did not necessarily carry the credentials of the Labour Party.
It is characteristic of the right hon. Gentleman that when he made his announcement yesterday he did not once pay tribute to Sir Arthur Cockfield who has served the Price Commission faithfully and well, who stayed on for an extra year, and who with one assistant, and for a great deal less money, did the job which four people are now going to do for a great deal more money. I hope that when he replies the Minister will pay due tribute to Sir Arthur Cockfield.
In Committee the Minister protested—this is an important point—that whereas he agreed that there was virtue in having an annual review of the existence of the Price Commission, the need to introduce new legislation altogether, if it were found that the Price Commission has been prematurely abolished, would be far to onerous to contemplate. He contradicted that view a few weeks later, having accepted an amendment which ended the life of the Price Code next year. He said that it would be easy to reinstate it by means of new legislation if that proved necessary.
Neither of his arguments against that amendment held water. But, to be fair to him, those arguments were directed at our intention to limit the life of the Price Commission to one year. He made it clear that it would never be his intention that the Price Commission's life should be indefinite. Indeed, he made it clear again and again that it was not his intention for the Price Commission to operate counter-inflation powers after 1979 and that after that date the powers vested in the Price Commission would be used solely as an arm of anti-monopoly policy. He went further. He said that by then it would be more appropriate for some of those powers to be vested in existing institutions. That is an important point, because we are talking about existing institutions, not an amalagamation of institutions and not about keeping the Price Commission on and merging it with any other existing institutions. Therefore it seemed to me that we were coming somewhere near to a convergence of views. This amendment, which is a broadened version of that which we moved in Standing Committee, attempts to build on that convergence, to write it into the Bill, and to provide flexibility and realism.
Our amendment is surely acceptable. I do not see how the Secretary of State can resist it after what he said. Nor is it conceivable that it will fail to find favour with the Liberal Party as it is precisely what its spokesman asked for and pledged support for in the debate on Second Reading.
If our amendment is accepted, the Price Commission could either be disbanded at the end of next year, as we think it should be, or it could be continued for a further year or two. We believe that as soon as its purely counter-inflation rôle is ended it would be absurd to keep the huge and expensive panoply of the Price Commission in being. We believe that for a fraction of that cost the Office of Fair Trading and the Monopolies Commission should be reinforced and strengthened to deal more swiftly and more effectively with monopoly and near-monopoly abuses, to investigate, monitor and uphold competition in pricing practice.
That fits in almost exactly with what the Minister said in Standing Committee. He said it so often that it is worth quoting some of his statements. In the final sitting of Standing Committee B he said that he regarded the powers in the Bill as a short-term weapon in the anti-inflation policy and a long-term weapon in the anti-monopoly policy. That is precisely what I have said.
Referring to my hon. Friend the Member for Pudsey (Mr. Shaw) he said that he wanted to see those powers as an element in anti-monopoly policy. The Secretary of State said:
Well, so do I in the long term.
As I said on Second Reading, I can conceive of a situation in which these powers are used for that purpose, and that purpose alone, when inflation is under control'.
Speaking of me at the same sitting, he said:
But what I shall say, for as long as and as often as the hon. Lady might like to hear me say it, is that when we do bring inflation down to the level of our competitors
—which we all know will be at the end of next year, according to the Prime Minister—
I want to see these powers used for their competition purposes."—[Official Report, Standing Committee B, 10th May 1977; c. 29.]
Earlier he said that he believed that when we had conquered inflation in this country the power to investigate and to freeze ought to be a weapon in our anti-monopoly policy.
At the first sitting of the Standing Committee, referred to by my hon. Friend the Member for Pudsey, the right hon. Gentleman said that there was virtue in having an annual review of these matters. I agree. Nothing could be clearer than the right hon. Gentleman's statement in Standing Committee. I shall be interested to hear what objections the Minister may have to this amendment—if, indeed, he has any objections. As I said, I do not know how he could possibly resist the amendment. If he has any objections, I shall be interested to hear them.
I believe that the only difference between us is the date on which this should occur. We both have the same purpose in the end and we differ only on the date. Our amendment seeks to meet that point by allowing flexibility on precisely that point, up to 1980. After that, it would be intolerable for the Price Commission to remain in existence with its present powers, which have the potential to exacerbate the great damage which has already been done to business and industry, particularly if they continue to operate longer than would otherwise be the case, because of the indefinite institution of the Price Commission.
It is very difficult to debate the amendment without reminding the House of the wide, ill-defined, arbitrary, discretionary powers which are vested in the Price Commission under the Bill. It would be wrong not to warn the House of the real danger to business confidence and investment and of the wide uncertainty which will continue if these powers are prolonged further than the date which I have set—all the more so because of what we consider to be the inadequacy of the proposed safeguards. We shall deal with all these points more fully and appropriately on later amendments, but they are relevant to a discussion of how long a Price Commission with such powers should remain in being.
Perhaps the Secretary of State will say, as he said in Committee, that he is not averse to an amalgamation of existing institutions or an annual review of the institution of the Price Commission. But if so, it is absolutely essential that business and industry should be given a definite date beyond which they can know for certain that they will be free from price and profit controls and that the latest possible date is 1980. This, of course, brings me to the fatal flaw in a later Liberal amendment: it does not contain a definite final date, so it will perpetuate the uncertainties in business and industry.
Many people in business and industry would say that our suggestion is far too late and that the amendment is too moderate. I have much sympathy with that view, but at least if they knew that the end was in sight, forward planning would not be as completely shattered as it is at present. After all, profit margin control, as such, under the Price Code, is to end next year, a decision which we believe to be right. Our amendment, which provides for the possibility of ending the rest of the counter-inflation price and profit controls at the same time, is consistent with that decision.
The Secretary of State, the Chancellor and the Prime Minister have all confidently predicted that inflation will be down to the levels of our competitors by the end of next year. Our amendment allows them two years longer, in keeping with the margin of error which they have already shown in their counter-inflation predictions. If the Secretary of State—who, when yawning, does not look very pretty, by the way—does not accept our amendment, that will be taken as an implication that inflation may still be very high by the end of 1980, and that will, indeed, be a spine-chilling prospect.
The Secretary of State expressed in Committee the view that the life of the Price Commission should be finite and he has agreed that an annual review would be a good thing, while the Liberal spokesman actually called for an amendment to that end. It would therefore be inconsistent of the right hon. Gentleman and positively pusillanimous of the Liberal Party not to support the amendment.
However, we learn from The Guardian of yesterday, from an article by the business editor, that the attitude of the Liberals to this amendment is not as favourable as one might have expected from their contribution on Second Reading. Whether or not it is a correct attribution, The Guardian said:
The Liberals regard this
—that is, this amendment—
as a deferred wrecking of the Bill, since it would encourage business men to put off proposed price increases in the hope that, with or without a change of Government, the powers of the Commission might cease".
That is an original and interesting view. Yet the Liberal spokesman said on Second Reading:
I believe that the Bill should last for one year only
—I ask my hon. Friends to note the word "only"—
and I shall support amendments to that effect".—[Official Report, 27th April 1977; Vol. 930, c. 1307.]
I find it very sad to contemplate the spectacle of the Liberal Party disintegrating into the role of parliamentary harlotry, which is what its stance on this matter must inevitably be. The Liberals were obviously short of good advice from their good friends when they entered their unholy alliance or they would have been told that if you lie down with dogs you get up with fleas. I assure you, Mr. Deputy Speaker, that I am not comparing the Labour Party with dogs. I consider dogs to be noble creatures and I am fond of them. I was simply using the old adage to illustrate the point.
I assure you, Sir, that that is not the case. Dogs, of which I am very fond, occasionally have fleas. I am not particularly fond of the Labour Party and I cannot say whether they have them or not. That implication was not my intention and I should have to apologise to all the dogs in the country if it were.
If the Liberal Party does not support the amendment and the Secretary of State does not accept it, business and industry will not be subjected to much more uncertainty than is necessary and a high price will have to be paid for that in terms of unemployment and investment.
I commend the amendment to the House. It is the very least that should be done to try to restore some of the lost confidence in business and industry, and we urge the Secretary of State to accept it.
We must go a little further on this amendment than my hon. Friend has suggested. We are now dealing with a very different animal from the Price Commission that it is intended to replace. The Secretary of State made it clear in Committee that he was concerned to find a pattern appropriate to this country and modelled to some extent on the pricing legislation in Australia or Canada, but neither of those countries and no other industrial country of which I am aware has a pattern of prices legislation similar to that proposed in the Bill.
The power to freeze and the time for which prices may be frozen are substantially greater under these proposals than under the legislation of Australia, Canada or any country of Western Europe. The voluntary principle, which has been of great importance in this country in the stabilisation of prices, plays a substantial part in most prices legislation in other markets.
In Australia, there is a voluntary arrangement under which prices are frozen for 21 days. Here, we have a statutory requirement that they be frozen for 28 days. In Australia, there is a voluntary agreement that after an investigation there may or may not be a freeze. Here, there is a requirement that there must be a freeze if the price investigated is found to be at fault with the regulations. A freeze in this country can extend for a considerable time. It is this characteristic above all that has given us and many people outside the greatest anxiety.
It is not just a matter of seeking to compare the Bill with the legislation of other countries; it is very much a matter of a different principle behind the Bill. The Bill is designed to freeze prices under criteria that we shall discuss later and to give the Commission substantial powers.
The amendment suggests a regular review in 1978 and in 1979, with a terminal date of 1980. We have arrived at that point not by luck but because it seems to us that there should be a review of these substantial powers when they have operated for a reasonable period. One year is quite reasonable, because prices legislation has been reviewed regularly. Under the old arrangements, under the 1973 Act, when the Pay and Price Codes were joint bulwarks of that legislation, there was a regular review of the operation of both codes. That Act provided for a regular reporting to Parliament by the Price Commission. It is noteworthy that in Committee we took some time to persuade the Government that regular reporting of the Price Commission's activities was a good thing.
As for the freeze powers under this proposal, there can be little doubt that if there were no review within 12 months the workings of the Commission could be grossly injurious to industry. When all is said and done, at this time hon. Members on both sides of the House will be acutely concerned not to provide industry with another major problem which might injure investment and employment. Therefore, a review over the two-year period covering 1978 and 1979 seems to us to be wholly compatible with at least the Secretary of State's initial objective—to find a way in which the new Price Commission, with its new powers, may be seen to be acting fairly and in harmony with the objects set out in Clause 2.
We then come to the question of the terminal date. My hon. Friend has dealt fully with the question of the importance that we attach to showing industry that it can be confident that these powers are not permanent. During the past few weeks, the Secretary of State has found it necessary to concede the question of dividend and profit control and those powers under the Remuneration, Charges and Grants Act 1975 which relate to wages policy. He conceded it, as I recall, very much in the context of believing that it was necessary to state a terminal date so that people outside the House, particularly in the trade union movement, could see that the ability to discipline manufacturers and employers, because they might be exceeding the wages policy, was dead. The TUC was also anxious to see that section of that Act removed, because it removed with it the suggestion that there could be statutory wages policies. Surely, exactly the same criterion applies to the major powers of the Price Commission. There should be a terminal date.
The Secretary of State has consistently argued that he sees a necessity for, as he puts it, permanent and positive powers. If that is so, it is reasonable to ask him what is the evidence that requires him to take that view. We have been able to show that the voluntary nature of previous prices policies was important. In 1972–73, there was a period of nearly 18 months' voluntary prices restraint by the top 200 companies listed in membership of the CBI. They kept prices to within 5 per cent. of the start date figure voluntarily. I stress "voluntarily".
Despite the major powers in the Prices Act 1974, which now begin to lapse, there has been little indication of any company—certainly any category 1 company—exceeding its references and of the Commission's having to take action over an incorrect price. I think that there have been only seven or eight such cases in which the Commission has had to take further action in support of the code. The reason is that throughout British industry there has been a willingness to co-operate voluntarily with the Government of the day in achieving their objectives in running the Price Commission. It is true that the legislation, when revised by this Government, contained penalties, but it is not true to suggest that there is any evidence that British industry requires to have penalties attached to the legislation—that it requires to have a legislative framework placed upon it because it has not been able to co-operate voluntarily in the monitoring and handling of prices policies.
We are left with the conclusion that the Government seek to make these powers permanent and to have major forces of law behind them because they are unwilling to rely on the voluntary principle. That suggests to me that they want to use these powers strongly, that they want to use them to their fullest effect and, therefore, to the greatest detriment of industry.
It is to try to change that objective, to try to confine the Government to a legitimate period, such as two years, that we seek to make the amendment and bring the Act, in relation to the powers of the Commission, into line with the stand already taken by the Secretary of State in the matter of profits, dividends and wages control. If we do that—if we make the powers of the Commission lapse by 1980—we shall be going a long way to restore industrial confidence, which is an extremely laudable objective.
In considering the purposes of the amendment we must have regard to the institution of the Price Commission, because it is a very recent acquisition to the government scene. It was only in 1973 that it was conceived and brought into being as part of a twin policy of trying to contain wages and prices. Since then, the structure has been undermined. Part of it has been knocked down, and the Price Commission remains as a ruined tower forming part of the twin edifice first set up by the Conservative Government of 1970–74. It has remained an anomaly on the Whitehall scene ever since.
The Pay Board was brought to an end very quickly after the arrival of the Labour Government, as part of their placatory action to honour their undertakings to the trade unions, which did not wish to see such a body exercising control over wages. For over a year we had wages uncontrolled and out of control, leading to average increases of up to 35 per cent. Therefore, the Government were obliged to intervene, in August 1975, with a counter-inflation policy that has exercised restraint over wages ever since.
But now, after less than two years, the explosive forces on the wages front which led to the creation of the Pay Board, part of the twin structure of which the Price Commission was the other part, are again beginning to become uncontainable. The Government are already under severe pressure in continuing such restraint. Pay restraint is another aspect of prices. The price of labour is perhaps the most important price of all, certainly in labour-intensive industries. We have the irony that three years on from the abolition of the Pay Board we are still arguing whether the other twin tower of the original structure, the Price Commission, should be allowed to remain.
It seems consistent that we should try to put a limited life on the Price Commission. We recognise that if there is to be restraint, there must be restraint all round. We cannot have one sector of the economy—wages—running rip while the other is controlled, because that has a disturbing and damaging effect, particularly on employment. Equally, we cannot control wages and not prices.
While we, as Conservatives, would instinctively not welcome the institution of controls of this character on either front, it seems absolute nonsense to have one without the other. As with Siamese twins, killing off one calls into question the survival of the other, and so it should be with the Price Commission, the Pay Board having long since gone. But there is an argument for retaining the year's lease of life for the Commission, which we commend in the amendment, because we understand that at this critical time the Government are endeavouring once again to negotiate wage restraint with the unions. To do that, they must have something to offer. Our criticism in the past has been that all too frequently the Government have given massively and received only a limited response. They have acceded to the negotiating demands of the organised trade unions to the extent of doing damage not only to the Government's strate- gic economic policy but to the members of the trade unions themselves.
We think it absolute folly that the proposal should be that the Price Commission should remain, that it should have a permanently constituted basis, that it should be part of the Whitehall superstructure for as long as one can see, and that it should be part of the career progress of many civil servants. Although it has a detached existence, obviously there is secondment between these institutions. We are now creating a new calibre of man—a man who is prepared to see the height of his commercial or business career as the head of a body committed as the Secretary of State has indicated, to a positive belief in the benefits of Government intervention in the economy. That, of course, is anathema to us.
We are arguing whether the Price Commission should continue. It is proposed that it should do so for another year, and should thereafter be renewable. This seems to us to make sense, because the Government are poised on the brink, as they hope, of a third stage of the pay restraint contract—the social contract—with the unions.
The Government seem to be throwing away one of their strongest negotiating cards by saying that the Price Commission, willy-nilly, whether or not there is agreement on further wage restraint, will be continued. In other words, the strongest card in the Government's hand—their ability to control prices, or, as we would put it, their ability to seem to control prices—is put to one side as not being part of the hand that is being dealt at present between the Government, the TUC and the CBI.
The CBI is naturally very worried. It sees expectations of higher wage awards being made with no strong counteracting effort being made by the Government to contain those expectations. There is a general understanding amongst employed people that for the third year the limitations will not be as strict as before, although we know that in economic terms they should and must be.
As a result, the trend in the Government's pattern of progress is running towards higher wage control. Yet we see that the Price Commission is to be established permanently and therefore is no longer, one imagines, to be part of the bargaining between the Government and the TUC. This seems to be crass ineptitude at best and folly at worst, because it would be a very powerful argument to the trade unions, in seeking further restraint from them, that it would be conditional upon their agreement that the Price Commission remains.
Our proposal is that the Price Commission should exist up to the middle of 1978 and thereafter possibly for another couple of years, but that it should be renewable only as part of an annual strategy. Just as we normally have the Budget annually in April, so it seems that under this Government there is to be the regular summer ritual of an agreement with the TUC, based, on the one hand, on continuing pay restraint on its side and, on the Government's side, on the social wage, increases in social welfare benefits, food subsidies—which have now been abandoned—and price controls.
That being so, we think that there should be no element of permanency in the Price Commission. We understand that the Government would have great difficulty in recruiting to the numerous staff of that Commission—up to 600 or more—people who thought it had a future unless they gave some degree of permanency to it.
Surely it is possible to discuss on the Floor of the House of Commons the question whether the very real disadvantages that are implied by price control intervention should be counterbalanced by equivalent gains on the wages front. If we do not hold to this, we no longer have that bargaining advantage. When one looks at the other side—the damage that is done, the uncertainty that is created and the general restriction on profit that has led to such high unemployment—one cannot but be gravely sceptical about the continuing existence of the Price Commission even for a year.
If we were not a reasonable and moderate Opposition we might advocate the Commission's abolition here and now. But we offer a compromise proposal that it should continue for one year. At the end of that year we should have passed over the transitional arrangements from the present Price Code, which has become increasingly irrelevant, because where people would have been able to make profits they have been stopped from doing so and, where they would not have been able to make profits the Price Code has had no effect at all. It has become an illusion and a deception. As a result, it has been thoroughly discredited.
The Minister has intervened on that point before. I have tried to explain the history of this institution. First, it was intended to be part of a twin policy of restraint on wages and prices. It was certainly given some permanence as an institution in the Bill in which it was incorporated, but the powers were to be renewable yearly as part of a continuing and developing agreement and understanding amongst all the people in the country—in particular, between the TUC, the Government and the CBI, the tripartite alliance that has led us to such disaster in the course of the past few years.
That does not surprise me at all. I would certainly have hoped that that was his view, as it would be mine. What we are creating here is a further Parkinsonian exercise, whereby if an institution exists it must be staffed and financed, and when it becomes obsolete new purposes must be found for it.
Does not my hon. Friend find it rather remarkable that one of the Ministers on this Bill is having to do all the interrupting from the Government Benches? Is it not remarkable also that on a major piece of legislation, which we have been told is an essential part of phase 3 and the economic policy of the Government, apart from four Members of the payroll vote there are no Members on the Government Back Benches? Where does my hon. Friend think they are? Does he think they are all on the picket lines now, or what?
I must answer my hon. Friend first. My hon. Friend has asked me a question and I must do my best to answer it. My hon. Friend has already suggested that they may be on the picket line. They may be in their favourite haunt—the Tea Room. But what is certain is that they will be consistent with their colleagues on the Committee if they excel themselves by their silence. There was very little contribution from the Government Benches. Yet they were told that this was a crucial element in the Government's policy.
One has now established by dialogue that the Opposition set up the Price Commission on a permanent basis but did not really mean it. Let us make it clear whether this amendment is intended not merely to limit the life of the Price Commission as an institution to one year initially but also to limit the powers or to curtail the existence of the powers in this Bill for one year on the same basis.
I am arguing my case. I am not arguing the Minister's case, nor am I supplying him in advance with information that he may need for his reply.
The point about this amendment is its flexibility. We are arguing the continued existence of the powers sought for a year, but there would then be an annual renewal, which would give the House of Commons, which surely should be paramount in these matters, the opportunity to decide whether it had been a good bargain.
We believe that it has been a fool's bargain in the past few years. We have no confidence at all in the Government for making a permanent contract of this kind which will have no compensating advantages.
Does my hon. Friend agree that the Minister is really suggesting that he does not expect to be in power in a year or two and that therefore he is going to oppose this amendment because he would rather that something were put on a per- manent basis, so that when he is not in power it would mean repealing the Act?
I think that the Minister is also looking to the time when there may be a permanent memorial to his unsuccessful tenure of office and superintendence of the Bill. Indeed, even the Department may one day be razed to the ground. It would be nice to think that down the road, just off the Embankment, there was to be a tribute to the sterling work and long hours put in by the Minister to such little effect.
We are sceptical about the effect of the Price Commission. We believe that Professor Parkinson's philosophy should be abandoned. Because the Price Commission exists, it does not mean that it should continue to exist. Because it has some thinking people among its numbers it does not mean that they must continue to stay with the Price Commission.
I understand that the Liberals hold the view that the proposed powers for selective intervention in pricing might be better exercised by one of the previously existing institutions—for example, that they should be brought within the monopolies area and, more particularly, within the general ambit of the Office of Fair Trading. That institution, which is of some permanence, was set up on the inspiration of the then Conservative Government. That would seem to have a proper r61e to play should there be any evidence of profiteering to the disadvantage of the economy generally.
To set up the Price Commission and to give it this degree of inevitability, if not infinity, seems entirely wrong. That is why we have moved the amendment.
I note that we have now been joined by one Labour Back Bencher, and he is very welcome. I hope that the hon. Member for Liverpool, Walton (Mr. Heffer) will feel that we are glad to see him. We were astonished to find only a few minutes ago that there were literally no Labour Back Bench Members present on this important matter.
I should like to refer to the effect of the permanence of these powers on small businesses. Inevitably, in discussing these matters and making detailed arrangements for them, the Government have to operate mainly through the larger units in industry by exerting the necessary restraints on them. Therefore, the many small enterprises which make up the vast bulk of industries have to tag along at the end of the arrangements which are settled between the Price Commission and the major units in any industry.
Many hon. Members on both sides will have experience of how this works in practice. Because of the way that it works in practice, I feel that it would be a bad thing psychologically and practically for the Price Commission to be given these powers with unlimited tenure. I shall briefly explain why.
Small businesses, which have been experiencing the greatest squeeze on their profitability, on the time of those who manage them and on the employment they provide, are the most likely victims at any point where price control or restriction operates on an industry. The larger units do not necessarily suffer the quickest or the most. I would argue that they often suffer much less than the smaller units which make up the main part of any industry.
Apart from a few devoted people who espouse the cause of small businessses—there are one or two associations and there is the Small Business Bureau which some of my right hon. and hon. Friends wisely, effectively and successfully set up—there is not nearly as good a voice for those who operate small businesses as there is for those who, understandably, have direct representation on the CBI and often have links with members of the TUC.
On behalf of the many thousands who run small businesses, I beg the Minister to think through the effects of having these powers with an unlimited time scale upon them. The effect will be that small businesses will know for sure that, for as far ahead as they can see, every turn of the inflationary screw will hit them longer and harder than it will hit the main parts of the industries in which they operate.
In case anyone should think that this is a somewhat narrow base upon which to found an argument and that we should not consider only those who run small businesses—I would argue that we should indeed very carefully consider such people—I point out that the employment provided by small businesses in most parts of the country is rarely less than 30 per cent. of jobs and is probably as high as 40 per cent. or 50 per cent. in many areas.
The inevitable result of price freezes or controls which squeeze margins generally is that those at the smaller end will find that their weaker brethren go to the wall. From figures which have been made available in recent months, we know of the numbers of bankruptcies which have tragically taken place among many small businesses. Those who do not go into liquidation inevitably have to lay off employees or, more likely, do not take on new employees and do not take on any new activities or expand because of the restriction on their profitability.
I hope that the hon. Gentleman will not regard my intervention as unhelpful, but I understand that there are instructions to keep the debate going. I should be interested to learn—I want small businesses to be helped—where he feels that the Price Commission and the proposed powers in the Bill will impinge on small businesses. Margin controls will operate for a further year, but only during the period of pay policy. After that it will be on selective examination. Will the hon. Member try to explain in more detail how he sees the Price Commission and these powers impinging on small businesses? In some cases, small businesses are oppressed by large monopolistic concerns which would be more likely than small firms to be the subject of investigation by the Price Commission.
I did not know that the Minister was under instructions to keep the debate going. I do not know from whom those instructions have emanated. Obviously he wants to wait until his troops arrive.
I am worried about what the Minister has just said. If it is necessary for an Opposition Member to explain to him at this stage how small businesses are adversely affected by matters such as these, there is obviously a long way to go.
