Price Commission Bill

Clause 2 – in the House of Commons at 12:00 am on 21st June 1977.

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Bill (as amended in the Standing Committee), further considered.

10.15 p.m.

Photo of Mr Giles Shaw Mr Giles Shaw , Pudsey

When we divided, I was trying to summarise the reasons why we feel that this is an important amendment which should be pressed. It is inconsistent with the importance given to the criteria and the steps taken to consult industry about the matter that the discretionary power should remain. It is very important that the Commission should be seen to work fairly and openly and to establish a case law about its operations which industry can understand.

Unless industry has the assurance that the criteria are fully understood because of their relevance and that the Commis- sion does not decide on a whim to ignore them, it will not be able to prepare a full defence of prices being investigated, knowing full well the criteria to be applied.

The Secretary of State thought that there were adequate provisions in the Bill, for safeguards for the party making the application, and after later discussions with the Price Commission the Minister felt that there were sufficient safeguards not to make it necessary to accept the amendments. We would like to hear what the Government have to say about this now, bearing in mind the substantial anxiety being expressed about safeguards concerning profitability in Clause 9. Industry is relying on the way in which the Commission works, and these criteria will become an important aspect of the Bill. That is why we want them spelt out fairly and the discretionary power removed.

Photo of Mr Terence Walker Mr Terence Walker , Kingswood

The hon. Member for Pudsey (Mr. Shaw) mentioned criteria, and I hope that the Minister will address himself to this point when he replies. I think that the definition of the criteria in Clause 2 is very important. That was dealt with in Committee. I hope that the Minister will go a little further on it when he speaks tonight.

It is a very relevant point to make that if the Commission has the ability to delay price increases based on legitimate costs, particularly of imported basic raw materials, this would be a real worry. In all this, the Commission must be seen to act fairly on price investigations.

In my constituency I have had considerable representations from the Cad-bury Group, which is a very large employer, and, of course, the jobs there are very important to my area. The representations have come from both management and trade unions at the Somer-dale factory of Cadbury-Schweppes. They are very concerned about certain provisions contained in Schedule 2 to the Bill because the criteria are not quite clear to them. It is necessary to reiterate their concern in respect of some principles of price control which do not appear to be wholly clear. Particularly in the food industry, imported commodity prices fluctuate a great deal and this contributes a significant element to the cost. It was the subject recently of very dramatic prices increases, which are totally beyond the control of manufacturers.

I am told that in the past year spot cocoa and raw cocoa prices have risen three times. The company concerned believes that if price rises are not allowed there will be a reduction in profitability. This is acknowledged by all, but this could lead to a rationalisation and a reduction in investment in the plant. But most of all—and this is the main concern of management and the work force—it could lead to implications in respect of job security and employment prospects in the area.

I wish to address myself to the job situation, because if prices are not allowed to rise there may be long delays, leading to rationalisation within plants and perhaps to the diminution of job prospects. The company has a long record of good industrial relations in my constituency over a long period. Both the company and the trade unions are justifiably proud of this fact, but they believe that job prospects will be damaged if there are delays. I hope that the Minister can go a little further when he replies and will give a clearer definition of the criteria, which I am sure would be helpful to my constituents and to us all.

Photo of Peter Viggers Peter Viggers , Gosport

One is sometimes reticent about speaking in the House when one was not a member of the Committee which has considered a Bill, but perhaps an outsider sometimes sees most of the game. Coming fresh to this amendment, as a lawyer, I believe that the Government should accept it. There is no point in pursuing narrow party politics. I do not regard the amendment as particularly Conservative, Labour or Socialist. There is no point involving any major difference between the parties. It is simply a matter of drafting.

The parliamentary draftsman has chosen to word the Bill in one way and he wants it worded in no other way. As often happens in the House, it becomes a matter of the defence of a Minister's virility to make sure that a Bill is not amended. If, however, the Government were to accept the amendment, it would reinforce the position of Parliament. It would mean that Parliament would specify relevant matters instead of leaving the job to the Price Commission.

I hope that the Government will not be led by the nose and will allow Parliament to specify what it thinks is relevant and will not let the Commission do the job for us. It is foolish for Parliament to prepare a shopping list which the Commission may or may not accept as relevant. It is surely for Parliament to spell out the things that ought to be relevant.

Let us look at this shopping list and examine the matters which the Commission can or cannot accept as being relevant. If the Government are reluctant to accept the amendment, we should pursue our argument reductio ad absurdum and ask what will happen if the amendment is not accepted and if the Commission is free to say that certain matters are not relevant.

The amendment proposes that certain matters should be accepted so far as they are relevant. They include the need to recover costs incurred in efficiently supplying goods and services and in maintaining the value of the relevant businesses". Does anybody suggest that this is not related to prices? Of course it is. Nobody can say that the Commission in its objective wisdom shall deem that this is not relevant.

In paragraph (b) we see the desirability of encouraging reductions in costs by improvements in the use of resources and so on. Does anybody suggest that the Commission can take a subjective view and say that that is not relevant?

In paragraph (c) we see the need to earn, from selling goods and providing services in the United Kingdom, profits which provide a return on the capital employed in producing the profits which is sufficient, taking one year with another—

  1. (i) to defray the cost of the capital (including compensation for the risk involved in producing the profits), and
  2. (ii) to provide money for, and to encourage the promotion of, innovations and technical improvements in and the expansion of the enterprises which consist of or include the relevant businesses".
Can anybody say that that could not be regarded as relevant or that the Commission should be able to disregard that factor?

Another of the criteria is (d) the need to take account of changes in prices in determining the value of assets". Is that such a narrow point and drawn so technically that the Commission should be able to decide to disregard it? The next criterion is (e) the desirability of maintaining the quality of goods and services and satisfying the demands of users of goods and services ". The only criticism I make of (e) is that it is drawn so widely that it is meaningless, but to go further and say that the Commission should be entitled to disregard it and that it is not relevant is also meaningless.

The list continues: (f) the need to safeguard the interests of users of goods and services by promoting competition between suppliers or, where competition must be restricted or cannot be promoted, by restricting prices and charges". That is one of the things that the Commission is meant to do, but it is to be allowed to take account of that only if it considers it relevant.

The next of the criteria is (g) the desirability of establishing and maintaining a balance between the supply of goods and services and the demand for them". Again, it is so broadly drawn that nobody in his right mind could possibly say that it should be disregarded. Yet the Commission has the right of a subjective judgment to disregard that factor if it so wishes.

The last on the list is (h) the need to avoid detriment, from restraints on prices and charges, to the United Kingdom's balance of payments and the need to increase the share of United Kingdom enterprises in markets in the United Kingdom and elsewhere". Of course, anybody concerned with the distribution of goods and services must be aware of those things and should take account of them. To think that we are considering the possibility of allowing the Commission to take a subjective judgment as to whether that is relevant or not is simply cloud-cuckoo-land.

This is not a narrow political point. The Government would not lose anything—sleep, prestige or anything else—by accepting the amendment. It does not make sense for the Government to insist upon a substantive Bill and not to accept the amendment.

Photo of Mr Tim Smith Mr Tim Smith , Ashfield

I must first declare an interest because I speak in the capacity of a company secretary of an engineering group of companies who during the last two years has had to deal with the Price Commission. The group of companies, having elected not to be categorised in accordance with paragraph 84(a) of the existing code, is not a category 2 enterprise but is a category 3 enterprise in accordance with paragraph 84(b) or 84(c).

Nevertheless this has meant that, although we have not had to pre-notify prices, we have had a considerable amount of correspondence with the Commission. I must pay tribute to the fair way in which the Commission has dealt with my company and other companies which have, on a continuing basis, negotiated over pricing policies and profit margin controls.

My comment on the amendment is that the Bill should be seen to continue the same element of fairness. If that is to be so, it is important that in all the circumstances and all cases the Price Commission should apply the same criteria to all companies that are the subject of investigation. The unfortunate thing about the clause as it is presently structured is that it gives the Commission discretion to decide in a subjective way what is relevant and what is not. The amendment would mean that the way that the matter was considered would be more objective.

My hon. Friend the Member for Gos-port (Mr. Viggers) has taken us through the various criteria. All of them are important and will be relevant in almost all circumstances. They should not be disregarded. The important point is not the theoretical intention of the Bill and the right or wrong wording, but the practical effect of the law and how the new Price Commission will work in practice. Those of us in industry who must deal with the Price Commission regard that as of high priority.

10.30 p.m.

In Committee, the Minister of State said that the judgment as to which criteria were relevant must be made by the Commission. No one on this side of the House is arguing about that, but the point is how subjective that judgment should be. The Minister also said in reply to my hon. Friend the Member for Pudsey (Mr. Shaw) that my hon. Friend could sustain his objections only if he could show that commissions of this nature had acted in a totally unreasonable way. No one is suggesting that this has happened. The Commission has acted in a very fair manner, and it is important that it should continue to do so.

The distinction that the amendment seeks to make is between a decision that no reasonable person could have made—that is the only way that the Commission could be challenged in court—and a decision that a reasonable person would have made. This is not a narrow point. It is an important distiction. It may seem like a lawyer's point, but it is very much more important than that.

Photo of Mr Ronald Thomas Mr Ronald Thomas , Bristol North West

If I were tempted to be kind to the Opposition, I would suggest that they are making heavy weather of three or four words. It can easily be argued that all that is being sought here is that, in the examination of certain threatened price increases, certain yardsticks or criteria should be relevant on certain occasions but that on other occasions they will not be relevant. However, I do not feel like being kind to the Opposition. I suspect that they want a list such as the one in the Bill because it is so wide and woolly that any company accountant or secretary will be able to substantiate a case for a price increase being necessary.

The Opposition want to see the Price Commission going through every dot and comma on the list on every occasion, irrespective of the product involved, the reasons for the price increase or the area or market situation of the firm. Presumably they want a right of appeal by lawyers if the Commission fails to examine one part of the list. The Opposition want a list as long as one's arm because they oppose any sort of price control. Why do they not admit it?

The hon. Member for Gloucester (Mrs. Oppenheim) seems to think that prices are fixed in a free market in an auction in one of the Gloucestershire villages, but the world is not like that any more.

Photo of Mr Cecil Parkinson Mr Cecil Parkinson , Hertfordshire South

The hon. Gentleman is making a very good speech, but he is making it on the wrong amendment. Our amendment says simply that Parliament is laying down the criteria for the Commission and that the Commission should remember that it is set up by Parliament and should obey the rules laid down for it. I do not know why the hon. Gentleman is getting so excited. We are not undermining the Commission. We are saying that it should do what it is being set up to do.

Photo of Mr Ronald Thomas Mr Ronald Thomas , Bristol North West

I understand what the Opposition are saying. Instead of the Commission being able to say in respect of a price increase that one or two of the criteria are relevant, they want it to have to say on every conceivable occasion that all the criteria are relevant. It is said that the Commission should go through them like a check list. If we delete the Commission consider them relevant", we are saying that the Commission is not given the right of judging relevance; we are saying that it must accept that in every case every matter is relevant. In my judgment, the real meaning behind that is that Opposition Members want to drag out any Commission investigation. They want to be able to challenge the company lawyers, accountants and secretaries by saying "You did not look at this." The provisions are full of all sorts of value judgments.

Clause 2(2)(c) refers to the need to defray the cost of the capital (including compensation for the risk involved in producing the profits)". What exactly does that mean? I do not know. One of my amendments—it has not been selected—called for that to be deleted. It is nebulous. The Opposition want the longest possible list, filled with all sorts of vague judgments and woolly statements. I wish that they would be honest about their wish to prevent any price control. This is the position in which we find ourselves even after the Sandilands Report.

A considerable amount of judgment is involved. On every occasion, irrespective of the scale of the price increase or threatened price increase, the Commission must take every aspect into account. This is the method that the Opposition are using to try to make the Bill even less effective than it is now.

Photo of Mr Michael Neubert Mr Michael Neubert , Romford

Subsection (2) is perhaps the most remarkable feature of the Bill. It is a measure which has been introduced by a Labour Secretary of State and sponsored by a Labour Government. What is more, it is supported by the whole spectrum of Labour opinion in the House, from the far right represented on the Treasury Bench by the Undersecretary of State to the Tribune Group, which has made its contribution in the form of the hon. Member for Bristol, North-West (Mr. Thomas).

Subsection (2), to which the amendment draws attention, requires the Commission to pay regard to its detailed provisions in so far as they are relevant. It is such a veritable litany of capitalism that it is surprising that it is not recognised as such. Within the compass of this small series of clauses and subsections is all that those who believe in free enterprise would wish to see as safeguards for the Bill. The unfortunate part about the subsection is that it is not, as has been acknowledged, sufficiently specific and certain for business men and others engaged in commerce and trade to be sure.

Rightly and properly, and not unexpectedly, we are moving the amendment to make a subtle but significant change. It is not the change that the hon. Member for Bristol, North-West believes it to be—namely, that all these considerations should be taken into account. Only those that are relevant should be taken into account.

For the moment, I concentrate on the importance of the matters to which the Commission should refer in coming to its decision. First, there is the need to cover costs incurred in efficiently supplying goods and services". That goes without saying. That is without question in any part of the House.

We come, however, to more remarkable features of this Labour Bill which has been supported with such enthusiasm by members of the Parliamentary Labour Party. There is the provision to defray the cost of the capital equipment (including compensation for the risk involved in producing the profits)". The hon. Gentleman did not understand what that meant. It was so alien to him that he could not understand it. It means something quite remarkable. It means that for the first time the Labour Government are prepared to put into print their belief that those who invest money in hazardous enterprises, who gamble with their capital and their shareholders' funds, should be compensated, and compensated above average, if they succeed in those enterprises.

That is the main element of free enterprise. It is the essence of risk-taking that the greater the risk taken, the greater the reward. What is so often forgotten by Labour Members is that if a great risk is taken and failure follows, the greater the loss and failure than if a smaller risk is taken. Therefore, there should be compensation. The free market allows for that.

Those in the bureaucratic, dogmatic world of the Labour Party see everything in strictly controlled terms. Although a person may risk a vast amount of money, he is allowed to secure only a minimum return on that risk.

Photo of Peter Viggers Peter Viggers , Gosport

My hon. Friend is showing me the Bill in a new light. Are the Government proposing to have the Commission to facilitate speculation?

Photo of Mr Michael Neubert Mr Michael Neubert , Romford

I hope that that is the reason. The Bill does not appear in a flattering and encouraging light because it is drafted in legislative terms. It does not fire the blood. How could it be a clarion call to enterprise when it is drafted by Parliamentary draftsmen?

There are some remarkable provisions in the Bill. It recognises that the Commission, before coming to a decision, should take into account the need for companies to provide money for research, innovation, technical improvement and expansion. It even takes account of the ravages of inflation. It allows—this is remarkable in view of the present political scene—companies to make as their defence of apparently high profits the fact that in real terms they are not making profits at all. That is shown by the Bank of England bulletin. Were it not for the stock appreciation relief introduced by the Chancellor, many of the so-called profits would be losses and would be shown as such.

Photo of Mr Ronald Thomas Mr Ronald Thomas , Bristol North West

Does not the hon. Gentleman agree that it allows a company to charge prices high enough to replace its assets, such as machinery, at replacement cost, so that the consumers pay for them? Does this mean that the private enterprise system and the market mechanism to which the hon. Gentleman refers have now gone?

Photo of Mr Michael Neubert Mr Michael Neubert , Romford

The consumers pay for part of the cost of the overheads of any product. The person taking the risk must recover his investment. Unless the consumer buys his product, he will not recover his investment. That is where the risk lies. In the price of any product there will be an element for research and development and future capital investment. Of course the consumer pays for it. That is a proper part of the price of a product.

Finally, I draw attention to another matter that is enshrined in this Labour Party Bill—the desirability of establishing a balance between supply and demand. I thought that the concept of supply and demand was foreign to the Labour Party and that its members did not undestand that in times of shortage prices are higher than in times of glut, and vice versa. Nevertheless, they obviously wish to commit their new-found belief in enterprise and capitalism to paper.

Naturally, the Opposition regard these criteria as of the highest importance. They have a philosophical significance that goes beyond this debate. That is why we are so concerned that the new Commission, the members of which are not yet known apart from the four announced yesterday, should take account of such criteria as are relevant. The Bill provides for the Commission to have discretion whether to consider the criteria relevant. Relevance is not a matter for scientific definition. Relevance is ultimately a matter of judgment. All of us think we know what is and what is not relevant. There are different views on the matter.

In Committee, the Minister frequently offered a safeguard to people in business if they were apprehensive about what would happen in the course of the Commission's wide-ranging and arbitrary activities. Business people are being asked to substitute for the devil they know a devil whose face they recognise but whose name they cannot quite remember. They do not welcome this uncertainty. It will hinder their forward planning and investment. They are being asked to contend with a vague set of general principles, of which they can have no confidence that the Commission will take account.

10.45 p.m.

The amendment would not ensure that all the criteria were always taken into account, but it would constrain the Commission against exercising its discretion unwisely because the company under investigation could have recourse to the courts. That was the ultimate safeguard offered by the Minister in Committee. It is better for the decision on relevance to be with the courts rather than the Commission. After all, if the Commission contended that it considered some criteria in good faith not to be relevant, that could hardly be challenged.

I choose an illustration with some provocation, that of television rental companies. The Minister of State regards that as the classic evidence of the success of the Government's policy. I regard it instead as the only evidence of how the Commission is likely to take into account the criteria in the Bill. The companies have invested over £1,000 million in television sets and the net profit margin challenged by the Commission's report was 16·5 per cent. for 1976, when the year-on-year inflation rate began at 23·4 per cent, and ended at 15·1 per cent.

My hon. Friends will understand my apprehension that the Commission should regard that as excessive, given the level of investment and the rate of inflation. Nor did the companies breach the Price Code. I am apprehensive about how the Commission will work. It will be biased by being composed entirely of people who believe in the benefits of Government intervention in the economy. I want to help to secure business confidence by supporting the amendment.

Photo of Mr Robert Maclennan Mr Robert Maclennan Parliamentary Under-Secretary (Department of Prices and Consumer Protection)

I agree with my hon. Friend the Member for Bristol, North-West (Mr. Thomas) that the Opposition are making heavy weather of the amendment. He thought that the object was to allow companies to resort to a large number of criteria so as to escape price control. He provoked a response from the hon. Member for Hertfordshire, South (Mr. Parkinson), who asserted more succinctly than anyone else that the Opposition's sole interest was to ensure that the Price Commission should take account of the criteria in the clause.

That is precisely provided for as the clause stands. Although the general safeguard for industry is summed up in Clause 2(1), which specifies what the Commission shall have regard to, the clause also provides that there are some matters to which the Commission shall also have regard in particular.

The hon. Member for Pudsey (Mr. Shaw) said that the criteria were important, that they should be seen to be important, and that the Opposition wanted to underline their importance by moving the amendment. The Government accept that these are important considerations. That is why they are included among the matters to which the Commission has a duty to have regard. But behind the amendment is not so much, as my hon. Friend the Member for Bristol, North-West said, a general attempt to evade price control as an attempt to reverse the clock and to reintroduce by the back door a kind of Price Code.

Our whole purpose in bringing forward the Bill has been to tailor price control to the needs and demands of our economy, to ensure that the broad brush criteria set out in the Price Code are not reinstated and to allow the Price Commission to exercise its judgment on which price increases are justifiable and which are not. In making these subjective determinations—I make no attempt to deny that they will be subjective—the Commission will have in mind and will take into account the considerations put forward by companies notifying proposed price increases.

The matters included in subsection (2) are the considerations which readily spring to mind as being those which companies would no doubt deem it important to have considered. But they are not, and we would not wish them to be, exclusive considerations. Companies may bring forward other considerations, and it will be proper for the Price Commission to consider such other considerations as companies may choose to advance.

The defect in the amendment is that it seeks to objectify these criteria in a way which I believe cannot be done. The result of passing the amendment would be that the Commission would none the less still be free to make its own assessment whether the criteria were applicable, because the amendment fails to specify who would judge the relevance of the criteria. Even accepting that the Opposition's objective was justifiable—in my view it is not, because it seeks to make the criteria more rigid and indeed code-like—I suggest that it fails on the wording of the amendment.

The main consideration for firms which are concerned about the criteria lies in subsection (1), which also provides that the Commission shall have regard to all the matters which seem to it to be relevant. The Government take the view that it is right to appoint men—and perhaps women—who are capable of bearing fully in mind whether a proposed price increase is justifiable on the basis of the appropriate considerations which may be put forward by firms or which may occur to the Commission.

The hon. Member for Romford (Mr. Neubert) said that he would view with equanimity the prospect of the relevance or otherwise of criteria being tested in the courts. That would not provide industry with the certainty that the hon. Member's Front Bench advocates.