I am grateful to my hon. Friend for reminding me of that fascinating passage which I recall having read in the Committee's proceedings. It is a telling point.
Perhaps I should explain to the Minister what happens to small businesses. When the Price Commission imposes a price freeze on a firm or industry, or if it calls in for examination an application for a price increase from a particular industry, it normally deals with the trade association concerned or with one or two of the larger units in the industry.
The Minister must be familiar with the procedure. The profit margins, cost increases and all the necessary details are carefully gone into by officials on both sides. While the larger units in the industry are providing the information and going through this procedure, small businesses not directly involved, except posi-sibly through a trade association, have to carry on. Who is thinking about their month-by-month, week-by-week activities? The big concerns can probably carry a few months of reduced profitability while the procedure is going on, but small businesses often cannot do so.
The fact is that under the Bill small businesses will be just as severely affected as large concerns. Will my hon. Friend note that, when a price freeze investigation is taking place on a market leader, which tends to be a large company, all other prices in that sector will presumably be frozen?
My hon. Friend is right. He has assisted us and saved a little time by making the point I was about to make.
When a large market leader firm is being investigated, it is unable to put up prices and no one in competition with it is likely to be able to put up its prices to a higher level. I hope the Minister will confirm that he understands that this could have a serious effect on small businesses. If he does not understand that, I suggest that we should get in touch with all the organisations which represent small businesses and tell them that, despite all the work they have done, they have failed to get their case through to the Minister.
I was genuinely seeking understanding about what the hon. Member was worried about. He has now said that he is not worried about margin control. He has accepted that there will be a freeze on the prices of small businesses when a sectoral investigation is taking place. His concern boils down to the slight effect that a limitation of prices imposed on a larger business would have on small businesses.
I am glad that the Minister has recognised my argument, but I hope he will not regard this as a small matter. Many of my constituents who are involved in small businesses do not regard this as unimportant. It is life and death to them. It is not unimportant when a small concern has to go out of business because of the onrush of inflation and because it is prevented from putting up prices.
Although small businesses are not directly affected by the Price Commission, they are involved because competition prevents them from putting up their prices to any greater extent than the leaders in the market. I hope that we have got through to the Minister that thousands of people are worried about this.
That is why we have made this modest proposal. We are not suggesting that the Price Commission should be prevented from doing its work during the next year or two. We want to put a yearly seal of approval on the Commission and an ultimate limit of three years. That is a modest proposal. My hon. Friend the Member for Gloucester (Mrs. Oppenheim) has done her best to meet the Minister part of the way, and I hope that there will be a response. If there is no response, I shall be deeply depressed about what the Government believe to be the role of the House on a matter which so seriously affects our constituents.
The powers of the Price Commission are and must be connected with the continuation of the pay policy. The Minister made that clear during Committee on several occasions. The freeze powers of the Commission are part of a whole policy which includes a pay policy. If the Government are right about their claims that inflation will be brought down to single figures later next year, there cannot be an argument for demanding that these powers should continue for more than three years. However, I am getting a little cynical about Government predictions about when inflation will be brought under control.
Our proposal is reasonable. Many would say that it is too reasonable. Many people would say that we have gone too far to try to meet the Minister. In logic, we should be proposing that the Price Commission should exist for only another year, until phase 3 comes to an end. In the interest, however, of trying to be reasonable and in an attempt to persuade the Government to meet us half way, we have gone further than we should have done.
I hope that the Minister will respond favourably and agree to the amendment or something like it. Unless he does that, we shall be letting down small businesses. Those who run small firms look to us to solve their problems. Many thousands of jobs are involved. If the House does not step in on behalf of such people, who on earth will do so?
This is indeed a modest proposal, but the amendment is fundamental to the Bill. It enables the House to consider the extent to which the existence of the Price Commission can be tolerated in the short term. The House can reach a satisfactory conclusion on this matter only by considering whether the existence of the Commission will really help consumers to deal with inflation. The House should consider carefully the adverse effects that a permanent Price Commission could have on the interests of the consumer, in addition to considering the advantageous effects that it might also have.
There is also the other side of the coin. For example, what effect will a permanent Price Commission, with its new powers, have on industry? How will its existence affect investment, profitability and—perhaps to many hon. Members most important of all—employment?
The entire principle of price control is raised by the existence of the permanent Price Commission now envisaged. When the Minister talks about the intentions of the previous Conservative Government he should remember that much water has passed under the bridge since those days. Views on price control and the effectiveness of price commissions and the way in which they operate have also changed. It is right for the House to look at these matters in the light of present day circumstances.
The argument for the House is whether the Price Commission should stay as a permanent feature of the British scene for many years to come or should cease to exist in a year or two.
The terms of the amendment are reasonable. Price control can be justified only in the most specific circumstances, such as a monopoly or near-monopoly situation, a temporary counter-inflation measure, or as a counterpart to effective pay control. These views were largely accepted by the Secretary of State during the long debate on Amendment No. 1 in Committee. That amendment sought to limit the life of the Price Commission to one year or to the duration of the pay policy, whichever was the shorter. When we voted on that amendment the vote was tied and it was negatived by the casting vote of the Chairman. It is therefore right that the House should reconsider the arguments in favour of giving a limited life to the Commission. We hope that the Minister will be persuaded to change his mind and meet the House half way.
My hon. Friend the Member for Ayr (Mr. Younger) said that this was an opportunity for the Government to meet the Opposition half way. I hope that the Minister will accept that in the spirit in which it is intended. We are today trying to look ahead a few years. We are not trying to deal only with the situation with which we are faced today. We are trying to look ahead to the end of price control, perhaps to the summer and autumn of 1978 and beyond, and the situation that will prevail then. Therefore, one of our principal concerns is considering the clause and, indeed, throughout our consideration of the whole Bill thus far, has been to examine the question whether the existence of a permanent Price Commission, in particular, will really help the consumer.
I have directed my attention to this matter in some depth and I have thought a great deal about the question whether the power to investigate price increases and to freeze them is really an effective means of countering inflation in the short term or even in the longer term. Certainly the history of attempts by Government—the present Government in particular—to manipulate prices is not at all encouraging. I have seen little if any evidence that the consumer believes that such manipulation, in either the short term or the longer term, is really effective. In fact, I think it would probably be much truer to say that consumers are, generally speaking, by now almost totally disillusioned by the repeated promises of more stable prices that they have heard over recent years.
One has only to sit in the Chamber and listen to Ministers talking about prices being stabilised or the rate of inflation dropping to single figures next year to hear the jeers and feelings of disillusionment that are expressed by hon. Members in the House. We in the House, after all, only reflect what people outside feel—what our constituents tell us when we meet them, week in and week out, and get their views on these important issues.
I believe that many people are coming to believe that all that can be achieved by the Price Commission is a short-term distortion of prices at the expense of a considerable distortion of competition. Do consumers really believe that the alteration of the constitution of the Commission contained in the clause will really bring down prices and that it will really act as an important element in the Government's counter-inflation policy? The answer to that question must certainly be "No." Most consumers will, I suggest, believe it to be little more than another bureaucratic convulsion in the life of an institution in which they have little faith. They will shrug their shoulders, because they know that an appointed Price Commission, on the basis proposed in the clause, can do little to relieve the burden of rising prices and unemployment.
Talking of unemployment, I turn now to the question how the Price Commission, will affect industry, investment, profits and employment. I want to ask the Minister how the establishment of the Commission on the new basis set out in the clause is likely to affect business confidence, investments, profits and employment. Can he tell the House today that the Bill and the proposed alterations to the constitution of the Price Commission have met with enthusiasm from industry? Has he received deputations telling him that it will have a helpful effect on their investment programme, that they are satisfied that they will be able to operate profitably in the future, and that they will be able to expand and will be able to offer more jobs in areas in which jobs are very hard indeed to find today? If the Minister has received any such deputations, I shall be very interested to hear about them.
To my certain knowledge, the Minister has received deputations from industry telling him something very different—that the continued existence of price control—the existence of this Price Commission, with its powers to investigate and to freeze prices—is likely to have the most disastrous effects upon companies' investment programmes up and down the country. It is not just the large companies that are involved. The smaller companies are also worried about their ability to maintain an adequate level of profits and to expand and offer increased employment.
From all the published reactions, there is very little doubt that in being asked to be subjected to the kind of price controls and intervention that the continuation of the Price Commission presupposes, industry generally is very unhappy indeed. If industry is unhappy, there must also be many millions of consumers who are unhappy, because consumers know that their jobs depend on successful, expanding industry. They know that the availability of products in the shops depends upon the ability of industry to make adequate, but not excess profits, and they know that the availability of a wide range of choice also depends upon successful and expanding industry.
I believe that it is well recognised—certainly on the Opposition side of the House—that what industry needs is a period in which to recover the profits that it has lost, to invest, to expand and, in so doing, to create more jobs. Surely, then, it is not unreasonable to say that industry should be expected to accept the power to investigate and to freeze for only a very limited period—a period of the length proposed in the amendment—in turn for phase 3 of the pay policy. That, at the very least, would be a bargain that industry might feel was a reasonable one to strike.
After all, if the Prime Minister is correct—I hope that he is—in saying that the rate of inflation will come down to single figures by the middle of next year, surely that in itself is a good reason for limiting the existence of the Price Commission to a couple of years more at the very most.
The House also knows that it is extremely unlikely that any effective pay policy will go beyond August 1978, so why should the Price Commission not go at about that time, or a little later, as well? I cannot see any reason why it should not go then.
I have not had the advantage of serving on the Standing Committee on the Bill. Perhaps I may ask my hon. Friend whether the Minister has given any indication of the extent or the quantification of the extent to which the Bill will actually lead to any reduction in the rate of inflation by the middle of next year.
I am grateful to my hon. Friend for his intervention. No. I do not think that the Minister has given any quantification of the extent to which the Bill will help to reduce the rate of inflation. As I recall, what the Secretary of State said was that the Bill was an important element in the Government's counter-inflation policy but that it was the overall economic effect of the Government's policy that would be much more important than the existence of the Price Commission or the machinery proposed to be set up by the Bill. That is an additional reason for making the point that the Price Commission should go as soon as is humanly possible.
I want to touch upon the question of monopoly powers, because very often in our debates on prices Labour Members raise the question of monopolies—an important topic which, quite rightly, concerns us all. In recent months we have heard more about monopolies than we did a year or two ago. It is a matter of concern to everyone, but I suggest that there is no reason for keeping the Price Commision in permanent existence to deal with a monopoly situation. After all, the anti-monopoly powers of the Monopolies and Mergers Commission are very considerable and could be strengthened if necesary.
Why, then, do we need the degree of permanence now envisaged in the clause? I have heard it suggested that the Com- mission must have permanence in order that the right people may be found to serve on it. That, surely, must be nonsense, because the Secretary of State said in the House only yesterday, in answer to a Question that I had tabled to him with regard to membership of the Price Commission, that he hoped that its members would serve for three years. I suggest that this clearly implies that the chairman and deputy chairman might serve for a much shorter period, and that the Minister was keeping his options open.
Yes, I do recall that, and I am grateful to my hon. Friend for his intervention. That was a very convenient statement by the Secretary of State. Another two years would fit in very nicely with the amendment. I say to the Minister of State, therefore, in all sincerity, on the basis of the arguments already advanced on the clause—arguments that I am sure will be advanced by some of my hon. Friends—that it would be reasonable to limit the life of the Commission to a definite and comparatively short period. I believe that the powers that the Commission has to investigate individual increases and to freeze prices at the level at which they were before investigation, are very considerable.
I have heard it said on behalf of the Government that these powers are an important element in their counter-inflation policy. Anyone who has read the reports of the Standing Committee will recognise that it is probably the deterrent effect of the investigation and freeze procedure that the Government appear to have in mind as an element of their counter-inflation policy rather than the actual results of the freeeze and investigation itself.
This is a cause of considerable concern. It causes concern in industry—in companies both large and small—and because of the deterrent effect that is contained in those powers it is only right that the House should decide today to limit the existence of the Commission to a couple of years at the most.
It has been said during the Committee stage that it would be inconvenient and cumbersome and that it would cause difficulty for the House if the Government were forced, in a couple of years' time, to introduce another Bill to replace a measure that had a limited life. I am not sure that that is correct. I believe that if the House feels that legislation is necessary to deal with a continuing problem of inflation at any time in the future, there will be no difficulty in dealing with it. I do not, therefore, accept the argument that because there is to be further legislation, continuing and permanent powers must be given to the Price Commission.
For those reasons, I have great pleasure in supporting the amendment.
The Liberal Party believes that what industry most requires from Parliament is not the prospect of drastic or dramatic change but continuity, stability and a fair degree of consensus. Therefore I start with a point on which I am very glad to be at one with the hon. Member for Gloucester (Mrs. Oppen-heim), although I do not think that she was quite as anxious to be at one with me. It concerns our suspicion about adding to the bureaucracy.
We regard with suspicion—although we hope that we shall receive satisfactory explanations—the persistence of an apparently increasingly large Price Commission. Had there been the legal possibility we should have wished the whole of these powers—because we accept and welcome them—to be introduced into the Monopolies and Mergers Commission. Unfortunately, the Fair Trading Act 1973, as enacted, does not permit that to happen, and there would have to be substantial amendment of that Act in order that our objective could be achieved. Certainly our blood on the Liberal Bench would run cold indeed if the Government were in any way to indicate that they look forward to a permanent Price Commission, additional to the Monopolies and Mergers Commission.
I hope that the Government will make plain tonight that when the legalities can be attended to they will not be at all opposed to an amalgamation of the Price Commission and the Monopolies and Mergers Commission, so that the powers may continue, but without a redundant and supernumerary bureau- cracy. That is our point, and that is what is down on the Order Paper in our names.
I have always considered the hon. Member for Colne Valley (Mr. Wainwright) to be one of the more sensible Members of his party, and I must say that so far I agree with everything he has said, particularly about some of the powers, when he was speaking about the Monopolies Commission. But I put it to him that unless this amendment is accepted, what he fears could happen at some date in the far future. Is he prepared for such an eventuality, where no definite date is set on that particular happening?
The hon. Lady is being ingenuous. She knows perfectly well—and here I must come to a point of dissension—that we welcome these powers. Indeed, the Liberals on the whole would give a greater permanence to them even than the Government.
We welcome the powers and reject the eloquent arguments against the powers which we have heard during the last hour or so. It is the redundant bureaucracy that we oppose. All we ask is that as soon as the legalities can be attended to—at the moment they prevent all this being carried out within the Fair Trading Act 1973—this will be done. But there really can be no doubt with regard to the powers themselves. Our view is that the powers are needed, that they must be permanent, and that they must be elaborated and revised as the years go by.
Yes, but it will be apparent—I do not need to insult the intelligence of the House by labouring it—that until the legalities can be attended to, so that we can get all these powers, preferably in a sharper form, well ensconced under the Monopolies Commission, it will be very dangerous to oppose the extension of the Price Commission. We do not want these powers to lapse, because Liberals do not accept the argument that they threaten the existence of small businesses or that they are detrimental to investment. We construe them in the opposite sense—that they are very stimulating to business. We want and have worked for years for a strong, positive, dynamic competition policy in this country, which both Conservative and Labour Governments have grossly neglected all my life. I hope that the Government will be reassuring on that score.
Because the investigation of the most arrant symptons of oligopoly and monopoly, namely, extortionate prices, would be the tin-opener into the can of the monopoly situation. We want to see a Monopolies Commission which is not a ponderous legalistic body which spends months examining the books and going through the minutes and trying to find what somebody said to somebody else in the golf club. We want it to be a body with sharp investigatory powers, and which can point to a symptom of monopoly or oligopoly or unhealthy stagnation and say "Let us get our teeth into it and see if this is something which should be investigated at the very root."
What the hon. Gentleman is arguing for is the gist of Amendment No. 8. He is saying that at some stage some of the powers of the Price Commission should be transferred to a new body—a much tougher, more aggressive and more capable monopolies rather than mergers body. But it would not be possible to transfer these powers without new legislation. The hon. Gentleman is saying that what has been presented is a strictly short-term measure, whereas we need permanent powers in a new type of exercise by a new body. He is actually arguing for our amendment, because we want the same thing as he does, and we say that it will not be achieved by continuing the Price Commission with these powers.
No. I am not as naive as that. It is a perfectly honourable position, although I dissent from it sharply. It is clear that what the Conservative sector of the Opposition wants is to get rid of a lot of the powers, which are, in their view, dangerous and damaging, as they have been arguing in the last hour or so. That is emphatically not our view as Liberals.
There is, I think, one thing that is even worse than bureaucrats, and that is a fixed, rigid, over-elaborate Byzantine code which has been given layer upon layer of annual reinforcements of Byzantinry and which it is now virtually impossible for small businesses to understand.
I quite understand that the large businesses, so often represented by hon. Members on my right, can take these codes in their stride because they have vast staffs of trained lawyers who can deal with codes. But if one asks a small business man whether, given this wicked and unhappy world, he would rather have a Byzantine code that one had to study for nights on end with a towel over one's head or a bureaucracy of flesh and blood, I am sure that we would get an answer for the latter. I am glad that the Committee, even though poorer for the lack of a Liberal presence, had the sense to get rid of the code within 12 months.
Is the hon. Gentleman really saying that in order to get rid of the tendencies which he has so graphically described it would be right that they be dealt with by an organisation constituted like the Price Commission in preference to a revised Monopolies and Mergers Commission which is able to operate more effectively. I certainly accept what the hon. Gentleman says about the length of time which the Monopolies and Mergers Commission takes, but I put it to him that a better way to deal with the problem of monopolistic tendencies would be to devise a quicker machinery rather than to deal with it through the almost arbitrary powers in the hands of three commissions.
We must face the fact that in a rapidly changing market situation it is necessary in some respects to appoint people of the utmost integrity, independence and skill and to give them considerable discretionary powers. I do not think that the legalistic approach, although it is essentially the usual approach of this Parliament, by building up a code of incredible elaboration is really adequate even though it may prevent the occasional rough justice taking place.
As I hope I have made clear, our aim is to have a permanently strong, positive and at times drastic competition policy. That is what we are after. But we believe that this will need an element of price control because we must unfortunately face the fact that getting rid of monopoly situations is a long-term job. In any major industry one cannot hope to send the Monopolies and Mergers Commission in, in order to give the public the benefit of lower prices with reasonable speed. We believe, and have long believed, that there is also room for an element of discretionary price control whilst monopolies are being dismantled.
Here I come to the point where we part company from the Tory sector of the Opposition, and perhaps from the Government also, because we approach these things without having the Trade Union Congress in any way around our neck or in our pocket.
I would incur the wrath of Mr. Deputy Speaker if I were to go into that question, but I think it is common knowledge that there are five Opposition parties, and very distinguished sectors there are among them, one of which was well represented in Standing Committee.
To summarise, our position is that we believe, and we have ever since the time of Beveridge, in full employment. We believe that in order to achieve full employment there must be a continuous and substantial Government intervention in the economy. We do not believe in the invisible hand. If we ever did, we were cured of that in the last part of the nineteenth century. It is time that other people were cured of it as well.
When we come to the form of Government intervention in the economy we believe the price that has to be paid for achieving as near as possible full employment is a permanent wages and employment policy. That is where we may differ from Labour Members. Parallel with that permanent pay policy which we regard as a permanent feature of British life there must be a strong and dynamic competition policy. It is simply the difficult legal obstacle in the form of the present legislation that prevents us from going helter skelter with a greatly expanding and more powerful Monopolies and Mergers Commission. In the meantime we very much welcome the transformation of the Bill in Standing Committee.
The hon. Member for Gloucester made play of one sentence that my hon. Friend the Member for Truro (Mr. Penhaligon) uttered in the Second Reading debate about the Bill being for one year only. The situation is transformed by the fact that there is every chance that the code to which we take the greatest exception will disappear after one year as a result of the amendment which I am sure my hon. Friend would have supported vigour-ously had he served on the Committee.
We shall come in due course to Amendment 80, which, in a more positive form, embodies the changes that we should like to see. I hope that in the meantime we shall have some response from the Government on the point of the powers remaining, but the bureaucracy being greatly reduced, by the possibility, when the legislative situation allows, of an amalgamation with the Monopolies and Mergers Commission.
Having heard the hon. Member for Colne Valley (Mr. Wainwright), the news should go out from this House that with regard to the Price Commission and the Price Commission Bill the Lib-Lab pact is in good shape. Whatever differences may exist between the Liberal Party and Government over direct elections or devolution, the Liberal Party and the Labour Party think as one in respect of the Bill and competition policy. Indeed, if the Government want an easy ride for the next 12 months they should go on reintroducing this Bill every month, because, so far as I can see, it is about the only measure on which they are likely to get the full-hearted support of the Liberal Party.
I would enlighten the hon. Gentleman a bit further, We have never been content with the status quo for very long. We are already pressing the Government as hard as possible to amend the 1973 Act so that the developments I spoke of can take place.
I am pleased to know that the Liberal Party is not satisfied with the status quo. But the Bill we are now considering, in terms of the form that it incorporates into the existing legislation on the regulation of prices in our economy, is yet another staging post along that story and rocky road that Governments of all parties feel inclined to take from time to time. Over the last 10 years we have had debates like this on many occasions. The previous Labour Government had its system of price regulation and control. We had our own Price Commission and the code. Now we are entering yet another phase.
The intervention of my hon. Friend the Member for Worthing (Mr. Higgins) in the speech of my hon. Friend the Member for Uxbridge (Mr. Shersby) was entirely pertinent. He asked whether the Government had made any sort of assessment about the effect of the next stage in our system of price regulation on the retail price index. My hon. Friend got a stony answer. That was one of the occasions when the Minister did not seek to intervene because he could not give that forecast.
We all know how effective the Price Commission has been since 1973. It is necessary for both sides of the House to approach the question of price regulation with considerable humility and to recognise that any instrument that any Government sets up will have only a limited effect on the actual level of prices of any goods or services at any given moment of time in our economy.
Does my hon. Friend recall the speech of my hon. Friend the Member for St. Ives (Mr. Nott) on Second Reading, when he quoted from an inter-
view that the Secretary of State had with a Mr. Leak. He said:
Mr. Leak asked the Secretary of State:
Would the price of any product be lower today if these controls had been introduced three years ago?
The Secretary of State answered,
Some prices certainly would. But not overall." "—[Official Report, 27th April, 1977; Vol. 930, c. 1358.]
In other words, the Secretary of State admitted that even if the new machinery had been available for the last three years it would have made no impact at all on price levels.
Yes. I wish that all members of the Government spoke with such frankness. There is a great deal of double talk when the Government talk about a deal on phase 3. They suggest to trade union leaders that the Bill will inhibit price increases, when we all know that it will have a very limited effect. At the beginning of the day the determinants that affect prices are the overall policies of the Government.
The reason for our high rate of inflation can be laid directly at the door of the disastrous economic policy of the Chancellor and the Secretary of State for Employment in 1974–75. That was the Foot-Healey inflation era. Only 18 months ago the Chancellor recognised this and made an attempt to get the money supply under control. He was remarkably successful, but at the same time he embarked on a ludicrous policy of driving down the external value of the pound, which is entirely contrary to controlling the money supply. It is these factors that determine the level of prices in our society for goods and services. It is necessary for us all to recognise that with humility.
This amendment deals with the life of the new Price Commission. I support it, and take issue with the hon. Member for Colne Valley about the powers and status of the Commission and his reasons for not wishing to support the amendment. The new Commission being set up by the Bill is a very different beast from today's Price Commission, even though it has the same address, many of the same commissioners, and most of the existing 650 civil servants.
The Price Commission today operates under the code. The Government have sensibly decided to abandon the code and the whole basis of allowable costs for their price regulation policy. One has learned that the code is cumbersome and Byzantine, and it gave certain companies through its guidelines, price increases that they might not otherwise have got. The Government are sensible to abandon that, but they are creating a Commission with considerably greater powers in certain areas.
It is in the exercise of these powers that the House should be very reluctant to concede permanent status. That is what this amendment is all about. I have some sympathy with the argument that our country can do with an institution that combines the Price Commission and the Monopolies Commission. There is a rôle for a combined body, looking into situations of imperfect competition, which is slightly less cumbersome than the Monopolies Commission. In fact, the powers of the Price Commission will not give the new body anything like satisfactory powers or powers that can be exercised fairly.
The Monopolies Commission can start an investigation only if there is a case to be answered—if there is a prima facie case of a monopoly situation and various criteria have been met. These criteria include market share, abuse of market position, and things of that nature. Under this Bill, inquiries can be instituted into the operation of companies without any criteria at all.