Photo of Mr Tim Smith Mr Tim Smith , Ashfield

Does the Minister agree that it is important that the Commission should not only be fair but should be seen to be fair and that it should operate with objectification—which, I assume, is the noun that comes from the verb "objectify"? Surely it is important that there should be an objective element. The basis of appeal would be widened if the reasonableness were that of a reasonable man rather than that of the Commission.

Photo of Mr Robert Maclennan Mr Robert Maclennan Parliamentary Under-Secretary (Department of Prices and Consumer Protection)

It is more desirable for the resolution of any disputes that these matters should be decided by the Commission and that they should not be appealable to the courts. That would be a retrograde step. In the amendment, the Opposition are prepared to obfuscate certainty by seeking to remove from the Commission the right to make that judgment.

Photo of Mr Giles Shaw Mr Giles Shaw , Pudsey

We have just heard a stirring defence of the state of the Bill. The Under-Secretary of State piled obfus-cation upon objectification in seeking to find a reason why the Government are not prepared to accept this reasonable amendment.

The debate has thrown up one or two important observations. My hon. Friend the Member for Ashfield (Mr. Smith) has direct experience of the Commission, and his contribution was valuable. The most interesting comments were made by the hon. Member for Kingswood (Mr. Walker), who recognised that vital issues are at stake which are important to his constituents. They are so vital that they are ignored completely by his hon. Friend the Member for Bristol, North-West (Mr. Thomas), who does not understand the relationship between profitability and jobs.

The criteria are vitally important. They should be seen to be operated fairly. There is an important distinction between the way in which the new Commission is to operate and the way in which the present Commission operates. The new Commission will have sub-committees of as few as three persons operating within it. Although the Secretary of State has readily responded to the pressure and has made some alterations to the way in which these sub-committees may operate, the criteria will be interpreted by sub-groups on many occasions. We wish to remove that provision from the Bill.

The relevance of these criteria and their importance must be safeguarded and must be free from being interfered with in an inconsistent manner. When it comes to deciding the relevance of the criteria, Parliament has a role to play. Had the Under-Secretary looked further into the list of amendments, he would have noted an amendment, No. 5, which has not been selected, which also sought to establish this case.

11.0 p.m.

I remind hon. Members that although the Under-Secretary might accuse us of seeking to introduce the code by another name—or by the back door, as he put it—one of the few advantages of the Price Code, and one of the ways in which the Commission operated fairly, was that the code was clear, public and understood, and the Commission had no ability to bend the conditions of the code and was able to interpret it fully and fairly on each occasion because everyone, both those applying for prices and those vetting prices, knew precisely where he was.

Photo of Mr Ronald Thomas Mr Ronald Thomas , Bristol North West

The hon. Gentleman said "one advantage". Could he say whether the advantage was to the price fixers or the consumers? Would he not also agree that the Price Code was simply used as a check list and that firms said "How much can we add on for that, that and that?" and it pushed up prices to the extent possible under that code?

Photo of Mr Giles Shaw Mr Giles Shaw , Pudsey

I suppose that the hon. Gentleman would then be amazed to know that profitability under the Price Code was halved in the three years of its existence, and equally amazed to know that one of the most significant costs under the code was the rapid increase in the costs of labour, brought about, no doubt, by many of his activities.

Photo of Mr Robert Maclennan Mr Robert Maclennan Parliamentary Under-Secretary (Department of Prices and Consumer Protection)

In abandoning the Price Code, one of the major considerations in the Government's mind was precisely the converse point of that made by the hon. Gentleman. It was that the code was exceedingly complicated and required a great deal of management time to interpret. It is quite untrue to suggest, as the hon. Gentleman has done, that it was beyond doubt. As it got further and further from its date of introduction, so it became more and more complex, and so, indeed, it became very consuming of management time. It is an extraordinary defence that the hon. Gentleman makes.

Photo of Mr Giles Shaw Mr Giles Shaw , Pudsey

I wonder why it is, therefore, that the new Price Commission should have one chairman and three deputy-chairmen, with greater increases in salary, to undertake a task which so clearly is much less than that which the present Chairman of the Price Commission is undertaking. Why is it that the new Commission apparently has a much more onerous role?

The fact remains that under the existing Commission the code was large, cumbersome and unwieldy, and it certainly absorbed great management time. Under the amendment, however, we are discussing the criteria by which prices should be frozen and investigations shall be undertaken. If any hon. Member believes that that is not a matter of great importance, he does not know what the Bill is all about. We on the Opposition Benches are determined to try to ensure that the Commission will operate in the future by the criteria, which remain important and should be fair and not ignored.

In so far as the code which expires on 31st July has any lesson to teach us, it is that where a code is clear and unequivocal it can be established fairly. The Under-Secretary will know that the relationship between the existing Price Commission and industry has at least survived over some years the test of fairness and equity, as my hon. Friend the Member for Ashfield so rightly pointed out.

We have not had any single reason offered as to why this modest amendment should not be accepted, other than the fact of the way in which it has been drafted and the glutinous way in which the Under-Secretary found us "objectifying" and "obfuscating". We shall pursue the amendment to a Division. I call upon my right hon. and hon. Friends so to do.

Question put,That the amendment be made:—

The House divided: Ayes 244, Noes 266.

[For Division List No. 160 see c. 1603]

Question accordingly negatived.

Photo of Mr Robert Maclennan Mr Robert Maclennan Parliamentary Under-Secretary (Department of Prices and Consumer Protection)

I beg to move, Amendment No. 82, in page 3, line 28, at end insert: 'and not to have regard to any other matters'.

Photo of Mr George Thomas Mr George Thomas , Cardiff West

With this amendment, we shall also take Government Amendment No. 11.

Photo of Mr Robert Maclennan Mr Robert Maclennan Parliamentary Under-Secretary (Department of Prices and Consumer Protection)

The purpose of the amendment is to provide that the Price Commission, in performing the functions mentioned in subsection (3), must have regard solely to the matters set out in subsections (1) and (2).

In putting forward the amendment the Government intend to give effect to the substance of the amendment moved by the Opposition in Committee, an amendment which was carried and which now constitutes subsection 3(c). The Opposition's amendment seems to us to be defective, and I hope that they will be satisfied that in moving Amendment No. 82 we are meeting their point.

Photo of Mrs Sally Oppenheim Mrs Sally Oppenheim , Gloucester

We are grateful to the Government for this amendment. The House will have guessed from the verve with which the Minister moved it that it was a concession. We consider it to be a fairly important concession, although giving effect to a vote which we won in Committee.

This is a point of which the House should be fully aware, because the hon. Member for Bristol, North-West (Mr. Thomas) has been continually calling for powers under the Bill to induce companies to enter into planning agreements, whether they want them or not. The purpose of our amendment in Committee was to ensure that the Price Commission had regard only to the criteria in Clause 2—not because we thought that those criteria were adequate but because if they were there the Price Commission would have some regard to them. It precludes any other consideration later of planning agreements or anything else that might be close to the heart of the hon. Member for Bristol, North-West. In moving the amendment in Committee, I wanted to make sure that the hon. Gentleman knew exactly what it was all about.

Photo of Mr Ronald Thomas Mr Ronald Thomas , Bristol North West

May I ask whether the hon. Lady is all right?

Photo of Mr George Thomas Mr George Thomas , Cardiff West

I take the point that, un-fortunately—and I am sad about this—the Government have accepted the situation as it happened in Committee and have been forced to move their amendment to cover the matter. They have slightly reworded the provision, but in essence it amounts to the same thing. I am sorry that, having set out the criteria in Clause 2, they believe that that is the beginning and end of any possible criteria in the lifetime of the Price Commission—unless it is suggested that at some stage we shall have an opportunity to amend it.

A number of my hon. Friends and I attempted by an amendment to try to include as one of the yardsticks under Clause 2 the planning agreement concept. I believe that planning agreements, which were central to the Labour Government's industrial policy and our election manifesto, link up with all the other yardsticks in regard to capital investment, the question of producing goods and services efficiently, planning, expansion of business and research and development. All those aspects were covered in our concept of planning agreements.

I regret that the Government were unable to accept an amendment on those lines. It would have been possible for the Price Commission to impose a complete freeze on price increases until a company had entered into a planning agreement with the Government and trade unions concerned. I am sad that the Government have now accepted the Opposition's amendment, because it is tantamount to suggesting that these are the only things that should be looked at. In a few weeks, months or even one year's time there may be other important factors that the Commission ought to take into account, and this will restrict the Commission severely.

Photo of Mr Norman Tebbit Mr Norman Tebbit , Waltham Forest Chingford

I am sorry to intrude on what seems to be an occasion of some sort of private grief between the hon. Member for Bristol, North-West (Mr. Thomas) and the Government. It is another one of those disputes between the Labour Party and the Government.

I thought that the Minister was rather brief. That may have been all right for hon. Members who served on the Com- mittee, but those of us who did not do so deserve from the Minister the courtesy of a fuller explanation about how he has become convinced that the Opposition were right in moving the amendment in Committee. I want to hear more from the Minister about why he thinks it right to resist the amendment put forward by his hon. Friends who are so keen on planning agreements and the enforcement of such agreements. Why is the Minister so much against using the Bill as a vehicle for forcing the planning agreements that his hon. Friends want?

Intuitively, I feel that the Minister is right and that his hon. Friends are wrong, but the Minister owes it to the House to give a fuller explanation of the virtues of the amendment which he so quickly and glibly glossed over. I want to support the Minister. It is my natural reaction in this reasonable stand, but I am worried about his dispute with his hon. Friends. Before I finally cast my vote one way or another, I should like to hear from the hon. Gentleman why he agrees with us and not with his hon. Friends below the Gangway—who, after all, constitute the majority of his party—and why he believes that they are wrong.

Photo of Mr Eddie Loyden Mr Eddie Loyden , Liverpool, Garston

The clause deals with the matters to which the Commission should have regard, and I join with my hon. Friend the Member for Bristol, North-West (Mr. Thomas) in expressing disappointment that the matters that were raised on the clause in Committee have not been given full consideration by the Government.

One point which was raised in Committee by my hon. Friends and myself—and I accept that the Government now make reference to this in a later clause—was that of hidden prices. The argument ought to have been met in this clause. By implication, the Government agree with the arguments that were put forward at Second Reading about hidden prices being relevant to the Bill. The Minister said that he was sympathetic to the point, and he welcomed the fact that we had raised this important issue. In those circumstances, I should have thought that it would be politic for the Government to enshrine the point in this part of the Bill.

Hidden prices are a matter of major concern to the consumer. I am well aware that this is not just a matter of the price mechanism but that it concerns the quality and quantity of goods. That also needs the attention of the Price Commission. Other points that were mentioned on Second Reading about the desirability of encouraging cost reductions through the improvement and use of resources are also relevant in dealing with the whole matter of the price mechanism and control. Reductions in cost through improvements in the use of resources are also important, because it has been argued that the Bill is part of the Government's whole strategy and that it will encourage efficiency. Therefore, it is right that we should register our concern. I hope that even at this late hour consideration will be given by my right hon. Friend the Secretary of State to the introduction of these imporant matters.

Photo of Mr George Thomas Mr George Thomas , Cardiff West

Does the hon. Gentleman wish to raise a point of order?

Photo of Mr George Thomas Mr George Thomas , Cardiff West

The hon. Gentleman has already addressed the House on this amendment, and this is Report stage.

Amendment agreed to.

11.30 p.m.

Photo of Mr Cecil Parkinson Mr Cecil Parkinson , Hertfordshire South

I beg to move Amendment No. 6, in page 3, line 30 after "recover", insert "all".

The debate on a similar amendment was one of the very few bad-tempered debates in Committee. The bad temper arose because the amendment was so obviously sensible and not offensive, and it so obviously would help and not undermine the Bill, that we did not think there could be any possible objection to it. To our utter astonishment, however, the Minister said that he did not think that the amendment was necessary because, provided that a supplier was efficient, all his costs would be allowed. The Minister then went on to argue—for a trumped-up reason that even he seemed not to find very convincing—that he could not accept the amendment.

If the amendment were accepted, subsection (2)(a) would say that the Com- mission had to take account of, amongst other things, the need to recover all costs incurred in efficiently supplying goods and services". We say that the word "all" is important. A number of people in industry are convinced that without it the clause would be defective.

The Minister has said that it is his intention that all costs should be allowed. If he would say "This is a perfectly sensible little amendment. We have now had time to reconsider it, and we accept it.", the House could quickly move to the next of the remaining 37 debates.

Photo of Mr Robert Maclennan Mr Robert Maclennan Parliamentary Under-Secretary (Department of Prices and Consumer Protection)

I wish that I could accommodate the hon. Member for Hert-fordshire, South (Mr. Parkinson), who has made his speech very reasonably, but on further reflection he is likely to realise that the amendment would be rather burdensome to industry and would out-weigh any safeguard that he is anxious to provide.

It would be a great mistake for the Commission to feel that it was constrained to investigate every cost element which might not have been advanced by the company concerned in its original submission, where it considers that costs are relevant. As I made plain in an earlier debate, part of the purpose of our moving towards this system of price control is to minimise the administrative burden upon industry without in any way minimising the effectiveness of the control. I think that what the hon. Gentleman has in mind is undesirable from industry's point of view.

Photo of Mr Michael Neubert Mr Michael Neubert , Romford

I am sure that my hon. Friend the Member for Hertfordshire, South (Mr. Parkinson) will find that reply most unsatisfactory and very little different from the one we received in Committee. It shows no sign of progress on what is quite an important point. On the last amendment but one we sought to delete four words and substitute two. Now we have even an more modest ambition, to insert only one word, but even that is not acceptable to the Government. The Government find even one word choking in their gullet.

It could be said that "costs" implies all costs since it has no other qualification and that "all" would be redundant, but it appears from what the Minister has said that not all costs will be taken into account under the Bill. He has said that, if a company has to count all costs in its submission, that would be an unnecessary burden, but surely any company wishing to make a submission for a proposed price increase would want to bring forward as many costs as it could in justification of the increase.

It is important to the company and not a burden on it to established all the costs incurred in efficiently supplying goods and services. Surely the safeguard that the Government require is in the criteria dealing with the efficiency of the operation and the fact that there should be no opportunity for companies to be wasteful in expenditure and to recoup that wasted money from the public through higher prices. As they have that safeguard, why cannot the Government accept the insertion of one word to make clear that the Commission should have regard to all costs?

There is a current illustration of why we should be apprehensive on what appears to be a retatively small point. Under the existing Price Code, not all costs are acceptable as a justification for price increases. Only "allowable" costs can be submitted. The distinction is important. This reasonable amendment could be accepted by a Government who were prepared to concede reasonable arguments. If there are no signs of the Government relenting, I hope that we shall divide.

Photo of Mr Ronald Thomas Mr Ronald Thomas , Bristol North West

I oppose the insertion of the word "all". It is all very well to say that this is the sting in the tail in the sense of the inefficient supply of goods and services, but, if a firm decides to spend a considerable sum on advertising or giving away gimmicks, it could try to insist that this expenditure was part of the efficient supply of goods and services. I hope that the Commission would reject such a submission. We spend far too much on advertising and gimmicks.

Photo of Mr Tim Smith Mr Tim Smith , Ashfield

If the Commission considers that advertising costs are in excess of what is necessary in order to market a product efficiently, that is taken into account in the clause which refers specifically to the efficient supply of goods.

Photo of Mr George Thomas Mr George Thomas , Cardiff West

I can imagine circumstances in which the Commission would judge that some costs should not be taken into account, and it should have the power to act in those cases.

I notice that the hon. Member for Hertfordshire, South (Mr. Parkinson) did not go on to quote the rest of Clause 2(2)(a), namely: and in maintaining the value of the relevant businesses ". I am worried about the criteria in the clause. Increasingly, it seems that the consumer is expected to pay for expansion, the maintenance of the value of relevant businesses, the purchase of capital equipment and so on. Is the shareholder now defunct and finished? Has the Stock Exchange come to an end? Will hon. Members tell us what has happened? It seems that it is the consumer who is expected to maintain the value of the "relevant businesses". I am sure that when the hon. Member for Hertford-shire, South picks up his textbooks on O-level economics he will read that, when a firm wants to expand or maintain the value of the business, it borrows money or gets more shareholders to put up money.

We hear time and time again from Opposition Members that not enough profits have been made and not enough dividends have been paid out for money to be ploughed back into industry. Nothwithstanding those arguments, they are now demanding that housewives and other consumers should meet all the costs of maintaining the value of the "relevant businesses". I shall not support any amendment of that sort.

Photo of Sir David Price Sir David Price , Eastleigh

I shall not follow the O-level economics of the hon. Member for Bristol, North-West (Mr. Thomas). If I did so, the hon. Gentleman and I would detain the House for a very long time.

I return to the rather narrow point made by my hon. Friend the Member for Hertfordshire, South (Mr. Parkinson). I think that the Under-Secretary of State has his answer if he goes back to the earlier part of the clause, which reads: It shall be the duty of the Commission, in performing any functions mentioned in subsection (3) of this section—(a) to have regard to all matters which appear to the Commission in the particular circumstances to be relevant". That seems to be a qualification. Further, in an earlier debate we retained as the Commission consider them relevant". It seems that those are two qualifications already on the Commission's terms of reference. Surely that covers any fear that if the word "all" were added there would be submissions for frivolous costs. Under the wording of the clause, it would be open to the Commission to regard them as not being relevant.

My hon. Friend the Member for Rom-ford (Mr. Neubert) said that under the previous dispensation of the Commission only certain factors were regarded as relevant. In moving on to the new regime, which I understand the Secretary of State sees as leading to more permanent machinery than the previous constitution of the Commission, it is important to get these matters right. Surely the Government can accept "all" with the qualifications already written into the clause without giving anything away.

It is no secret that a number of hon. Members on both sides of the House have received representations on this issue. If the Government accepted the amendment, they would give nothing away in what they are attempting. At least it would be a conciliatory gesture. Even if the Government care to ignore my right hon. and hon. Friends, perhaps they will bear in mind that these are important matters when dealing with industry and trade, with which the Commission must live as long as it exists.

Photo of Mr Tim Smith Mr Tim Smith , Ashfield

This is an important amendment. The cost referred to in Clause 2(2)(a) are those incurred both in efficiently supplying goods and services and in maintaining the value of the relevant businesses". Following the experience of industry in dealing with the Price Commission under the present code, which I think is in stage 5, it is important that there should be reassurance for industry that under the Bill there will not be any arbitrary exclusion of costs. As my hon. Friends have already said, under the existing code there is the important distinction between allowable and non-allowable costs. We want to be clear that in future there will not be such things as non-allowable costs or any question, for example, of productivity deductions, with the exception which is already provided in the clause where costs are incurred in the inefficient supply of goods and services. That distinction should be made.

The Minister's objection to the amendment—I think he said this in Committee—is that it will increase the administrative burden for industry. If there is to be a distinction between costs that are incurred in the efficient supply on the one hand and costs that are incurred in the non-efficient supply on the other hand, there will be a burden on industry in arguing with the Commission about which costs were incurred in the efficient supply and which were incurred in the non-efficient supply. I can imagine the correspondence that would take place on what was efficient and what was not. That is a good example of speculative judgment. It might be called an accountant's nightmare.

11.45 p.m.

I come now to the question of maintaining the value of the business. The hon. Member for Bristol, North-West (Mr. Thomas) did not seem to understand the distinction between maintaining and expanding the value of a business. He thought that the shareholders should be called upon to maintain the value of the business. The shareholders or the stock market should be called on if the business is to be expanded. But in times of high inflation businesses have a problem in maintaining the value of their business. That is why this must be a relevant factor when the Price Commission is considering price increases or the price levels for a company or industry. I should be interested to know the attitude of the Government to this aspect.

Under the Bill there will be no detailed code that the Commission will follow. I am interested to know how the matter of maintaining the value of the business will be defined. There is a fundamental distinction between maintaining the value of a business in historical cost terms and maintaining its value in current cost terms.

The Government have accepted the need for a change in current cost accounts.

Photo of Mr Ronald Thomas Mr Ronald Thomas , Bristol North West

Given the hon. Gentleman's view that it should be the consumer who has to maintain the value of the business along with other expansion later on, does he not accept that the whole risk element has been taken out?

Photo of Mr Tim Smith Mr Tim Smith , Ashfield

No. The question of the risk involved was raised in the debate on a previous amendment. Government supporters did not understand what this meant. Nor did they understand how the Price Commission would determine the risk. If I put my money into a building society and receive 11 per cent, interest if I do nothing, I should want much more than 11 per cent, on the capital employed if I involved my money in risk. Most industrial companies are not achieving that rate. There is no incentive. That is what is meant when we speak of the risk involved. But we are not talking about that now. We are discussing maintaining the value of a business.

The Government should make more clear their position on what they mean by maintaining the value of the business. This matter is still the subject of discussion. Businesses should be permitted, as they are under the present code, to make an upwards adjustment for depreciation. I am sure that this practice will continue, although it is not clear whether the present adjustment under the existing code, or a new depreciation adjustment based on replacement cost or fixed assets, will be permitted.

The same applies to working capital. The value of working capital must also be maintained. I am not clear that this will necessarily be allowed, although under the present code there is an allowance for the replacement cost of stock in the same way as there is tax relief for stock. We need clarification of what is meant in respect of working capital.

The question of all the costs involved in maintaining the value of the business is as important as the efficient supply of goods and services. For these reasons, I think that the amendment should be supported.

Photo of Mr Eddie Loyden Mr Eddie Loyden , Liverpool, Garston

My hon. Friend the Member for Bristol, North-West (Mr. Thomas) mentioned the question of the continuing reliance upon consumers to meet every element of risk that is involved in industry and commerce. An important alteration is proposed in the clause by the insertion of the word "all". It makes the relevant part of the clause dealing with the costs incurred in the efficient supply of goods and services subservient to the word "all". Therefore, there would be no control over inefficient and non-essential use of capital in the way that business often uses it.

Much of the inefficiency of industry and commerce is borne by the consumer. Consumer protection should be enshrined in a clause. The Opposition have not said a word in this debate about the consumer. All they have talked about is the protection of business profits and interest. The Bill is intended to protect the consumer, and I should have thought that by this time the Opposition would want that object achieved as well.

Photo of Mr Norman Tebbit Mr Norman Tebbit , Waltham Forest Chingford

The best possible way of considering the consumer is to remember that since the present Government came to office, with all their paraphernalia of nonsense, the value of the consumer's pound has declined to 45p. If hon. Members wanted to protect the consumer, they could put down a motion of confidence and defeat the Government. On a narrower front, they could gut the Bill and throw it away.

Photo of Mr George Thomas Mr George Thomas , Cardiff West

Order. I have been very tolerant with both sides. Now that the hon. Gentleman has had his canter, it would be a great help if he would come to the amendment.

Photo of Mr Norman Tebbit Mr Norman Tebbit , Waltham Forest Chingford

I am willing to come under starter's orders and get into the race. My problem is knowing why the Minister is resisting the amendment. He did not tell us. In racing terms still, he has blinkers on. He does not know what he is up to any more than we do. I suspect that he cannot even read his Civil Service brief, or he would have gone on longer.

The hon. Gentleman has not said whether the Bill already requires the Commission to take all costs into account and that, therefore, the amendment is otiose, or whether there are some costs which he believes should be excluded. Without the amendment, would some costs be disallowed? If he did not know the answer to that straightforward question, the Minister would not have been able to make his case, poorly though he made it. I notice that he is looking anxiously towards the Officials' Box even for the answer to that question.

The hon. Member for Bristol, North-West (Mr. Thomas) mentioned advertising and free gimmicks.

Photo of Mr Norman Tebbit Mr Norman Tebbit , Waltham Forest Chingford

Indeed. The more examples we get the better, because through them we might work to the generality of the issue.

Will advertising and further gimmicks be allowable costs if the Bill is enacted as drafted? For example, will expenditure on trading stamps be allowable? The Minister is now consulting his right hon. Friend the Secretary of State, let alone the civil servants. Again, are the costs involved in industrial disputes, which the management of a company feels it ought to resist to make sure that it operates efficiently, allowable? Are they in or out? They would obviously be brought in by the word "all". But are they in at present?

Suppose, for example, that a company, having decided to take on a political or industrial adviser—a consultant—were to take leave of its collective mind and take on the hon. Member for Bristol, North-West to deal with its problems in getting efficient and good industrial relations. Suppose that a company said to the hon. Gentleman "We have poor industrial relations and we need to know how to improve them in order"—in the words of the Bill—"'to be consistent with the making of adequate profits by efficient suppliers of goods and services'. Will you help us?" I am sure that the hon. Gentleman, being the kind of chap he is, would say "I should not want to be paid for that."

On the other hand, because he is a Socialist and does not want to be paid for anything—we know that Socialists do not accept payment or profit beyond the absolute minimum for their needs, which is how some of them have become so extraordinarily rich—the hon. Gentleman, being a principled fellow, would no doubt say "I have to come here by chauffeur-driven limousine and there is, of course, lunch as well as one or two other little expenses." Would those costs be allowable under the Bill as drafted? It is important to the House, and even more important to those outside, to know about these matters.

Photo of Mr Norman Tebbit Mr Norman Tebbit , Waltham Forest Chingford

A company might want to know in order to decide whether to offer a consultancy to the hon. Member for Bristol, North-West, to whom I gladly give way

Photo of Mr Ronald Thomas Mr Ronald Thomas , Bristol North West

I think the hon. Gentleman for giving way. He talked about a chauffeur-driven limousine and other expenses. Is he talking from experience?

Photo of Mr Norman Tebbit Mr Norman Tebbit , Waltham Forest Chingford

I regret to say that I have no experience of these matters at all.

Photo of Mr Ronald Thomas Mr Ronald Thomas , Bristol North West

The hon. Gentleman disappoints me.

Photo of Mr Norman Tebbit Mr Norman Tebbit , Waltham Forest Chingford

It is a grave disappointment to me. If the hon. Gentleman wants to advertise the fact that my services are available, it will be very kind of him. It might be picked up somewhere. As the House knows, I am an expert on defusing nasty industrial situations which might from time to time lead to violence. I am eager to know whether such expenses arc allowable as the Bill is drafted. If not, I think that we should press the amendment to a vote.

To be rather more serious than the certain amount of leg-pulling in which I have indulged, as opposed to the hon. Member for Bristol, North-West, who might or might not be a reputable consultant—I understand that he has never been a consultant, so I do not know how good he would be—there are a number of reputable consultants who might or might not be taken on by companies, and those companies want to know whether such expenses would be allowable.

I come back to the specific questions which I put to the Minister. Are there some costs which, as the Bill is drafted, would be disallowed? In particular, would expenditure on trading stamps be allowed or disallowed as the Bill is drafted?

12 Midnight

Photo of Mr Roger Moate Mr Roger Moate , Faversham

The hon. Member for Bristol, North-West (Mr. Thomas) told us of his experiences with O-level economics, but he did not say whether he had passed or failed. If, as I suspect, it was the latter, that would explain some of his recent contributions.

I think that the hon. Gentleman answered the Minister. The Minister told us that his reason for rejecting this eminently reasonable amendment was that apparently it would be a great burden upon industry. He was not very convincing when he put forward that argument, but perhaps I may return to that later. The hon. Member for Bristol, North-West saw it not as a burden on industry but as an opportunity for industry to pass on unwarranted costs to the consumer. We now have a situation with which we are familiar—total disagreement between the Government Front Bench and the majority of Back Benchers.

Does the proposal represent a burden on industry? Is the Minister right to defend industry against this unreasonable burden that the Opposition are seeking to impose upon it? Alternatively, is the hon. Member for Bristol, North-West right to say that we are opening the gates to allow unreasonable costs to be passed on?

The Minister is trying to pull a fast one. I was anxious to learn from the debate. I was not privileged to serve on the Committee. I sat here impressed with the skill with which my hon. Friends deployed their arguments and their obvious tenacity after having lived through weeks of debate on all these technical matters. I thought that nothing could be more reasonable than the amendment. It seemed sensible to argue that all costs incurred in the efficient supply of goods and services should be allowable.

My hon. Friend argued that industry wanted the amendment, but the Minister said that it was an unreasonable burden on industry. The Minister is telling us that he knows better than industrialists. That is the philosophy that runs through the Bill. The hon. Gentleman is saying that he knows what is good for industry and the consumer better than they do.

This is a reasonable amendment which has been rejected on specious grounds. The Minister is obliged to tell us which costs should not be allowable. He has said that not all costs incurred in the efficient supply of goods and services will be allowable, but he has failed to tell us which costs will be allowable.

The Minister's argument is that the amendment would impose a burden on industry because of the necessity of investigating all such costs. That pinpoints the sheer nonsense of the whole operation. Presumably, if an industrialist does not wish to make a claim for legi- timate expenses he will not do so. If he feels that he has a case, he will make a claim and be ready to accept that it might be investigated. For the Minister to say that every claim must be investigated by the Commission demonstrates the sheer bureaucratic folly of the operation. I do not understand how businesses can be expected to make intelligent decisions in a climate like this.

The Minister owes it to the House to give a better explanation of why he feels that all expenses incurred in this fashion cannot be allowed. He has given a poor explanation. If this has been his attitude throughout, my hon. Friends who suffered in Committee have my sympathy.

Photo of Mr Cecil Parkinson Mr Cecil Parkinson , Hertfordshire South

I should like to wind up the debate, because it seems that the Minister has nothing to add to his totally inadequate earlier reply. As he said, I moved the amendment very briefly and reasonably, because it is a very brief and reasonable amendment. All that we got from the Minister was a rehash of the very bad answer that his colleague gave in Committee.

I congratulate my hon. Friend the Member for Ashfield (Mr. Smith), who is not in the Chamber at present, on his first interventions during a Report stage. He has shown the House what an asset he will be. He is extremely well informed and has made two very useful interventions.

I deal with the point raised by the hon. Member for Bristol, North-West (Mr. Thomas). I have heard about people who are dominated by the conspiracy theory of politics, but I have never come across anyone with such a bad attack of that problem as the hon. Member. Here we have the simple suggestion to insert in a subsection the word "all", which would be qualified by the fact that all costs would have to be incurred in efficiently supplying goods and services—not just any old costs, but only all the costs incurred in efficiently supplying goods and services—and then in maintaining the value of the relevant businesses.

The hon. Member seems to see something very offensive about maintaining the value of the relevant businesses. Perhaps I may tell him in simple terms that what it means is making sure that the business is not making a loss and thereby using up its assets. That may not seem very important to him, but the basis of employment for people is the fact that the business they are in remains viable. All that the subsection would say is that the Commission should make sure that one of the things that it can take into account is the need for the business to remain viable. Every person who works in business needs the business to be capable of doing just that.

Photo of Mr Ronald Thomas Mr Ronald Thomas , Bristol North West

Taking this subsection along with all the others, in essence it means that the consumer will be paying for all these additional costs, maintaining value, expansion and all the rest. One of the best arguments for public ownership is that the consumer should own these things if he has to pay for them.

Photo of Mr Cecil Parkinson Mr Cecil Parkinson , Hertfordshire South

The truth of the matter is that only in the public sector could losses of the kind that have been incurred be incurred and still allow people to remain in jobs, yet the hon. Gentleman's Government are saying that they cannot carry on having losses in the public sector because if they have to keep subsidising the public sector they will be undermining the private sector. The hon. Gentleman has got it wrong. He must try to understand this matter and put his prejudices on one side just once in a while.

It is vitally important for the workers, who themselves are consumers, that the businesses for which they work should stay in business. That is the way in which people will be able to afford to live. There is nothing sinister and nothing of which to be scared in the subsection. It is very important to all of us that British industry remains viable and that the Commission is allowed to take that factor into account in arriving at its decisions.

The introduction of the word "all", which the Minister said would be a burden on British business, is being requested by British business for the very simple reason that industry wants to be assured about a very simple point—that is, that all costs incurred in providing the efficient supply of goods and services should be allowed. Industry is not sure that the Commission would not decide, for instance, that only a proportion of properly incurred costs need be recovered by the company. The clause could easily be read in that way—that, whether or not the costs were properly incurred, the Commission could decide not to allow all of them. Industry simply says that we should put in the word "all", which would remove ambiguity and make the clause clearer. The Minister has already said that it is what he wants. The Opposition simply do not understand why the Government are being so obdurate.

Photo of Mr Norman Tebbit Mr Norman Tebbit , Waltham Forest Chingford

During my hon. Friend's time in serving on the Standing Committee on the Bill, did he discover whether the Minister thought that the Bill as presently drafted meant that a company would be able to recover all costs? The Minister seems to be very reticent about that. Does my hon. Friend know the Minister's intention? The Minister clearly does not want to say what his intention is.

Photo of Mr Cecil Parkinson Mr Cecil Parkinson , Hertfordshire South

My hon. Friend asks a question which I am not qualified to answer. All I can tell him is that in Committee, when we put to the Minister the points which he has put to him today, we were given exactly the same answer as we have had today. One has formed the distinct impression that neither the Minister then nor the Minister today understood the answer he was reading. In their defence, I must say that neither Minister gave the impression that his heart was in his answer. They both seemed embarrassed at having to say "No".

We have had a much longer debate than I imagined on a point which should not have detained the House at all, because it is obviously a simple, sensible and fair amendment.

Photo of Mr Michael Neubert Mr Michael Neubert , Romford

On a point of order, Mr. Speaker. You mentioned earlier that it was only possible for a Member to contribute once to the debate on an amendment on Report. Can you confirm that the Minister could have contributed again by leave of the House, and that if he has not done so it is by his own wish and not because of the procedures of the House?

Photo of Mr George Thomas Mr George Thomas , Cardiff West

A Member who moves an amendment and the Minister are able to speak again if they so wish.

Question put, That the amendment be made:—

The House divided: Ayes 230, Noes 273.

[For Division List No. 161 see c. 1607]

Question accordingly negatived.

Photo of Mr Robert Maclennan Mr Robert Maclennan Parliamentary Under-Secretary (Department of Prices and Consumer Protection)

I beg to move Amendment No. 8, in page 4, line 3, after 'expansion', insert 'in the United Kingdom'.

In Committee my hon. Friends, in particular my hon. Friend the Member for Liverpool, Garston (Mr. Loyden), asked for an assurance that among the criteria expansion would be limited to expansion of business activities in the United Kingdom and that we should seek to discriminate between expansion of business overseas and expansion in this country. My hon. Friend the Minister of State undertook to consider the point further, and this amendment is intended to meet it. I commend the amendment to the House.

Photo of Mr Ronald Thomas Mr Ronald Thomas , Bristol North West

I very much welcome the amendment. We have heard no mention by Conservatives of the consumer. They are not concerned with the consumer—indeed, it seems to be a dirty word for them. The only word they keep repeating is "profit".

As the provision originally stood, it meant that consumers would have to pay higher prices so that multinational companies and others could expand overseas to the detriment of employment, economic growth and export potential in the domestic British economy. There are those who argue that there are certain advantages to be gained from capital investment overseas, which last year ran at a figure of £2,000 million. In the last five years the figure has been as much as £7,000 million. But if we examine in detail the balance of payments red book, we see that little of the profits from the companies which have expanded overseas ever returns to the United Kingdom balance of payments. Although there are regulations to the effect that two-thirds should come back to this country, the fact is that only one-third has returned here in recent years.

12.30 a.m.

I welcome the amendment but I ask the Government for a further assurance. because to allow firms to put up their prices simply in order to expand their business suggests that consumers could be asked to pay for takeover bids of many kinds. We have seen many such takeover bids in the past, most of which have been carried out simply for asset stripping and so on. There have been many cases where this general term of expansion of companies has really meant something that has been done to achieve the highest possible level of profitability without concern for employment or for the best interests of the British people or the economy.

It would be quite wrong that firms should be allowed to put up their prices so that there can be takeover bids—and that has happened. Once the takeovers have been completed, there has been asset stripping, establishments have been closed down and there have been redundancies. I hope that the Minister will give an assurance on that aspect. However, on behalf of my hon. Friend the Member for Liverpool, Garston (Mr. Loyden), who has had to leave for a short while, and my other hon. Friends, I welcome what the Government have done.

Photo of Sir David Price Sir David Price , Eastleigh

I wish to reply now to what has been said by the hon. Member for Bristol, North-West (Mr. Thomas), but I hope to catch the eye of the Chair in order to speak on the next group of amendments as well. I shall then support the hon. Member for Colne Valley (Mr. Wainwright) in trying to fortify competition. The House will remember that during Question Time today I put it to the Government that the best way of protecting the consumer was by trying to fortify competition. The next group of amendments attempts to do that.

The hon. Member for Bristol, North-West has brought up on this amendment a point that he has mentioned before—the sad song that the consumer is not mentioned in every amendment. The hon. Member lives in a curious fantasy world of his own in Bristol, North-West. However, we are confident that he will not be representing that constituency for much longer, so the House should not be detained by his views.

I have a certain sympathy for the point of view that consideration should be given to where capital will be used. However, I should have thought that the Government could give a better explanation than they have given so far about why the words in the amendment should be added. Those words would have the effect of restricting the expansion of companies abroad in support of British exports. I do not need to tell the Minister that it is often necessary to spend money abroad in order to export. That seems to be a proper use of resources. Indeed, much of the Third world needs such expansion and we are encouraged by United Nations agencies to do more manufacturing in those countries. It is perfectly proper for a British company to spend some of its resources in setting up in the Third world a factory which would give a base for further exports. I am sure that many hon. Members know that in the case of an increasing number of products it is impossible to sell the finished article in Third world markets.

In order to maintain employment in this country, we must assemble products in those countries while the more sophisticated work is done here. That is the cost of keeping ahead of the game technologically in Britain. Surely that is a proper use of resources. I should have thought that the Government would be anxious for us to do more for Third world countries and to help them to pull themselves up by their boot strings, and that the Government would realise that it is necessary for us to spend capital in order to do that.

A typical example is to be found in the motor industry. British Leyland finds it necessary to export lorries in knockdown form for assembly abroad. Do the Government think that that is wrong? We must guess that they do, and certainly that the hon. Member for Bristol, North-West would regard it as contrary to his view of the national interest, although no doubt when we debate underdeveloped countries he will say that we must do more to help them.

Photo of Mr Ronald Thomas Mr Ronald Thomas , Bristol North West

The hon. Gentleman will know, if he looks at the balance of payments statistics on the export of capital, that the vast bulk of it goes to the highly industrialised countries of Western Europe or South Africa or the other highly industrialised countries such as the United States and those in the Commonwealth, and not to the underdeveloped world.

Photo of Sir David Price Sir David Price , Eastleigh

I am surprised that the hon. Gentleman, coming from the stable that he does, regards South Africa as being fully developed. I should have thought there was a strong case—I would deploy it, but no doubt the hon. Gentleman feels differently—for saying that there is a degree of underdevelopment among the population of South Africa.

Photo of Sir David Price Sir David Price , Eastleigh

Of course. That is why we want to get back to a proper rate of economic growth. Until we do, most of our problems will remain insoluble.

I return to the Minister's proposal to limit the subsection to the United Kingdom. He has given us no case so far. He has assumed, as is becoming the increasing habit of Ministers on Report, that all hon. Members were members of the Standing Committee, which is not so. The hon. Gentleman should give us a better explanation, and I hope that he will seek leave to reply.

Photo of Mr Anthony Nelson Mr Anthony Nelson , Chichester

I welcome the opportunity to contribute to the debate because I feel that the amendment is particularly important. There is a theme from both sides of the House that could be met. The Minister may have tried to meet it with the amendment, but I have serious misgivings about it. I believe that its eventual effect will be very detrimental to even the best desires felt on both sides of the House.

The hon. Member for Bristol, North-West (Mr. Thomas) spoke particularly about the way in which prices which might be excessive in this country would be used to finance expansion abroad. I am open to correction, but I understand that the subsection refers specifically in a limited way to innovation and development. It contains nothing to prevent a United Kingdom company charging a substantial price out of which a substantial amount of resources could then be used for setting up capital plant abroad.

All that the amended subsection will say is that, in working out what is an adequate rate of return on capital employed, the Price Commission must have particular regard to all the elements spent on innovation, on improving and on developing new products for sale abroad, where that will not result in expansion in the United Kingdom. I hope that that is well understood by the hon. Gentleman and some other Labour Members whose intentions, while they are not being frustrated, are certainly not being met in the amendment.

Photo of Mr Eddie Loyden Mr Eddie Loyden , Liverpool, Garston

I am sorry if I have not followed the hon. Gentleman as carefully as I might have done. Is he suggesting that the innovations to which he refers would be best served by investing capital abroad?

Photo of Mr Anthony Nelson Mr Anthony Nelson , Chichester

No. That was not what I was suggesting.

The amendment could be extremely prejudicial to opportunities for expansion of British companies in this country and the expansion of their profits, activities and employment opportunities internationally, a large part of the benefit of which will accrue directly to the Government through tax payments and to shareholders and consumers in this country.

This part of the Bill refers to the encouragement of research and development in the innovation and development of new products. I believe passionately that one of our major post-war failings has been that we have been unable to devote adequate money, in the public or the private sector, to research and development, not only in new products but in new production tecehniques. This latter point is particularly important. If we look at major industries in other developed industrialised countries, we can see that research and development in production research has enabled them to automate processes and make strides in increasing productivity and their competitive position.

The decline in the rate of investment and productivity in this country is a reflection of the low levels of research and development, and we should be seriously concerned about any legislative proposals that may mitigate against further research and development here.