During the course of this debate today and tomorrow the Government will say that there are criteria in the Bill. But it is very important to establish what the criteria are referring to. In Clause 2 they refer to the conduct of the actual investigation once it has started. I do not quarrel with those criteria; they are sensible, widely drawn and provide clear guidelines to the Price Commission, once it has started an investigation.
But the key question is, what is the trigger that initiates the investigation in the first place? This is where the Bill is deficient, and we should be reluctant to give permanent powers to the Price Commission until we see how it will choose the companies that are to be investigated.
The present position is that companies of a certain size have to pre-notify the Price Commission of price increases that they intend to introduce. Companies of another size must notify after introduction, and there are other companies that do not have to notify at all. The new Commission can undertake investigations without any prompting. It can decide to investigate a company if it increases its prices by only ½ per cent. for the first time in six years. On the other hand, it can ignore the activities of a company that is regularly increasing its prices by 3 per cent. a month. There are no criteria at all. A company does not have to increase its prices by 5 per cent., 10 per cent., or any set percentage over any given period for the Price Commission to start an investigation. Indeed, a company does not actually have to increase prices at all to be subjected to investigation under Clause 10. A company can just go on trading and then find itself subjected to investigation on a direction from the minister.
No, I shall not give way. I know what the Minister will say—he is not allowed to specify a particular company unless there is a monopoly situation. But he can specify two, three or four companies without their applying for any price increases in their activities. The point that I am making is that if any investigation powers are given to a commission of this sort to examine areas of imperfect competition, some criteria about that imperfect competition should be laid down. That is what is missing and that is why the official Opposition believe that the powers should not be granted until the criteria have been laid down clearly in the Bill, or enunciated in a statement from the Minister. That is why we should have a period during which we can watch the operation of the Price Commission and see how it intends to investigate companies.
I have heard it said that it is likely to pick companies at random to investigate. Will it say it is investigating six from Yorkshire, seven from the South-West and 20 from London during the next three months? How else could it choose? I put this as a serious question to the hon. Member for Colne Valley, who lectures us about the pure philosophy of Liberalism. The hon. Member was not in the Standing Committee on the Bill, and I do not believe that he is the usual spokesman for the Liberal Party on these matters. He must address himself to these questions. It is no good the Liberal Party saying it is in favour of goodness, gentility, and general warmth in society and warm weather as well unless it can satisfy us how it actually wants to see these things operate. It is no use saying that Amendment 80 is the quintessence of Liberal thought. That amendment simply wishes to combine the Price Commission and the Monopolies Commission.
Is the hon. Gentleman satisfied with the system of criteria which I have described in Amendment No. 80? If the hon. Gentleman gives the matter a little thought, I think that he will not say "Yes".
The hon. Member for St. Marylebone (Mr. Baker), in his usual engaging way, is leading the House straight back to a Byzantine code. Once one begins to adumbrate detailed criteria, all the great corporate state bodies such as the CBI, TUC and all the others will weigh in and say "We do not want it to happen that way, but we want refinements". Before we know where we are, we shall be back once again to this appalling code, which I am glad to see is on its way out.
I am not adverse to the attractions of the Byzantine, when we compare what has happened to world civilisation since the decline of that empire. I am not suggesting the creation of a great Byzantine façade and code; I am asking for clear criteria to guide the Price Commission in its investigations into British industry.
The hon. Member for Colne Valley made one of those statements at which Liberal Party spokesmen are extremely good. He said that the Liberal Party wanted for British industry continuity, stability and certainty. The three things they will not get from this Bill are continuity, stability and certainty.
I shall be delighted to wait and see—but not too long, please.
British industry is uncertain when it will be investigated under the powers of the Price Commission. No company knows whether, if it puts up its prices by 10 per cent. or by 8 per cent., it will be investigated. No company knows whether, if it increased its prices six months ago and attempts to put them up three months later by a figure of 6 per cent., it will be investigated. There are no criteria to guide industry. One can search the provisions with the thoroughness that one searches for Liberal policies but one still cannot find any criteria.
I believe that the Liberal Party would be well advised to support our amendment. We believe that we should see how the Price Commission will operate.
By no means. One wants to create an atmosphere of stability for British industry so that companies know where they stand and are not subject to the quixotic whims of a Commission that is barely answerable to this House, or to a ministerial direction that is imperfectly dealt with in this House. Industry should be allowed to expand and to reinvest and develop in a stable environment. That will not be the case under these provisions.
Just as criteria have been devised for the method, style and operation of the investigative powers of the Price Commission, I am equally convinced that criteria could be established to trigger off the whole elaborate mechanism of investigation.
As I studied the Bill in Committee I came to the conclusion that one essential element was missing from it. The Government, in their competition policy and price policy, have been thinking about these matters as they have gone along. They have produced proposals and have modified them. They abandoned the Price Code, and one sunny morning upstairs in Committee the Secretary of State suddenly said "I wish to abandon dividend control". That was only accepting reality. I do not know whether hon. Members below the Gangway on the Government side would agree with that. Indeed, I do not think they quite understood the impact of their amendment when they moved it. If it had been cleared by the presidium that presides over the Tribune Group they would never have been allowed to table it. But they have done a good job in reviving the stimulus to capitalist society.
Before these proceedings are over, the Secretary of State may cast off yet another veil surrounding the body of the Government's competition policy. He may well decide to do so, because he got into a muddle about safeguards. I hope that on that matter at least we shall have the support of the Liberals when we come to that part of the Bill. In Committee we had to squeeze out of the Secretary of State—it was like squeezing water out of a big sponge—the commitment to publish the list of safeguards before Report.
I have gone a little wide in my remarks, but I still believe that the life of the Price Commission should be limited as suggested in the amendment. If in the next two years it is seen to be operating effectively and there is a job to be done, it can be continued by the Government of the day. I very much hope that the House will accept the amendment.
I did not have the privilege of serving on the Standing Committee, but I have listened with interest to the debate so far and to the interesting speech of my hon. Friend the Member for St. Marylebone (Mr. Baker). My hon. Friend touched on a fundamental point. We shall have this new Price Commission, the chairman of which I understand has been appointed today, as have two vice-chairmen. The Minister is making a gesture. Is he saying that there are four vice-chairmen?
Three deputy chairmen. According to newspaper reports, their responsibilities will be considerably greater following the enactment of this Bill.
My hon. Friend the Member for St. Marylebone made a profound point. He asked what criteria the Price Commission is to apply to judge whether a company should be investigated. The hon. Member for Colne Valley (Mr. Wainwright), in his extreme attitude toward Byzantine affairs of whatever nature, oversteps the mark. If we had to choose between the arbitrary decisions of a single person, even taken with colleagues, and some rudimentary guidance laid down by this House, or something laid down by the Minister, and available in print so that people can read it, surely one must opt for the second. It is the uncertain intervention of arbitrary ministerial ukases and judgments that most bedevils industry at the present time, creating an uncertainty that is prejudicial to investment.
The Minister asked the Opposition why we voted in 1973 for the establishment of the Price Commission. The answer given to the Minister was that at that time the code had to be renewed and reviewed every year. Let me give the Minister another answer. I voted for the Price Commission in 1973 because I thought that it would help to control inflation. I then believed that a Price Commission would do something to stop inflation from rising and would help to maintain inflation at least at the level it then was, or, hopefully, that it would reduce it below that level.
Events have proved one to have been grossly mistaken. I do not recollect what inflation was in 1973. It was about 7 or 8 per cent. It certainly did not reach the figures of 14 per cent., 15 per cent. or 20 per cent., the heights to which it has risen since the installation of the Price Commission. The Commission has not proved effective. It did not work as an anti-inflationary instrument in 1973. Not only have we higher inflation, but a far higher level of unemployment compared with that in 1973. I am sure that the House will regret the unemployment figures which were published today. Unemployment is now just 50,000 short of 1½ million—if I heard the news aright on the car radio as I came to the House at lunch time.
The anti-inflation policy which has been tried by both Governments—with the Price Commission, a wages policy and so on—has not been successful during the last four years, and yet we are now debating an amendment whereby the Government are asking us to give a continued, and more or less permanent, statutory existence to the Price Commission. We say "No". It should be given an existence of two years or something of that sort. It should go hand in hand with the present counter-inflationary policy, which will, I hope, fade away shortly.
As one of those who do not wish to see a statutory and permanent Price Commission I have a suspicion that this is part of the move along the collectivist road so much beloved by many members of the Labour Government and Party. There is a choice before us in dealing with inflation and unemployment. We can move towards some form of siege economy with complete and permanent price control, or we can move back to some greater degree of competition, a mixed economy, more investment by business and more support for business and entrepreneurs.
There is another aspect of this upon which no Conservative speaker has yet touched, and that is that the concentration of Government power in industry has changed considerably during the last decade. That represents a power that can influence prices in a tight and powerful way, and there seems to be nothing to counter that growing power in the economy.
The applause that greeted the hon. Member for Liverpool, Garston (Mr. Loyden) when he stood up earlier was because he was the first hon. Member on that side to have intervened so far. I congratulate the hon. Gentleman on his second intervention. He is right. The power of the nationalised industries is one of the greatest threats to the anti-monopoly movement. It is instructive that the increase in the price of gas was disapproved by the Price Commission but allowed by the Government. That is a specific incident that comes to mind. I entirely agree that this is a matter for grave concern.
I agree with the hon. Member for Streatham (Mr. Shelton) about the nationalised industries and the specific matter of gas, but does he not agree that this is not isolated to the nationalised industries? I should like to see the multi-national companies and the giant companies that dominate our economy dealt with in the same way.
I understand that point, and it exemplifies what I have said about the fork that we are facing. We can go along a road whereby we would deal with this sort of problem through complete and absolute control, or we could take the other road, which I prefer, because that would lead to greater benefit for the people. It would mean an increase in the anti-monopoly powers of the Government, because they would be able to intervene to break up monopolies. This is done more successfully by the United States Government than it is here. It is by competition that we can control the unfair excesses of the big companies, whether they are nationalised industries or multinational companies. They cannot be controlled through individual metered control on this or that effect and on individual prices. It can be done only by imposing some form of competition and, as far as possible, removing monopoly elements.
It is precisely by trying to make the Price Commission a permanent part of the establishment that we shall take a step along the wrong road to the corporate State, a more planned economy and more intervention, instead of the road that I wish to see us take towards less intervention.
I have changed my view about the causes of inflation since 1972–73. At that time I supported the Price Commission. I now believe that inflation is a monetary phenomenon and that prices and incomes policies, norms and stages ones and twos do not have the remotest effect on the level of inflation. The level of inflation is almost directly the consequence of decisions taken by the Chancellor of the Exchequer a year or two previously. We are now seeing the result of decisions taken by the Chancellor a couple of years ago.
The House hardly needs reminding of the ineffective attemps that have been made to control prices—and not just in the last four to five years. Such attempts have been made during hundreds of years past. The Roman emperors ordered, when there was a wheat shortage, that anyone who increased the price of grain would be killed. Of course, the price of grain still increased because there was a shortage. I could speak for some considerable time about the attempts that have been made to control prices by the most Draconian methods; but they have always failed.
I was recently a guest at a kibbutz in Israel. Money was not used there at all, and I asked how goods such as cigarettes were distributed. I was told that each member was given a number of credits that could be used throughout the year for the purchase of goods. I asked how it was decided how many credits each person should have and was told that the total product of the kibbutz for a year was estimated, converted into a number of credits, and that those credits were shared. I wondered what happened if the product fell short of expectations and I was told that more credits would have to be paid for each purchase. This must be so, and that is why inflation is a purely monetary phenomenon.
However, a wages policy, although it does not at all affect the level of inflation, does, no doubt, mitigate some of inflation's more unpleasant by-products. If inflationary expectations are not reduced, but the monetary supply is reduced so that the level of inflation can be brought down, there will inevitably be appalling unemployment.
I apologise to the Chair.
If the Price Commission does not in any way affect inflation, but merely affects some of the by-products of inflation, if the Government are determined to bring inflation under control, and if the Chancellor has realised at last the effect of a monetary policy, it is quite clear that the Price Commission will have no function. These by-products will not be making their appearance. It is not important whether the Price Commission should exist for six months, a year or two years, or even whether it disappears now. It is of great importance that it should not continue to exist indefinitely.
When we introduce controls on the economy, such as a price commission or wages policy, in order to reduce unemployment, we inevitably introduce all sorts of rigidities into the economy. If the Commission freezes prices, this undoubtedly damages the industry or company whose prices have been frozen. Some may have been profiteering and could be said to have put themselves in difficulties that they have asked for, but the other companies involved, which have not been profiteering, will find that their investment potential is reduced, and this will probably lead to further unemployment.
The damage that the continued existence of the Price Commission will do in the longer term is far greater than any good it produces, and I believe that it produces very little benefit because it does not have an effect on the level of prices. My hon. Friends have already quoted the Secretary of State's admission that the Price Commission indeed does not affect the level of prices. Why on earth are we agreeing that the Commission should go on indefinitely? I hope that the House will agree that two years is long enough, and, indeed, is probably too long.
One of the reasons why there are few speakers on the Government side of the House is that we regret that Mr. Speaker was unable to select some new clauses that we had tabled. The idea behind them was to strengthen the legislation, because we believe that the Bill is far too weak to deal with the present structure of our economy and the way in which prices are fixed within our economy.
I get the impression from these debates that hon. Members on the Opposition Benches think that we are still living in the nineteenth century. They keep referring to competition being able to deal with these matters. I was happy to hear the hon. Member for Colne Valley (Mr. Wainwright) say that the Liberals had left that idea alone in the middle and latter part of the nineteenth century. Conservative Members deliberately fail to point out that within the present structure of British industry we have oligopolies completely dominating various industries and determining levels of investment, exports, prices, employment and unemployment.
I see no evidence from the United States or the United Kingdom that monopolies commissions or any other methods have injected the sort of competition that hon. Members opposite say is needed and that they claim will prevent the need for a price commission.
It has been suggested that attempts to control prices in the past have been useless, but all previous attempts have included far too many ways in which firms could dodge and get round the legislation and increase their prices. For example, the Price Code recently transferred £1,000 million from consumers to the corporate sector because of the gateways through which prices could be increased.
Under our new clauses, the Commission would have been able to freeze prices. It would have been able to make firms enter planning agreements, and would have been able to freeze their prices if they refused to do so. Planning agreements are linked with capital investment, prices, and so on. My hon. Friends and I will support the Commission against this attempt to shorten its life, but we should have liked it to be given the power to do something about the ways in which firms will seek to get round the legislation by reducing quality and standards while maintaining prices.
The hon. Member for St. Marylebone (Mr. Baker) said that the Commission would be able to intervene only if there were price increases or to deal with monopolies or oligopolies. I believe that it is essential that the Commission should also be able to intervene if it considers that prices could have been reduced. In cases where large firms dominate an industry and the prices of their raw materials are reduced, there should also be a reduction in the price of their goods. We wanted to propose that the Commission should have the power to investigate such situations.
My hon. Friends and I are not very happy about the Bill, because we believe that it will be ineffective. We do not accept that it has any teeth. I was not surprised when the hon. Member for St. Marylebone said that he had no criticism of the criteria in Clause 2. They are so woolly, waffling and wide open, and so full of gateways, that I do not believe that they will have any effect. That is why we wanted to strengthen them.
Thank you, Mr. Deputy Speaker. I was just going to say that the amendment deals with the length of the Commission's life and that I should like it to have a longer life than that suggested in the amendment. At the same time, I should like that longer life to be effective and for the Commission to have the teeth really to control prices.
I should certainly do that if we had some control over the price of postage stamps and cards.
An hon. Member on the Opposition Bench made great play of the recent increase in gas prices, but the Opposition know that this is all part of the Tory strategy of demanding cuts in public expenditure. The IMF imposed an agreement on the Government, part of which involved the increase in gas prices. Hon. Members on the Opposition Benches support the IMF loan and that sort of strategy, together with cuts in public expenditure. The increase in gas prices was, in effect, a cut in public expenditure.
Conservative Members know that the increase in gas prices was, in effect, a cut in public expenditure. They have supported such cuts which have created the stagflation in our economy, over which they have been shedding crocodile tears. I shall vote against the amendment and support the contention that the Price Commission should have a long life. However, I appeal to the Government to give the Commission some teeth.
I reject the militant monetarism that we have heard from the Opposition Benches. That is no good. It is an insult to anyone's intelligence when Opposition Members say that inflation is due to too much money, to the Government or to the public sector borrowing requirement. It is high time that those allegations were justified. Even Friedman can no longer justify the stagflation in our economy. I reject the monetarist approach.
A real Price Commission with effective teeth which could impose price freezes and prevent prices rising is something that is required in our economy. I very much hope that even at this late hour some of the amendments tabled by my hon. Friends will be allowed to stand.
I rise with somewhat mixed feelings as I have the rather doubtful privilege of having the Adjournment debate. Therefore, I shall endeavour to be brief. I shall resist the temptation of taking up the argument advanced by the hon. Member for Bristol, North-West (Mr. Thomas) shortly before he concluded his remarks—namely, the relative virtues of Professor Friedman's analysis. It never seemed that his theory satisfactorily explained every case. I have in mind the example of inflationary effects of the black death some time ago. We must also bear in mind that inflationary wage settlements in the public sector may themselves have an effect on the public sector deficit and the money supply. The two factors are not totally unrelated.
I take up the two main points made by my hon. Friend the Member for Gloucester (Mrs. Oppenheim). First, I join with my hon. Friend in paying tribute to Sir Arthur Cockfield, who is about to retire. Despite all the massive imperfections in the legislation that he was obliged to operate, he carried out his task with his customary skill. I know from my own experience in the Treasury, when I had the pleasure of working with him, that it is extremely great. I hope that the Minister will feel it appropriate to pay tribute to the excellent work that he has done over the years.
I was slightly puzzled by the reference of my hon. Friend the Member for Gloucester to fleas. I thought at one stage that she was going to burst into a well-known Russian song, which would seem not irrelevant to the present position of the Liberal Party.
I turn to the main point of the amendment—namely, whether a time limit should be set on the duration of the Commission. I share my hon. Friend's view that that should not be so. As she has pointed out, the amendment is modest in that it allows the Commission to continue for longer than many of us feel that it should.
We must consider this issue in relation to the Government's present anti-inflation policy. I return to the point that I sought to make earlier in an intervention. Surely it is not good enough for the Government to say that we must have the Commission and that it must continue in perpetuity without giving us some estimate of what they believe the quantitative effect of the Commission is likely to be on the level of inflation and the contribution that it is likely to make, in particular, to a reduction in the rate of inflation over the coming year. I have not heard any such quantification, and without that the Bill is not part of the counter-inflation policy in any overall sense but is an aspect of the policy to which a number of my hon. Friends have referred—namely, monopoly legislation and legislation against restrictive trade practices.
We must consider these matters against a horrific rate of inflation. During the 1969 General Election campaign I well recall my hon. Friend producing a large shopping bag which reflected the situation at the beginning of the previous period of the Labour Government in 1964 and a second bag which showed the situation in 1970. I hate to think what she would have in that bag today, still less what she would be likely to have in it in a year's time. This is an immensely serious problem and not one that will be significantly affected by the proposals for continuing the Commission into the indefinite future.
It is definitely arguable that splitting the responsibility between the Commission, the Office of Fair Trading and the Monopolies and Mergers Commission is likely to multiply bureaucracy—that cannot be disputed—and to make the impact that can be effected by the Office of Fair Trading and the Monopolies and Mergers Commission significantly less than it need be.
That having been said, I find myself much in agreement with the remarks made by the Secretary of State. On Second Reading he said:
Improving our competitive efficiency and influencing industrial performance in less than perfectly competitive markets is not a task confined to the next few years. Active promotion of competition is essential."—[Official Report, 27th April 1977; Vol. 930, c. 1257.]
I agree very much with the right hon. Gentleman in that objective. It is a central feature of Conservative philosophy that competition should be encouraged.
It seemed that the hon. Member for Bristol, North-West did not understand what we have been saying. We are saying that we believe competition to be imperfect and that we should do what we can to stimulate it. We believe that we must have an effective agency to do so. Although there is a need to speed up Monopolies and Mergers Commission investigations, that will not be done effectively if the task is handed over to the Price Commission. At the outside, I believe that within a year—certainly within the time specified within the amendment—the Government should in tegrate the two functions. That would be not only more economical but a great deal more efficient.
We must ask ourselves why the Bill is being given such prominence at this time. Indeed, it is almost the entire scope of Government legislation of a controversial nature now being put through the House. One cannot avoid feeling that it is in some sense a quid pro quo measure on the basis that its presence on the statute book is more likely to enable the Government to achieve a phase 3 settlement.
I am glad that the Leader of the House is present. I am not among those who take the view that wage control is unimportant or that wage restraint is unimportant. What I find incomprehensible is that the right hon. Gentleman is now stressing so strongly the need to control inflation when much of the inflation that we have had over the past three years has been due to his gross irresponsibility at the time he came into office.
I do not believe that this sort of Price Commission and its continuance for the indefinte future will have a significant effect on the level of pay settlements. It was the irresponsibility of the right hon. Gentleman in the past that led to a wage explosion. I do not believe that the continuation of the Commission will enable the Government to get the type of agreement that they want to restrain inflation. If that is the sole object in saying that we must have the Commission and continue its indefinitely, I believe that the result may be counter-productive. The idea that we should have a stage 3 agreement on that basis could create a situation in which the increase in the total wage bill over the next year or 18 months will be greater than if there had been no stage 3 agreement. If that is the quid pro quo, I do not believe that it is likely to be effective.
The Prime Minister has stressed that he does not want a phase 3 that is a fig leaf. I am not sure that we shall not end up with one that is a stinging nettle as a large number of people will receive wage settlements significantly greater than they would otherwise have obtained. I do not believe that the Bill and the continuation of the Commission provide a suitable means of achieving the Government's counter-inflation objectives.
Another matter that gives me cause for great concern is that the latest report of the Bank of England in its quarterly bulletin demonstrates clearly that the rate of return on capital in relation to the cost of capital is diabolically low, which will deter investment. We have only to look at the figures at page 156 to see that over a prolonged period the rate of return obtainable on capital has been significantly less than the cost of capital.
The effect of the Commission and its continuance into the indefinite future is likely if it does anything at all, to reduce rather than increase the rate of return which may be obtained from investment. It may be that the rate of return is falsely high because of monopolistic practices. If that is so, it should be investigated by the Monopolies and Mergers Commission. If that Commission is too slow—I agree that it is—it should be given additional powers and staff to speed up the process. However, the procedure should not be carried out by means of the Price Commission.
If we are to keep up the rate of return or do something to raise it above its present abysmally low level, it is only when the monopolistic pressures are creating an unsatisfactory rate of return that the matter should be investigated.
This Commission, far from furthering either the Government's counter-inflation policy or their industrial strategy, and far from significantly benefiting the consumer, will foul up the overall structure of competition policy and the overal structure of the agencies that deal with competition. It will have an adverse effect on the future general economic prosperity of the country.
I hope that we may persuade the Minister to accept the amendment, if for no other reason than that it would speed up the debate and allow me much sooner to reach my Adjournment debate on the problems created in Worthing by the Department of Transport's A27 proposals.
I fully support the amendment. I remind the House of my interests. I am Chairman of the Retail Consortium and director of two firms with distributive interests.
The amendment is valuable and the arguments put forward in its support have been strong. I agree with my hon. Friend the Member for Worthing (Mr. Higgins) but he left me spellbound when he spoke of changing a fig leaf for a stinging nettle. It seemed that that would be a highly dangerous and probably embarrassing situation in which anyone might be involved. I thought that his metaphor was interesting. I also support what the Opposition Front Bench speakers have said.
I was a member of the Government who introduced the first Price Commission. It is incumbent upon me to make clear that I justify my support of the amendment by saying that when we introduced the original Price Commission and Price Code it was very much in our minds that it was a temporary measure. It was firmly written into the Bill that it should be temporary and related to one set of circumstances.
In Committee the Secretary of State withdrew some of the proposals in relation to the Price Code. It is the permanent nature of the Commission which worries us. The Secretary of State is aware of this concern, because I had the privilege of making representations to him in another capacity. As a Member of Parliament, I must make clear that I am concerned because I believe that this provision is unnecessary. The provision to leave these reviewing powers in the hands of the Price Commission is wrong.
I understand the argument against monopolistic powers, but I believe that the Monopolies and Mergers Commission is the right body to handle this. If it requires additional powers, they should be provided through a Bill relating to that Commission. It is not necessary for the Price Commission to be involved. Those outside for whom I have the privilege to speak—the distributive interests and the retailers—feel most strongly that a dangerous precedent is being set. They are totally opposed to the permanent continuation of this kind of power.