Clause 2 (2)(c) (ii) refers to the promotion of innovations and technical improvements in the expansion of enterprises. It is wholly desirable that any international company that is registered and has a productive base in the United Kingdom should be able to devote a portion of its resources to promotion of innovations and technical improvements and the expansion of plant in markets abroad.

Famous British companies such as ICI and Dunlop undertake a substantial amount of research and development on innovative and technical improvement work in this country that is used in developing countries and industrialised countries, and they devote substantial resources to new productive plant in developing countries that can be used to import employment, teechnical skills and labour from Britain. Through the process of dividends—which some Labour Members may argue is not adequate—a return accrues to this country, and a company that is United Kingdom-registered and based has to produce accounts showing the public, consumers and shareholders that an adequate return has been obtained.

The amendment would allow the Price Commission to disregard that element of resources spent on research and development in the United Kingdom even though it may be used subsequently for the development of plants abroad. This may have a detrimental effect on companies in this country, on our unemployment and on any technological leads that we may have developed in particular areas of research.

Photo of Mr Eddie Loyden Mr Eddie Loyden , Liverpool, Garston

I go at least part of the way with the hon. Gentleman, but does he not agree that, although some of the greatest technological innovations have taken place in this country, there is evidence, especially in telecommunications, that they are being transferred abroad? The Thorn case, in which a factory was transferred to Japan, is an example. The Lucas presentation, which involves going abroad for development and innovation, is being resisted by the Lucas management——

Photo of Mr Myer Galpern Mr Myer Galpern , Glasgow Shettleston

Order. If the hon. Gentleman wishes to take part in the debate he may do so, but I do not think that an intervention should be as long as the one that he has begun, otherwise we shall be sitting on Saturday and Sunday too.

12.45 a.m.

Photo of Mr Anthony Nelson Mr Anthony Nelson , Chichester

I appreciate the drift of the hon. Gentleman's intervention and I go along with him to an extent. We have been a great country for winning Nobel Prizes, but since the war we have been less able in translating those prizes into products that people want to buy at the right price and in sufficient quantity. There are a variety of reasons for that.

I am sure that the hon. Gentleman will be one of the first to read the findings and report of the Select Committee on Science and Technology, which has been giving specific consideration to the problems of technological transfer and encouraging new and smaller-base high technology industries in this country.

It must be a matter of concern to both sides of the House, and one that is central to discussion of the amendment, that there should be adequate encouragement of and resources made available for the development of new ideas. However, I parry the hon. Gentleman's intervention by saying that, if we have an economic situation in which a young research graduate coming from the research laboratories with a good idea finds that the cost of borrowing money to fund the initial product, which has market potential, is substantially above the likely average rate of real return that he will make, substantial commitment is involved even if he can offer the security to get hold of the money that is required. It also involves substantial risk, which in present economic circumstances he is unlikely to meet.

It is that wider fiscal and economic environment which militates against the take-up of many of the greatest ideas that we have had, in addition to which the size of our economic base and the size of many of our companies and the market that certain specialised products can supply are much more limited than in the case of the Japanese market, which is twice as large as ours, or the American market. That is another reason for many of us taking the view that positive advantages may come from our membership of the European Community and should be developed. At least the Community has a substantially larger market for many of the new high technology products that we have developed.

I return more specifically to the finite provisions of the amendment. Why should the cost of research and development of products that are to be manufactured where they are perhaps most suitable, which in some instances may not be in this country, be particularly allowable by the Commission in assessing an adequate rate of return for the company involved? It seems that the amendment is diametrically inconsistent with paragraph (h), which provides that the Commission must take account of the need to avoid detriment, from restraints on prices and charges, to the United Kingdom balance of payments and the need to increase the share of United Kingdom enterprises in markets in the United Kingdom and elsewhere. If a United Kingdom-based company is able and willing to develop a product abroad, and is willing to set up a manufacturing plant abroad for a product which has been developed in its initial stages in this country because it feels that it has worldwide application and that for good commercial and economic reasons the productive plant for the product should be near the source of product—it may be crop-based or based on a raw material—by investing in it it will earn a rate of return that will be of substantial benefit for the Government, who will take half the consolidated profits of the company, as well as substantially enhancing employment opportunities and the potential for investment in this country through retained group profits. I believe that that is wholly desirable. But why should an amendment not allow the company to pass on the cost of the research and development work on a product which would be of benefit to us all but will be excluded as one of the considerations by the Price Commission?

Photo of Mr Ronald Thomas Mr Ronald Thomas , Bristol North West

We are talking not only about British companies. We are also talking about multinational companies that are foreign-owned. They already get up to enough financial manipulations as it is. The hon. Gentleman is inviting them to select the United Kingdom in which to undertake work the cost of which can be passed on to the consumers and the benefits of which can be passed on to the multinational companies in other markets.

Photo of Mr Anthony Nelson Mr Anthony Nelson , Chichester

I shall deal later with international, or multinational, companies. I hope that the Minister will answer the points made by hon. Members and not merely provide further justification for this important amendment.

What is meant by expansion in the United Kingdom"? "Expansion" may have a number of meanings. Does it mean expansion in terms of the definition and for the purposes of the Price Commission? Does it mean expansion in capital plant or in turnover attributable to the United Kingdom operation, or in the number of people employed in this country? Does it mean an expansion of the whole asset base of a company which may be registered wholly or partly in this country? Is it the consolidated profit base of the entire group, taking into account its international operations, which may be based in this country? If so, the purpose of the amendment is frustrated.

If we talk about the expansion of a company, we must define what the expansion means. If it takes into account the receipt of dividends from foreign plant which has been set up in consequence of research and development activities in this country, well and good, but in that case the amendment is totally redundant.

The amendment will prevent expenditure on jobs, progress and research and development in the United Kingdom by international companies, which cannot necessarily take account of the cost of that research and development in setting prices that will apply in this country and abroad when work as a result of the research and development may be done elsewhere.

The amendment does not overcome a large part of the problem referred to by the hon. Member for Bristol, North-West. He referred to the way in which international companies are aided and sometimes transfer their assets and decide to start—as well as to close—plants. That is a subject for another debate. It is a value judgment. We may not share the same opinion on the extent to which that can and should be controlled. In this instance, however, where we are discussing the provision of funds for the improvement or development of new products, my point is that for an international company, as well as for a United Kingdom company, the amendment will provide a substantial restraint on its willingness to undertake research and development in this country resulting in an improved product that would benefit all groups.

This is not a partisan point. Unless I am completely overlooking an area of inadequate interpretation, I do not believe that the Government's amendment meets the point raised in Committee. It will mitigate against the future of research and development in many industrial areas.

If the amendment is passed, what will be the status of grants or contract work by businesses to universities or independent teams to do research which will show a profit but may involve production or sales abroad? Many companies make substantial contributions in this way, often benefiting this country in dividends and transfer payment from British citizens abroad. The amendment may prejudice the financing of such projects by limiting the extent to which the costs of development can be passed on in prices.

What will be the status of in-house research and development of products or techniques which may be used abroad, raising a substantial sum in licences and royalties and creating a valuable number of British jobs abroad? Many British manufacturing and services companies are designing new production plants and doing research which is critical to the development of an industrial base in many Third world countries. Some have sales in this country. It is a worthy commercial decision to cover group costs with the price of the product. The cross-subsidisation of products is a matter for the company and would normally be taken into account in the corporate structure, but such research and development activities by British companies selling designs and techniques abroad and earning British licence fees will be prejudiced by the amendment.

What is the status of joint ventures by British and foreign companies developing products for sale here and abroad? They will be far more likely to choose a site for the research where they will be allowed to pass on the costs in the price of the product. If the research and development is not attributable to subsequent sales here—if it is not among the Commission's criteria—that will weigh the decision in favour of doing the research and development abroad. We have a desperate paucity of facilities and opportunities in this area, and the amendment may worsen the chances of people looking for such work in future.

I reiterate that I genuinely believe that these are points that the Minister may not have taken fully into account in formulating the amendment. If passed, the amendment will work against the intention enunciated in Committee and will certainly act to the detriment of progress in research and scientific endeavour in this country.

1.0 a.m.

Photo of Mr Peter Brooke Mr Peter Brooke , City of London and Westminster South

I shall shortly be following my hon. Friend the Member for Chichester (Mr. Nelson) in the views that he expressed.

I hope that I shall not be out of order in speaking for the first time on Report if I begin by congratulating the Secretary of State on having selected one of my constituents to be Chairman of the Price Commission. However bad the Bill and however bad the Commission, it cannot but be improved by having one of my constituents as chairman.

I am not addicted to many forms of recycling—I suspect that recycling appeals to supporters of the amendment—but one form to which I am addicted is the preparation of notes for speeches in the House on the backs of invitation cards which hon. Members receive to attend various functions.

By chance, the card on which these notes have been made is an invitation from the City of London Trade Club, which, the card tells me, was founded in 1720—the year in which the South Sea Bubble burst and a commendable sign of optimism and enterprise on the part of the City of London in hard times.

The card goes on to point out that the club is incorporated with the Trader's Society, which was founded in 1739, that having been the first year of the war of Jenkin's Ear—a war which, no doubt, may shortly break out again in Brussels. But again the City of London took a forward-looking and progressive stance at a time of economic trouble.

The spirit which motivated both those actions has a great deal to do with the major contribution that the City of London makes to our balance of payments. But that optimism is in sharp contrast with the pessimism which motivates this amendment. The amendment, with its pessimism, is opposed to the multinational company. At least in terms of the postwar era, the multinational company is one of the phenomena of our age. It has been one of the major engines of growth for the considerable economic prosperity which the world has seen over the last quarter of a century.

There is anxiety on the Government Benches about the multinational company being used for the adjustment of taxes around the world. I remember being in Brussels six years ago when the then American Ambassador to OECD described a Committee which the OECD had set up to consider the problems of taxation in a multinational world. He said that the various member countries had been asked to indicate whether they thought that supranational taxation powers were in any way necessary to combat the multinational company. The conclusion of that Committee, six years ago, was that no further powers were needed and that each of the member countries had powers of its own to deal with it.

It comes as no surprise to me that in the last six years the taxing authorities and the internal revenue services of the various countries have in fact been collaborating so much more closely than in the past. The apprehension about the multinational company being used as a vehicle for the adjustment of taxation has increasingly seemed to me to be an illusion. I have a sense that, just as generals are accused of always fighting the battles of the last war rather than looking forward, so, in our anxiety about the multinational company today, we are fighting similar former battles when the world economy is in fact moving into a new strategic era.

The hon. Member for Bristol, North-West (Mr. Thomas) quoted figures for foreign investment out of this country. He said that it amounted to £2,000 million. That is exactly the same figure for inward investment to the United Kingdom as was quoted by his hon. Friend the Member for Nelson and Colne (Mr. Hoyle). The coincidence between these figures should come as no surprise, because in an open economic society there is likely to be movement to and fro which broadly balances year in, year out.

There is unhappiness about the large part that multinational companies play in investment in this country. The American figure represents about 10 per cent. of our economy. But periodically we are guilty of hypocrisy. We resent the global figure of 10 per cent. because that confers power, but we welcome investment in our constituencies by individual companies who provide jobs. I am not suggesting that one should be in favour of the export of capital per se. I am in favour of maintaining an open society in which capital can move freely between societies.

I follow my hon. Friends the Members for Eastleigh (Mr. Price) and for Chichester in their observations about the benefits and predicaments caused by foreign investment. If I were a manufacturer of bicycles, there would come a time when either markets in the Third world would be closed to me or the country concerned would say that I must build a plant and make the product in that country rather than export from the United Kingdom. It would be cutting off one's nose to spite one's face to turn round and say that one would not put a plant in that country because the climate was against investment of that kind.

I take the point made by the hon. Member for Bristol, North-West that a large amount of investment goes into developed countries rather than developing countries. But I ask the House to be conscious of the considerable benefits in terms of the transfer of technology which flows from foreign operations in countries such as the United States. British management can pick up knowledge by being involved in such operations. It is significant how many chairmen and managing directors of British companies, whether domestic or multinational, have experienced a substantial period of being rotated through such companies at some stage in their careers. They are better managers as a consequence.

I want to deal with the argument about invisibles. There is a permanent historical and economic debate about whether trade follows the flag or the flag follows trade. I have worked in international trade for 15 years. I am talking of service firms which are spread across the world and which generate substantial income for this country on the backs of customers whom they first secured in the United Kingdom. A company which starts off in the United Kingdom and then goes abroad provides an opportunity for service firms to follow it and spread trade across the world.

The Government are pessimistic and defensive. I am proud that the City of London, with Governments of both colours and under the leadership of the Bank of England, has maintained an open society—although it is hindered by the weakness of sterling and the currency. I am proud that the contribution which the City of London has made to the invisibles of this country has been so impressive and is growing so rapidly as a consequence of that stance and policy.

Photo of Mr Eddie Loyden Mr Eddie Loyden , Liverpool, Garston

The amendment also relates to the question of matters that the Commission would have a duty to regard. So far in this debate, the Opposition have given no indication of their concern about a major problem for British industry. The intervention that I made was to establish the direction of the argument about innovations in Britain and the need to develop them. One of our problems has been the inability of British capital, for whatever reasons, to find its way into industries that require it in order to develop innovations that are very much a part of British industrial life.

Every one in this Chamber knows that there have been numerous occasions in the recent past when Members defending constituency positions have argued against the closure of a factory or against the movement of work from Britain to countries such as Spain, where there is a positive advantage for the capitalist in a higher degree of exploitation of a labour force in another country. That has been the main motivation. To try to disguise that fact with an argument that this means that we are depriving other parts of the world in need of our technology is a load of hypocrisy and cant.

In this country we have seen industries in which technology and innovations have been brought forward. Some hon. Members have evidently not studied these matters. Innovations do not necessarily take place only in the universities. There are people on the shop floors of factories in Britain who are as capable—in many cases more capable—of developing innovations that will benefit British industry as anyone else, if they are given the freedom to do so. The Lucas presentation, which took on board the question of innovations such as railroad vehicles, the development of kidney machines and the diversification of the industry, has been disregarded by management. Certainly there has been no indication of management support and finance for that sort of ingenuity which exists in the British worker.

I completely reject the argument that the amendment will affect the areas of the world that require our technology.

Given the opportunity and the freedom to make decisions about production, our workers will be found to have the greatest expertise in developing and diversifying the industries in which they work. The inhibitions placed upon them are the inhibitions of management and those who control the capital. Therefore, it is non-sense to argue that these things have an effect upon developments that everyone desires should take place in other parts of the world. Indeed, if freedom were given to British workers in the way that I suggest, we should be able to solve many of the problems of the developing countries and to increase their technology and, in turn, to have an exchange of resources which would carry us a lot further along the road to the solution of our present problems.

We have a responsibility towards British industry, and that is why we welcome the clause. I well understand and accept that we cannot close our eyes to the rest of the world, but there is a problem here that requires the Government's attention and a regard for expansion in the United Kingdom. Let me give an example of what expansion in the more generalised sense, can mean. In the GEC factory in Liverpool, on Merseyside, three or four years ago 14,000 people were employed. When Weinstock began the takeover and the GEC-AEI combines——

Photo of Mr Eddie Loyden Mr Eddie Loyden , Liverpool, Garston

Expansion, as my hon. Friend says. It has been continuously argued from the Opposition Benches that if the capitalist classes were given the opportunity of pouring profit into their pockets, they would provide the jobs that workers so desperately need. If that is the case, can someone tell me why, when Weinstock took over GEC and merged it with AEI, 14,000 jobs were reduced to 3,500, with a further 400 redundancies on the way? That is the sort of expansion we can well do without.

1.15 a.m.

It has been a question of takeover and, when takeover takes place, of running down what could be the base for expansion of industry in which we have the possibility of penetrating world markets, instead of which we are transferring capital abroad to establish bases in other countries where there is a higher degree of exploitation than can be enjoyed here.

Photo of Mr Neville Sandelson Mr Neville Sandelson , Hillingdon Hayes and Harlington

Would not my hon. Friend agree that per capita productivity has greatly increased in the industry he has referred to and that unemployment is quite different from productivity?

Photo of Mr Eddie Loyden Mr Eddie Loyden , Liverpool, Garston

That has resulted in a loss of £16 per unit of production in cookers. That is the world we have to live in, and it shows the idiocy of the argument about increased per capita production. It is nonsense. Weinstock is laying off 14,000 people because of the loss per cooker of £16. What has been the effect of the so-called expansionist policy as carried out by Weinstock? The result has been that we lost 11,000 jobs on Merseyside and that the factory is producing at a loss of £16 per unit. That is the result of the insane economics of the system in which we live.

I believe that there is a responsibility on the Government and that they are right in bringing forward the amendment. Their responsibility is to industry in the United Kingdom, and the whole mechanism of the Price Commission should be allowed only when it is a matter of development within the United Kingdom.

Photo of Mr Timothy Raison Mr Timothy Raison , Aylesbury

I rise to seek enlightenment about what the Government's amendment means. In passing, may I say that it is some time since I took part in a debate on prices legislation and I had forgotten what nonsense it is. Looking at Clause 2, it is hard to imagine a worse piece of legislation. It would be a good example for a textbook and is a succession of potentially impossible value judgments which have to be made by the pathetic Price Commission.

Those judgments can presumably be taken to court. We remember the example of Tameside, where Ministers thought that the power to deal reasonably gave an absolute power to say what was right and what was wrong. We remember what happened to Ministers there, and no doubt it could happen to the Price Commission in the same way. How will it come to a judgment of what is relevant? These judgments are subjective and meaningless.

I would first reiterate a point made by a number of my hon. Friends that it is nonsensical to argue that activities overseas are in some way harmful. The hon. Member for Bristol, North-West (Mr. Thomas) suggested that it was bad thing that we allowed work to be done overseas when it could be done at home. Some things cannot be done at home.

In the mining industry, there are certain minerals which one cannot take out of the ground in Britain. I suppose that the hon. Member would disapprove of such activities abroad, regardless of the fact that they can make a great deal of money for this country and do a great deal for the balance of payments.

As my hon. Friend the Member for Chichester (Mr. Nelson) pointed out, there is a contradiction between what is permitted under the amendment and what is permitted under paragraph (h). How will this pathetic Commission and the courts, make up their minds whether to follow paragraph (c) or paragraph (h)? We are really talking about Alice-in-Wonderland nonsense.

But, somehow or other, we have to distinguish between an element in a price devoted to innovation at home and expansion overseas. How does one do that? How does one look at the price of goods and say "So much of the price is concerned with the new factory that we are planning to set up in Yorkshire, Bristol or wherever it is and so much is to go to set up a new plant in Australia, Canada, South Africa or the West Indies"? How on earth can we possibly make that kind of judgment? It is complete and utter rubbish.

As I said at the beginning, I do not know what the amendment means. My hon. Friend the Member for Chichester made an extremely able speech, but I have a faint suspicion that he may have been wrong in his interpretation of the amendment. The trouble is that we are faced with a peculiarly sloppy and nasty piece of drafting. The least the Minister can do is to go back and gently reprimand the parliamentary draftsmen for the way in which they have handled this part of the Bill.

The problem relates to commas. If the amendment is accepted, paragraph (c)(ii) would read: to provide money for— comma— and to encourage the promotion of— comma— innovations and technical improvements in— there should be a comma there— and the expansion in the United Kingdom of". There should be another comma there. If those two commas were inserted, it would become slightly easier to understand what the whole thing was about. The point I am making, and the point on which I am inclined to disagree with my hon. Friend the Member for Chichester, is that I believe that the words "in the United Kingdom" apply only to "expansion" and do not apply to "innovations and technical improvements ".

The Minister nods. I am pleased to see that I have the quality of mind of a first-rate parliamentary draftsman and that I understand these things very well. I am flattered to have a ministerial nod. But how on earth do we draw the distinction and say that it is all right to innovate overseas but wrong to expand overseas? If some great new plan or scheme involves new technology, it is perfectly permissible. The Price Commission will think that it is a splendid thing to do. What makes it wrong is if it entails expansion as well. In that case it is very bad. It is damaging to the British worker in Bristol or Merseyside and it is not acceptable to the Government.

How is this crazy Price Commission to make up its mind whether a piece of overseas activity is desirable innovation or undesirable expansion? If a company took the matter to court, as it might well do because considerable sums of money are at stake, how on earth could the courts make up their mind whether something was desirable innovation or undesirable expansion? I say to the Minister that this is absolute rubbish and that he should withdraw the amendment.

Photo of Mr Norman Tebbit Mr Norman Tebbit , Waltham Forest Chingford

I was a little puzzled by my hon. Friend's comments about undesirable expansion, because paragraph (h) reads: the need to increase the share of United Kingdom enterprises in markets in the United Kingdom and elsewhere". That is even more confusing because British companies are enjoined to expand their markets but, of course, without investing any money, because that would be very wicked and wrong.

Photo of Mr Timothy Raison Mr Timothy Raison , Aylesbury

My hon. Friend is absolutely right. That is one more example of the complete and utter dottiness of this legislation.

Photo of Mr George Younger Mr George Younger , Ayr

The Government's amendment does not have a single friend among those who have spoken, except for the hon. Member for Liverpool, Garston (Mr. Loyden) and the hon. Member for Bristol North-West (Mr. Thomas). They expressed their views sincerely, but the doctrines which those views encompass, if put forward seriously in the country, would condemn the whole industrial setup to an inevitable slow and steady decline. This would mean a continual loss of employment as far ahead as we can look.

It would have been bad enough if the amendment had been put down by a Back Bencher. It is quite terrifying that the Government felt able to put down an amendment like this. It is economically illiterate. Only a member of the Government who was not looking at Government policy in the round, as a whole and without consulting his colleagues could possibly have tabled it in the first place. If the Minister is honest, he will admit—not here, perhaps, but at another time in another place—that the amendment does not intend to achieve anything practical or concrete.

The amendment is a gesture made by a weak Government to those who make their life a misery. For this reason the gesture is contemptible, and it is gravely damaging because of the attitude it displays. That attitude is one of hostility to the whole concept of international trade.

One cannot isolate international trade and on the one hand say that the country is happy to have firms here from overseas, making jobs and setting up economic activity and technology, yet on the other hand legislate in small and petty ways to try to prevent British companies from doing the same thing in reverse elsewhere.

I think of the time when I had responsibility for industry in Scotland under the previous Conservative Government, to which I was proud to belong. I wonder where we would have been without the thousands of jobs provided by companies that have come to Scotland attracted from overseas. At that time, something like 30,000 to 40,000 jobs were provided by these companies. I challenge the Minister, who also represents a Scottish constituency, to tell us what on earth the unemployment figures in Scotland would be if there were no foreign investment by multinational companies. The figures would be even more horrific than they are now and have been for the past year or two. The Minister knows it, and he knows that this is a petty amendment that is designed to discourage an attitude in companies that will lead to investment and the provision of jobs.

Photo of Mr Ronald Thomas Mr Ronald Thomas , Bristol North West

I do not read into the amendment that the Government are trying to prevent British firms from investing overseas. I wish that there were much stronger regulations to prevent the outflow of capital. The Government are simply saying that the British consumer should not have to pay increased prices for this capital investment overseas. Anyway, I ask the hon. Member how it is possible for the Price Commission to monitor this. If a company says that it spends £10 million, £20 million or £30 million overseas and it increases its prices by 10 or 20 per cent., how the dickens can the Price Commission begin to monitor that situation?

1.30 a.m.

Photo of Mr George Younger Mr George Younger , Ayr

The hon. Gentleman is right to say that this is impossible to monitor. This is depressing news for Ministers because they are not even pleasing those whom the amendment is supposed to please. It is supposed to please those Labour Members who create alarm and despondency concerning the idea of British firms expanding and investing overseas. Those hon. Members are not satisfied because they can see that this will not achieve anything. This' gesture, which is aimed at pleasing people such as the hon. Member for Bristol, North-West, has failed.

I wonder whether the Minister has consulted his colleagues. Has he, for example, consulted the right hon. Lady the Minister of State for Overseas Development? It is Government policy to encourage British trade and aid to the Third world? The right hon. Lady travels around constantly encouraging that policy. The Government's White Paper "An Account of the British Aid Programme", published a year or two ago, takes pride in the fact that the United Kingdom is a large-scale investor in the developing world and underlines the fact that the contribution of private investment to the flow of resources to the Third world is very considerable. Therefore, the right hon. Lady's Department must be looking askance at this petty provision which is designed to discourage British firms from investing overseas.

I believe that there is no logic in this provision. It does not even please those Left-wing Labour Members whom it was designed to please. It displays an attitude that is liable to discourage the whole concept of freedom in international trade, because the only way in which industry can be successful and expansionist is by having the broadest possible base for development.

In a period of unemployment, a large international company is moving into my constituency right now and will produce hundreds of much-needed jobs. My area has an unemployment rate of 10 per cent, and that work will be greatly welcomed. The firm to which I refer is Digital Computers and it has been attracted to Scotland. What would have happened if domestic legislation in the United States had contained a similar provision to that which we are now discussing?

Photo of Mr George Younger Mr George Younger , Ayr

That is not correct. Firms in the United States are encouraged to invest all over the world, because United States industry knows that the way to have a prosperous, successful and well-provided industry at home is to have the widest possible international base for its activities so that there is the maximum opportunity for the use of technology for development at home and the maximum outlet for those activities.

I know that some Labour Members consider these matters in their own ways and that they have their prejudices, but unless they appreciate these considerations they will condemn their constituents, and the industries in which they work to an inevitable slow decline. Our industry will bleed to death if it is not allowed to play its part.

Photo of Mr Eddie Loyden Mr Eddie Loyden , Liverpool, Garston

Is the hon. Gentleman aware that recently a firm in the constituency of my hon. Friend the Member for Ogmore (Mr. Padley) was prohibited from selling machinery in this country because of the fact that the sole supplier was its parent company in the United States? Does he not consider that to fall within the kind of restrictions which he says do not exist?

Photo of Mr George Younger Mr George Younger , Ayr

With respect, that is an entirely different point.

I conclude by making a point that should appeal to the Under-Secretary of State, who represents the area of Caithness, and Sutherland—very nearly the same part of the world from which I come. I refer to the effects on our economy of North Sea oil. Many considerations are involved but I want to mention only one of them that is relevant.

One of the benefits that we can receive from North Sea oil—if we exploit it correctly—is that we shall become world leaders in the technology of extracting oil from these difficult conditions in the North Sea and from great depths. Long after our own resources have been exploited, we shall be able to expand our companies, with their wealth of experience, into locations overseas where there will be similar activities in the future, in ever more technically difficult conditions and areas.

That is an actual case in which the attitude of the amendment will militate against those possibilities. In its small way the amendment goes out of its way to discourage expansion and to prevent—for the purposes of this legislation—the sort of expenditure that will need to be made in expanding the activities of British companies in the North Sea oil industry into other areas overseas where similar activities may take place in the future. It is a direct illustration. There are many more such examples, but we cannot discuss them all now, as well as many other opportunities that we cannot foresee.

This small and petty-minded attitude of thinking that one can build a fortress wall around this country is preventing our companies from expanding overseas because, superficially, an odd job or two may be lost when the expansion first takes place. In the long term, it bleeds a company to death because it cannot keep up with the whole trend and worldwide activities of the industry.

The amendment is bad and it is disgraceful that the Government should have produced it. I do not believe that Ministers have discussed it with the Foreign Office, the Ministry of Overseas Development or even the Department of Industry. The Government should be thoroughly ashamed of themselves for producing such an economically illiterate amendment—even at 2 a.m.—and I hope that they will have the grace to admit this and withdraw it.

Photo of Mr Doug Hoyle Mr Doug Hoyle , Nelson and Colne

This is a necessary amendment and I and most of my hon. Friends welcome it. When I listen to the Opposition talking about British industry, I cannot understand what factories they have visited. The Opposition are, of course, knowledgeable about the City of London and know all about the institutions there. Indeed, they spend most of their time there. Of course, there are also farmers in the Opposition, but when we start talking about manufacturing industry it is clear that most of the Opposition have never visited a factory.

Photo of Mr George Younger Mr George Younger , Ayr

As one who, unfortunately, has nothing to do with the City of London, I take that as a compliment, because the City earns more by way of the balance of payments for this country than many other industries added together.

Photo of Mr Eddie Loyden Mr Eddie Loyden , Liverpool, Garston

That is absolute nonsense. I am pleased to hear that one hon. Member opposite is not connected with the City. That makes a change.

Photo of Mr Doug Hoyle Mr Doug Hoyle , Nelson and Colne

The one thing that Tories do not know about and are not connected with is manufacturing industry. They do not go into factories. Indeed, from the statements that they have made tonight it is clear that they do not do so. From what they say, one would imagine that British industry is now modern, expanding and full of technical innovations. Quite the reverse is true of the many factories that I have visited recently—and I have visited quite a few.

The type of freedom under which companies have been operating, particularly at times when the Tories have been in office, has meant that investment has been going overseas. The consequence of that is that we have fallen far behind our competitors. If we visit our factories now, we see outworn machine tools and a need for modernisation, and we also see ourselves falling far behind developing nations. It is highly necessary that we should be talking about the amendment. We want expansion here, but the Conservatives want to see it overseas. They are not concerned about where the employment is created. That is the difference between the two sides of the House. Profits is the name of their game.

Here we return to the City of London. It does not matter to the City whether goods are made here. They could be made elsewhere if labour costs were a bit lower there. Only the other day I was in a factory where television tubes are made, and I was told that expansion might take place in Taiwan instead of in this country. It does not matter to the multinational company. Wherever the profit is the greatest, there it will go. Whenever I talk to trade unionists from the developing world, I tell them that the multinational company gives them no safety. [Interruption.] Let the Opposition be educated. They are being taken out of their City offices for a while. [Interruption.]

Photo of Mr Brian Sedgemore Mr Brian Sedgemore , Luton West

We are seeing the Opposition's public school manners.

Photo of Mr Doug Hoyle Mr Doug Hoyle , Nelson and Colne

A multinational company may build a factory in a developing country, but if it can find somewhere else with labour that is a little cheaper it will move there. Therefore, there is no protection for labour in the developing country.

By the amendment, we seek to answer that the technical innovation and expansion will occur in this country, where we shall benefit. Far more than most of the other developed nations, we have a tendency to build factories overseas rather than to export. My hon. Friend the Member for Liverpool, Garston (Mr. Loyden) knows full well the unemployment that has resulted in his constituency and on Merseyside generally. Companies have left because they are no longer profitable, as the expansion and modernisation have not occurred there. My hon. Friend mentioned GEC.

The same thing is happening in North-East Lancashire, but the Opposition do not care. They are here only to defend their friends, particularly multinational companies. They are not concerned about the people of this country, except at election times.

Photo of Mr Norman Tebbit Mr Norman Tebbit , Waltham Forest Chingford

I am deeply impressed by the hon. Gentleman's humanity and concern. The only thing that puzzles me is why he continues to give his loyal and devoted support to a Government who have more than doubled the number of people out of work in this country in the past three years.

Photo of Mr Doug Hoyle Mr Doug Hoyle , Nelson and Colne

I am amazed that the hon. Gentleman puts that proposition forward. I know that he believes in private enterprise, free competition and laissez-faire. I know that he is a great supporter of the right hon. Member for Leeds, North-East (Sir K. Joseph). If the Conservatives were in power, unemployment would be not 1½ million but more than 3 million.

Everything must find its own level. If all the capital departs overseas, we shall eventually find our own level. Our real concern—and I well understand that the Opposition are not at their best at this time of the morning—should be to see that investment, technical innovations and expansion occur here.

I congratulate the Minister on the amendment.

1.45 a.m.

Photo of Mr Timothy Raison Mr Timothy Raison , Aylesbury

The hon. Gentleman is making a most attractive speech, but will he bear in mind the point acknowledged by the Minister that this has nothing to do with innovation and concerns only expansion? Whenever the hon. Gentleman talks about innovation overseas, he should remember that this can still go on.

Photo of Mr Doug Hoyle Mr Doug Hoyle , Nelson and Colne

Of course we are concerned about expansion here and the fact that jobs should be created here.

I congratulate the Secretary of State on an amendment that will do the sort of things that we all want to see, that will create expansion here and provide new jobs, and that will, we hope, lead to less capital flowing overseas.

Photo of Mr Roger Moate Mr Roger Moate , Faversham

We have just heard a fascinating exposition of the internationalism of Socialism. I am disappointed that no Liberal Member is here. The Government may be prepared to enter into rather scruffy horse-trading with its left wing to import an amendment that is highly restrictive and damaging to our international position, but I am surprised that the Liberals will presumably vote with the Government, as they have done all night.

The Liberals used to say that they would not stay in the House after midnight—they argued that they would turn into pumpkins after the witching hour had struck—but with the new Lib-Lab coalition they will stay and vote blindly with the Government—and "blindly" will be the word if they support this amendment. It introduces an important principle that is in conflict with our international obligations and with the declared aim of the Government and Labour Members below the Gangway to expand investment in underdeveloped countries, and it is in conflict with our obligations in the EEC.

I endorse what my hon. Friend the Member for Eastleigh (Mr. Price) said about the way the Minister introduced the amendment. It was deplorable. Hon. Members may not agree with our arguments, but they will agree that we have demonstrated that this is a matter of considerable importance. The Minister introduced the amendment in about 30 seconds and gave hardly any explanation. It was grossly discourteous and disgraceful. I also agree with what my hon. Friend the Member for Eastleigh said about the assumption that we all understand the whole of the Committee proceedings and that the Report stage is regarded as a cosy extension of the Committee, so that there is no need to make a proper presentation of the case for an amendment. In this instance it was the Minister who was discourteous to the House. I hope that he will make amends by giving us a full reply. Surely he has some extremely important matters to answer.

I hope that the Secretary of State had the good grace to feel embarrassed at some of the things that he heard from his hon. Friends below the Gangway. It would be interesting to know whether he agreed with any of their remarks. Did he agree with their diatribes against the multinationals? Did he agree with the attacks that were made against American investment in the United Kingdom? As he is supporting the amendment, presumably he is agreed that we should actively be discouraging investment in the European Economic Community. Is he actively trying to discourage investment in the underdeveloped countries? Perhaps at some stage we might even be honoured by a reply from the right hon. Gentleman. Surely we should know his views.

What is the position in respect of the EEC? As is well known, I was and remain an opponent of membership of the Community. However, I do not necessarily agree with Labour Members below the Gangway that this is a time to be bashing our heads against brick walls in futile exercises in respect of the Community.

I did not agree with the argument against the EEC to the effect that there would be a possible outflow of capital from this country to the Community. If there is such an outflow and if investment grows more in Europe than here, that is merely a reflection of our economic performance. If we see more investment on the Continent than in the United Kingdom, that is a reflection of the type of Government that we have had in the past three years and of the economic climate that the Government have produced.

We cannot artificially pen our capital and investment in the United Kingdom. The Common Market is right in its free trading arguments. We should want to see as much free movement of capital investment as possible.

Photo of Mr Eddie Loyden Mr Eddie Loyden , Liverpool, Garston

If it is true that the outflow of capital from this country reflects the inefficiency of British industry, how can the hon. Member square that argument with the flow of capital from the United States, which by implication he must accept as being in similar circumstances reflecting the inefficiency of American industry?

Photo of Mr Roger Moate Mr Roger Moate , Faversham

I only wish that the cause and effect were the same. One of the significant reasons for an outflow of British capital is this sort of Bill. It is this type of nonsensical restriction that is driving business to invest abroad instead of investing in the United Kingdom.

There is a strong case for the freest possible movement of capital across frontiers. I understood that to be a fundamental principle of the Community. I understood that the Secretary of State was one of the most passionate supporters of membership, yet he is advocating an amendment that introduces a positive act of discrimination against capital investment by British companies in Europe. It may be that the amendment is in legal conflict with our membership of the Community. However, I am sure that investigations have been made and that they have not produced the result that it is improper in that sense.

I am glad to see that the hon. Member for Colne Valley (Mr. Wainwright) is with us. He is another passionate supporter of the Community. I was seeking to ascertain whether the Liberal Party will support the amendment, which seems to introduce an act of discrimination against the Community and against the underdeveloped world. As the Liberals have been following the arguments closely and avidly, no doubt they will exercise their wisdom and vote with us. I cannot believe that they will support the Government on this occasion.

Labour Members below the Gangway were somewhat worried when mention was made of the underdeveloped world. Their answer was that not enough money was going into the underdeveloped countries. They say that only a small percentage of overseas investment goes to the underdeveloped world. That may be right, but is it not their case that it should be more? Is there not agreement that we want to encourage as much private investment in the underdeveloped world as we can? Here, however, we have a positive act of discrimination against it.

Photo of Mr Ronald Thomas Mr Ronald Thomas , Bristol North West

Is the hon. Gentleman suggesting that British companies should be given a completely free hand to invest as much as they like overseas and charge it to the consumer? We are talking about whether they should be allowed to increase their prices to pay for expansion overseas. Does the hon. Gentleman believe that that is the most effective way of helping the underdeveloped countries? The Government are doing it in a far more effective way through the Ministry of Overseas Development and not by appealing in the hope that a larger amount of the £2,000 million that went overseas last year would go to the underdeveloped countries if the private firms could put up their prices to do so.

Photo of Mr Roger Moate Mr Roger Moate , Faversham

I wonder what answer the hon. Gentleman would receive if he asked the underdeveloped countries whether they would appreciate more private investment. Their answer would be that they would appreciate more investment of the kind of which we are talking. The hon. Gentleman will discourage it by means of the amendment. It is all very well for the Secretary of State to shake his head. He does not like what I am saying. How can we expect companies to survive if they cannot charge prices that reflect the cost of borrowing the capital that is required for expansion? It will be a deterrent to their continuing to invest abroad.

There has been an argument about whether the amendment is workable and practical. There is a strong point here. I can see great problems arising in deciding within a company to what extent its general borrowing powers have been exercised in favour of expansion in the United Kingdom or abroad. That is a matter of technicalities. I find the principle obnoxious in this instance. The expression of the appalling, reactionary approach of members of the Tribune Group to the economic argument is remarkable. They are the true reactionaries. They argue for the preservation of every outdated factory and piece of machinery, when they are determined to maintain overmanning levels.

Photo of Mr Doug Hoyle Mr Doug Hoyle , Nelson and Colne

My point was that our industry was out of date because capital had flowed overseas and investment has not occurred in this country.

Photo of Mr Roger Moate Mr Roger Moate , Faversham

We are all concerned about the creation of wealth. We are anxious to see first-class working conditions, high wages and a greater level of investment in British industry. If the hon. Gentleman seeks to maintain every job, every factory and all the old equipment, as he argued earlier, he will destroy wealth and not create it. His argument in favour of putting a tight wall around this country and preventing international and multinational investment would be destructive of jobs and damaging to the consumer.

We were asked whether we ever visited factories. I can think of a few factories in my constituency. I am sure that nearly all hon. Members visit factories in their constituencies regularly. Let us not compete in that regard.

I think of a major private enterprise steelworks in my constituency which employs 800 people and which is backed by Canadian capital and, a mojor pharmaceutical company which employs 400 to 500 people and is backed by American capital. About 600 people are employed in an electrical components factory which is financed by German capital. I can think of dozens of companies in my constituency which were initiated by overseas capital or are parts of multinational companies. I wonder what reaction the hon. Gentleman would get if he told his trade union colleagues that we do not want those companies here. Their employees get generally getter working conditions, industrial relations and wages than people working in our older industries.

2.0 a.m.

Photo of Mr Ronald Thomas Mr Ronald Thomas , Bristol North West

Just now the hon. Gentleman said that capital was rushing out of Britain. Now he is giving us a catalogue of foreign capital coming in. It is very strange.

Photo of Mr Roger Moate Mr Roger Moate , Faversham

It was the hon. Member for Nelson and Colne (Mr. Hoyle) who said that the amendment was needed because of a massive outflow of capital. I said that if there was an outflow it was due to the Government's appalling record. Investment here by multinational companies benefits the British people and it works both ways. Many British companies have invested in the ways that the amendment seeks to deter. They have bought and taken over businesses abroad, helping to ensure a more secure market for British exports. The arguments of Labour Members are totally damaging to British workers and consumers and to wealth creation. They prove the old definition of Socialism that it is concerned with the redistribution of poverty.

Photo of Mr Tim Smith Mr Tim Smith , Ashfield

With his perpetual obsession with charging everything to the consumer, the hon. Member for Bristol, North-West (Mr. Thomas) might be de scribed as the Severn bore. He said that we were not concerned about the consumer. On Amendment No. 4, I declared my interest as the secretary of an engineering company who had dealt with the Price Commission. I might also have declared my interest as a consumer, along with all those I work with and all my constituents. It is because the Government have consistently misled consumers about prices that I stand here at all, because the consumers of Ashfield returned me. The Government have never told the truth about prices since 1974, when the Chancellor said that the annual rate of increase was 8·4 per cent.

Since every forecast since then has been optimistic, people have become cynical. They do not believe anyone who says that he has a magic formula for reducing price rises. They look for some other protection, but they do not get it from the Labour Party. The ordinary consumer would probably say that the Price Commission has had no effect, and he would therefore doubt the effectiveness of these proposals.

The amendment epitomises the negative attitude of some Labour Members towards industrial expansion. They complain about the failure of British industry to invest but they fail to understand that in the final analysis it is not incentives or restrictions that will make companies invest.