When hon. Members talk about lack of competition, I reply that that proposition cannot be sustained in relation to retailing. There is no keener competition anywhere in the world than in the High Streets of this country. That competition, and not the provisions of legislation such as this, is the real safeguard of the housewife's interests. If we keep that fundamental thought clearly before us, we can be far more realistic when dealing with legislation. As long as that competition exists, as it undoubtedly does, the housewife benefits.
Evidence of that is given clearly in the report of the Price Commission which shows how far below the levels of profit that would be tolerated by the Price Commission's own rules are the levels of profit of our retailers. Those levels are kept extremely low. The Government's figures show that there is no necessity for additional powers in this matter.
The Secretary of State argues that he wants these powers so that he may be selective in his approach. I understand that there must be a degree of selectivity but I do not believe that the paraphernalia of the Price Commission is necessary for this purpose. I have always held the view, as do those whom I represent, that a continuation of this is tolerable only as long as there is a continuation of a clear period of pay restraint. The linking of the two, which was proposed in the first Price Commission proposals under the previous Government, can, I think, be justified as being tolerable. A permanent Price Commission when there is no intention to have a permanent continuation of pay control seems unfair and inappropriate. Therefore, the amendment does not go far enough. But as it is going in the right direction it has my full support.
I hope that on second thoughts the Secretary of State will accept the amendment, because it would enable him to have the powers that he wants but it would not give this body the permanence which I believe is wrong and in respect of which I hope he will reconsider his views.
I have always opposed the televising of the proceedings of the House. However, in view of the absence of the non-payroll Bench Members, I wish that my constituents could see that there are no Labour Back Bench Members here when we are discussing this important Bill, which deals with prices and the Price Commission.
Is my hon. Friend perhaps being a little unfair? I gather that some Government supporters have been arrested today. Perhaps that may account for their absence.
Government supporters, whether present or elsewhere, should realise that the overwhelming majority of the electorate are concerned about prices. Housewives would be ill disposed towards a party which could not find one Back Bench Member of Parliament to be present at a debate on the Price Commission.
I endorse the coments of my right hon. Friend the Member for Grantham (Mr. Godber), who stated that competition has always kept prices stable and at a reasonable level. Some of the highest price increases—and some of the price increases that have most affected my constituents—have been those in the nationalised sector, where there is no competition. I think, for example, of the latest gas and electricity price increases and, from last week, the latest increases in postal charges. These are prime examples of lack of competition and of a monopoly trying to put its prices sky high against the public interest.
We would not have had the postal increases which we have just had if the existing Commission had taken the necessary action. The Monopolies and Mergers Commission is well able to control prices, and the proposed Price Commission is completely unnecessary. I am totally against any price control, but when we are trying to be conciliatory and to help the Government I am more than willing to support the amendment. It is highly reasonable and I cannot understand why the Secretary of State will not accept it.
One or two reasons have been given in the past. First, it is suggested that permanency is the only way of attracting satisfactory members to the Commission. That is a ridiculous argument when we know that many Labour politicians are applying to be parliamentary candidate for Birmingham, Ladywood. People of great calibre seem, prepared, therefore, to take on a position with an uncertain future.
If, as Ministers have often told us, inflation will be under control next year, why do we need a permanent Price Commission? If it is reviewed from year to year, when inflation is under control it can be suspended. There is also doubt that wages policy will last beyond August 1978. It would be foolish to continue price control in those circumstances.
I am concerned about the effect of the Price Commission on small businesses. The people in small businesses are already overlegislated about and overburdened with bureaucracy. These are the people who cannot cope and who will be badly affected by this proposal. They are normally competitive and keep their prices down, giving the housewife a good deal. A Price Commission which will further cut incentives and drive the self-employed out of business will do much long-term harm to our economy.
On a day when it has been revealed that nearly 1½ million people are out of work, this is a sad and dangerous time to be further restricting business and, therefore, reducing jobs. I ask the Secretary of State to consider the amendment, which is a logical compromise. Many of us have had to go some way to come to this proposal. I ask the right hon. Gentleman to do the same. The whole House would appreciate it.
I was unable to serve on the Standing Committee, but it is clear that those who did so must have laboured long and hard. I have little technical knowledge in this field, but I was impressed by the authority and background knowledge of my right hon. Friend the Member for Grantham (Mr. Godber). I was surprised that the Minister did not intervene in his speech since my right hon. Friend speaks with one of the most authoritative voices on the subject.
Although I am not technically competent, I have strong prejudices on this subject. The record, going further back than merely the present Government's period of office, shows that Price Commission-type bodies are not just negative but are positively disastrous in their attempts to intervene in society. The Bill attempts to introduce more permanency. Philosophically, we should discuss the amendment from the point of view of limiting the Commission's life to one year. I see that there are now two Liberal Members present; that must be a record for this debate.
I have certainly seen the hon. Gentleman before, but I will not say how I know, because that would lead me into personal remarks. The Liberals are distracting me by their unaccustomed presence.
A limitation to one year might limit this obnoxious form of Government intervention. We only have to look at other Government bodies to see how permanent they become after three years.
A major problem with this Parliament, as with others, is the degree to which we can control the governmental processes in the interests of, for example, the consumer. We have seen how unconcerned the Government are about their inability to retain the confidence of the House in the matter of Supply. They ignore all the normal conventions. Those who, like me, have been privileged to serve on the Public Accounts Committee will know—the criticism is not limited to one political party—that Select Committees have few tools with which to test and examine the processes of government, especially of quasi-governmental bodies outside the control of Parliament. They have very little teeth and, even if they decide to make a recommendation there is no guarantee that adequate time will be allowed for discussion.
Surely here is an opportunity for the Government to accept an amendment which in essence says "We want to come once a year to Parliament to allow parliamentary scrutiny, to allow parliamentary consideration, whichever party is in power". To that extent it would allow an annual re-examination of the workings of the Price Commission to see whether it was carrying out the job that it was supposed to carry out.
I would not have thought that that was a particularly onerous suggestion. I would have thought that those who would like to see the development of further parliamentary control, those who are concerned to see respect brought back to Parliament as an institution, would be leaping up from the opposite Benches to try to support such a suggestion as opposed to creating a system in which those of us who seek through regular parliamentary debate to analyse the workings of institutions not directly reporting on an annual basis know that we cannot do so.
I would have thought that hon. Members on both sides of the House who have similar objections to mine would be eager to support this very reasonable amendment limiting these provisions to one year. That is all the amendment does.
Does not my hon. Friend realise that the Government's business managers have perhaps thought this through possibly rather further ahead than he has done, as they are introducing the Bill when they know that they will no longer be in Government by the time the three-year period is up? Therefore, does not my hon. Friend agree with me that what they want to do is to make sure that the Bill, with its bureaucratic structure, remains as a monument to their memory once they have passed from office at the hands of the people at the General Election, and that it would be for the incoming Conservative Government to take up parliamentary time in rescinding it? Is that not the real reason why the Government are resisting the amendment?
My hon. Friend is absolutely right. That is the point I was going to make. That is the degree to which the limitations of the Government are quite apparent to us all. Obviously the Civil Service, because of the desire to create a degree of permanency, recognises that this Government will not last beyond a year. To that extent it is necessary to build into this organisation a permanency, knowing that the present Government party will not be in office beyond that year.
It is clear that the civil servants will be listening very carefully to the lengthy debate from this side of the House, a debate which has made it quite clear from all parts of the Opposition—the only Opposition that really counts—that when this party comes to office within a year we shall have very clear attitudes that will not lead to a permanent Price Commission. Therefore, I think that the point of the debate in terms of arguing for limitations, even if the Government are not wise enough to recognise and accept it, is a key point to those from the Civil Service who are listening.
One of the factors which makes me very concerned not to see this whole Price Commission structure go beyond one year into permanency is that over the last three, four or five years we have created a fraudulent atmosphere in the public at large. We have given the impression that within this Chamber, in pieces of legislation such as this, we are not having any moderating effect on prices. Those who know this area at all and who practise in any kind of business know how fraudulent this is, whichever party introduces such attempts at legislation.
I recognise full well the need to control, investigate and pursue monopolistic practices. That is an entirely different and valid area. I am talking about the creation of a fraudulent atmosphere in Society which gives the illusion that by setting up an organisation such as is proposed our task is finished, that we have now effected the, price structure within Britain and that every housewife should kneel down at night and thank the Government. That is total rubbish. We all know it. Creating this body as a permanent structure only adds to the fraudulent nature of the claim. It also creates deeper cynicism about the political processes of Parliament.
I should have thought that those who wish to see this Parliament and parliamentary government as a whole regain a degree of respectability would be more than willing, whichever party was in power, to submit themselves to the judgment of this House each year on the basis of this particular kind of legislation. I say "each year". Is that asking too much of a Government who, tragically, still unnecessarily cling to office? Even if they do, what is wrong with coming to the same Parliament next year and asking "Is it right or is it wrong?" That is all we are asking. Is that not democracy? Surely we should argue for the amendment.
The purpose of the Bill, as I understand it, is linked irrevocably to three items. One is that there is an agreement on pay which has to be supported by this Bill. I hope that the Government have been more successful in their talks today than they have been in the recent past in bringing that about. If they are successful in those talks today, then surely that need will pass within the foreseeable future.
Secondly, the Government need to hold down prices. The Secretary of State, supported by the Chancellor in many of his recent expositions on the anticipated rate of inflation at this year end—whether we are to believe him, on the basis of previous expositions on that same theme, is rather doubtful—has shown some confidence. But if the prices are held down, as the Government think they will be, surely the Commission will have lost its need as well.
The third reason is the need that the Secretary of State has expressed for long-term surveillance over trading practices in industry. I would remind the Minister of the Secretary of State's own words on this very point. In a speech to the Industrial Society, which has been quoted before in debate, the right hon. Gentleman said that
when inflation is finally overcome and there is no further need for margin control and price restraint, the power to investigate a price and freeze will remain an important part of competition policy. Perhaps it will be exercised by a new agency that properly combines our competition and prices policy".
The Secretary of State has expressed the likelihood of a need for a new body to carry out the functions which the Price Commission is not meant to carry out. Therefore, in so far as the Bill relies on those three elements for its existence and need for the future, if my projections are in any way proved to be correct it will demise.
It therefore comes to a question whether it is necessary for the Government to have a continuing permanent Price Commission in their relationship with Parliament and with people outside. Surely the Government are aware of the growing desire among people throughout the country to have less rather than more government.
Previous speakers have drawn the attention of the House to the sad decline in profitability which companies have had to face because of the existence of the Price Commission so far. They would certainly support the need for less Government intervention.
With gross margins permitted under the Price Code of 90 per cent, at 1973 reference levels, it is absurd to expect industries and companies to invest as the Government hope they will and as they continue to invoke them to do. The Chancellor, at Guildhall on 31st January 1977, said:
Firms will only expand and invest if they can see scope for making profits.
How can the Government expect those firms to invest when their return on capital has declined from 10·6 per cent, in 1964 to 2 per cent, in 1975? This point was made emphatically by my hon. Friend the Member for Worthing (Mr. Higgins).
At the other end of the spectrum, people want less government in their lives. They have to pay the taxes for the bureaucracy to administer the Price Commission. It is nonsense to expect people to be prepared to pay those taxes for a Price Commission which in the evolution of life may become unnecessary.
The relationship between the Government and Parliament has been touched upon by my hon. Friend the Member for Christchurch and Lymington (Mr. Adley). It is worth stressing that the Government are too little accountable to the House. If the Government seek permanency for the Price Commission now, they are immediately saying to the House "We do not wish to come back and discuss its need in future."
The amendment, in a most reasonable way, suggests that the Government should come back to the House and answer questions about the Price Commission's existence at some future date. The situation may have changed at some future date. Life is not static; it is evolving. We ought to know that on this day of all days, at the height of the summer, as the sun starts going down from this day on. [An HON. MEMBER: "What summer?"] What Bill?
On this midsummer day, let us remind ourselves that as the sun goes down the Commission should start running down so that one year hence, when the sun has come up again, we can re-inspect it.
The hon. Members for Bristol, North-West (Mr. Thomas) and Colne Valley (Mr. Wainwright) have said that they dislike elements in the Bill. If they dislike elements in the Bill, surely this amendment is worthy of their support. Only by supporting the amendment will they have an opportunity guaranteed to them in a year's time of re-inspecting the application of the Bill under the same circumstances then or under circumstances as they have evolved. I therefore feel that it is unworthy of them to have spoken as they did and not to support the amendment in the Lobby.
My hon. Friend the Member for Lewes (Mr. Rathbone) has echoed many sentiments expressed by other of my hon. Friends in deploring the way in which the Price Commission and the paraphernalia provided under the Bill will become a permanent feature of the legislative landscape. I should like to add my voice to that chorus in support of the amendment.
I feel very strongly that the attitude displayed by the Liberal Party in supporting an amendment along similar lines in Committee and apparently failing to do so on this occasion is a great shame. We have made a substantial concession to the views and wishes of Members of other parties by ameliorating the provisions of the original amendment that was moved by the Conservatives in Committee. In my view, for them now to come forward and to suggest that they are not prepared to accept this amendment because they feel that on the ending of the pay policy it would be better to assimilate this Commission within the Monopolies and Mergers Commission, is illogical.
The wording of the Liberal amendment, to which we shall come later, provides only for Parliament to say that it "may"—not "shall"—be assimilated into the Monopolies and Mergers Commission. Therefore, there is still the possibility, even if that amendment is carried, that this Commission will continue long after the pay policy has finished. That is a material point of which the Liberals should be made aware, if they are not already, and should be brought to account for.
The hon. Gentleman referred to the Liberals supporting an amendment in Committee. Is he not aware that, unfortunately, no Liberal Member served on the Standing Committee on this Bill? Is he further aware that at present the Fair Trading Act 1973, initiated by the then Conservative Government, would not permit the amalgamation of this Commission with the Monopolies and Mergers Commission? We have not heard any indication that Conservative Members would support the necessary amendment of that legislation.
My hon. Friend the Member for Gloucester (Mrs. Oppenheim) has answered the point made by the hon. Member for Colne Valley. Perhaps I may correct a slip on my part. I meant that the support given by the Liberal Party on Second Reading to our objections to many aspects of the Bill in its entirety led us to suspect that they would support this amendment, especially as we have substantially ameliorated the proposal since the Committee stage, which no doubt the hon. Member for Colne Valley like many other hon. Members, will have read in detail and with great interest.
I am particularly concerned about the legislative provision for the permanence of the Price Commission. I believe that it will further undermine confidence in industry, which at the moment is making a very slow but delicate revival. It is clear from the latest figures published by the Central Statistical Office that the revival in industrial production is not only very sluggardly but is substantially below the most modest of the Government's expectations.
Looking at the extent to which industry is able to make an adequate return on capital, the present rate is under 4 per cent., in real terms. Considering the cost of borrowing money, to industry let alone to individuals or other groups, it is clear that for industry to invest and provide for a substantial level of production in future it will be looking towards retained profits as a substantial part of the contribution towards its own investment costs. Therefore, any procedures that have a substantial impact on restraining the extent to which companies will be able fairly to retain profits and, in a cyclical situation, perhaps larger profits in one period than another, is to be regretted.
On previous occasions we have heard from the Minister that the operation of the Price Code has, over recent years, resulted in tangible reductions in the level of prices. These have been quantified and effectively passed on to the consumer. However, it is equally clear from the figures that have been quoted that this is a drop in the ocean and that it has had very little impact on the macro-economic control of prices. I believe that the paraphernalia of intervention, of freezing and of price restraint set up under the Bill and to be perpetuated, if the amendment is not passed, will do further substantial damage to the delicate revival of industrial confidence. Added to that, the bureaucratic nature of these provisions and the further requirements that they will undoubtedly place on many companies make this a negative piece of legislation to which to give any permanence.
I believe that return on capital is one of the most central features that we should be discussing at this time. It goes to the heart of the Bill. If companies are unable to make adequate margins of profit, due to further restraint, our economic position compared with that of other industrial countries with which we have to compete will still be further undermined.
The CSO figures on industrial production, to which I referred earlier, which are in part a reflection of some of the Government's legislation over recent years, show that such legislation has resulted in a poor economic and industrial performance compared with our European and OECD competitors. This is brought out in the CSO report, which admits that
the underlying level of industrial output rose slowly in recent months.
The index of industrial production was 0·1 up in the first quarter of this year on what it was in the fourth quarter of last year and only 0·1 up on what it was in February 1974. That is hardly a reflection of a successful industrial strategy being pursued by the Government. Nor is it a reflection of the success of the Price Code.
The Minister says that the provisions in the Bill, which, he claims, justify its permanence, have been inserted not only for economic but for social reasons. He says that after a reduction in the rate of inflation he will have a statutory mechanism to provide for control over wider trading aspects of companies and, indeed, excess profits and pricing. In my view he is not really seeking a social advantage; he is seeking a practical negotiating point for further discussions on a wages pact.
It is equally clear that in the forthcoming 12 months of wage restraint it will be more difficult to achieve anything more than a fig leaf or a blank piece of paper to wave at the City of London in terms of a pay policy. This was not the case when the Bill was originally introduced. With that change in circumstances, when it is clear that far less tangible agreement will be reached on pay restraint in the next year, there is at least a case for arguing that a far less specific commitment should be made towards price and dividend restraint in the next year.
For those reasons I believe that the principle of concurrence with the wages policy is important that a change in the stringency of one should affect the stringency of the other. It undoubtedly justifies the passing of the amendment. 1 would regret a further institution or Government agency which, after our economic problems had been brought under control, was able to exercise wide ranging and discretionary powers of intervention which might overlap the powers of the Monopolies and Mergers Commission. It could also be a recipe for abuse. Although present Ministers might not abuse it in that way, radical members of the Labour Home Policy Committee, if they had their way, would. Threats such as they have made make us cautious about giving sanction to provisions such as these.
For those reasons it is prudent and justifiable that we should pass the amendment. It would give the House a yearly opportunity to debate whether the Price Code and the Price Commission should be continued. It would give us the opportunity of deciding whether the restrictive inquiries and procedures provided in the Bill should be maintained. I support the amendment.
I am glad to have the opportunity of supporting my hon. Friend the Member for Chichester (Mr. Nelson). I note in particular his reference to the dichotomy of view between the left wing of the Labour Party and the Government. No fewer than 12 Tribune Group amendments appear on the Notice Paper. I am delighted to see that we now have one member of the Tribune Group in the Chamber.
My eyesight is fairly good and I am not yet forced to wear glasses. The hon. Member for Liverpool, Garston (Mr. Loyden) has not been here all the time. He is now in a minority among a number of his colleagues whose absence from the Chamber has been noticeable. Their presence elsewhere in London will have been noted by those who have been watching the affairs at Grunwick's. Perhaps they are more concerned about getting their names in the papers than they are about supporting their amendments.
The amendment gives hon. Members such as myself and my hon. Friend the Member for Croydon, Central (Mr. Moore), who did not serve on the Committee, the opportunity to take part in the debate.
I should like to amplify a number of comments made by many of my hon. Friends about the proliferation of paper and verbiage which this Government have produced for a whole series of Bills. My own Government was not entirely blameless, either. The Long Title of the Bill states that it is:
To make further provision about the Price Commission and prices and charges, and to amend the Counter-Inflation Act 1973 and the Remuneration, Charges and Grants Act 1975.
That sounds grand and fine, but as my hon. Friend the Member for Croydon, Central said—who really believes that all these words and all this paper will have any influence whatsoever on the price of cabbages, tea, or food of any kind, or on all the household commodities that are essentials of life for our people today?
For a country such as ours, which I believe imports more food than any other nation, it is nothing less than a cruel deceit to pretend to our constituents that what we are doing today will do more than tinker at the edges of the cost of living for them.
Does not the Bill do more than that—and less? It not only tinkers on the edges; it causes senior executives of retail distribution firms to spend time working out ways round the controls and ways of making profit out of the items that are not controlled by the Bill. Is that not positively damaging, as well as tinkering on the edges?
My hon. Friend the Member for Gosport (Mr. Viggers) makes an important point. The tax laws have turned this country into a nation of fiddlers. Legislation such as this causes people to spend far more time getting round it than on productive activities.
As the House knows, I have connections with a hotel company, in an executive position. I know of the inordinate amount of time that my colleagues have to spend in satisfying busybody officials about the rules and regulations that have been imposed by successive Governments in vain attempts to contain inflation.
My hon. Friend the Member for Worthing (Mr. Higgins) made a notable contribution earlier in this debate and pointed out that the Government should concentrate on increasing investment in industry and finding ways of combating a tax system that discourages people from working, instead of spending hours playing with words to introduce a Government Bill that will do little to affect the cost of living.
What worries me about the Government's attitude to this amendment is that it illustrates their general attitude towards bureaucracy, and also towards private enterprise. It illustrates what the Labour Party has always believed—that the State and Whitehall know best.
I have just served on the Committee considering the Passenger Vehicle (Experimental Areas) Bill. We have spent time trying to remove nonsenses from that Bill, all of which were proposed by the Department of Transport. Instead of concentrating on Bills such as this the Government should find ways of solving the youth employment problem or of improving the taxation system.
How nice it is to have my hon. Friend the Member for Stechford (Mr. MacKay) with us. He is a man of practical common sense and replaces his predecessor, who has gone off to lush pastures in Europe. My hon. Friend made the point—I think that he spoke for many Opposition Members—that we do not like the implications behind the Bill that Big Brother Price Commission knows best and Big Brother Government knows best. However, in the Conservative Party we have made an attempt to come to terms with the philosophy of the Bill in order to prove that we are not opposed in principle to trying to do anything practical about inflation. But it would be a great deal more encouraging to those of us who have taken this conciliatory attitude if we could feel that the Government today were prepared to accept the amendment.
Another point that is relevant to the activities of the Price Commission in its attempts to control inflation is the Government's lamentable record in trying to support a currency that used to be valued at$2·40 to the pound. We have had three substantial bouts of devaluation since the war, and they have all taken place under Labour Governments.
When, as I have said, we live in a country that has to import vast quantities of food—more than any other country—one of the greatest causes of inflation and of the increase in the cost of living is the money that we have to pay overseas to cover the costs of our food imports. How wonderful it would be to look forward to a time—we shall certainly not see it under the present Government—when our currency can be restored, we hope, to something like its value when the present Government came to office.
I conclude my brief remarks by saying that I hope that the Government will support the amendment. Once again, I see that we are blessed with no Liberal Members in the Chamber. They come in occasionally, make a few sedentary remarks, and then disappear. As my hon. Friend the Member for Lewes (Mr. Rathbone) suggested, how much longer do Liberal Members think that they can get away with this charade of trying to prove to the people that they really mean to support moves put forward to return this nation towards a sane economic policy, while making sure that they actually do nothing in the Lobbies to bring that about? It must be a very difficult balancing exercise to make a speech say- ing that one agrees entirely with what the amendment says and with the Conservative Party's philosophy on this, that and the other issue, but when it comes to voting, to say that one is very sorry but one will be in the other Lobby.
I have always been under the impression, Mr. Deputy Speaker—no doubt you will correct me if I am wrong—that there is something in "Erskine May" that forbids an hon. Member from speaking in one way and voting differently.
I shall not succumb to that temptation, Mr. Deputy Speaker. I most certainly would not wish to incur your wrath. All that I can say is that many of us look forward to the time when the Liberal Party puts its vote where its mouth is. Liberal Members will not be doing it on this amendment. As we progress further on the Bill, no doubt we shall find that situation arising again.
The hon. Gentleman makes very serious allegations indeed, for which there is not a scintilla of foundation. Would he be prepared to quote a single sentence in my speech that would indicate that I supported what he has been pleased to elevate and to call Conservative philosophy? Will he give a quotation to substantiate his allegation?
I understood the hon. Gentleman to say that he believed in competition, yet the mere existence of the Price Commission in the form as proposed under the Bill for an extended period of years is a direct threat to competition. If the hon. Gentleman would like further examples, I should be happy to go and collect his Hansard references.
The hon. Gentleman mentioned earlier, with reference to my hon. Friend the Member for Liverpool, Garston (Mr. Loyden), that his eyesight was very good. Perhaps he would give the House the benefit of some knowledge about his hearing, because he was not present when the hon. Member for Colne Valley (Mr. Wainwright) was speaking.
The hon. Gentleman assumes that the only place in which one can hear a debate is sitting here in one's seat. There are other ways. One can be elsewhere in this building and do so. The hon. Gentleman is a new Member. Perhaps he has not discovered that if he goes out of the door, turns right along the corridor, takes the second door along on the left and goes up one flight of stairs, it is quite easy to have a look at what hon. Members have been saying during the debate. Before he makes any more immature interventions of that sort, perhaps he will learn to find his way around the building.