We grant incentives to companies in many forms. First, all companies are given 100 per cent. writing-down allowances if they invest in new capital and, indeed, second-hand plant and equipment. In addition, cash grants are made to companies in intermediate and other assisted areas. Under stage 5 of the present code there are incentives for investment. A certain percentage of the relevant investment can be charged as an addition in calculating price increases.

Government bodies encourage investment. The National Research Development Corporation, to give one example out of many, is in the embarrassing position of having large sums of which it cannot dispose. Although the terms on which it is prepared to lend the money are generous, it cannot persuade industrialists that the climate is right for investment.

I wish that some of my constituents could have heard the objectionable remarks about Opposition Members made by the hon. Member for Nelson and Colne (Mr. Hoyle). I was astonished. I knew that Labour Members had their heads buried in the sand, but I did not realise that some were completely covered. The hon. Gentleman said that we did not visit factories and that we were concerned only with the City of London. My company has factories all over the United Kingdom. In the last four months I have visited Glasgow, Aberdeen, Grangemouth, Sheffield, Manchester, Birmingham, Newport, Brierley Hill, Stratford-on-Avon, Stoke Newinglon and other places in the South-East. 1 have visited many industrial locations as well as the factories and mines in my constituency. Therefore, I take exception to the hon. Gentleman's remarks.

On the positive side, there are grants and incentives. On the negative side, there are restrictions on outward investment through exchange control arrangements and in other ways. The amendment attempts further to restrict outward investment. None of these incentives or restrictions determines the amount of investment in the United Kingdom. Such investment is based on the judgment of individual managers in industry, and that judgment is not influenced to any great extent by the various incentives which are available.

We must make it worth while for industrialists to invest in this country rather than overseas. If we provide opportunities for a reasonable return on capital employed, the amendment will be unnecessary. In the meantime, we must reject it.

Photo of Mr Norman Tebbit Mr Norman Tebbit , Waltham Forest Chingford

I have one or two points to put to the Minister. I hope that on this occasion he will manage to stagger to his feet and lean on the Dispatch Box long enough to answer the debate instead of expecting the House to submit again to his total discourtesy, ineptness and lack of ability to make any case for his amendments.

It comes as no surprise to us that the Minister is one of the least competent performers in his Department—and, my goodness, that is saying a great deal—even when supported by the intellectual wing below the Gangway. I suggest that he might tell us whether Her Majesty's Government still welcome inward investment. He can even make a sign now one way or the other to indicate whether they do, but he does not. Perhaps he is waiting for a note from the civil servants in the Box to tell him whether the Government welcome it or for one of his intellectual colleagues below the Gangway to tell him. It is clear that he is in doubt whether the Government welcome inward investment into the United Kingdom.

It is totally unreasonable for the Government to make out that it is wicked for British companies to make sufficient profit in the United Kingdom to invest outwards overseas and at the same time to make out, as they seem to do from time to time, although the Under-Secretary does not yet know, that they welcome inward investment from overseas. That must be inward investment which is financed out of profits made out of consumers in the United States, Germany and elsewhere. I am glad to see that the hon. Member for Liverpool, Walton (Mr. Heffer) has reinforced the intellectual wing. I welcome the addition of the hon. Member's intellectual superiority to those who have been trying to make the case for the Government this evening. That is by no means praising him.

The Under-Secretary of State might tell us whether multinational companies are welcome in this country. Any outsider listening to or reading the debate would have to assume that the British Government are bitterly opposed to multinational companies. That must be presumed from the general theme of the debate from the Government Benches, if the Benches below the Gangway are Government Benches. It is hard to tell these days because the situation is so confusing. There are Government Benches behind me with Liberal Members sitting on them and Opposition Benches on the Government side with Labour Members sitting on them.

Despite the theme of the debate, when the Chancellor of the Duchy of Lancaster goes on one of his trips to the United States one hears whispers that the Government welcome these companies to this country. Who is speaking for the Government—the Minister or the supporters of the Government? The Minister does not wish to say anything. Presumably he does not want to upset those who might loosely be called his supporters. With supporters like that, I hope he never gets a hernia.

How does this amendment, which the Minister has moved but has not exactly recommended to the House, fit in with Clause 2(2)(h)? There is a reference in that to the need to increase the share of United Kingdom enterprises in markets in the United Kingdom and elsewhere". "Elsewhere" must mean abroad. I do not see how any other construction can be put on that. Presumably, even hon. Members below the Gangway and the Minister will latch on to this.

Photo of Mr Norman Tebbit Mr Norman Tebbit , Waltham Forest Chingford

The hon. Member for Walton suggests that it is simple. It may be, but the Minister has to convince me if he is to get my vote. After all, that is what these debates are supposed to be about. The Minister is supposed to make a case. Perhaps some of us are a little simple. That is the luck of the draw in the parliamentary business. If that is so, we need a better-quality Minister to put the arguments.

How on earth is a company in the United Kingdom to increase its share of the market overseas unless it is allowed to generate profits in the United Kingdom that are sufficient to finance investment overseas? In the original draft of the Bill, the Government's intention was contained in paragraph (h). Now to be stuck in at the behest of the so-called intellectuals is this inane amendment which prevents British companies from doing what they are enjoined to do in that paragraph.

There might be a case for stopping British industries from investing overseas. The Minister might be able to make it. I do not know. But there cannot be a case for telling industries not to invest overseas and to increase their share of business overseas. The two things are incompatible.

2.15 a.m.

The Minister has got himself hooked through crawling to either the intellectuals below the Gangway or the Government in exile behind me, on the Liberal Bench. I do not know whether this was the Liberals' amendment. It is daft enough, so it might be theirs. I was not privileged to serve on the Standing Committee. I do not know whether the amendment has Liberal support. We have not heard anything from them as to whether they support it. Presumably they have not been instructed by the Government Whips, so they do not yet know whether they support it.

The Minister cannot seriously expect to have both these injunctions in the Bill. Let us look at some of the things that will happen if this silly amendment goes into the Bill. Let us consider the construction industry. Here I shall engage the interest of the hon. Member for Walton. Like me, he is very interested in these matters.

It is appropriate that I should declare the fact that I have a financial interest in the construction industry. The state of that industry in the United Kingdom has been caused by the recession that the Government have engineered. Unemployment in it has more than doubled in the last three years. That recession must be unknown to Labour Members below the Gangway, because they are against unemployment although they support the Government who cause it, so they clearly have not heard about it. Because of the vast recession that the Government have created, the construction industry has had to turn its attention to engaging in business overseas. It has had no other choice. It could have either shut down or gone into the export business. It went into the export business.

How has the industry financed its export business and the contracts into which it has entered overseas? It has done it out of the profits that it has made in the United Kingdom. But that is now what it is specifically supposed not to do. It is said that it is a very wicked thing to use United Kingdom profits, from consumers, to go overseas and make profits overseas, improve the balance of payments, regenerate the industry, regenerate capital, expand the business and provide jobs in Saudi Arabia, Germany, Italy, the Oman and many other places to which the unemployed building workers of Britain can go and get jobs that they are denied in Great Britain by Her Majesty's Government. According to the Minister, that is very wicked and must not be done.

Then one has to look at an industry in which the hon. Member for Nelson and Colne (Mr. Hoyle) is interested—so I am told. That is the aircraft industry. Let us consider one of the major deals that has been done in that industry over recent years, the tripartite deal between the British Aircraft Corporation—which will be continued now by the nationalised industry—Britten-Norman Limited and the Romanian industry.

This has been a very complex agreement. In essence, what has happened is that the profits of one company have been fed out into the Romanian industry and a deal has been made so that, as BAC sold BAC111 aircraft into Romania, the Romanian industry would construct Britten-Norman aircraft for repurchase by the British industry and subsequent export in many cases.

Many thousands of jobs have been involved in the deal. It is a very complex arrangement. However, I am willing to bet that an element of the profits that have been made by BAC and Britten-Norman Limited has been used to finance part of this expansion in Romania, and, indeed, in a similar sort of deal in the Philippines too. Both are underdeveloped areas. There is nothing more underdeveloped than a Communist country, as we all know. This generates new jobs back in Britain, with expansion of British industry. If those deals had not been done, there would be no BAC111 line now on which to build that future.

That is the sort of deal that the Minister now says is wicked and immoral because it rests on profits generated in the United Kingdom being used elsewhere. It is the sort of deal to which the hon. Member for Nelson and Colne objects because, in his fantastic and fairy-tale world, the workers in Romania—Romania of all places—are robbing the chaps in Britain of jobs; but they are not. They are helping to create jobs and to create wealth. I, by no means a Communist, as the House knows, welcome the fact that the British capitalism is able to generate work in a Communist country and to improve the standard of living there, and that it is enabled in turn to improve the standard of living in Great Britain as well, because that is part of the pattern of international trade in which the profits of one country's enterprise are invested in another.

How ridiculous it would be to tie the Bill down a little more tightly and say that it would be wicked if the profits earned by industry in the constituency of the hon. Member for Nelson and Colne were used to be invested in the constituency of the hon. Member for Bristol, North-West (Mr. Thomas). Clearly, people would say that that is crazy—or would they? I suppose that some of them are sufficiently crazy to think it a sensible idea and that the profits earned in Nelson and Colne should be used to protect the jobs there. We all know that it would not do that. That is the kind of restrictive attitude of those who think that we can build a well-run country and can survive without trading with the rest of the world, or, alternatively, that the rest of the world is so anxious to trade with us that it will climb any mountain or get over any wall to get into our market, however clapped out and run down this country had become.

Lastly, I take up the point raised by my hon. Friend the Member for Faver-sham (Mr. Moate). Is this provision compatible with the letter or the spirit of the Treaty of Rome? There was a day when the Secretary of State used to believe in the European ideal. There was a day when he was a member of a Cabinet which was committed, believe it or not, to Britain staying in Europe. He is still in the same Cabinet, but the Cabinet is not committed any more and we wonder to what extent the right hon. Gentleman has a commitment when we look at his friends.

Is this compatible with the free move ment of capital throughout Europe? I hope that the Secretary of State will tell us about this. I do not mind if he comes to the Dispatch Box and says "There is a narrow technicality on which we can reckon that this just gets by the Treaty of Rome." [Interruption.] The intellectual wing is at it again. It is bursting with ebullience. [Interruption.]

Perhaps we have two intellectual wings. It is hard to know which is which. I would not mind if the House would just shut up for a moment.

I do not mind if the Secretary of State comes to the Dispatch Box and says" I have founnd a neat little legal quibble to get this through the Treaty of Rome." I should like to know even more whether the Secretary of State thinks that this provision is compatible with the sort of ideals he used to profess when he was active in propounding British membership of the European Community before he found it possible to coexist with, to cohabit with, the other members of the Cabinet, and with the deputy-leader of his party, who are bitterly opposed to his own Government's policy.

Photo of Mr Robert Maclennan Mr Robert Maclennan Parliamentary Under-Secretary (Department of Prices and Consumer Protection)

This has been a long and wide-ranging debate and has gone further than I anticipated when I opened it briefly.

A number of hon. Members have referred to their lack of knowledge of what was discussed in Committee. A number of hon. Members have also recognised that the amendment has been put forward in response to a debate in Committee. It has been put forward in response to undertakings to consider points made seriously in Committee that it was desirable that the Price Commission, in exercising its duty, should have particular regard to the financial needs of companies expanding in the United Kingdom. It was never asserted, and the point has been made clear tonight by a number of my hon. Friends, that foreign investment was in any way undesirable. My hon. Friends simply wish to emphasise the desirability of companies in this country having the potential to expand here. No one would seriously argue that there is no need to expand industry in this country.

Opposition Members who have built up a substantial argument at some length on this modest amendment overlook the most important aspect of the clause, which is that the Commission, in exercising its functions, is required to have regard to all matters which appear to it to be relevant. That, of course, includes the possibility that investment overseas may generate requirements which companies may freely advance as a reason for increasing their prices. There is, however, a clear distinction concerning matters which the Bill provides ought to be particularly regarded by the Price Commission. Expansion of domestic investment is obviously one of them. I think that this is merely a point of clarification and no more than that. It is clarification of the original intention of the Bill.

Photo of Mr Michael Neubert Mr Michael Neubert , Romford

Mr. Neubert rose——

Photo of Mr Robert Maclennan Mr Robert Maclennan Parliamentary Under-Secretary (Department of Prices and Consumer Protection)

I have many points to answer and it has been a long debate. I might well cover the hon. Gentleman's point by the time I complete my speech.

The amendment which I have recommended to the House, and which I hope the House will approve, does not brand overseas investment as undesirable. What it does do is avoid any presupposition that overseas investment should be funded or subsidised from price increases imposed on British consumers. That is a fair point. There is no discouragement of trade. Indeed, this is specifically protected in paragraph (h), to which a number of hon. Members have referred. Investment for export production can still be cited in support of price increases, just as it can be cited at present under the investment relief provisions of the existing Price Code.

Photo of Mr Norman Tebbit Mr Norman Tebbit , Waltham Forest Chingford

If a company charged lower prices overseas than in the United Kingdom for the same product, would that in general be taken as evidence that it was financing its overseas expansion out of the profits of its United Kingdom sales and, therefore, that it was acting contrary to the injunctions of the clause?

Photo of Mr Robert Maclennan Mr Robert Maclennan Parliamentary Under-Secretary (Department of Prices and Consumer Protection)

That sounds at first blush as if it would be illegal under the dumping provisions of the General Agreement on Tariffs and Trade. But the hon. Gentleman clearly wants to tempt me down pathways that are well beyond the scope of the provisions that we are considering tonight. As we have had such a long and extensive debate, it would be wrong of me to detain the House any further.

Photo of Mr Cecil Parkinson Mr Cecil Parkinson , Hertfordshire South

I am sorry that the Minister did not feel it necessary to give a better answer than the one he has just given. This has been a very serious debate on a very serious subject. Although my hon. Friends have made points in an amusing manner, they have nevertheless made telling points. Any objective observer must come to the conclusion that the amendment has been completely and utterly savaged and destroyed.

2.30 a.m.

Photo of Mr Timothy Raison Mr Timothy Raison , Aylesbury

Did not the Minister refuse to give way on the ground that he had a lot of points to answer? He then sat down in the most gutless and contemptible way I have ever seen.

Photo of Mr Cecil Parkinson Mr Cecil Parkinson , Hertfordshire South

The truth is that this is a foolish and shabby amendment. At the beginning of his interesting intervention, my hon. Friend the Member for Eastleigh (Mr. Price) asked why the Government had introduced it. There are two reasons. First, they had to satisfy the hon. Member for Bristol, North-West (Mr. Thomas) and his colleagues who hate foreigners and anything to do with places described in the Bill as "elsewhere". They simply cannot bear to have anything to do with those people, or investment or trading with them.

Secondly, the Secretary of State is an ambitious man and he is anxious to keep in with that lot. This shabby amendment is a sop to the Lef wing. We know what to make of the Government, but I wonder where that leaves the Liberal Party. Are Liberal Members seriously supporting the Government in their shabby little amendment? I understand the hon. Member for Rochdale (Mr. Smith), whose world begins and ends at the borders of Rochdale, but what about those Liberal Members who actually think before they speak and act responsibly from time to time? Are they really happy to be living with this lot? Are they happy with the amendment?

The Liberal Party is the great believer in internationalism and the EEC. Is it really saying that companies which use their profits, generated here, to invest overseas are doing something disreputable and should be stopped? Is this what the Liberal Party has come to as a result of the Lib-Lab pact? Does the hon. Member for Colne Valley (Mr. Wainwright), who understands business and trade, really believe that British companies investing overseas are doing something to damage the interests of British workers? He knows full well, as does the Minister, the advantages of overseas investment to British workers.

Photo of Mr Stephen Ross Mr Stephen Ross , Isle of Wight

The aircraft manufacturing industry was once in my constituency. My constituents would be delighted to have it manufacturing back on the Isle of Wight instead of in Belgium and Romania, where it has gone.

Photo of Mr Cecil Parkinson Mr Cecil Parkinson , Hertfordshire South

The hon. Member should have listened more carefully to the arguments of my hon. Friends about loss of jobs in an area. In Weybridge an important export line has been reopened, with growing opportunities for jobs in this country. Now we find that the Liberal Party does not think any farther than the Isle of Wight. Anything that is not good for the Isle of Wight is not good for Britain. That is extraordinary.

Photo of Mr Norman Tebbit Mr Norman Tebbit , Waltham Forest Chingford

I am surprised that the hon. Member for the Isle of Wight (Mr. Ross) is unaware that, while the Britten-Norman company has been saved by the Belgian factory and the Romanian operation after failure on the Isle of Wight, there is every prospect, if all goes well, of restarting production as well as fitting out aircraft in the Isle of Wight. He seems to be ignorant of the fact.

Photo of Mr Cecil Parkinson Mr Cecil Parkinson , Hertfordshire South

I hope that the hon. Gentleman's constituents in the Isle of Wight will notice that by supporting the amendment he has done his best to sabotage that possibility.

The Liberal Party talks a great deal about its interest in the Third World, and Labour Members often make the point that not enough resources go to the Third world. The amounts may be small but they are significant. By supporting these provisions, however, the Liberal Party will make that effort more difficult.

Photo of Mr Robert Rhodes James Mr Robert Rhodes James , Cambridge

My hon. Friend will no doubt recall that when, on 13th June, we had a full day's debate on overseas development—a distinguished debate—the absence of Liberal Members was conspicuous. Indeed, not one Liberal Member was present. Incidentally, we lacked even the presence of the Labour intellectuals below the Gangway.

Photo of Mr Cecil Parkinson Mr Cecil Parkinson , Hertfordshire South

I thank my hon. Friend for that important intervention. The hon. Member for Rochdale is well suited to be lined up with that mob opposite, but some of his hon. Friends are better than that and deserve better. They should be ashamed of themselves if they support this shabby little amend- ment. I urge my right hon. and hon. Friends to vote against it.

Question put, That the amendment be made:—

The House divided: Ayes 257, Noes 222.

[For Division List No. 162 see c. 1611]

Question accordingly agreed to.

Photo of Mr Richard Wainwright Mr Richard Wainwright , Colne Valley

I beg to move Amendment No. 9, in page 4, line 13, after "promoted", insert either because certain suppliers control a substantial share of the relevant market or for any other reason". I hope that these words will be added to the Bill at the wish of all sides of the House. That would be a welcome, if small, token of a prospect of stability and continuity of policy for British industry, which is intensely nervous at every prospect of political upheaval in this country, as is registered on the Stock Exchange every time the Government's majority appears to be in danger.

The Liberal Party takes the view that legislation by criteria in this matter is greatly preferable to the rather unsuccessful legislation based on a code that the country has suffered for some years. The price to be paid in having a rather heavier top hamper of a Price Commission which will have to use some discretion rather than operate an automatic, tedious and elaborate code is well worth paying. I hope that we shall not hear much more from hon. Members who are understandably a bit miffed at the distinguished roll call of captains of private enterprise that the Government have managed to acquire. Those hon. Members should stop complaining that a Commission working by discretion has to have such a distinguished team at the top. This is a modest price to pay. If one is working on the basis of a gramophone record, one needs only a gramophone. This operation requires a whole orchestra, and the price is well worth paying.

Turning to the criteria, I echo the lavish compliments paid to them by the hon. Member for Romford (Mr. Neubert). As these robust canons of enlightened commercial policy, expressed in unusually muscular prose for a statute, were unfolded to my noble Friend and myself by a representative of the Government, we felt that we could not have done very much better ourselves. The criteria are admirable. Nevertheless, we regard criterion (f) in its present form as somewhat abstract. There must be many in the country who, having grown up under successive Governments, do not really know what competition means. We think that the word should be defined and illustrated for the benefit of industry.

More seriously, it is of the utmost importance—I am sure that this view is felt on both sides of the House—that industry should know as far as possible where it stands from the first without having to wait for the Commission to establish a rhythm of activity. We believe that by importing these words into criterion (f) the businesses that know that they are not sharing in an outstanding slice of the market and industries which know that they are working in a competitive climate will have nothing to fear and nothing to bother about from the Bill. That is the situation that we want to achieve. We want as many businesses as possible to feel entirely confident that they have nothing to fear from the statute. We believe that by introducing these words they will be reassured to some extent.

The purpose of a measure of this sort is not primarily to guard against profiteering. The Liberal Party has never regarded profiteering as the most unfortunate consequence of a monopoly. We fear inefficiency, stagnation and the lack of enterprise that comes from a monopoly. We regard those as the worst evils.

We believe that these few words will reinforce the criteria, which are themselves an excellent definition of a genuine and flourishing mixed economy. We hope that the House will agree to their addition.