I do not wish to detain the House any longer. Twice I have been about to resume my seat. I conclude by saying that the Government would be doing the country a service if they accepted the amendment so ably moved by my hon. Friend the Member for Gloucester (Mrs. Oppenheim).
I shall be brief. I want first to deal with one of the points made by the hon. Member for Christchurch and Lymington (Mr. Adley). Other than responding to the calls of nature, green cards and telephone messages, I have been on the Back Benches since 2.30 p.m., so I suggest that the hon. Gentleman sees a good optician at the first opportunity.
The Government should take heart from the debate and from the statements made by Opposition Members. In spite of the inconsistency and contradictory nature of the contributions of Opposition Members, for the first time we have an indication of the Opposition's regard for Government policy generally, because we have heard more than one Conservative Member on that subject, in particular, one hon. Member who raised the question when the sun will rise. It was my view that the Opposition have consistently said that for the present Government the sun would never rise at all. It is at least an expression of the Opposition's growing intelligence about matters that they now indicate that in about 12 months' time the sun will possibly be shining very brightly. That, again, gives a fair indication of what lies in minds of Conservative Members in terms of the Government's general strategy on this and other matters.
In that sense, I do not accept that the Bill will meet all the requirements that I would want in terms of prices. Many of my hon. Friends have expressed some concern, and this has been reflected in amendments tabled by some of my hon. Friends who are members of the Tribune Group and by other Back Benchers. As my hon. Friend the Member for Bristol, North-West (Mr. Thomas) said, one of the reasons why a greater presence on the Government Back Benches has not been felt is that none of the amendments that we have tabled has been called. That is one of the reasons why there has been a falling interest in the Bill. Nevertheless, we still argue that while the present situation exists, there must be a Price Commission Bill.
One of the things that come clearly out of the discussion is the fact of the power elements that exist outside the House. I was astounded to hear a Member of Parliament saying that no matter what sort of legislation this place may pass in terms of a Price Commission Bill it will be meaningless in terms of its ability to control prices. To some extent I agree, because the real power that exists outside Parliament is the thing with which we are constantly in conflict. Within a pluralist society it is the Government's responsibility to contain those powers as far as possible.
I noticed that when the question of wage restrictions and controls was being discussed, Conservative Members never dealt with it in the same way that they have dealt with the question of prices.
I should like to carry on for a moment.
One must conclude that what Conservative Members are really arguing is that they are prepared to accept restrictions on wages and rigorous control of them but are not prepared, at the same time, to see prices controlled in the same way.
One of the most important problems facing this country, at present reflected in the anger of people who do their shopping day by day, has been the rise in the cost of living, and at this stage that is what is uppermost in people's minds. Therefore, it is essential that a Bill be brought in. We should like to see the Bill strengthened and we should like to deal with the situation.
The hon. Member referred to remarks that I made. I make it quite clear that, speaking for myself, I completely agree that it was absolutely wrong to attempt to restrict or restrain wages and prices. Both attempts are irrelevant. One of the prime problems in this country is the appallingly low level of wages of most of the people.
With due respect, in making their case the Opposition argue that the Bill is a fraud. If it is a fraud, and meaningless, how can they say, several sentences later, that it will so affect the profitability of industry as to put its whole future in danger? These are the contradictory and confusing statements that Conservatives make on the Bill.
Whether we like it or not, we live in a plural society. The power of the trade unions has been curbed considerably in regard to wage negotiations. There is no free collective bargaining. In that situation, within the limitations of Parliament, the Government are bound to seek ways and means to control prices. Many of my hon. Friends would like to see the Bill strengthened. Nothing has come from the Opposition by way of argument for the strengthening of the Bill. If the Opposition are conscious of the need to control prices, they have made no serious contribution in that connection. In my view, the whole of the Conservative Party's opposition to the Bill is a fraud.
The question of the profitability of industry is correlated to prices, and if the hon. Gentleman does not accept the correlation between prices and profits, he ought to go back to wherever he came from and study it again. I look at profits in the sense that they have a direct effect upon prices. There are many examples which I could quote of enormous profits being made. One instance is the brewing industry. We see no reflection of that industry's vast profits in a lowering of the prices of its products.
There are many areas in which prices are rising unnecessarily. If this Bill means aught else, it is that the Government are beginning, by this process, to gain some control over the prices sector. It therefore merits our support. If Conservative Members really want to argue that the present price levels are unacceptable, they should support measures that attempt to control them.
Does the hon. Gentleman agree with me that in the food industry, for example, the profitable companies are invariably those which are most competitive, and that the food companies that make profits do so because they are able to attract the custom of the housewife on a competitive basis? Does he accept that?
Anyone who travels around as I do, visiting stores and other places, will have noticed the enormous expenditure on what every shopper considers to be unnecessary changes. Every week, departments are moved either upstairs or downstairs. They are continually being shifted all over the place, and massive amounts of money are being spent in making these unnecessary changes. The same argument applies to public houses. I know one public house that has changed its interior three times in as many years. Activities of that sort are helping to strip away the wealth of the nation in the most abusive way. It is necessary for the Government to gain control over the situation.
I agree entirely with that observation, which is borne out by the speeches that we have heard from Conservative Members.
The amendment deals with the lifetime of the Bill and, as I have argued previously, it is necessary to take into account the growing power of fewer and fewer people in controlling industry. This means that price regulation and price tendencies are also in the hands of fewer and fewer people. That power must be matched, and it can be done only by the Government intervening in the most positive fashion in this area.
If the Government fail to gain control of this situation they will certainly put themselves in peril at the next General Election. Much of the intention of the Bill is acceptable to my hon. Friends and myself, but we should like to see it strengthened during its passage. We hope that the Minister will see fit to deal with some of the matters that we raised in Committee and will strengthen the Bill on Report.
The hon. Member for Liverpool, Garston (Mr. Loyden) started by disagreeing with certain elements in the Bill and went on to misinterpret most of the speeches made in the debate so far. He ended with a certain disagreement with elements within the Bill. I presume, therefore, that he will be supporting the amendment, proposed so ably by my hon. Friend the Member for Gloucester (Mrs. Oppenheim), in order to give himself and other hon. Members a chance to improve the Bill in whichever way they wish to do so in a year's time.
I can fully understand the concern of the hon. Member for Liverpool, Garston (Mr. Loyden) and his anger in regard to prices. The fact is that £1 in 1974 is now worth about 55p, and many of his hon. Friends and supporters have been looking around for someone who is felt to be responsible, because they cannot believe that it could be the Government. We hear criticism of the common agricultural policy, the Common Market and so on, but the fact is that inflation last year was running at about 26 per cent. and this year the figure is about 17 per cent.
Many people, the Government among them, are looking for a way of controlling inflation. I suppose that that is the purpose behind the Bill, but it shows a complete misunderstanding and misconception of the causes of inflation and the ways of rectifying it.
A proper application of inflation accounting will show that companies have not been making a satisfactory return on capital employed during the last few years. It will also show that, bearing in mind the amount of the cost that companies have to pay to borrow money and the level of inflation, they have actually been making losses in real terms in many ways. Companies have been seeking to rectify their shortage of investment capital by rights issues. What they have not been able to do is to balance their books by keeping retained profits.
The whole of the Price Commission paraphernalia is based on the theory that prices can be kept down by statute and by ministerial edict. It is easy to see how people fall into this misconception, because politicians tend to have too lofty a concept of what they are capable of doing. Politicians think that they can do much more than they can. They think that they can rectify situations which they are not capable of rectifying and which are better left to market forces.
Faced with the enormous inflation that we have seen and with real hardship among working families, the Government feel that they have to do something. Therefore they bring forward a Bill to try to keep down prices, based on a complete misconception. The position is completely different. Companies will not invest unless they are receiving a proper return on capital employed. Faced with the present disadvantageous position, companies need encouragement rather than discouragement. It is quite wrong for the Government to bring in a Price Commission Bill which seeks by means of price levels to restrict the profits of companies.
The hon. Member for Garston was challenged by my hon. Friend the Member for Christchurch and Lymington (Mr. Adley) to say whether he accepted that there was a correlation between prices and profits. The hon. Member for Garston is always anxious to say that he left the Chamber only for the cause of nature or green cards. It seems that one of those things has come over him. But everyone knows that there is a correlation between prices and profits. Obviously there is. Obviously the correlation is an inverse one. The higher prices are, the higher profits will be. If prices are restricted, profits will also be restricted. What we seek to do is encourage fair competition and discourage unfair competition. Within those parameters we wish to see profit and healthy competition.
Does the hon. Gentleman also agree that there is no positive correlation between high profit and capital investment? Many firms which have made high profits have failed the British economy by not investing for a couple of decades to regenerate British industry.
This could become a philosophical argument that would take some time to follow through to its natural conclusion. I urge the hon. Gentleman to accept that if companies can see the prospect of a good return on capital employed they will invest. If, however, they do not see the prospect of a good return on the capital employed, they will not invest.
Much of the misconception on the Government Benches is based on the fact that some companies—banks and others—have been returning high profits but that part of the capital which they need to service is enormous and the rate of return, looked at in profit terms based on proper inflation accounting, is not particularly high. This is an argument that I could happily continue with for a long time, but obviously there is not much point in doing so at the moment.
It seems to me that the point made by the hon. Member for Bristol, North-West (Mr. Thomas) is relevant, since the Bill is surely the easiest way of discouraging investment because of the total uncertainty that it creates.
My right hon. Friend speaks with great authority on this subject and I accept his point. I am grateful to him for making it.
One comes to the question of what is the purpose of the Bill. There are two answers that one can give. The first is that it is part of the deal with the unions and that it is part of the Government's concept of their management of the economy that they should have a short-term Bill that will enable them to reach short-term arrangements with the unions and others. In other words, it helps the Government to reach a fig leaf of understanding and agreement and protects them from full frontal failure.
That is one possibility which would indeed be fulfilled if the Opposition's amendment were accepted, because the Government would then have a small piece of string with which to adjust their fig leaf and they could come to this House with some confidence that it was a weapon in their armoury with which to negotiate with the unions. The amendment would give the Government what they wish. But the other way of looking at the Bill is to say that it imposes a set of permanent controls. That is utterly different, and that would make the Bill as it stands a completely different Bill.
I maintain that the Secretary of State for Prices and Consumer Protection has a bit of a non-job. He is an energetic right hon. Member who is seeking to make the best out of his non-job. The question is, who is best able to judge the most efficient way of serving the consumer? Is it the companies operating in that area, or is it the civil servants? Put another way, is it the job of the Government and civil servants to make Marks and Spencer as efficient as British Railways? Is it the job of the civil servants and the Government to strengthen competition? I maintain that a great deal of courage is needed by the Government to stand back and say to the British consumer that they are not able to control prices in the way that they seek to control them. To accept the Bill unamended will mean yet more bureaucratic control and yet more interference with commerce.
I should be grateful if my hon. Friend would emphasise the fact that the latest estimate for the administration of the Bill is £8·5 million a year. That is the latest estimate, which rather strengthens the point that my hon. Friend is endeavouring to make.
I am grateful to my hon. Friend, who, as always, makes a most valid and cogent point. It is so easy for Ministers to come to the House and say "We shall create a Commission as a way of rectifying a problem"—namely, inflation and high prices. It is easy for them to accept that but so difficult for them to stand fast against creating such an authority. Yet every time a new authority is created it costs money, and every time jobs are created money is spent and it becomes increasingly difficult for those jobs to be taken away again and for the money to be saved. [An HON. MEMBER: "It is our money."] In fact, it is the taxpayers' money which has to be raised through taxes, rates and other Government measures.
Will my hon. Friend remind the House who it was who made the invariably forgotten comment about Royal Commissions taking minutes and wasting years? I wonder what the right hon. Member for Huyton (Sir H. Wilson) would say about the Price Commission in one of his less guarded moments.
I am also grateful for that helpful contribution of my hon. Friend. It is, indeed, easy to create a commission to consider a subject and to pontificate, but it is difficult to stand still and say "No, we cannot do this". I believe that on every Minister's desk there should be a sign which says "Do not just do something. Sit there.", because sitting there is actually more difficult than doing something. To give the illusion of movement and the impression of progress is one of the greatest inherent faults of politicians. The Bill is a typical politician's Bill because it gives the appearance and impression of progress when no progress is involved. It is merely backward movement.
I therefore urge the Government to accept the amendment. It will give them the weapon they need in discussing prices and wages with the unions, but it will not give them the longer-term permanent controls. I urge them to accept it.
I start by correcting what was a manufactured slight by the hon. Member for Gloucester (Mrs. Oppenheim), in which she accused my right hon. Friend of not paying tribute to Sir Arthur Cockfield. That was hardly a fair accusation. My right hon. Friend was answering a question about the appointment of the Price Commission. Of course, one pays tribute and expresses one's gratitude to Sir Arthur for his hard work over a long period of time.
In turning to the Bill itself I ask hon. Members to study carefully the provisions that they seek to criticise. I take one example, which I think demonstrates how a number of hon. Members have largely misunderstood the effect of the Bill. I mention the example, given by other hon. Members, of small businesses. The Bill, they say, will do great harm. While some people suggest that for larger businesses it will be good they go on to argue that the powers should be given for only one year. I ask them not to undermine the confidence of small business men and to look carefully at what the Bill does.
Small businesses do not have to give notification of price increases. Small businesses are most unlikely to be subject to any kind of freeze except after sectoral investigation. If a large firm has its prices frozen, and the large firm is a back-marker, during the course of an inquiry small businesses can make representations to the Price Commission suggesting that the large price-setting firms should be given an interim price increase because of the effect on competition and the effect on other firms. They have that protection as well.
At this point I do not want to be drawn into that discussion. Small businesses have a chance to make representations about the price of backmarkers.
The House should remember that small businesses are most unlikely to be in competition with very large quasimonopoly suppliers. They are much more likely to be customers of large firms and in need of aid and protection from the Price Commission rather than be caught by the provisions and powers of the Bill. if one examines the only fair part of the case put for small businesses one will see that if a small business is selling something at a price that comes under the umbrella of a monopoly, when one intervenes in the monopoly price one can protect the small business price. That was the argument for the protective umbrella monopoly. I urge hon. Members on the Opposition Benches to look carefully at the provisions, which give protection for small businesses rather than impose a burden under the protection powers.
I did not mention that aspect, because it was not raised during the debate.
There are three propositions that I want to examine. One with which I have sympathy and total agreement is that there should not be a rigid mathematical code of marginal controls once the voluntary pay policy has come to an end. We accept that if price controls are analogous to pay controls such as we have seen over the past two years, the two must go together. We have accepted an amendment to the Bill removing the mathematical controls—the historical levels of control—at the same time as the voluntary pay policy ends. There is no argument there.
The Opposition are also against a permanent power to investigate prices. They are opposed to that power and opposed to the institution that will exercise that power. The difference between us is that we believe that there should be a permanent price policy and a permanent sharpening of competition policy. The Opposition do not want a permanent price policy. During the four-hour debate they have given no detailed exposition of any Conservative price policy. There has been none whatever. [An HON. MEMBER: "That would have been out of order."] Many things that have been said in the debate have been almost out of order. The Opposition could have tried to put forward an alternative policy until they were stopped by the Speaker. The fact is that they do not want an alternative policy. Of course, they agree with some kind of permanent competition policy, but as I understand it they do not want any addition to the powers in the Bill to affect existing competition policy. Perhaps the hon. Member for Gloucester will say whether she agree with all the powers in the Bill and is opposed only to the Price Commission.
Does that include the power to freeze prices? Apparently, it does not, as the hon. Lady does not respond. Perhaps she can have some consultations with her colleagues and tell us a little later whether she supports the power to freeze prices.
The Minister is splitting hairs. If, as a result of investigation or monitoring, it is found that a monopoly or near-monopoly situation exists, there should be an automatic paying back of prices. I do not think it should be done first, but it should be done retrospectively.
There is no power for the Monopolies and Mergers Commission to have a general roll-back. Perhaps we can narrow down the differences between the Tories and the Government. We believe in having permanent intervention powers to deal with prices. The hon. Lady says that she is against the institution. That is over-simplifying it. During the course of her speech she said that she wanted a much swifter investigation of monopoly situations. The truth is that under the Fair Trading Act we do not possess the power to institute a swift and rapid investigation. I want, perhaps she wants, and many people in this House want, that situation. But we are not creating a new institution here. We are talking about the existence of an institution that was given permanent life by the Conservatives in 1973, in their Counter-Inflation Act. Of course, their code was renewable annually, but the institution was given permanent life. Therefore, the attitude of the Opposition today is not only unconstructive; it is reactionary, as it goes back beyond 1973.
The Opposition say that they are against far-reaching discretionary powers. They should read the criteria in the Fair Trading Act:
The Commission shall take into account all matters which appear to them in the particular circumstances to be relevant and, among other things, shall have regard to the desirability—
That is a pretty wide-ranging discretionary power. The criteria are similar to the criteria in the Bill. The Commission was also to have regard to
… maintaining and promoting competitive activity in markets outside the United Kingdom. ….".
If hon. Members read the criteria in the Fair Trading Act and the powers given to the Monopolies and Mergers Commission they will find that they are far-reaching discretionary powers, which were provided by the House because it realised that only by having such powers could we deal with these matters. Therefore, we have disposed of the argument that something is wrong with the Bill and that the Commission should endure for only a year because the powers are too far-reaching.
The hon. Member for Croydon, Central (Mr. Moore) suggested—and he was supported by others—that in order that parliamentary control might be exercised, the Price Commission should come up for yearly review. If he follows that to its logical conclusion, the Monopolies and Mergers Commission and the Manpower Services Commission should also come up for annual review. That would not be in the interests of the House, nor would it constitute the proper use of our time.
Secondly, it will undermine the confidence of industry and distributors if it looks as if the Price Commission is a plant to be torn up every year to be examined, with suggestions that it may be changed. Above all, industry wants some degree of permanence and reassurance. It is a grave disadvantage to industry and to consumers to suggest that the powers and the institution in the Bill may be of a purely temporary nature.
The Minister should address himself to the germane point involving a yearly review by Parliament. If he is concerned about the use of parliamentary time, he has only to remember how parliamentary time has been used in the past three years to realise that time spent on many of those matters would have been more usefully spent in reviewing, each year, the activities of bodies such as the Price Commission.
I am not reviewing the past three years' parliamentary proceedings. The hon. Gentleman should remember that the Counter-Inflation Act 1973 gave the Price Commission powers that were not subject to the control of Parliament. The exercise of those powers are automatic and not subject to review by this House. Under the present Bill, apart from the temporary power to freeze prices for three months, subject to the right of an interim increase, one can act on the recommendation or advice of the Price Commission only by bringing an order before the House. That is a far greater degree of parliamentary control over the activities of the Commission than we have had hitherto. I ask the House to reflect on that matter when considering the question of parliamentary control.
Why do we want a permanent prices power? We want it partly to redress the imbalance between the power of the consumer—the individual, the unorganised shopper—and the power of large institutions. The hon. Member for Streatham (Mr. Shelton) missed the point. He thought that the encouragement of competition could be brought about by having less intervention, but that is not the case. One has to intervene, as happened in the case of television rentals, to encourage competition or to redress the effects of a lack of competition. Intervention and competition arc not inconsistent. We need to do these things to redress the balance of power between consumers and industry, because there is an enormous concentration of such power.
On Second Reading I gave an example to the effect that 40 per cent. of net manufacturing output is concentrated in the top 100 firms. Furthermore, in 1972 about a quarter of all manufacturing sectors were concentrated to such an extent that five firms accounted for more than 70 per cent. of gross output in each sector. I shall not repeat all the examples that I gave on Second Reading.
The reason why we want a permanent institution is that the imbalance between organised industry, finance and the individual unorganised consumer is so great that some power must be given to an intervening authority.
Let us get this point straight. Is the Minister now saying that the Government are in favour of a permanent Price Commission, with permanent counter-inflation powers? If so, that is not what his right hon. Friend the Secretary of State for Prices and Consumer Protection said. He said that the counter-inflation powers would be temporary, and that the Price Commission should have a finite life.
Perhaps the hon. Lady will allow me to explain. I am saying that we should have a permanent institution with permanent powers first because of the imbalance of power, and, secondly, because the powers in the Fair Trading Act and the procedures available to the Director General of Fair Trading and the Monopolies and Mergers Commission are not adequate. We need those powers to sharpen competition and to protect the consumer from the abuses that flow from lack of competition.
I have given an example that went to the Price Commission—namely, the sub- ject of television rentals. The Price Commission in its report showed that the six major rental companies had maintained artificially high profits, which should have been eroded not by legislative intervention but by the action of the market place and the influence of competition. None of those television companies individually would have qualified as a monopoly. There might have been what is called a complex monopoly situation. That is sufficient evidence for saying that the speed of the Monopolies and Mergers Commission is not sufficient to deal with the situation. That is the second reason why we require an institution with permanence.
No, I do not intend to give way to hon. Members who have not been present during the debate.
I hope that my right hon. Friend the Secretary of State will make clear that we do not see a permanent separation of the identity and existence of the work of the Monopolies and Mergers Commission and that of the Price Commission. One does not rule out the fact that at some time in the future one would like to encourage a much closer working relationship, and perhaps a unity between the two institutions and the exercise of their powers. It is not now possible to spell out how that would work in detail. We are dealing with institutions that we have inherited. We inherited from the Conservatives the Monopolies and Mergers Commission and the Office of Fair Trading, and also the Price Commission. This is not the time or the place to talk about the unity of the two institutions, or of their powers. I do not rule out in future a much closer working together, although I do not wish to tie myself to a timetable.
The difference between the Labour Party and the Liberals together, and the Conservatives, is that we and the Liberals want to see a development of those powers and institutions and the Conservatives, by their amendment, want to bring about their death. It is a difference between death and development. Indeed, that is the difference in this debate. It is not a bad argument for asking the House to reject the amendment.
The Minister may think it is a mistake to give way to me, but will he admit that what he has said means that the Labour and Liberal Parties believe that bureaucracy and the State machine can solve the nation's problems, whereas the Conservatives believe in trusting people, reducing taxation, and letting them get on with the job, and thus reducing inflation?
I said it was a mistake to give way to the hon. Gentleman, and so it has proved. I do not see how a philosophy of "trusting the people" could automatically control the behaviour of the 40 per cent. of net manufacturing output that is concentrated in the top 100 firms. That does not follow. In that situation there must be intervention.
I turn finally to the question of confidence. I believe that to give a temporary life to the Commission and a temporary existence to its powers will undermine the confidence of industry. It may be that people will then start to put off investment decisions for one year, hoping that the institution will be abolished, or that this may happen after a period of one year. Industry wants certainty and security, and those factors would be undermined if this amendment were to be agreed to.
I am grateful for the spirit of generosity in which the Minister is answering this debate, but his argument is absurd. He is saying that industry wants certainty, and that if it felt that this whole panoply and paraphernalia of control and intervention and freeze could be withheld for a year it would make industry uncertain about its investment decisions. He is saying that companies may postpone their investment decisions at the end of that year. This implies that a panoply of controls will deter firms from investing this year. It is absurd to suggest that the one way in which to give confidence and stability to industry is to say "This is what we shall do for industry—we shall introduce a freeze on prices. It will upset your investment decisions, but do not worry, because it will last not for a year, but for ever."
It means that a group of firms that can abuse its powers in the market place might decide to wait until there was no longer any control or investigation. It would be a mistake, and it would undermine the confidence and security of industry, if the Price Commission ran from year to year. The Opposition are most anxious to manufacture a paranoid neurosis about the Bill. Of course, the Commission is a responsible body that will act responsibly and it will have powers not dissimilar in nature or principal from those now possessed by the Monopolies Commission.
The Price Commission will be bound by the criteria set out in Clause 2, which I hope we shall be discussing shortly. Those criteria charge the Commission to act in a manner consistent with the making of adequate profits by efficient suppliers of goods and services. The criteria charge the Commission to pay regard to the need to recover costs incurred in the efficient supply of goods and services, to provide for a return on capital employed, and to ensure that profits are sufficient, taking one year with another, considering the risks involved. Once we are freed from arithmetical controls the Commission will be able to start taking account of risk taking.
I hear the hon. Member for Gloucester mumbling about current cost accounting, but one reads in the criteria about the need to provide enough money for the replacement of assets, and so on. In looking through the criteria—which will be binding on the Commission and the Secretary of State—one wonders who will be worrying. The only people who will be worrying will be those who are inefficient, those who are monopolists, and those trading in areas in which competition does not or cannot work.
What the hon. Member for Gloucester and the Opposition are trying to achieve through the amendment would be inefficient and monopolistic in those areas where competition does not work sufficiently. The hon. Lady said that the amendment would strike a blow for those who want to remove the shackles of price control. I do not believe that those shackles should be removed, either temporarily or permanently. Those shackles and a degree of investigation should exist on a permanent basis.
One of the most worrying features of the speech that the Minister has just made is that he has an obvious and total lack of knowledge about the real world of business and industry. He appears to think that one can freeze the prices of major companies and yet not affect small businesses at all.
My hon. Friend the Member for Lewes (Mr. Rathbone) pointed out to the Minister that a large number of small businesses are suppliers of large companies and that it is unlikely that if the Government froze the prices of large companies those companies would be prepared to accept higher prices from their small suppliers. The minister waved that aside because he patently did not understand it.
In showing his ignorance, the Minister gave me more cause for alarm than at almost any other time in the debate. It is frightening that we have a Minister who does not understand that small businesses can be affected by a price freeze for the large companies and that such a Minister should have a major influence at the Department of Prices and Consumer Protection.
Small businesses will be affected by the legislation in several ways. I have already mentioned the overspill effect. Large companies that have had their prices frozen will inevitably refuse to accept higher prices from their suppliers. There will be Clause 5 investigations, and there is nothing in the Bill to indicate that small businesses will not be investigated. Clause 5 is specifically intended to make sure that non-pre-notification companies can be investigated. Under Clause 10 there can be sectoral investigations that would certainly affect small companies. I hope that the Minister, having listened to the debate, will go back and start to look at the ways in which small companies will be affected by the Bill instead of blandly reassuring the House that he does not understand what he is talking about.
A welcome intervention was made by the hon. Member for Liverpool, Garston (Mr. Loyden). We like to hear the other point of view sometimes and Government Back Benchers appear to be more in touch with the real world than those who speak for them. The hon. Member for Garston said that it was scandalous that prices were now going up faster than before, that that could not be right and that we must have this mechanism because it is bound to help.
The Secretary of State has given an answer that was quoted by my hon. Friend the Member for St. Ives (Mr. Nott) during an earlier debate on the Bill. The Secretary of State gave an interview to Mr. Gordon Leak, and this was the report of part of that interview. I quote:
Mr. Leak asked the Secretary of State:
'Would the price of any product be lower today if these controls had been introduced three years ago?'
The Secretary of State answered,
'Some prices certainly would. But not overall'."—[Official Report, 27th April 1977; Vol. 930, c. 1358.]
In other words, if the Minister had had these powers during the last three years, by his own admission there would have been no change of any real consequence in the level of prices. It is to that point that the Opposition object. We do not object because we want to see prices rocketing through the roof so that we can then say "Is not that a good thing?" We object to taking part in something that is purely a way of deluding the British public. We are not prepared to be party to misleading the public into believing that the Government are in control and capable of influencing events, because they are not.
We do not see the Bill as a means of affecting prices in any way. The Secretary of State has admitted that it will not do so. The Bill will damage confidence, produce higher unemployment than is necessary, and destroy investment. It will do nothing to deal with the problem of prices, and it will produce other equally important problems.
I am sorry to interrupt the flow of rhetoric and logic, but the hon. Member for Hertfordshire, South (Mr. Parkinson) has said that the Opposition object to deluding the public through the Bill. If that is so, I must point out that the amendment that the Opposition have moved makes it clear that they are prepared to delude the country for three years but that they would object if that went on indefinitely.
I do not know why the Secretary of State that the Bill represents ing worthwhile interventions, spends so much of his time sniping in a misleading way at my hon. Friend the Member for Gloucester (Mrs. Oppenheim). Unless he can say something more worth while he should stay in his seat. At least, while he is sitting there he is not doing any positive harm, and we should be grateful for that.
We have been repeatedly told by the Secretary of State that the Bil represents a new approach to price control. He has told us that we must stop thinking about the way in which the old price controls operated and that we are entering new and unchartered territory. We have been told today that we must not get involved in dealing with the nitty-gritty of specific points, that the Commission will operate the broad criteria agreed by Parliament and that it should be allowed to get on with the job. Whatever the Minister has said, we are entering a new phase. If the Price Commission is to operate with new powers, it will be a different sort of Commission from the one of which we have had experience. I am sure that the Minister would accept that.
We were at a terrible disadvantage in Committee because, as the Minister has admitted the criteria are extremely vague and general. We did not know what the profits safeguards would be and the sort of people who would be operating the Price Commission. It was therefore difficult to examine the Bill in the way we should have liked, because we did not know the key features that we needed to know in order to pass judgment on it.
We did not know what phase 3 would be, and we still do not know, though we are beginning to get a slightly better idea. We argued in Committee that industry might be prepared to accept the Price Commission and the new powers—but only if they were part of a deal that included wages control. I do not know where the Minister gets the idea that he can speak for industry. Time and again he has said that industry feels this or that, but a considerable number of indus- trialists to whom I have spoken say that a prices policy without a pay policy would be an unmitigated disaster. Every industrialist to whom my hon. Friends and I have spoken has said that without wage control and an acceptable level of wage settlements he would not be prepared to accept the measures in the Bill.
I was invited recently to meet a number of brewers, who expressed to me their concern that the powers being taken in the Bill could result in their deferring £250 million of investment in new plant, which would mean very many new jobs being lost.
I have not been talking to the brewers, but I have been talking to a number of other people in a wide variety of industries and their reaction has been similar. We argued in Committee the dangers of a tight prices policy without an incomes policy and we pointed out that industry would not accept that situation because, in industry's opinion, it would be a recipe for increased unemployment and reduced investment.
Since the Committee stage, one or two things that we did not know have become clear. For example, we now know who will be the new chairman and the three deputy-chairmen of the Commission. Many of us have found it difficult to tie up some of the Secretary of State's recent pronouncements on this subject. He has been reassuring us that the new Commission will not be as busy or active as the old one. On Second Reading we were told that there would be about 40 investigations a year. I do not know how many thousands of applications the Commission has to vet and approve at present, but it must be a considerable number. When the Secretary of State was explaining why he was paying the new chairman, a retiring merchant banker, an increased salary, and why the chairman needs three highly-paid deputies, the right hon. Gentleman said that they would be so much busier and would have to do so much more than Sir Arthur Cockfield.
Many of us welcome the Minister of State's belated attempt to pay a compliment to Sir Arthur, because the Government have given the impression that the new people will do a much bigger job and earn much bigger salaries than Sir Arthur. I hope that the Secretary of State will take an opportunity to clear up that possible misunderstanding and make clear that Sir Arthur has done a first-class job. The idea that the new man is better qualified and deserves more money, even though he will be doing less work, is unfair to Sir Arthur.
We now know who the four highly-paid new officials will be and we know about the new safeguards. We also know that these safeguards will be regarded by industry as totally unsatisfactory and certainly much less satisfactory than the existing safeguards. We also know of the continuing lack of progress on a pay policy.
I listened last week to a rather arrogant speech by Mr. David Basnett, who said that he had been present at a meeting at which the most important political decision of the year had been taken. That decision was taken not by this House but by the TUC Economic Committee. It was a rather arrogant claim to make while a guest of the Mother of Parliaments. That decision will not ensure an agreed level of wage increases. It will ensure only that trade unions will not seek pay increases—and the TUC will make sure that they do not—less than 12 months after the last pay increase. We were left with the clear impression that this was about as much as we could expect in phase 3.
So we know that it is unlikely that in phase 3 industry will get anything that could be called a pay policy or that we shall get a norm that would be acceptable to industry. We are now creating alongside a virtually non-existent pay policy a permanent and strong mechanism for controlling prices. We are creating precisely the situation that industry believes will produce a lack of investment and increased unemployment. We are creating machinery that will damage industrial confidence and will do nothing to help the housewife or the consumer by controlling prices. We are creating a permanent intervention mechanism on the prices front while wages control is collapsing.
I listened carefully to the hon. Member for Colne Valley (Mr. Wainwright), who argued that a strong prices policy without an incomes policy would be a disaster.
I do not want to be unfair to the hon. Gentleman. He said that a permanent incomes and prices policy was a feature of Liberal Party policy. Does not the Liberal Party think that, if we have one part of that policy but not the other part, that is a dangerous combination?
The Liberals are introducing a new scale into this concept of opacity. I do not understand a great deal of what they stand for, and there are-times when I do not think they understand either.
The Minister of State argued in Committee that one of our problems was that pay policy had always been more effective than prices policy. He said that this was evidence that prices policy had not worked as well as pay policy and that the pay policies had always been forced more rigidly than prices policies. The truth is that there are many elements in prices that neither this nor any other Government could control, and it is inevitable that pay policy will always work better than prices policy if one judges prices policy on whether it is able to keep down prices as much as wages policy can keep down wages. However, the Government are not in control of many of the elements that produce increases in prices, and it is no argument for tightening price control to say that it has not worked as well as has wages control. It never can and never will, and any attempt to tighten price control will damage industrial confidence and cause more problems.
The hon. Member for Colne Valley made a typically engaging and muddled speech. He said that the Liberals wanted to see the powers in the Bill merged with the Monopolies and Mergers Commission and that his party would support the Bill. That is because the hon. Gentleman thinks that this would be a step in the policy that his party will produce. Therefore, the Bill must not have a date fixed to it as is sought by the amendment. The Bill must not have a year to run, plus, possibly, two more years if Parliament approves. We see the amendment as in no way preventing the Liberal Party from achieving its objectives. There is no possibility of producing the body that the hon. Gentleman wants without further legislation. If we have this legislation continuing automatically with no time limit upon it, it postpones the date when we can obtain the instrument that the hon. Gentleman wants. This legislation in no way brings it forward.
If this policy had to be reviewed next year, the Liberals could argue with the Government for the creation of a new body. However, the Government do not need their approval. The Government can continue with the present arrangements and the Liberals, by not supporting us, will be postponing the objective that they seek.
The facts are contrary to the scenario that the hon. Gentleman is imagining. If he thinks for one moment that the Liberals will wait for one year before continuing persistently to urge on the Government the necessary alterations to the Fair Trading Act 1973 he is entirely mistaken. The pressure will be continuous.
The hon. Gentleman seems to be making the mistake that is consistently made by the Liberal Party. He thinks that if he and his colleagues influence future policy they will influence the past. Once the Bill is on the statute book, what the Liberals think or do not think is of little consequence. The situation is precisely the same in a whole range of other areas. The Community Land Act is still functioning and land is being nationalised. The aircraft and shipbuilding industries are being nationalised. That is taking place by administrative action and the Government do not need Liberal approval.
If Parliament puts a time limit on this legislation and if the Government have to come back in a year's time to prove the case, the Liberals will have a chance of
|Division No. 157]||AYES||[8.26 p.m.|
|Adley, Robert||Bain, Mrs Margaret||Biggs-Davison, John|
|Aitken, Jonathan||Baker, Kenneth||Blaker, Peter|
|Alison, Michael||Bell, Ronald||Body, Richard|
|Amery, Rt Hon Julian||Bennett, Dr Reginald (Fareham)||Boscawen, Hon Robert|
|Arnold, Tom||Benyon, W.||Bottomley, Peter|
|Atkins, Rt Hon H. (Spelthorne)||Berry, Hon Anthony||Bowden, A. (Brighton, Kemptown)|
|Awdry, Daniel||Biffen, John||Boyson, Dr Rhodes (Brent)|
making the progress that they seek. In supporting the amendment, they would in no way be undermining their prospects. If they support us, they will be ensuring that there is an opportunity for the Government to recognise their arguments and to produce a new instrument. If they do not support us, they will be denying themselves the opportunity that they so obviously want.
The new Price Commission will consist of a group of people of whom the House and the British public have no knowledge. We have never seen these people in action in their new guise. We do not know how they will use the powers that the Bill will give them. We know that the Bill and the criteria are extremely vague and that the way they are interpreted will be of the greatest importance. We know that the safeguards that will be built into the Bill are widely regarded by industry as totally inadequate. All those features point to the fact that Parliament must have a chance within a year to assess the performance of the new commission, to assess the way in which the legislation is operating and to consider whether industry or the Minister is right about how the safeguards will affect British industry.
We are arguing that the House should have a chance a year from now to review the working of this brand-new instrument and the activities of a group of people none of whom has ever remotely tried to operate anything like the Price Commission. We believe that our arguments are overwhelming. We are bitterly disappointed that the Liberals, because they are so totally in the pockets of the Government, are not prepared to support us in giving Parliament a chance in a year's time to review the workings of this new body. I urge my right hon. and hon. Friends to vote resoundingly in favour of the amendment.
|Braine, Sir Bernard||Heseltine, Michael||Raison, Timothy|
|Brittan, Leon||Hicks, Robert||Rathbone, Tim|
|Brocklebank-Fowler, C.||Higgins, Terence L.||Rawlinson, Rt Hon Sir Peter|
|Brooke, Peter||Hodgson, Robin||Rees, Peter (Dover & Deal)|
|Brotherton, Michael||Holland, Philip||Rees-Davies, W. R.|
|Bryan, Sir Paul||Hordern, Peter||Renton, Rt Hon Sir D. (Hunts)|
|Buchanan-Smith, Alick||Howe, Rt Hon Sir Geoffrey||Renton, Tim (Mid-Sussex)|
|Buck, Antony||Howell, David (Guildford)||Rhodes James, R.|
|Budgen, Nick||Hunt, John (Bromley)||Rhys Williams, Sir Brandon|
|Bulmer, Esmond||Hurd, Douglas||Ridley, Hon Nicholas|
|Burden, F. A.||Hutchison, Michael Clark||Ridsdale, Julian|
|Butler, Adam (Bosworth)||Irving, Charles (Cheltenham)||Rifkind, Malcolm|
|Carlisle, Mark||James, David||Rippon, Rt Hon Geoffrey|
|Churchill, W. S.||Johnson Smith, G. (E Grinstead)||Roberts, Michael (Cardiff NW)|
|Clark, Alan (Plymouth, Sutton)||Jones, Arthur (Daventry)||Roberts, Wyn (Conway)|
|Clark, William (Croydon S)||Joseph, Rt Hon Sir Keith||Ross, William (Londonderry)|
|Clarke, Kenneth (Rushcliffe)||Kaberry, Sir Donald||Rossi, Hugh (Hornsey)|
|Clegg, Walter||Kers'haw, Anthony||Rost, Peter (SE Derbyshire)|
|Cockcroft, John||Kimball, Marcus||Sainsbury, Tim|
|Cooke, Robert (Bristol W)||King, Evelyn (South Dorset)||St. John-Stevas, Norman|
|Cope, John||Kitson, Sir Timothy||Scott, Nicholas|
|Cormack, Patrick||Knox, David||Shaw, Giles (Pudsey)|
|Costain, A. P.||Lamont, Norman||Shelton, William (Streatham)|
|Crawford, Douglas||Latham, Michael (Melton)||Shepherd, Colin|
|Crouch, David||Lawrence, Ivan||Shersby, Michael|
|Crowder, F. P.||Lawson, Nigel||Silvester, Fred|
|Davies, Rt Hon J. (Knutsford)||Lewis, Kenneth (Rutland)||Sims, Roger|
|Dean, Paul (N Somerset)||Lloyd, Ian||Sinclair, Sir George|
|Dodsworth, Geoffrey||Loverldge, John||Skeet, T. H. H.|
|Douglas-Hamilton, Lord James||Luce, Richard||Smith, Dudley (Warwick)|
|Drayson, Burnaby||MacCormick, lain||Smith, Timothy John (Ashfield)|
|du Cann, Rt Hon Edward||McCrindle, Robert||Speed, Keith|
|Dunlop, John||McCusker, H||Spence, John|
|Durant, Tony||Macfarlane, Neil||Spicer, Michael (S Worcester)|
|Dykes, Hugh||MacGregor, John||Sproat, lain|
|Eden, Rt Hon Sir John||MacKay, Andrew James||Stamton, Keith|
|Edwards, Nicholas (Pembroke)||Macmillan, Rt Hon M. (Farnham)||Stanbrook, Ivor|
|Elliott, Sir William||McNair-Wilson, M. (Newbury)||Stanly, John|
|Emery, Peter||McNair-Wilson, P. (New Forest)||Stewart Rt Hon Donald|
|Evans, Gwynfor (Carmarthen)||Madel, David||Stewart, lan (Hitchin)|
|Eyre, Reginald||Marshall, Michael (Arundel)||Stokes, John|
|Fairgrieve, Russell||Mates, Michael||Stradling Thomas, J.|
|Fell, Anthony||Maude, Angus||Tapsell, Peter|
|Finsberg, Geoffrey||Mawby, Ray||Taylor, R (Croydor, NW)|
|Fisher, Sir Nigel||Maxwell-Hyslop, Robin||Taylor, Teddy (Cathcart)|
|Fletcher, Alex (Edinburgh N)||Maywell, Patrick||Tebbit, Norman|
|Fookes, Miss Janet||Meyer, Sir Anthony||Temple-Morris, Peter|
|Forman, Nigel||Miller, Hal (Bromsgrove)||Thatcher, Rt Hon Margaret|
|Fowler, Norman (Sutton C'f'd)||Mills, Peter||Thomas, Rt Hon P. (Hendon S)|
|Fox, Marcus||Mitchell, David (Basingstoke)||Townsend cyril D|
|Fraser, Rt Hon H. (Stafford & St)||Moate, Roger||Trotter Neville|
|Galbraith, Hon T. G. D.||Molyneaux, James||van Straubenzee, W R|
|Gardiner, George (Relgate)||Monro, Hector||Vauglian Dr Gerard|
|Gardiner, Edward (S Fylde)||Montgomery, Fergus||Viggers Peter|
|Gilmour, Rt Hon Sir Ian (Chesham)||Moore, John (Croydon C)||Wakeham John|
|Glyn, Dr Alan||Morgan-Giles, Rear-Admiral||Walder, David (Clitheroe)|
|Godber, Rt Hon Joseph||Morrison, Charles (Devizes)||Walker, Rt Hon P. (Worcester)|
|Goodhart, Philip||Morrison, Hon Peter (Chester)||Walters Dennis|
|Goodlad, Alastair||Mudd, David||Watt, Hamish|
|Gorst, John||Neave, Airey||Weatherill, Bernard|
|Gow, Ian (Eastbourne)||Nelson, Anthony||Wells, John|
|Gower, Sir Raymond (Barry)||Neubert, Michael||Welsh, Andrew|
|Gray, Hamish||Newton, Tony||Wiggin, Jerry|
|Griffiths, Eldon||Onslow, Cranley||Wigley Dafydd|
|Grist, Ian||Oppenhelm, Mrs Sally||Wilson, Gordon (Dundee E)|
|Grylls, Michael||Page, Richard (Workington)||Winterton Nicholas|
|Hall-Davis, A. G. F.||Paisley, Rev Ian||Wood, Rt Hon Richard|
|Hamilton, Michael (Salisbury)||Parkinson, Cecil||Young, Sir G. (Eating, Acton)|
|Hampson, Dr Keith||Pattie, Geoffrey||Younger, Hon George|
|Hannam, John||Powell, Rt Hon J. Enoch|
|Harrison, Col Sir Harwood (Eye)||Price, David (Eastleigh)||TELLERS FOR THE AYES:|
|Hastings, Stephen||Prior, Rt Hon James||Mr. Spencer Le Marchant and|
|Havers, Rt Hon Sir Michael||Pym, Rt Hon Francis||Mr. Carol Mather.|
|Abse, Leo||Atkinson, Norman||Bidwell, Sydney|
|Allaun, Frank||Barnett, Guy (Greenwich)||Bishop, Rt Hon Edward|
|Anderson, Donald||Barnett, Rt Hon Joel (Heywood)||Blenkinsop, Arthur|
|Archer, Rt Hon Peter||Bates, Alf||Boardman, H.|
|Armstrong, Ernest||Bean, R. E.||Booth, Rt Hon Albert|
|Ashley, Jack||Beith, A. J.||Boolhroyd, Miss Betty|
|Ashton, Joe||Benn, Rt Hon Anthony Wedgwood||Boyden, James (Bish Auck)|
|Atkins, Ronald (Preston N)||Bennett, Andrew (Stockport N)||Bradley, Tom|
|Bray, Dr Jeremy||Heffer, Eric S.||Pavitt, Laurie|
|Brown, Hugh D. (Provan)||Hooley, Frank||Pendry, Tom|
|Brown, Robert C. (Newcastle W)||Horam, John||Penhaligon, David|
|Buchan, Norman||Howell, Rt Hon D. (B'ham, Sm H)||Perry, Ernest|
|Callaghan, Rt Hon J. (Cardiff SE)||Howells, Geraint (Cardigan)||Price, William (Rugby)|
|Callaghan, Jim (Middleton & P)||Hoyle, Doug (Nelson)||Radice, Giles|
|Campbell, Ian||Huckfield, Les||Rees, Rt Hon Merlyn (Leeds S)|
|Canavan, Dennis||Hughes, Rt Hon C. (Anglesey)||Richardson, Miss Jo|
|Cant, R. B.||Hughes, Robert (Aberdeen N)||Roberts, Gwilym (Cannock)|
|Carmichael, Nell||Hughes, Roy (Newport)||Robertson, John (Paisley)|
|Carson, John||Hunter, Adam||Robinson, Geoffrey|
|Carter, Ray||Irving, Rt Hon S. (Dartford)||Roderick, Caerwyn|
|Carter-Jones, Lewis||Jackson, Colin (Brighouse)||Rodgers, George (Chorley)|
|Cartwright, John||Jackson, Miss Margaret (Lincoln)||Rodgers, Rt Hon William (Stockton)|
|Castle, Rt Hon Barbara||Janner, Greville||Rooker, J. W.|
|Clemitson, Ivor||Jeger, Mrs Lena||Rose, Paul B.|
|Cocks, Rt Hon Michael||Jenkins, Hugh (Putney)||Ross, Stephen (Isle of Wight)|
|Cohen, Stanley||John, Brynmor||Ross, Rt Hon W. (Kilmarnock)|
|Coleman, Donald||Johnson, James (Hull West)||Rowlands, Ted|
|Colquhoun, Ms Maureen||Johnson, Walter (Derby S)||Ryman, John|
|Concannon, J. D.||Johnston, Russell (Inverness)||Sedgemore, Brian|
|Conlan, Bernard||Jones, Alec (Rhondda)||Selby, Harry|
|Corbett, Robin||Jones, Barry (East Flint)||Shaw, Arnold (llford South)|
|Cowans, Harry||Jones, Dan (Burnley)||Sheldon, Rt Hon Robert|
|Cox, Thomas (Tooting)||Kaufman, Gerald||Short, Mrs Renée (Woly NE)|
|Cronin, John||Kelley, Richard||Silkin, Rt Hon S. C. (Dulwich)|
|Crowther, Stan (Rotherham)||Kerr, Russell||Sillars, James|
|Cryer, Bob||Kilroy-Silk, Robert||Silverman, Julius|
|Cunningham, G. (Islington S)||Kinnock, Nell||Skinner, Dennis|
|Cunningham, Dr J. (Whiten)||Lambie, David||Small, William|
|Davidson, Arthur||Lamborn, Harry||Smith, Cyril (Rochdale)|
|Davies, Bryan (Enfield N)||Lamond, James||Smith, John (N Lanarkshire)|
|Davies, Denzil (Llanelli)||Latham, Arthur (Paddlngton)||Snape, Peter|
|Davies, Ifor (Gower)||Leadbitter, Ted||Spearing, Nigel|
|Dean, Joseph (Leeds West)||Lee, John||Stallard, A. W.|
|Dell, Rt Hon Edmund||Lestor, Miss Joan (Eton & slough)||Steel, Rt Hon David|
|Dempsey, James||Lever, Rt Hon Harold||Stewart, Rt Hon M. (Fulham)|
|Doig, Peter||Lipton, Marcus||Stoddart, David|
|Dormand, J. D.||Lomas, Kenneth||Stott, Roger|
|Douglas-Mann, Bruce||Loyden Eddie||Strauss, Rt Hon G. R.|
|Duffy, A. E. P.||Lyon, Alexander (York)||Summerskill, Hon Dr Shirley|
|Dunnett, Jack||Lyons, Edward (Bradford W)||Swain, Thomas|
|Eadie, Alex||McCartney, Hugh||Taylor, Mrs Ann (Bolton W)|
|Edge, Geoff||McDonald, Dr Oonagh||Thomas, Jeffrey (Abertillery)|
|Ellis, John (Brigg & Scun)||McElhone Frank||Thomas, Mike (Newcastle E)|
|English, Michael||MacFarquhar, Roderick||Thomas, Ron (Brisol NW)|
|Ennals, David||Mackenzie Rt Hon Gregor||Thorne, Stan (Preston South)|
|Evans, Fred (Caerphilly)||MACKINTOSH, JOHN P.||Tierney, Sydney|
|Evans, loan (Aberdare)||Maclennan, Robert||Tinn, James|
|Ewing, Harry (Stirling)||McMilIan Tom (clasaow C)||Torney, Tom|
|Fernyhough, Rt Hon E.||Madden, Max||Tuck, Raphael|
|Fitch, Alan (Wigan)||Maqee, Bryan||Varley, Rt Hon Eric G.|
|Flannery, Martin||Mallalieu, J. P. W.||Walnwright, Edwin (Dearne V)|
|Fletcher, Ted (Darlington)||Wainwright, Richard (Coine V)|
|Foot, Rt Hon Michael||Marks, Kenneth||Walker, Harold (Doncaster)|
|Forrester, John||MarshalI, Dr Edmund (Goole)||Walker, Terry (Kingswood)|
|Fowler, Gerald (The Wrekln)||Marshall, Jim (Leicester S)||Ward, Michael|
|Fraser, John (Lambeth, N'w'd)||Maynard, Miss Joan||Watkins, David|
|Freeson, Reginald||Meacher, Michael||Weetch Ken|
|Freud, Clement||Mellish, Rt Hon Robert||Weitzman, David|
|Garrett, John (Norwich S)||Mendelson, John||Welibeloved, James|
|Garrett, W. E. (Wallsend)||Mikardo, Ian||White, James (Pollok)|
|George, Bruce||Millan, Rt Hon Bruce||Whitlock, William|
|Gilbert, Dr John||Miller, Mrs Millie (llford N)||Willey, Rt Hon Frederick|
|Ginsburg, David||Mitchell, Austin Vernon (Grimsby)||Williams, Rt Hon Alan (Swansea W)|
|Golding, John||Moonman, Eric||Williams, Alan Lee (Hornch'ch)|
|Gould, Bryan||Morris, Charles R. (Openshaw)||Williams, Rt Hon Shirley (Hertford)|
|Gourlay, Harry||Moyle, Roland||Williams, Sir Thomas (Warrlngton)|
|Graham, Ted||Mulley, Rt Hon Frederick||Wilson, Alexander (Hamilton)|
|Grant, George (Morpeth)||Murray, Rt Hon Ronald King||Wilson, Rt Hon Sir Harold (Huyton)|
|Grant, John (Islington C)||Newens, Stanley||Wise, Mrs Audrey|
|Grimond, Rt Hon J.||Noble, Mike||Woodall, Alec|
|Grocott, Bruce||O'Halloran, Michael||Woof, Robert|
|Hamilton, James (Bothwell)||Orbach, Maurice||Wrigglesworth, Ian|
|Harrison, Rt Hon Walter||Orme, Rt Hon Stanley||Young, David (Bolton E)|
|Hart, Rt Hon Judith||Ovenden, John|
|Hattersley, Rt Hon Roy||Padley, Walter||TELLERS FOR THE NOES:|
|Hatton, Frank||Palmer, Arthur||Mr. Joseph Harper and|
|Hayman, Mrs Helene||Pardoe, John||Mr. Frank R. White.|
|Healey, Rt Hon Denis||Park, George|
I beg to move Amendment No. 2, page 1, leave out lines 12 to 20 and insert—
'(2) The members of the Price Commission shall continue to be appointed as defined by section 1(2) of the Counter-Inflation Act, with the addition of a representative appointed by the Secretary of State for Scotland.'