Photo of Mr Roy Hattersley Mr Roy Hattersley , Birmingham Sparkbrook

This is one of the amendments that relates to what I believe to be common ground on both sides of the House among hon. Members who wish to see a relationship between the central power of the Bill to initiate inquiries, and possibly impose a freeze, and the competitive policies that exist or should exist or should be improved.

We anticipate that the investigation and freeze powers, in both the short term and long term, will be used in areas where the market is far from perfectly competitive and where unreasonable and, by some standards, unnatural profit is the result of the market's condition and the exclusion from the market of competitors who might come in and push down profit levels and price levels to their proper marginal form.

It was always the intention of those who drafted the Bill that it should meet the point which has been raised by the hon. Member for Colne Valley (Mr. Wainwright). I would argue that the hon. Gentleman's points are covered by implication. The hon. Gentleman referred to Clause 2(2)(f), which relates specifically to competition. It was our intention that his points on market shares should be embraced in the clause.

The weakness of the hon. Gentleman's points stem from the fact that they are covered by implication. Their strength is that it is better to be precise than to cover obliquely. As the hon. Gentleman puts into words what we were implying in the clause, I am happy to accept the amendment.

Photo of Mr Giles Shaw Mr Giles Shaw , Pudsey

Before indicating whether we fully endorse what the Secretary of State is seeking, I take up two of the points that have been made. First, I ask the right hon. Gentleman to comment further on why he thinks that the amendment will clarify the issue. The words that the hon. Member for Colne Valley (Mr. Wainwright) proposes to add to the criteria are as loose in describing "any other reason" as being allied to the issue of competition. Secondly, if the right hon. Gentleman accepts the words that the hon. Gentleman proposes, does he not agree that they require a much more accurate definition to be applied to what is a substantial share of the relevant market or what is to be a cause of genuine competition?

One of the consistent features of the discussion on the criteria is that where there has been a case for introducing a monopoly trigger we have argued that there should be some sort of surveillance mechanism that could provide the intray, as it were, for a Monopolies and Mergers Commission inquiry. During yesterday afternoon we were asking about the position that would arise if the Price Commission were to be used as a quasi Monopolies and Mergers Commission. We were anxious to establish from the Secretary of State clear guidance as to when he might see the monopoly and merger rôle of the new Commission taking shape to a point where he felt that those powers should be transferred to the Monopolies and Mergers Commission. It was that, in part, which led us to move Amendment No. 1 and to suggest that the Price Commission should have a short and finite life limited to 1980.

3.0 a.m.

If the Secretary of State accepts the Liberal amendment, it must be because he believes the monopoly role to be important. We agree. Equally, if he wishes to see competition more clearly defined, he must prepare for the Commission to be given much more sharp guidelines than are at present available as to how it should act in these circumstances.

If the Minister believes the monopoly role and the surveillance of competition to be important, why does he not come clean on the issue of when these powers should be divested into the Monopolies and Mergers Commission? We accept that the forces of competition are the main way in which the consumer gets good value for money and the way in which prices will be best restrained. We cannot easily argue that that is best achieved by a Commission whose major force and mechanism is that of the imposed price freeze.

If the Secretary of State wants to encourage acceptance for this proposal on all sides of the House, he must recognise that there must be a long-term strategic view that the monopoly and merger role is significantly more important than one involving permanent price-freeze powers.

Those are the main arguments which, we have insisted all along, are relevant to a contribution to the economic well-being of the people.

Photo of Sir David Price Sir David Price , Eastleigh

I am at one with the hon. Member for Colne Valley (Mr. Wainwright) and the Secretary of State on the emphasis on competition policy. Yesterday we had a slight exchange at Question Time. The hon. Member for Aberdare (Mr. Evans) asked the Minister what he was doing to promote consumer protection. I am sorry that the hon. Member for Bristol, North-West (Mr. Thomas) is not with us as he asked questions about consumers earlier in this debate.

Yesterday I said: Does the hon. Gentleman agree that so far the best method that has been found of protecting the consumer is by ensuring that there is genuine competition in each product and service sector, and that the greatest problem is where there is not, for various reasons, genuine competition? The Minister of State replied: Yes, but we are trying to encourage genuine competition and the Price Commission Bill, when enacted, will add bite to the competitive edge."—[Official Report, 20th June 1977; Vol. 993, c. 866, 867.] That leads me to ask whether there is not a danger of a complete overlap between the scope of the Price Commission under this Bill and that of the Monopolies and Mergers Commission. Where does all this fit in with restrictive practices legislation?

Formerly, when in office as Undersecretary of State for Trade, I always supported anything to strengthen the power of competition. I am not so simple, nor are any of my hon. Friends, as to believe that competition happens naturally. Rules must be provided both administratively and, preferably, legally to ensure that the competition is maintained.

Earlier, the hon. Member for Bristol, North-West read us lectures on economics. If he would study the works of Adam Smith, the position would be clear to him. [Laughter.] I notice the horse laugh. If the hon. Gentleman had read "The Wealth of Nations", he would know that that makes the position clear. This is relevant to the twentieth and twenty-first centuries. That book makes it clear that active policies are needed to maintain competitive markets. There is a natural propensity of producers to gang up to the disadvantage of consumers. I welcome anything that adds to competition policy. There is a grave danger of there being a misunderstanding or even a misapplication of effort in this difficult area between the Price Commission and the Monopolies and Mergers Commission.

The difficulty with the first leg of the argument of the hon. Member for Colne Valley, not only here but in other countries, is the definition of "substantial share" and of "relevant market", geographically and in terms of product. Some elegant equations have been worked out, particularly on product substitution. Relevant considerations are what is a similar product and at what stage a market changes because a product is dissimilar. For instance, the makers of Guinness claim that it is a unique product. Most people would say that it was a stout and that if there were competition from other stouts Guinness should not have a monopoly. The manufacturers of stout would regard it as separate from beer, but others would maintain that beer was the relevant market because the two are sufficiently similar. These are important considerations in the real world, and the hon. Member for Colne Valley did not tell us how they would be solved.

What does the phrase "any other reasons" mean in the amendment? And what does the phrase "or cannot be promoted" mean in the clause? Are the Government thinking of a statutory monopoly like a water undertaking? What do they mean by the words where competition must be restricted"? Is there some natural reason for this? Who says that something should be restricted when the whole purpose is not restriction but encouragement? This is probably our last opportunity to know what those phrases mean.

Photo of Mr Robert Rhodes James Mr Robert Rhodes James , Cambridge

As the Bill progresses, the air of unreality becomes worse. I am new to this business, but I have now heard a Member from the Liberal Party dedicate himself to private enterprise and competition, shackled to a party which is vehemently opposed to both and which has produced a Bill which is a monstrosity against private enterprise. The hon. Member then produced an amendment which made even greater rubbish of an already bad clause in the worst-drafted Bill I have even seen. I give as an example the following quotation: if the report relates to an increase, a recommendation by the Commission as to whether the price to which the increase relates, as increased by the increase or part of it without the increase, should not be increased". That is a fair sample.

The hon. Member referred also to the splendid orchestra which is being created and the incredible sacrifice of the chairman, who will take a mere £18,000 a year to be of service to the nation. This figure appears to be quite common. It may seem small to the Press and to Ministers, but it is a large amount to the vast majority of people in this country and to me. The whole concept of public service that we used to have, when people made genuine sacrifices—not dropping to the minimum poverty line of £18,000, being described as an orchestra and having friends working part-time on £13,000 a year—appears to have gone.

I find the Liberal Party's performance astonishing. We are dealing with an amendment moved by the hon. Member for Colne Valley (Mr. Wainwright). If, in the course of my remarks——

Photo of Mr Richard Wainwright Mr Richard Wainwright , Colne Valley

The hon. Gentleman made a direct assault in what he says I said. Does he recall at any stage in my remarks any reference, either directly or obliquely, to sacrifices? I assure him that I did not touch on that point at all.

Photo of Mr Robert Rhodes James Mr Robert Rhodes James , Cambridge

The hon. Gentleman clearly referred to how fortunate we were to have this wonderful orchestra——

Photo of Mr Robert Rhodes James Mr Robert Rhodes James , Cambridge

—which was to be of such service to us. I have no wish to misrepresent the hon. Gentleman, but he warmly endorsed these appointments which are paid for by the taxpayer.

The Bill is riddled with errors, fallacies and weaknesses. In marked contrast, the hon. Member for Colne Valley has introduced an amendment which finishes with the magical words or for any other reason". How is that part of the Bill to be interpreted, how is the Bill as a whole to be interpreted and how, indeed, is the—[Interruption.] The hon. Gentleman who mutters and heckles away in the background did not serve on the Committee for several weeks and endeavour to make sense of the Bill. Again and again, sensible and fair amendments moved by the Opposition were rejected—and rejected without argument, just as has happened in the House tonight. We spent hour after hour putting arguments to Ministers, and they did not bother to reply. The Government's handling of the Bill has been a persistent and insistent insult to the intelligence and capacity of the House. [Interruption.] It is nice to get some reaction from Labour Members, particularly those below the Gangway, who were so evident in the debate on overseas investment and other major matters.

I come back to the hon. Member for Colne Valley. What is he doing associating with that lot? What is he doing associating with a Government who go against everything for which the Liberal Party stands? Perhaps the answer to the dilemma will soon be found at certain by-elections. Perhaps the answer will be found when Liberal Party supporters ask themselves what their 13 MPs are doing producing a feeble, gutless amendment which does nothing in particular and then falling over themselves being grateful to the Secretary of State when he wakes up and makes a rare intervention indicating that he accepts their miserable amendment. The day of reckoning will certainly come. Meanwhile, this wretched Bill must proceed. I suppose that technically the amendment has to be accepted, but the right hon. Gentleman will hear from us again.

Photo of Mr Michael Neubert Mr Michael Neubert , Romford

It is not without significance and will not have escaped the attention of my hon. Friends that the first intervention by the Secretary of State on Report, after 11 hours, is to come to the Dispatch Box to welcome an innocuous amendment moved by the hon. Member for Colne Valley (Mr. Wainwright) on behalf of the Liberal Party. It is a pathetic and shabby set-up which should be exposed for what it is. Those of my hon. Friends who, in good faith, have argued the matter as a serious issue have merely allowed themselves to play parts in this pathetic play acting which passes for the Lib-Lab pact.

3.15 p.m.

Did hon. Members notice that, when introducing the amendment, the hon. Member for Colne Valley happened to mention in passing that he and his noble Friend had met the Minister and had discussions about it? The tremendous privilege confered upon the Liberal Party is that Members from it should from time to time meet the Minister, no doubt in the privacy of his private room. As a result of that meeting, the hon. Member for Colne Valley comes forward with an amendment which seeks to elucidate an otherwise complex clause which states the need to safeguard the interests of users of goods and services by promoting com- petition between suppliers or, where competition must be restricted or cannot be promoted, by restricting prices and charges". Nobody on this side of the House would have guessed that that relates to monopolies. It could not possibly do that, so the hon. Member does the House a service by bringing forward an amendment which makes it clear to us that the clause actually relates to a monopoly situation.

Obviously the hon. Member deserves our thanks for that. He will go down in history as someone who has contributed greatly to the prosperity of the country. However, those of us who have sat here for 11 hours are bewildered because the same Minister could not accept the insertion of the single word "all" to make the clause clearer. But as soon as a dozen or so words are moved by a Member from the Liberal Party they are accepted, although they add nothing to our understanding of the provision. This is part of the cornucopia of the Lib-Lab pact. It is a shabby business.

We should like to know the other reasons for accepting the amendment. The words "for any other reason" are almost as vague as the words "and elsewhere" which we discussed earlier. Let us have no posturing as if great matters are being decided at 3.15 a.m. Of course they are not. If the hon. Member for Colne Valley is satisfied with the play acting, no doubt we shall hear Ministers conceding these matters, but to us it is, frankly, nauseating.

Photo of Mrs Sally Oppenheim Mrs Sally Oppenheim , Gloucester

Of course we support the amendment. Unlike Liberal Members, if we see merit in an amendment we support it. That is the difference between us. However, the amendment comes under the category of amendments which can be described as very, very, very marginally better than nothing. It is certainly not an amendment that we should have liked to see in the Bill. We should have liked an amendment to provide that the Commission should first and foremost have regard to the extent to which normal market forces control the price of goods or charges for services. That should be the primary criterion.

We believe that only to the extent that competition is blunted or does not exist should the Commission have regard to the other criteria in Clause 2. The amendment is incidental to other more important points because it provides that this should be only one of the criteria. We should like to see this as the chief criterion to guide the Commission to its fully-fledged anti-monopoly stage. If this were to be the main criterion instead of merely an incidental one, the interests of consumers would be very well served indeed, and, at the same time, business and industry would be freed from a great deal of unnecessary intervention, except in the context in which it should be legitimately applied.

As long as a company is subject to the full effects of vigorous competition, there is no justification for subjecting it to other controls, to investigations, to freezes or to anything else, because in a fully competitive situation—which does not always exist today in Britain; that is far from being the case—the likelihood of excessive profits being made is very small indeed. If the Minister does not think that that is so, if he can give me examples of companies which are being subjected to full competition and are making excess profits, whether or not they have an advantageous position under the Price Code, I should be very interested to hear of them.

I was very interested to hear the hon. Member for Colne Valley (Mr. Wainwright) say that he did not regard profiteering as the worst abuse of a monopoly position. That was very interesting because that is a concept that we were trying to inject into the Bill with our first amendment. We feel that the sooner the powers in the Bill which deal with monopoly abuse are vested in institutions such as the Office of Fair Trading and the Monopolies and Mergers Commission, the sooner they can operate. [An HON. MEMBER: "Speak to the Chair."] I am trying very hard not to delay the House. I shall have to try a little harder.

We have heard contradictory arguments from the Liberal Party and from the Government about the new-found importance they place on competition policy. We never heard a word about competition policy or about competition when they were nationalising this and that. Suddenly they have to produce a Bill, which is very doubtful from the start, as some new measure of competition policy when that was very much an afterthought as far as the Bill was concerned.

Of course, we on the Opposition side of the House were very deeply touched by the Secretary of State's kind endorsement of the Liberal amendment. After all the talk of orchestras, I strained my ears very hard and I could have sworn that I heard the strains of "Hearts and Flowers" being played somewhere in the distance. Then I said to myself "No, it must be the lateness of the hour."

My hon. Friend for Pudsey (Mr. Shaw) raised the really important question. It is something on which we should like to see an amendment of this nature touching. It is not touched anywhere in the criteria in the Bill or the amendment. That is the question of what is genuine competition. The amendment will allow the Price Commission, or later the Monopolies and Mergers Commission or the Office of Fair Trading, to look into certain situtions where a monopoly situation exists. I belive that very often that will be too late and that sometimes an early warning system will be necessary for these investigations. Once a monopoly has grown up, it is very often too late for anyone to do anything about it.

Therefore, I would have hoped that one of the criteria in relation to these investigations would be to survey with an early warning procedure the near-monopoly situation that is likely to grow into a monopoly situation. That would have had a great deal more value than the amendment. The amendment does no harm, but we should have liked to see it going a great deal further than it does.

It is notable, too, that the Minister of State, who so often speaks about Price Commission reports—he mentioned the report on spectacles, I think, and the report on television rental sets is a favourite—[Interruption.] The supranational conglomerate from the Government Benches has left the Chamber for a few moments, otherwise my new business partner would have shown himself. Unfortunately, I shall have to wait for that pleasure. [HON. MEMBERS: "Oh."] I hope that he is keeping in good form. If we are to enter into this partnership, I hope that he will be ready and willing. For the edification of hon. Members, may I say that we are going into the spectacle business.

There was a Price Commission report on intruder alarms. It was an interesting report and it was not mentioned by the Minister of State in his apologies for not accepting our amendments. The report revealed what appeared to be abuse of competition by insurance companies who operate only a few burglar alarm providers. That means that people have only a limited freedom of choice. I mentioned this to the Minister of State privately, and his reply was that powers exist in the Fair Trading Act

Photo of Mr John Fraser Mr John Fraser , Lambeth Norwood

The hon. Lady must remember some kind of convention about private conversation. If she is going to indulge in quotation from private conversations, what will happen is that whenever I have a private conversation I shall have to bring a secretary to record it in order to protect myself. The hon. Lady should remember some of the conventions of the House.

Photo of Mrs Sally Oppenheim Mrs Sally Oppenheim , Gloucester

I do not believe that that conversation was discreditable on the Minister of State's part. It is quite normal. I asked him what action could be taken and he told me that powers existed in the Fair Trading Act. I was giving the House the benefit of that opinion, which I consider a fair opinion and in no way discreditable. I am in no way criticising the Minister of State by telling the House of the possibilities which exist.

As we look at competition policy in this country, it will be seen that over and over again the Conservative Party has been the forerunner in introducing anti-monopoly policy. We shall continue to be in that position in the not-too-distant future. In the meantime, this amendment is not enough. If the Minister had accepted an amendment from us in Committee, an amendment which went a good deal further, we should have felt more satisfied.

I would have liked the Government to go further and to have seen the Price Commission's powers in 1978, when the pay policy runs out, limited only to monopoly.

Photo of Mrs Sally Oppenheim Mrs Sally Oppenheim , Gloucester

If my hon. Friend says "Why not now?" he is perfectly right. It shows great tolerance to say that this is acceptable in phase 3 when we do not know what that will be. He is right to make that remark.

We think it right and proper for some of the powers to be used in the context of providing a basis for upholding competition in pricing practice and for looking into the near-monopoly situations which have a potential to grow quickly into monopoly situations and to become greatly out of control.

We have no grounds on which to object to the amendment. My regret is that the Liberal Party did not use its influence with the Government so that it might have gone a little further and injected an amendment of infinitely more value than this.

Photo of Mr Richard Wainwright Mr Richard Wainwright , Colne Valley

It is gratifying when, on an industrial matter, a modest amendment like this is supported by both Front Benches and by the hon. Members for Pudsey (Mr. Shaw) and for Eastleigh (Mr. Price), both of whom have much industrial experience.

In the light of that happy fact, I do not want to dwell on the extraordinary divisions in the Conservative ranks revealed in the different sorts of speeches which have been made. Those who mocked at the form of words proposed overlooked the fact that I never claimed that this was a tremendous thing. I said it was modest. I never claimed that this was the vegetable marrow of the harvest festival.

There is in the Bill at least one exhibit which deserves a prominent place on the harvest table. It illustrates a genuinely productive harmony—I do not know how long it will last—to receive from the Labour Government a Bill which uses the words: the need to earn … profits which provide a return on the capital employed in producing the profits which is sufficient … to defray the cost of the capital (including compensation for the risk involved in producing the profits)". That seems a splendid product from this situation, and it is something that we are glad to endorse.

3.30 a.m.

To turn to the amendment itself, I was surprised that some hon. Members, including one with great experience of the mechanics of the House before he was elected an hon. Member, overlooked the fact that it is necessary to read an amendment in the context into which it is to be inserted. The words in my amendment do not stand alone. That would be ridiculous. They stand as an admitted illustration, or partial definition only, of promoting competition. Therefore, in those circumstances it is surely not only reasonable but proper that our definition, having stated the points about people who control a substantial share of the relevant market", must go on to include the supplementary few word or for any other reason". In the absence of that, it would be quite apparent to the House, even at this hour, that had we stopped with the words a substantial share of the relevant market we would have been presuming to make an exclusive definition of the term "competition". That would clearly have been wrong. It is inevitable and very necessary in a statute that we should make clear that there are other forms of competition which have to be provided for. In view of the acceptance of the amendment, I need not detain the House any longer.

Photo of Mrs Sally Oppenheim Mrs Sally Oppenheim , Gloucester

On a point of order, Mr. Deputy Speaker. I beg to move, That further consideration of the Bill, as amended, be now adjourned.

Photo of Mr Oscar Murton Mr Oscar Murton , Poole

It is necessary for me to first put the Question on the outstanding amendment.

Amendment agreed to.

Photo of Mrs Sally Oppenheim Mrs Sally Oppenheim , Gloucester

I beg to move, That further consideration of the Bill, as amended, be now adjourned. I am grateful to you, Mr. Deputy Speaker, for giving me the opportunity of moving this motion.

We have had very long but, I believe, constructive debates so far. They may have been less long had we met with a different attitude from the Government both in Committee and in the proceedings so far on Report. At the outset the Government would not accept our amendment, which was a reasonable and moderate one. They went on to move their own extremely controversial amendment in a highly arbitrary manner and in a way that was likely to incense the House. These are some of the factors that have prolonged the debates on some of the amendments.

I do not believe that the debates have been unduly long. They have been constructive. We have had just over 11½ hours of debate and we have dealt with seven out of 37 amendments. That means that we have still a long way to go. I cannot help feeling that the Government have been pig-headed and have gravely underestimated the House in believing that 37 amendments with 33 Divisions, which they knew perfectly well would be the case, could possibly be provided for in a day and a half. It was surely ridiculous to think that the Bill could be considered in that time. One and a half days is a ridiculous amount of time to allot to that number of amendments and Divisions.