In moving this amendment the Scottish National Party has two end views in mind. First, it aims to prevent the exclusion of the Minister of Agriculture, Fisheries and Food from the appointment of members to the Price Commission. Secondly, it wishes to ensure a Scottish voice on the Price Commission.
In terms of the Minister of Agriculture, Fisheries and Food and his exclusion from these appointments, great concern has been expressed by representatives of food manufacturers, by the all-party Retail Group and by various consumer organisations throughout the length and breadth of the United Kingdom. It is our contention that it is important that the Minister of Agriculture, Fisheries and Food should have a role in these appointments, because he has a great deal of responsibility not only for food producers but for consumers. We do not accept that there is conflict between the housewife and the producer. But we are worried about the destruction of the link between the consumer and the producer which is implied in the clause.
As a member of the Standing Committee, I am aware that the Minister of State said that there would be a process of consultation between the two Departments, but that was only a vague promise. He gave no indication at any time of the way in which this mechanism would operate. We are trying to ensure that there will be such a mechanism of consultation, because we must guarantee that there is contact and real co-operation between the two Departments. This is increasingly important as we move into the international situation, bearing in mind the provisions of the Common Market and the common agricultural policy and its effect on prices in the United Kingdom.
We need look no further than at what is happening in the pig industry. In my own constituency of East Dunbartonshire, where I have only 25 farms, the local NFU has been particularly vociferous in pointing to the problems that they are confronted with in terms of the pig industry subsidy. What we are faced with is the ultimate shortage of home produce, and this is to the disadvantage not only the farmers concerned but of the consumer. We are faced with a great disaster in this industry.
In trying to ensure that the Minister of Agriculture, Fisheries and Food is represented in the making of the appointments, we recognise that it is much more sensible to be forewarned than to be forearmed and to have the considered opinion of those people in terms of the decisions which are taken which will affect the consumer. We consider that the amendment which we have tabled is the best way of achieving that.
There is no doubt that the Minister who will be replying to the debate will say, as was said during the Standing Committee, that the Government do not want to have as members of the Price Commission delegates of particular interested groups. What we are saying is that the people who would be appointed in this context would be people who would bring a great deal of knowledge, experience and understanding to the situation. This is vital both to the producer and to the consumer.
On the second part of the amendment, it will come as no surprise to the House that the SNP is asking for a particular Scottish representative to be appointed to the Price Commission. What may be surprising to the House is that we are at least giving the Scottish Office some credit for having the ability to make a sensible appointment. It could be that we give it extra powers before we abolish that office, because with independence there will be no need to have a Secretary of State for Scotland. We recognise, however, that the Scottish Office is the best way of ensuring that a particular Scottish viewpoint is heard in the Price Commission. We would therefore give it this right of appointment.
It is important to have a particularly Scottish representation on the Price Commission because different laws affect the consumer in Scotland. There is a different legal system in Scotland compared with that pertaining south of the border. We wish to ensure that those laws are taken into consideration when any legislation is enacted.
Different problems in Scotland affect prices—for example, the question of transportation and supplying sparsely populated areas with various consumer goods. I shall deal with those matters more fully on Amendments Nos. 10 and 12 when we reach them.
We believe that specific Scottish problems in agriculture must be taken into consideration. Three-quarters of our agriculture industry is concerned with livestock and livestock products. We need to ensure that producers have reasonable prices for home-produced goods.
We therefore recommend this amendment with a view to ensuring that both producers and consumers alike are protected and that the people of Scotland have the representation they so richly deserve.
I rise to support the amendment moved by the hon. Member for Dunbartonshire, East (Mrs. Bain). As she emphasised, Clause 1(2) omits the Ministry of Agriculture, Fisheries and Food from the appointment to the Price Commission and virtually gives the entire process to the Secretary of State. Some of us who have rather strong views about the present Minister of Agriculture, Fisheries and Food will understand why the Secretary of State had this change in mind.
Those of us who are interested in the maintenance of the principle involved here support the point made by the hon. Lady about the Secretary of State for Scotland. Behind my support for the amendment lies my concern, which I tried to express in Committee, about the considerable powers given to the Secretary of State for the appointment not only of the Commissioners, but of the Commission's staff. Subsection 3(b) emphasises that the appointment of the officers and servants of the Commission shall be done
with the consent of the Secretary of State".
Previously, it was done only after consultation.
In Committee, we received assurances that the Secretary of State would behave in an honourable and sensible manner and that only people of the highest worth and value, coming from a broad spectrum of the nation, would be appointed. We see no reason why, if those assurances are so important, they cannot be written into the Bill.
We do not understand the real significance of subsection (2). We are worried about it in the context not only of the omission of the Minister of Agriculture, Fisheries and Food, but of the fact that the officers and servants of the Commission shall be appointed
with the consent of the Secretary of State".
That seems an ominous development. It gravely reflects the sources of information and advice about the appointment of the Commissioners and their staff. I support the amendment.
I intervene briefly. I believe that it is a mistake to omit reference to the Minister of Agriculture, Fisheries and Food from this clause. This goes against various other trends concerning consultation and participation between consumer and producer groups, which is steadily being increased.
Indeed, the National Farmers Union has already learned this lesson. It is encouraging participation with consumer groups as an ongoing dialogue. Therefore, given that consumers and producers have a common long-term interest in home production, it is important to ensure that the Price Commission contains the voices of producers, processors and retailers as well as straightforward consumers who will obviously be in the majority.
I believe that producers and consumers have a common interest in encouraging the promotion of the maximum use of home production at reasonable prices. The alternative will be heavy and costly imports from Common Market countries to make up the backlog which, sadly, is already appearing in various commodities in the United Kingdom. Sometimes one side or the other may lose sight of this proposition. It is therefore important to have a means of ensuring that the work of the Commission is not too lopsided.
As a member of the Scottish National Party I would be in favour of giving more powers to the Secretary of State for Scotland within the United Kingdom, before finally abolishing him altogether, within a self-governing Scotland. But I hope that he would use those increased powers wisely.
A Scottish representative would ensure that our particular circumstances were taken into account—for example, the remoteness and sparcity of population, which in some areas affects living costs and prices to the detriment of local people. Most of all, I hope that a Scottish Secretary of State would ensure that producers, processors and retailers would be injected into the Commission to balance its approach and work.
As my hon. Friend the Member for Dunbartonshire, East (Mrs. Bain) said, the present pig crisis is a good example of the way in which lack of United Kingdom Government action in combination with the Common Market will produce a shortage of pig products in eight or nine months' time. A heavy price will be paid by both housewives and producers for this lack of foresight. I hope that the NFU and producer representatives will ensure that the voice of both producer and housewife is heard in the Commission. I support my hon. Friend, and I hope that the powers will be used wisely.
I intervene briefly on behalf of the food industry with which I am associated and in respect of which I declare an interest. The Under-Secretary of State knows the importance that the food industry attaches to the Ministry of Agriculture, Fisheries and Food. In Standing Committee we were saddened because we were unable to persuade the Government to accept the importance of maintaining joint sponsorship between the two Departments. We were even more saddened when we considered the powers of investigation that the Commission will have.
It is doubly necessary that the Commission should be appointed by Ministers acting jointly and that actions should be taken which Ministers, acting jointly, believe to be sensible. The enormous influence that food prices have, not only on indices but on the electorate, makes them a target for investigation. The Minister has said that about 40 investigations will involve food and related products. That is understandable, because they are of great concern to everyone.
It follows that the Commission should have a close link with the Ministry of Agriculture, Fisheries and Food. The reason for that is simple. The sponsoring Minister in this case is responsible not only for all the primary products that go into food processing but for the activities of that industry in dealing with imported food stuffs. It follows that the administration of the Commission should not run counter to the policy laid down by the Ministry of Agriculture, Fisheries and Food, which has been worked out in consultation with that industry.
I ask the Under-Secretary of State to acknowledge that the other side of the sponsoring Ministry is vitally important, particularly to the food industry. It could be argued that the Department of Industry also has an important role to play.
We call for an assurance from the Government that the doubts expressed about the second Department retiring from the field will not lead us into a situation in which only the Department of Prices and Consumer Protection will be involved in the machinations of the Commission and the appointment of members in consultation with those sectors to be investigated.
I accept that there have been some criticisms of the relationship between the two Departments. It has been suggested by a number of people in industry that there are too many persons involved, particularly in the food industry, from each Department. However, I think that we have reached the point at which both Departments are working in a degree of harmony, the one with the other, and that joint sponsorship has been found to be effective in terms of the existing Price Commission and legislation. We wish to see that harmony preserved, and to that extent it is important that the amendment is carried. That is why we shall support it.
The amendment moved by the hon. Member for Dunbartonshire, East (Mrs. Bain) seeks to achieve two purposes—first, to add to the number of Ministers who are responsible for appointments to the Commision the Minister of Agriculture, Fisheries and Food, and, secondly, to add the Secretary of State for Scotland.
The argument was canvassed extensively in Committee. My hon. Friend the Minister of State explained that since the Counter-Inflation Act 1973, which established the joint responsibility of the Minister of Agriculture and the then Secretary of State for Trade and Industry, there have been a number of Government changes, and particularly that the responsibility for the whole field of price control and the Price Commission has passed to my right hon. Friend. In those circumstances it seems inappropriate to seek to extend the number of Ministers directly responsible for appointments to the Commission.
This does not betoken, as was implied by a number of those who have spoken in the debate, any view that there need be a necessary conflict of interest between producers and consumers. Were that so, of course the logic of the arguments of the hon. Member for Pudsey (Mr. Shaw) might compel one to consult, or, indeed, to spread the responsibility for appointments very much more widely than to the Minister of Agriculture alone. However, we do not take the view that there is any necessary conflict here, and in these debates my right hon. Friend has sought to give reassurance. I believe that the whole Bill is testimony to his purpose that the interests of producers will be fully borne in mind in making these appointments. I should have thought that the appointments already announced would have done much to back up my right hon. Friend's assertions as concrete evidence of his intentions.
Perhaps I may say in passing that one is glad now to have Scottish National Party Members participating at all in the debates on the Bill. They were notably absent on Second Reading, and in Committee they voted for an Opposition amendment alleging that the Bill was not in the interests of the consumer.
No, I am in the middle of a sentence and I am addressing my remarks to the hon. Member for Dunbartonshire, East for her particular interest. I share the hon. Lady's view- and I share it as a Scot-that it is important that considerations affecting Scotland should be given full weight by the Price Commission where there are peculiarly Scottish considerations. Naturally, the Price Commission will seek to bring this about.
But the Secretary of State for Prices and Consumer Protection has responsibility throughout the United Kingdom, and I do not see any need to proliferate responsibilities for appointments of that kind. There are other parts of the United Kingdom which have special problems and for which special consideration will no doubt have to be given.
Perhaps it would be convenient to indicate that it is our intention to seek to ensure that regional interests are adequately represented in making these appointments. Indeed, partly with that purpose in mind, but also because of our recognition of the important judgments that will have to be made by Commissioners themselves, it is our intention to enlarge the maximum number of members of the Commission from that which prevails at present.
I do not equate any region with any other. I said that a number of different regions had special problems.
The hon. Member for Dunbartonshire, East (Mrs. Bain) has defined the amendment as having two purposes, and I speak in support of both propositions implicit in the amendment. The first is that Scotland should specifically have a voice in the Commission and that the Secretary of State for Scotland should be party to that appointment. The second is that the traditional relationship with the Ministry of Agriculture, Fisheries and Food should be maintained as it has been for the past three years or so under the present Commission.
Hon. Members who were on the Committee were in the position of having to argue a case very much in the absence of knowledge of the precise appointments to the Commission. Although the Commission is an institution and will be of more importance than any individual member of it—or, indeed, a collective contemporaneous number of members of it—none the less it helps us to understand the likely activity and motivation of the Commission to know the members of it.
We have as recently as yesterday afternoon had disclosed to us who the chairman and three deputy-chairmen are to be. Although they sound, on the face of it, very eminent men, it may be that closer familiarity with their qualifications and background may raise doubts. But certainly on the face of it they have a very considerable experience which one hopes will be of benefit to the Commission and to the country at large. We know in any case that, in the words of the Secretary of State on Second Reading, they will have
a positive commitment to the belief of selective Government intervention within the economy."—[Official Report, 27th April 1977; Vol. 930, c. 1258.]
Presumably they will believe in the benefit of selective Government intervention within the economy, but more than that we cannot know.
We are further told that the programme of the Commission will consist in an average year of 40 specific investigations and 10 sector investigations. The Commission will therefore have considerable discretion in undertaking investigations, so that the nature of the Commission is very important indeed.
I would not be one to argue that we could possibly hope to have a fully representative regional membership of the Commission. Although the Under-Secretary of State has indicated that he will take this into account, it is very unlikely to prove possible to have a geographical distribution of interests represented on the Commission. I accept, however, the point made by the Member for Dunbartonshire, East that Scotland, being so remote and so sparsely populated, has particular problems which ought to find an echo in the deliberations of the Commission.
The hon. Lady has put down other amendments drawing attention to the imbalance in employment opportunities and in the differential pricing which occurs as a result of distances between towns and villages in her part of the United Kingdom. I can and do, there- fore, support the proposition that Scotland should be represented on the Commission. Indeed, despite the discourteous remarks made about participation of Scottish nationalists in the debate on the Bill, I for one can say that we benefited by having a representative from the Scottish nationalists on the Committee, and I see no reason why the Price Commission should be denied equal benefits of Scottish participation.
To turn to the question of the relationship of the Ministry of Agriculture, Fisheries and Food in the arrangements made for the Price Commission to be active, I refer to the case made by the Minister in Committee, when he once again rested his argument on the fact that the only reason for that relationship's existence was that it was part of the Counter-Inflation Act of 1973 when there was no Department of Prices and Consumer Protection. The Minister of State seems to rest his case rather a great deal on that historic fact. During the debate on the first amendment he indicated the permanence given to the Price Commission by that Act. If one assumes that everything in that Act is to continue, one first forgets the possibility of repeal and, secondly, one assumes that this form of inflation will always be with us. The Conservative Opposition do not accept that, and we would not like to see any action, however small and relatively insignificant, that gives credence to that belief.
As my hon. Friend the Member for Pudsey (Mr. Shaw) has indicated, food is likely to be crucial to the whole question of selective Government intervention in pricing. The fact that this was open to arbitrary judgment, not just in the decisions reached but in the choice of investigations to make, causes us to be apprehensive about the working of this new body corporate. It is because the Government must be understood to be active in the public eye in seeking to reduce prices, or, at least, to contain price increases, that Opposition Members suspect that a number of references are likely to be in the food sector.
This is of most critical importance to everyone, particularly to those who find it hard to make ends meet, when inflation is so rapid and ravaging. Despite what the Under-Secretary said, there is a distinct possibility of conflict between the producer and the consumer concerning food. It means that the Minister of Agriculture has to represent the long-term needs of the producer, who must have a sustainable working margin with which to ensure the food of the future.
In discussions recently the National Consumer Council recognised that, however much it might like to get together with the farmers in coming to a common policy on the Common Market, it is virtually impossible because the two appear to be diametrically opposed, although the consumer and the producer have a real common interest. But it is the nature of food production and the nature of consumption that are difficult to reconcile in public opinion.
With my hon. Friend the Member for Pudsey, I can see a continuing value in the Minister of Agriculture being associated wtih the appointment of the members of the Prime Commission and in the general consultation processes that will be behind its work. There is no doubt at all, from past references that have been made, that the Secretary of State feels acutely sensitive on such subjects as the increase in potato prices, the staggering rise in the cost of coffee and tea, and brewers' prices. Only this evening reference was made to the fact that the brewers are at present very much in the public eye. The Minister of Agriculture can have a constructive, helpful, advisory role to play. To exclude him from these deliberations is to do so on the flimsiest of grounds and merely for administrative convenience.
Grounds other than those have been cited for thinking that the Minister of Agriculture should continue to play a role in this activity. I should like to see him doing so, and I therefore give my support to the amendment.
I was amazed by the comment made by the Minister in response to this debate. It seems that he did not take cognisance of the arguments in favour of the amendment. The amendment seeks to appoint to the Price Commission a representative who shall be appointed by the Secretary of State for Scotland. I cannot see any reason why the Minister has failed to
We understand that the Prime Minister recently addressed members of the Labour accept that proposition.
Party and told them that devolution was one of the important parts of the Government's programme, yet here we have a situation in which the Minister obviously is trying to perpetuate a form of administrative centralism.
The Labour Government have spoken in favour of devolution and a form of Scottish Assembly in order to make sure that certain powers are sent back to the Scottish people to look after, yet the Bill contains the proposal that the Price Commission should not necessarily have any representative whatsoever from Scotland. That attitude is not acceptable, and it is high time the Minister reviewed his attitude.
The hon. Member's strictures on me and my attitude would carry much greater weight if he had been present when I made my remarks.
Having heard about the remarks of the Minister I am glad that I was not here, because they were not worth listening to. He did not address himself to the proposition in the amendment. I am sure that my hon. Friend the Member for Dunbartonshire, East (Mrs. Bain) will return to that point.
In Scotland the Secretary of State at present has responsibility for agriculture and fisheries. He also has a lot of political responsibility, if not administrative responsibility, for people's complaints about increased prices in Scotland. Apart from that, it is essential that there should be a representative from Scotland on the Commission. We live in a time of high inflation, and in my constituency people are complaining day in and day out about how little they can buy in the shops with their money. Prices are a main consideration. Therefore, they will not understand why no Scottish representative is likely to be appointed to the Price Commission.
The Minister may well say that it is quite likely that a representative on the Commission will take care of what he calls the peculiar interests of Scotland. I think that that is rather condescending language, and somewhat surprising coming from a Scottish Member. Anyway, I am not sure that this will occur. If there is a Scottish representative, who will choose him? Will it be a principal from the Minister's Department, or will it be the Minister for Agriculture in England? What we will not have is someone chosen by the Minister responsible in Scotland—the Secretary of State.
I cannot see why anyone on the Labour side who voted for devolution should now say that under no circumstances will a Scot be chosen from within Scotland to be the Scottish representative on the Price Commission. We shall need a much stronger argument from the Minister if we are to be persuaded that the House should not divide.
I would prefer to see a separate Scottish Price Commission, because many people in Scotland suffer from problems related to the cost of food. We have special problems of distribution, scarcity and transportation, and it is therefore desirable that we should have a Scottish Price Commission. At the very least we should have a representative appointed by the Secretary of State for Scotland. If the Minister wishes to hide in the Unionists' cubbyhole and pretend that Scotland does not exist he will find that his sojourn in Caithness and Sutherland will be very brief.
I did not have the pleasure of serving on the Standing Committee, and having heard the exchanges tonight I am glad that I did not. I get the impression from the Minister that he is one of the worst-tempered Under-Secretaries that I have heard speak from the Dispatch Box. If that bad temper had been displayed in Committee, the Committee would not have made good progress. The only possible explanation for the reasonable progress in Committee probably lay in the fact that the Minister was not on it. I am not sure about that, but if he had acted in Committee as he has in the House the proceedings would have been very slow indeed.
I am always quick to point out to SNP representatives when they are talking a lot of nonsense and acting against Scottish interests. Indeed, only this morning I made this clear when the SNP voted for an extension of the powers of Scottish direct labour departments. Furthermore, in Glasgow only a few days ago SNP representatives joined with wild Left-wingers to give a major contracting job to a direct labour department, even though a private firm had quoted a lower price. I do not always agree with the SNP in principle, but on this occasion the SNP has advanced a strong case.
The hon. Gentleman says that it is the kiss of death, but he should know that I do not adopt obsessively points put forward by the SNP. I believe that they should be considered on their merits. Certainly tonight they put forward a good case, to which the Minister gave an inadequate reply.
I understand that the hon. Member for Dunbartonshire East (Mrs. Bain) was an assiduous member of the Committee and made a considerable contribution to its deliberations. It was unfortunate that her amendment was dealt with by the Minister in such a flippant and unhelpful way.
The first part of the amendment is very important, and the Minister should have met the SNP case with some argument—indeed any old argument—to show why the Minister of Agriculture, Fisheries and Food should be excluded from involvement in the choice of members of the Commission. However, the Minister put forward no case in explanation of the situation. He simply said that the Department of Prices and Consumer Protection should handle the matter. The Minister must be aware that there is a strong body of opinion that feels that both Departments should be involved.
There appears to be a desire on the part of the Government—certainly some of their Ministers—to promote a positive hostility between consumers and producers. There have been several examples in ministerial speeches, and that concerns me. Some decisions by the EEC will be taken where the interests of producers and consumers do not appear to coincide, but the Minister must accept that it is to the benefit of the nation that the two sets of interests should work together as harmoniously as possible. It is not helped by actions and speeches by Ministers which appear to be designed to promote hostility between the two. Unless the Minister can produce a reasonable argument showing why the Minister of Agriculture should be excluded, he has no right to brush aside so lightly the arguments that have been advanced.
I wish to deal with the second part of the amendment, namely, the exclusion of the Secretary of State for Scotland from any decision in appointing members of the Commission. This is intended to be a permanent Bill, and it would be a major error permanently to exclude the Secretary of State for Scotland from such deliberations.
There are a number of arguments to be advanced on this part of the amendment. Scotland is special in several respects. The Minister has drawn attention to problems in the rural, peripheral and island areas of Scotland which are exactly the same as problems in other parts of the United Kingdom. I am sure that if representatives from Cornwall were present—I am sorry that they are not here because they are usually assiduous in their attendance—they would be able to point to some of the problems in Cornwall involving transportation costs, lack of competition and the small turnover of shops—problems similar to those experienced in some of the rural and island areas of Scotland.
To that extent some of the problems relate to the whole of the United Kingdom and to various parts of the country that have special problems. Of course, there are some regional problems that apply to parts of Scotland, England and Wales. There are regional problems that apply throughout the United Kingdom. On the other hand, I hope that the Minister will accept that there are a number of items on which there is a national dimension. There are a number of specific examples that I shall give to show that it would be helpful and important for the Commission to have a Scottish representative to take account of the arguments that are not necessarily related to regional issues or particular national problems.
I am glad to see here the Under-secretary of State for Scotland—the hon. Member for Glasgow, Queen's Park (Mr. McElhone)—because he is likely to remember the many occasions when I put to the Government of the day, as a member of an earlier Opposition, the argument about the price of gas. It always struck me that there should be a United Kingdom price for gas, since there was a British Gas Board and it was a nationalised industry. However, that was not the case. There have always been substantial regional variations, and there were times, just a few years ago, when gas prices in Scotland were as much as 14 per cent. above the average for England and Wales. That had nothing to do with regional affairs or remoteness.
I am sure that the hon. Member for Dundee, East (Mr. Wilson) will be pleased to note, on behalf of the Scottish National Party, that Scottish gas was on its own, and self-financing. That was why an economic price had to be charged that took into account the special costs of producing gas in Scotland. The difference has been greatly reduced by the introduction of North Sea gas.
One of the reasons for the high price of gas in Scotland was that the gas boards in England were receiving gas from the North Sea and it took a very long time to bring that gas north. We had to pay for distribution facilities, and the same facilities will be used for North Sea gas when it is brought southwards from the basin off the Scottish coastline.
The hon. Member for Dundee, East is wrong. The hon. Member for Hamilton (Mr. Wilson) could help us in this, because he knows more about the coal industry than almost anybody else in the House. The price of gas in Scotland was considerably higher long before there were any supplies of natural gas. When these supplies eventually came we had a major battle at about 3 a.m. and we were given an assurance that North Sea gas would be supplied at the same price throughout the United Kingdom. The fact that that is now happening shows that the differential has been reduced.
The reports of the British Gas Corporation show that one of the reasons why gas prices were higher was because of the price of Scottish coal. If there is one overwhelming argument against separation and the policies of the SNP it is the position of the Scottish coal industry. It would be put at risk if the United Kingdom broke up, and that would mean that the price of coal in Scotland would be substantially higher.
Such factors will have to be considered when decisions are made by the Price Commission. I hope that the Minister will accept that these arguments are fair and backed up by facts. If the Price Commission is to carry out its duty under Clause 2 in considering detailed points about whether prices should go up and taking into account all the criteria, how can it do that for prices affecting Scotland unless it has a full knowledge of the circumstances affecting prices there?
It is probably not common knowledge that the level of domestic rates in Scotland are considerably higher than south of the border. This could be an important factor—although the rate support grant covers a larger share of the total Government expenditure. Rates in Scotland are higher than south of the border on both a per capita and household basis. There are also differences in the price of electricity. The price of electricity in Scotland is lower than the average price in England and Wales.
There are many other similar factors that I could mention, where there are not just regional variations but regional problems resulting in higher prices with the consequence of national differences between Scotland and England. The Price Commission would have to bear those differences in mind in considering whether price rises were justified and whether regional variations could be justified.
In addition, the Minister, who represents a rather remote area of Scotland, will know of the cost of transport and shipping, particularly in some of the islands, such as Orkney and Shetland. I was in Shetland three weeks ago and discovered that the shipping costs for a ton of hay were greater than the cost of buying the hay and taking it to Shetland. This is an important factor, which could not be fully considered unless there were a Scottish representative on the Commission.
There is little doubt that a Scot will be appointed to the Commission. Not to appoint a Scot would be a great mistake, and the only point that we have to consider is who should make such an appointment.
The Under-Secretary of State for Scotland—the hon. Member for Glasgow, Queen's Park—should listen. He has been making some alarming statements in the House that have been wholly inaccurate. These comments concern him, and when I see him laughing and sniggering while we are debating a serious problem affecting Scotland and Scottish prices, the only thing that makes me doubt whether the Secretary of State for Scotland should appoint a Scottish representative on the Commission is that the hon. Member for Queen's Park might have some small part to play in the decision making. We accept that we are almost certain to have a Scot on the Commission, and in those circumstances the appointment should be made by the Secretary of State for Scotland rather than by the Secretary of State for Prices and Consumer Protection.
By the nature of his job the Secretary of State for Scotland has more knowledge, experience and contacts with Scottish industry, people and business than does any other Minister. It is probably not generally known among hon. Members south of the border that he does not handle just one or two functions, as do other Ministers, but is responsible for a wide range of activities, including health, police, the fire service, roads and education. He is therefore in a unique position to know about Scottish problems and to have direct contact with the Scottish people.
Why is the Minister being so difficult about the amendment? Is it because of the bogy of devolution? We know that the Government are going through immense wrangles and a great deal of internal disagreement in an effort to find a solution to the almost impossible problems of the powers of taxation and the right number of Westminster MPs to be provided for in a new devolution Bill. The Prime Minister was inviting Labour Members this morning to support the Bill even before they had seen it.
Why has the Minister turned down what appears to be a reasonable suggestion, when we know that he is bound to appoint a Scot to the Commission? Is there some empire-building going on in the Department of Prices and Consumer Protection? That is doubtful, because that Department is not amongst the greatest empire builders. Is it because in the next Session we shall have a Bill, the contents of which we do not know, which may affect these matters?
The Minister has an obligation to explain why he will not accept the amendment, which seems sensible and reasonable. Its only effect will be that the Scottish representative that we expect to be appointed to the Commission will be appointed by the Secretary of State for Scotland rather than by the Secretary of State for Prices and Consumer Protection.
We are disappointed with the Minister's attitude and his inadequate reply. If the hon. Lady who moved the amendment wishes to press the amendment to a vote she can be sure on this occasion—though not always—of the full and undivided support of my party.
It never ceases to amaze me that whenever a Member from my party addresses the House the immediate reaction from both the Government and the Opposition Benches is such that we find ourselves covering so wide a range of subjects that we feel that we have strayed totally out of order. The hon. Member for Glasgow, Cathcart (Mr. Taylor), in view of some of his remarks, should reread the article entitled "The Honest Truth" in the Sunday Post in 1968, when he stated that a Scottish Parliament would be a good thing. He should contrast that statement with the remarks he has addressed to the amendment.
I was appalled by the Minister's negative attitude to the amendment and the proposals contained within it. After all, we are asking for an extension of democracy. Although I am cynical about the concept of democracy that is adhered to by the Labour Party, I should have thought that in this case the Minister would not have much difficulty in supporting us. By the extension of democracy we are ensuring that those most directly involved in price control will have confidence in those who are involved in the system of appointment.
It is obvious from the reaction of various sections in society that there is no confidence in what is proposed in the Bill. Many sections of society wish to see us return to the definition outlined in the counter-inflation legislation, thereby including the Ministry of Agriculture, Fisheries and Food. Surely nothing is being achieved by keeping that Ministry out of the system of appointment.
The Minister did nothing to convey to the House that there was any benefit from such exclusion. What would be the benefits? As he has added to our suspicions in that respect. I can see no course open to us other than to force the issue to a Division. I remind the hon. Gentleman that the Ministry, because of the experience that it has had in dealing with a whole range of crises that have arisen in the food industry, the Ministry of Agriculture, Fisheries and Food has been helpful on many occasions in the past. Surely it is not logical to exclude it now.
The Minister said that the Secretary of State for Prices and Consumer Protection has responsibility throughout the whole of the United Kingdom. I should not be surprised if Scottish consumers and producers have been saying "some responsibility!" bearing in mind the mess that we are in in Scotland. If we can have a statutory representative from the CBI and another from the TUC, why cannot we have a statutory Scot? I think it was purely by accident that I was the representative in Committee. I am not cynical enough to believe that I was the statutory Scot on that occasion. However, I was the Scottish voice in Committee when this piece of legislation was considered.
In dealing with the whole issue of price control in Scotland, it is essential to have someone who knows the Scottish situation. If, as the Minister says, the Government are considering increasing the number of those who are involved in the Price Commission, why not have a Scot? It is all very well having vague promises that one of them might be a Scot. T am sure the House will not be surprised when I say that the SNP Bench has had enough of promises from the Labour Government. We were told about getting back to work with Labour, but there are now 180,000-plus unemployed in Scotland. We were told that we would have a Scottish power-house, a Scottish Assembly to control all aspects of Scottish life——
I am referring, Mr. Deputy Speaker, to the promise that the Minister made and making a comparison with the other promises that we have heard. I note that the Secretary of State for Prices and Consumer Protection has returned to the Chamber. I hope that the Minister has conveyed to him the deep concern which has been expressed that there will not be Scottish representation at the highest level of the Price Commission. I have no hesitation in forcing this issue to a Division.
|Division No. 158]||AYES||[9.34 p.m.|
|Adley, Robert||Godber, Rt Hon Joseph||Morrison, Hon Peter (Chester)|
|Aitken, Jonathan||Goodhart, Philip||Mudd, David|
|Alison, Michael||Goodlad, Alastair||Neave, Airey|
|Amery, Rt Hon Julian||Gorst, John||Nelson, Anthony|
|Arnold, Tom||Gow, Ian (Eastbourne)||Neubert, Michael|
|Atkins, Rt Hon H. (Spelthorne)||Gower, Sir Raymond (Barry)||Newton, Tony|
|Awdry, Daniel||Gray, Hamish||Onslow, Cranley|
|Baker, Kenneth||Griffiths, Eldon||Oppenheim, Mrs Sally|
|Bell, Ronald||Grist, Ian||Page, Richard (Workington)|
|Bennett, Dr Reginald (Fareham)||Grylls, Michael||Parkinson, Cecil|
|Benyon, W.||Hall-Davis, A. G. F.||Pattie, Geoffrey|
|Berry, Hon Anthony||Hamilton, Michael (Salisbury)||Price, David (Eastleigh)|
|Biffen, John||Hampson, Dr Keith||Pym, Rt Hon Francis|
|Biggs-Davison, John||Hannam, John||Ralson, Timothy|
|Blaker, Peter||Harrison, Col Sir Harwood (Eye)||Rathbone, Tim|
|Body, Richard||Hastings, Stephen||Rawlinson, Rt Hon Sir Peter|
|Boscawen, Hon Robert||Havers, Rt Hon Sir Michael||Rees, Peter (Dover & Deal)|
|Bottomley, Peter||Hayhoe, Barney||Rees-Davies W. R.|
|Bowden, A. (Brighton, Kemptown)||Heseltine, Michael||Renton, Rt Hon Sir D. (Hunts)|
|Boyson Dr Rhodes (Brent)||Hicks, Robert||Renton, Tim (Mid-Sussex)|
|Braine, Sir Bernard||Higgins, Terence L.||Rhodes James R|
|Brittan, Leon||Hodgson, Robin||Rhys Williams, Sir Brandon|
|Brocklebank-Fowler, C.||Holland, Philip||Ridley, Hon Nicholas|
|Brooke, Peter||Hordern, Peter||Ridsdale, Julian|
|Brotherton, Michael||Howe, Rt Hon Sir Geoffrey||Rifkind, Malcolm|
|Bryan, Sir Paul||Howell, David (Guildford)||Rippon, Rt Hon Geoffrey|
|Buchanan-Smith, Alick||Hunt, John (Bromley)||Roberts, Michael (Cardiff NW)|
|Buck, Antony||Hurd, Douglas||Roberts, Wyn (Conway)|
|Budgen, Nick||Hutchison, Michael Clark||Rossi, Hugh (Hornsey)|
|Bulmer, Esmond||Irving, Charles (Cheltenham)||Rost, Peter (SE Derbyshire)|
|Burden,F. A.||James, David||Sainsbury, Tim|
|Butler Adam (Bosworth)||Johnson Smith, G. (E Gristead)||St. John-Stevas, Norman|
|Carlisle, Mark||Jones, Arthur (Daventry)||Scott, Nicholas|
|Churchill, W. S.||Joseph, Rt Hon Sir Keith||Shaw Giles (Pudsey)|
|Clark, William (Croydon S)||Kershaw, Anthony||Shepherd, Colin|
|Clarke, Kenneth (Rushclifle)||Kimball, Marcus||Shersby Michael|
|Clegg, Walter||King, Evelyn (South Dorset)||Silvester Fred|
|Cockcroft, John||Kitson, Sir Timothy||Sims Roaer|
|Cooke Robert (Bristol W)||Knox, David||Sinclair, Sir George|
|Cope, John||Lamont, Norman||Skeet T. H. H.|
|Cormack, Patrick||Latham, Michael (Melton)||Smith, Dudley (Warwick)|
|Costain, A. P.||Lawrence, Ivan||Smith, Timothy John (Ashfield)|
|Crawford, Douglas||Lawson, Nigel||Speed Kelth|
|Crouch, David||Le Marchant, Spencer||Spence John|
|Crowder, F. P.||Lewis, Kenneth (Rutland)||Spicer Michael (S Worcester)|
|Davies, Rt Hon J. (Knutsford)||Lloyd, lan||Sproat, lain|
|Dean, Paul (N Somerset)||Loveridge, John||Stainton Keith|
|Dodsworth, Geoffrey||Luce, Richard||Stanbrook Ivor|
|Douglas-Hamilton, Lord James||MacCormlck, lain||Stanley John|
|Drayson, Burnaby||McCrindle, Robert||Stewart' Rt Hon Donald|
|du Cann, Rt Hon Edward||Macfarlane, Nell||Stewart, Ian (Hltchln)|
|Dunlop, John||MacGregor, John||Stokes, John|
|Durant, Tony||MacKay, Andrew James||Stradllng Thomas J.|
|Dykes, Hugh||Macmillan, Rt Hon M. (Farnham)||Tapsell Peter|
|Eden, Rt Hon Sir John||McNalr-Wilson, M. (Newbury)||Taylor, R. (Croydon NW)|
|Edwards, Nicholas (Pembroke)||McNair-Wllson, P. (New Forest)||Taylor Teddy (Cathcart)|
|Elliott, Sir William||Madel, David||Tebbit, Norman|
|Emery, Peter||Marshall, Michael (Arundel)||Temple-Morris, Peter|
|Eyre, Reginald||Mates, Michael||Thatcher, Rt Hon Margaret|
|Fairgrieve, Russell||Mather, Carol||Thomas, Rt Hon P. (Hendon S)|
|Fell, Anthony||Maude, Angus||Thompson George|
|Finsberg, Geoffrey||Mawby, Ray||Townsend, Cyril D.|
|Fisher, Sir Nigel||Maxwell-Hyslop, Robin||Trotter, Neville|
|Fletcher, Alex (Edinburgh N)||Mayhew, Patrick||van Straubenzee, W. R.|
|Fookes, Miss Janet||Meyer, Sir Anthony||Vaughan, Dr Gerard|
|Forman, Nigel||Miller, Hal (Bromsgrove)||Viggers, Peter|
|Fowler, Norman (Sutton C'f'd)||Mills, Peter||Wakeham, John|
|Fox, Marcus||Mitchell, David (Basingstoke)||Walder, David (CIHheroe)|
|Fraser, Rt Hon H (Stafford & St)||Moate, Roger||Walker, Rt Hon P. (Worcester)|
|Galbraith, Hon T. G. D.||Monro, Hector||Walters, Dennis|
|Gardiner, George (Reigate)||Montgomery, Fergus||Watt, Hamish|
|Gardner, Edward (S Fylde)||Moore, John (Croydon C)||Weatherill, Bernard|
|Gilmour, Rt Hon Sir Ian (Chesham)||Morgan-Giles, Rear-Admiral||Wells, John|
|Glyn, Dr Alan||Morrison, Charles (Devizes)||Wiggin, Jerry|
|Wigley, Dafydd||Wood, Rt Hon Richard||TELLERS FOR THE AYES:|
|Wilson, Gordon (Dundee E)||Young, Sir G. (Ealing, Adon)||Mrs. Margaret Bain and|
|Winterton, Nicholas||Younger, Hon George||Mr. Andrew Welsh.|
|Abse, Leo||Fraser, John (Lambeth, N'w'd)||Mikardo, Ian|
|Allun, Frank||Freeson, Reginald||Millan, Rt Hon Bruce|
|Anderson, Donald||Freud, Clement||Miller, Mrs Millie (llford N)|
|Archer, Rt Hon Peter||Garrett, John (Norwich S)||Mitchell, Austin Vernon (Grimsby)|
|Armstrong, Ernest||Garrett, W. E. (Wallsend)||Molloy, William|
|Ashley, Jack||George, Bruce||Moonman, Eric|
|Ashton, Joe||Gilbert, Dr John||Morris, Charles R. (Openshaw)|
|Atkins, Ronald (Preston N)||Ginsburg, David||Moyle, Roland|
|Atkinson, Norman||Golding, John||Mulley, Rt Hon Frederick|
|Barnett, Guy (Greenwich)||Gould, Bryan||Murray, Rt Hon Ronald King|
|Barnett, Rt Hon Joel (Heywood)||Gourlay, Harry||Newens, Stanley|
|Bates, Alf||Graham, Ted||Noble, Mike|
|Bean, R. E.||Grant, George (Morpeth)||O'Halloran, Michael|
|Beith, A. J.||Grant, John (Islington C)||Orbach, Maurice|
|Benn, Rt Hon Anthony Wedgwood||Grocott, Bruce||Orme, Rt Hon Stanley|
|Bennett, Andrew (Stockport N)||Harrison, Rt Hon Walter||Ovenden, John|
|Bidwell, Sydney||Hart, Rt Hon Judith||Padley, Walter|
|Bishop, Rt Hon Edward||Hattersley, Rt Hon Roy||Palmer, Arthur|
|Blenkinsop, Arthur||Hatton, Frank||Pardoe, John|
|Boardman, H.||Hayman, Mrs Helene||Park, George|
|Booth, Rt Hon Albert||Healey, Rt Hon Denis||Pavitt, Laurie|
|Boothroyd, Miss Betty||Hefler, Eric S.||Pendry, Tom|
|Boyden, James (Bish Auck)||Hooley, Frank||Penhaligon, David|
|Bradley, Tom||Hooson, Emlyn||Perry, Ernest|
|Bray, Dr Jeremy||Horam, John||Prescott, John|
|Brown, Hugh D. (Provan)||Howell, Rt Hon D. (B'ham, Sm H)||Price, William (Rugby)|
|Brown, Robert C. (Newcastle W)||Howells, Geralnt (Cardigan)||Radice, Giles|
|Buchan, Norman||Hoyle, Doug (Nelson)||Rees, Rt Hon Merlyn (Leeds S)|
|Callaghan, Rt Hon J. (Cardiff SE)||Hucklield, Les||Richardson, Miss Jo|
|Callaghan, Jim (Mlddleton & P)||Hughes, Rt Hon C. (Anglesey)||Roberts, Gwilym (Cannock)|
|Campbell, Ian||Hughes, Robert (Aberdeen N)||Robinson, Geoffrey|
|Canavan, Dennis||Hughes, Roy (Newport)||Roderick, Caerwyn|
|Cant, R. B.||Hunter, Adam||Rodgers, George (Chorley)|
|Carmichael, Nell||Irving, Rt Hon S. (Dartford)||Rodgers, Rt Hon William (Stockton)|
|Carson, John||Jackson, Colin (Brighouse)||Rooker, J. W.|
|Carter, Ray||Jackson, Miss Margaret (Lincoln)||Rose, Paul B.|
|Carter-Jones, Lewis||Janner, Greville||Ross, Slephen (Isle of Wight)|
|Cartwright, John||Jeger, Mrs, Lena||Ross, Rt Hon W.(Kilmarnock)|
|Castle, Rt Hon Barbara||Jenkins, Hugh (Putney)||Rowlands, Ted|
|Clemitson, Ivor||John, Brynmor||Ryman, John|
|Cocks, Rt Hon Michael||Johnson, James (Hull West)||Sedgemore, Brian|
|Cohen, Stanley||Johnson, Walter (Derby S)||Selby, Harry|
|Coleman, Donald||Johnston, Russell (Inverness)||Shaw, Arnold (llford South)|
|Colquhoun, Ms Maureen||Jones, Alec (Rhondda)||Sheldon, Rt Hon Robert|
|Concannon, J. D.||Jones, Barry (East Flint)||Short, Mrs Renée (Wolv NE)|
|Conlan, Bernard||Jones, Dan (Burnley)||Silkin, Rt Hon S. C. (Dulwich)|
|Corbett, Robin||Kaufman, Gerald||Silverman, Julius|
|Cowans, Harry||Kelley, Richard||Skinner, Dennis|
|Cox, Thomas (Tooting)||Kerr, Russell||Small, William|
|Crowther Stan (Rotherham)||Kilroy-Silk, Robert||Smith, Cyril (Rochdale)|
|Crowther, Stan (Rotherham)||Kinnock, Nell||Smith, John (N Lanarkshire)|
|Cunningham, G. (Islington S)||Lamble, David||Snape, Peter|
|Cunningham Dr J. (Whiteh)||Lamborn, Harry||Spearing, Nigel|
|Davidson, Arthur||Lamond, James||Stallard, A. W.|
|Davies Bryan (Enfield N)||Latham, Arthur (Paddington)||Stewart, Rt Hon M. (Fulham)|
|Davies, Denzil (Llanelli)||Leadbitter, Ted||Stoddart, David|
|Davies, Ifor (Gower)||Lee, John||Stott, Roger|
|Dean Joseph (Leeds West)||Lestor, Miss Joan (Eton & Slough)||Strauss, Rt Hon G. R.|
|Dell, Rt Hon Edmund||Lever, Rt Hon Harold||Summerskill, Hon Dr Shirley|
|Dempsey, James||Lipton, Marcus||Swain, Thomas|
|Doig, Peter||Lomas, Kenneth||Taylor, Mrs Ann (Bolton W)|
|Dormand, J. D.||Loyden, Eddie||Thomas, Jeffrey (Abertillery)|
|Douglas-Mann Bruce||Lyons, Edward (Bradford W)||Thomas, Mike (Newcastle E)|
|Duffy, A. E. P.||McCartney, Hugh||Thomas, Ron (Brisol NW)|
|Dunnett Jack||McDonald, Dr Oonagh||Thome, Stan (Preston South)|
|Eadie, Alex||McElhone, Frank||Tierney, Sydney|
|Edge, Geoff||MacFarquhar, Roderick||Tinn, James|
|Ellis, John (Brigg & Scun)||MacKenzie, Rt Hon Gregor||Torney, Tom|
|English, Michael||Maclennan, Robert||Tuck, Raphael|
|Ennals, David||McMillan, Tom (Glasgow C)||Varley, Rt Hon Eric G.|
|Evans, Fred (Caerphilly)||Madden, Max||Walnwrighi, Edwin (Dearne V)|
|Evans, Ioan (Aberdare)||Magee, Bryan||Wainwright, Richard (Coine V)|
|Ewing, Harry (Stirling)||Mallalieu, J. P. W.||Walker, Harold (Doncaster)|
|Fernyhough, Rt Hon E.||Marks, Kenneth||Walker, Terry (Klngswood)|
|Fitch, Alan (Wigan)||Marshall, Dr Edmund (Goole)||Ward, Michael|
|Flannery, Martin||Marshall, Jim (Leicester S)||Watkins, David|
|Fletcher, Ted (Darlington)||Maynard, Miss Joan||Weetch, Ken|
|Foot. Rt Hon Michael||Meacher, Michael||Weitzman, David|
|Forrester, John||Mellish, Rt Hon Robert||Wellbeloved, James|
|Fowler, Gerald (The Wrekin)||Mendelson, John||White, Frank R. (Bury)|
|White, James (Pollok)||Wilson, Alexander (Hamilton)||Wrigglesworth, Ian|
|Whitlock, William||Wilson, Rt Hon Sir Harold (Huyton)||Young, David (Bolton E)|
|Willey, Rt Hon Frederick||Wise, Mrs Audrey|
|Williams, Rt Hon Alan (Swansea W)||Woodall, Alec||TELLERS FOR THE NOES:|
|Williams, Alan Lee (Hornch'ch)||Wool, Robert||Mr. James Hamilton and|
|Williams, Sir Thomas (Warrington)||Mr. Joseph Harper.|