I understand that the Finance Bill Committee has now adjourned. That is another reason why we should have adjourned now. Many hon. Members have been sitting for a long time considering the Finance Bill in great detail, but they are perfectly willing to come and join this debate and to swell our throng. I think that it would be in the interests of the House, however, and in the interests of this Report stage if hon. Members were given the opportunity of refreshing their minds before proceeding further with the Bill. It is absurd to think that we shall make any progress towards any sort of timetable at this rate. Things being what they are, it is likely that proceedings will move not faster but slower from now on. That is the normal way things go in the House. It is not unreasonable to request an adjournment at this time of the morning. Many people all over the world would think it absurd that we should sit for so many hours without a break of any sort.

I congratulate my hon. Friends who have taken part so far. They have all played a constructive part and have done a great service, not only to the Opposition, but to the whole House. I should like to think that we could proceed with the Report stage at a reasonable hour tomorrow, and by adjourning now we could do so with refreshed minds and could maintain the standard of debate.

Labour Members who scoff should look at the Amendment Paper and they would see that the amendments moved by parties other than the Conservatives far outnumber ours. We have not been attempting to obstruct the Report stage. We did not do so in Committee—the Secretary of State has acknowledged that—and we have no intention of obstructing the Report stage now.

However, we need to debate the amendments very fully. We were far from satisfied in Committee about all the amendments on which there was a tied vote, and we feel that there is a need to press the arguments a good deal further. I am not threatening the Government; I am simply stating what is required for the remainder of the Report stage.

It is reasonable to ask the House to adjourn now. Labour Members have been joining in the debates quite freely. I am glad that they have done so. But let it not be said that we have monopolised the debates in any way or acted in a way in which the Labour Party would act in Opposition. I think that for the most part Labour Members would like to accept that this is a very reasonable moment for the House to adjourn.

Photo of Mr Roy Hattersley Mr Roy Hattersley , Birmingham Sparkbrook

Of course, I accept the hon. Lady's explanation when she talks about progress being slower from now on. That is her judgment rather than a threat to the Government.

I am grateful to the hon. Lady for saying at the outset that had the Government's attitude been different much faster progress would have been made. She has been very frank in saying that. It is not something that I would have said. She admitted, however, that had the Government been prepared to accept the original wrecking amendment the Conservatives would have let the Bill progress very quickly.

Photo of Mr Roy Hattersley Mr Roy Hattersley , Birmingham Sparkbrook

No, I shall not give way just yet. However, the Government were not prepared to accept that amendment and, therefore, we are detained late. Now I shall give way.

Photo of Mrs Sally Oppenheim Mrs Sally Oppenheim , Gloucester

It is a small point. I just want to put the record straight and say that one of the causes of the slow progress has been the arbitrary way in which Ministers have answered debates and moved their amendments.

Photo of Mr Roy Hattersley Mr Roy Hattersley , Birmingham Sparkbrook

That is so, but the record will show that the hon. Lady began by saying that if we had accepted the first amendment things would have been different. We did not accept that amendment and we have been detained here during the night—and it may be that we shall be detained here for a very long time.

The Opposition will accept, as will my hon. Friends that it is necessary to make progress on the Bill, because if it has not completed all stages by 1st August there will be no prices policy in this country. [Interruption.] I hope that The Times tomorrow will record Opposition cheers at the announcement that after 1st August there may be no prices policy. Since my hon. Friends and I are determined that there will be some price restraint, we must proceed with the Bill.

Photo of Mr Robert Adley Mr Robert Adley , Christchurch and Lymington

The right hon. Gentleman will lose his hon. Friends soon because they will all be off on the picket lines.

Photo of Mr Roy Hattersley Mr Roy Hattersley , Birmingham Sparkbrook

I have no doubt that in seeking to make progress at this time of the morning the Government will suffer more inconvenience than will the Opposition. However, during that inconvenience we are reassured by two consolations. The first is that by Thursday or Friday the fact will be abroad that the Opposition have kept up the House of Commons for two nights, or perhaps more, in fighting against any sort of price control. That will be a useful subject for some weekend speeches. Secondly, although I have read in some newspapers, including The Times, that the Government are not at present able to command events in the House of Commons, I think that by the end of a week the Government will have got a controversial Bill through the House of Commons and will have nailed that lie in the process. I hope that my hon. Friends will resist the motion.

Photo of Mr Kenneth Baker Mr Kenneth Baker , St Marylebone

I support the motion with complete and utter enthusiasm.

We have now been debating the Bill on Report for the better part of 12 hours. As the Secretary of State said, some of the debates have been very interesting. They have, as always is the case on Report, been uneven—some better than others. What has been totally consistent has been the inadequacy of ministerial replies. Indeed, the reply made by the Undersecretary of State a short while ago was the worst reply I have ever heard from any Minister in any Government. Many may jostle for that crown, but when we consider the ministerial team on this Bill and think of the two junior Ministers we can truly say that we have not the first eleven, or indeed, the second eleven but the groundsman and the scorer. To carry the cricket analogy a little further, I suggest that the Secretary of State is the big roller, brought out from time to time to attempt to firm up the pitch. The plain fact is that the Government's replies during the night have been bad and are not likely to get any better. Therefore, the House would be well advised to adjourn now.

The Secretary of State ended his remarks on a characteristic note of defiance. He said that when the Government get their Bill by the end of the week they will be getting through the House a piece of controversial legislation. That is not a fitting remark coming from a Minister in a minority Government—a Government kept in power by whatever majority they can cobble together by throwing sops to the Liberals.

I see the Leader of the Liberal Party present. When he next appears at a Liberal conference, he will be asked what he has to show for this great deal and he will be able to say "Amendment No. 9 to the Price Commission Bill". That is the banner under which the Liberals will march to the promised land.

We have debated for long enough tonight. I hope that we shall now adjourn our proceedings, because if the Secretary of State continues in this way he will find that he will not have his Bill by the end of the week. There are many hours, and if we continue to make the degree of progress during the rest of the week that we have made so far we shall all be here well after Friday lunchtime. It will be a question of whose will will break first.

The Secretary of State should therefore be more sensitive to the feeling of the House. If he had been more sensitive earlier, he would have made better progress tonight. The House would do well to adjourn and meet again tomorrow afternoon.

3.45 a.m.

Photo of Mr Stephen Hastings Mr Stephen Hastings , Mid Bedfordshire

I rise to support the motion and I entirely agree with my hon. Friend the Member for St. Marylebone (Mr. Baker). It is true that I have not contributed to the debate on this long Bill but I have done my best to listen to it.

My concern is rather different from anything that has been mentioned so far, and I am sure that the Secretary of State will be bound to pay attention to my point. Anyone who has listened to our debates today must realise that if matters continue as they have done up to now the debate on the Bill will continue up to and beyond 2.30 p.m. today. I have checked carefully with the Clerks. If that happens we shall lose today's Question Time. I am sure that there are hon. Members on both sides of the House who wish to raise matters during Question Time.

There is a limit, in common sense, to the amount of time that should be devoted to the debate. There is a great risk that we shall lose tomorrow's Question Time. I do not wish that to happen for a particular reason—I have Question No. 14 tomorrow. I do not see why I should not admit that. These days it is a considerable achievement to get Question No. 14. If some hon. Members do not know what the Question is I shall enlighten them immediately. I shall ask the Minister for Transport whether he will now announce the abandonment of plans to nationalise the road haulage and port industries. I should stress that there is a great deal of uncertainty about the intentions of the Government—if it can be called a Government—for those plans. The scheme was in the famous manifesto with which they bludgeoned and bored us for three years. However, since then matters have changed and the Government's intentions are quite uncertain and opaque. There was relatively little mention of the matter in the consultative document on transport. The country, the industries and those who work in them need a clear answer to the Question. Is it to be lost—

Photo of Mr Stephen Hastings Mr Stephen Hastings , Mid Bedfordshire

That is the opposite of found. Perhaps it is different in Australia. Perhaps the hon. Gentleman will make a speech about it one of these days. That will be the day. Are matters simply to be passed over and ignored because we are to go drearily on, when anybody who takes an intelligent interest has almost reached the point when he cannot contribute much more?

If there were a great backlog of legislation that this dynamic Government were anxious to bring before the House, one could perhaps understand this frenetic activity in the middle of the night. But that is not so. The major Bills on which we thought we were to be engaged, such as those on European Parliament elections and devolution, have been put off to the next Session. What are we to do between now and the end of July? If we are to be kept here all night it would be much better if the Government told us what they intend to do from now on. What is the hurry?

There must be Labour Members with Questions that they want answered today, or do they just put them down for fun? Are they happy to sit and listen to these endless arguments? The risk of losing Question Time is real. I cannot conceive that in a sensible mood the House would fail to support the motion.

Photo of Mr Norman Tebbit Mr Norman Tebbit , Waltham Forest Chingford

The House should be grateful to my hon. Friend the Member for Gloucester (Mrs. Oppenheim) for moving the motion. The principal cause for our gratitude should be that the motion got the Secretary of State to his feet to make one of the longer speeches by a Minister tonight. It was a reasonably average speech by the standard of the Treasury Bench tonight, which is a bit rough. Three amendments were dealt with in ministerial speeches of one minute, one minute and two minutes respectively. Those were speeches on substantive amendments, including one of the Liberal amendments. One minute may have been too long to spend on that.

There is great interest in the motion. All the Liberals here are intent on making their speeches. I hope that they all catch the eye of the Chair when they manage to get up off their backsides and that they will say something intelligent instead of yah-booing.

The Secretary of State managed to make a speech of four minutes, four times as long as he spent on the Liberal amendment. It was a much better speech than most of those made by his hon. Friend the Under-Secretary, because at least the right hon. Gentleman was not failing to read properly from a tatty brief. That perhaps indicated the contempt with which Ministers have treated the House in general. They have made no serious attempt to reply to any of the debates.

We have had the ludicrous situation of the Under-Secretary saying that he could not give way because he had so many points to make yet, within a minute at the most, he had sat down. Perhaps he had lost his piece of paper or maybe the Secretary of State put him out of his misery by pinching it from the Dispatch Box. Either way, it was not the most elegant performance of even the Under-Secretary's time in the House.

We are now threatened that if we adjourn, the word will go out across the country that the Opposition are preventing the British people from having the benefits of a prices Bill. Anyone would think that inflation had been controlled in this country in the past few years. The Government's prices policy has led to the pound now being worth 55 pence after three years of this Administration. It may be that there could be worse circumstances, for example if the bunch below the Gangway opposite took office instead of operating the puppet strings.

Photo of Mr Marcus Lipton Mr Marcus Lipton , Lambeth Central

The hon. Gentleman has said that the pound is worth only 55 pence. I am quite willing to give him 55 pence for every pound that he has.

Photo of Mr Norman Tebbit Mr Norman Tebbit , Waltham Forest Chingford

Perhaps the hon. Gentleman would like to do a deal on the basis of the pound's purchasing power in, say, 1970 or on the basis of gold——

Photo of Mr Ernest Fernyhough Mr Ernest Fernyhough , Jarrow

The hon. Gentleman was caught out. He should admit it.

Photo of Mr Norman Tebbit Mr Norman Tebbit , Waltham Forest Chingford

Does the right hon. Member for Jarrow (Mr. Fernyhough) wish to make a speech?

Photo of Mr Ernest Fernyhough Mr Ernest Fernyhough , Jarrow

If an hon. Member is caught out in the House, he admits it. The hon. Gentleman made a slip of the tongue and should accept courteously and in a gentlemanly manner the offer of my hon. Friend the Member for Lambeth, Central (Mr. Lipton).

Photo of Mr Norman Tebbit Mr Norman Tebbit , Waltham Forest Chingford

It is very kind of the right hon. Gentleman to put it so nicely, but does he dispute that what the pound was worth in 1974 is only 55 pence in today's purchasing power? This is a consequence of pricing policy and three years of this Government. If the right hon. Gentleman did not have a better contribution to make, I am surprised that he took so much trouble to lever himself to his feet.

It is understandable that the right hon. Gentleman should have had so much trouble getting to his feet because 4 a.m. is ridiculous time to be attempting to give serious consideration to important matters of Government policy. Is there any other legislature that would attempt to deal with Government policies at 4 a.m.?

Photo of Cyril Smith Cyril Smith , Rochdale

I suggest that the hon. Member should put in his speech, for the record, the disgraceful behaviour in which he is indulging. It is 4 a.m. and he is deliberately filibustering and wasting time in order to keep out of bed those hon. Members who, he claims, want to go to bed. The hon. Gentleman stands there in sheer hypocrisy pretending that he is a saint, anxious to get the House up and to get the business through. At the same time, we have all this rubbish in a speech that he is making deliberately for the purpose of wasting the time of the House.

4.0 a.m.

Photo of Mr Norman Tebbit Mr Norman Tebbit , Waltham Forest Chingford

I am grateful to the hon. Gentleman. If Labour Members will relax for a moment—[Interruption.] Their friend the hon. Member for Rochdale (Mr. Smith), their partner in the coalition, is getting a little out of hand. I can understand that the hon. Gentleman would like to go to bed. I should like to see the bed that he could get into. To suggest that I am filibustering is totally outrageous. Had I been filibustering—

Photo of Cyril Smith Cyril Smith , Rochdale

It is true and you know it.

Photo of Mr Norman Tebbit Mr Norman Tebbit , Waltham Forest Chingford

If I had been filibustering, the Chair would have called me to order. To suggest that I have been getting away with filibustering without the Chair calling me to order is a slur on the Chair.

Photo of Mr Norman Tebbit Mr Norman Tebbit , Waltham Forest Chingford

That suggestion calls for the hon. Gentleman to apologise to the Chair.

Photo of Cyril Smith Cyril Smith , Rochdale

You know it is true.

Photo of Mr Norman Tebbit Mr Norman Tebbit , Waltham Forest Chingford

I shall be happy to give way if the hon. Gentleman wishes to make an apology.

Photo of Cyril Smith Cyril Smith , Rochdale

Carry on with your nonsense.

Photo of Mr Norman Tebbit Mr Norman Tebbit , Waltham Forest Chingford

At least the hon. Gentleman and I are agreed that it is no use attempting to deal with legislation at this time of night. If we have to discuss anything, we might just as well discuss the proposal to go home. At least that is a fairly innocuous proposal. That would call for no great judgment of State. It is suggested that we can deal with matters so complicated that the Minister does not understand them. That is obviously the position. If it were not so, we should not have been given replies of such a character. At this time of night it is absurd to continue our discussions on the Bill.

As I have said on previous occasions, it is a clearly established fact in industry throughout the world that at about this hour there is a far greater chance of industrial accidents than at any other time of day. It seems that if we are to avoid that danger it would be much better if we chucked in our hands, ceased dealing with the Bill and went home.

There is yet another reason that he House should adjourn now. As my hon. Friend the Member for Mid-Bedfordshire (Mr. Hastings) said, there is the matter of tomorrow's business. We have not quite reached the stage where we shall lose tomorrow's business but we have an interesting motion before us. We are due to have a most important statement from the Secretary of State for Trade during tomorrow's business—[HON. MEMBERS: "Where is he?"] That is an interesting question. The right hon. Gentleman is certainly not to be found on an aeroplane flying between London and America. As you will know, Mr. Deputy Speaker, it is the intention of the Secretary of State to make a statement today on the outcome of the Bermuda negotiations. Unless an agreement is reached in precisely one hour's time, that air service will cease between Britain and the United States. Among the extraordinary achievements of the Government will be that they were the first Government for 30 years that managed to stop international air travel between the United Kingdom and the United States.

Photo of Cyril Smith Cyril Smith , Rochdale

Now who is filibustering?

Photo of Mr Norman Tebbit Mr Norman Tebbit , Waltham Forest Chingford

It would be extraordinary if the House were denied the opportunity to hear the Secretary of State explain why that had been done and what arrangements he was to make for travel between the two countries. However, if we continue with our discussions for very much longer that is precisely the danger that we shall face. It might be that our debate on the motion could last sufficiently long to run us into that danger. If we have any more helpful interventions from the hon. Member for Roch-dale, we might manage to make it.

Photo of Cyril Smith Cyril Smith , Rochdale

You might have some more.

Photo of Mr Norman Tebbit Mr Norman Tebbit , Waltham Forest Chingford

Perhaps he has changed his mind recently.

Photo of Cyril Smith Cyril Smith , Rochdale

The hon. Gentleman is not giving us a chance. Sit down and let us get on with it. Give us a chance to vote.

Photo of Mr Norman Tebbit Mr Norman Tebbit , Waltham Forest Chingford

If the House proceeds in accordance with the way in which it was behaving earlier in these debates, we shall not make a great deal of progress.

The Minister's speeches are a gross contempt. He does not deal with the points that are raised. He just sits there and hopes. If we accept the motion, think of all the benefits that would come to him. To start with, think of the effect on the Government's legislative programme. We should be another day away from the embarrassment which the Secretary of State must endure when the direct elections Bill comes before the House. That is one piece of legislation that he does not want. Very few Government supporters want it. I am not sure whether the Liberal Party still want it. There is little other legislation that the Government want to introduce. The Government make statements about the lack of legislation. Day after day recently Government business has collapsed. There were several occasions recently when there were numbers of Adjournment debates as there was no business to carry on through the normal part of the day.

Photo of Mr Marcus Lipton Mr Marcus Lipton , Lambeth Central

We want to do business, do we not? I have 65p here. Will you give me a quid now? Then we may all go home.

Photo of Mr Norman Tebbit Mr Norman Tebbit , Waltham Forest Chingford

I am not sure that it is in order for an hon. Member to offer to take bribes to vote for a motion before the House. If the hon. Gentleman is suggesting that I may buy his vote for this motion for £1, that is an interesting proposition. We shall have to think about it. The hon. Gentleman has not told me which way he will vote, whether or not he receives his £1.

Day after day the House had not had enough legislative work to fill in its full day. Government business has collapsed. We have had extra Adjournment debates starting as early as 8 p.m. The Government now suddenly bring this business forward and suggest that the House must carry on through the night. I do not know what is the Government's intention. It would be helpful if we did know. Is it their intention to cease business at 1 o'clock or 2 o'clock? Shall we run straight through? What is the Government's intention?

Photo of Mr Stephen Hastings Mr Stephen Hastings , Mid Bedfordshire

I have been reflecting on what my hon. Friend said about the Bermuda negotiations and the intention of the Minister of Trade to make a statement on the subject. The continuation of air travel between this country and the United States is at stake. It is no small matter. There are hundreds of thousands of tourists in this country. There are presumably people on both sides of the Atlantic who want to continue flying backwards and forwards. If we are to be left in limbo as a result of this Bill going on and on, with no opportunity for the unfortunate Minister of Trade to explain why there is no further air transport across the Atlantic, we shall be in a proper pickle, to coin a phrase.

Photo of Mr Oscar Murton Mr Oscar Murton , Poole

Order. I fear that the hon. Gentleman is launching forth into a second speech, which is not in order on a dilatory motion. An intervention is different from a speech.

Photo of Mr Oscar Murton Mr Oscar Murton , Poole

Order. The hon. Gentleman must allow his question to remain unasked.

Photo of Mr Norman Tebbit Mr Norman Tebbit , Waltham Forest Chingford

That is a great pity as I am sure that it would have been an interesting question. I could not make out whether it was the House or the unfortunate people flying backwards and forwards across the Atlantic who were in limbo. We are still faced with the problem of wanting to know the Government's intention. [HON. MEMBERS: "What about BALPA?"] The Bermuda Agreement is of interest to BALPA and other unions.

Mr. Femyhough:

I hope that the hon. Gentleman will declare his interest in BALPA, in accordance with the custom of the House.

Photo of Mr Norman Tebbit Mr Norman Tebbit , Waltham Forest Chingford

Except that it costs me a few quid a year to belong, I have no interest in BALPA. What does the right hon. Gentleman think my interest is?

Photo of Mr Ernest Fernyhough Mr Ernest Fernyhough , Jarrow

The hon. Gentleman has on many occasions spoken in the House in the interests of BALPA.

Photo of Mr Norman Tebbit Mr Norman Tebbit , Waltham Forest Chingford

I have spoken in the interests of many things, including kindness to dumb animals, but that does not constitute an interest. Could the right hon. Gentleman be more specific?

Photo of Mr Ernest Fernyhough Mr Ernest Fernyhough , Jarrow

If someone suggested reducing the wages of British airline pilots I am sure that the hon. Gentleman would have nothing to say. I am sure that he is not interested in airline pilots.

Photo of Mr Norman Tebbit Mr Norman Tebbit , Waltham Forest Chingford

The right hon. Gentleman is making my case, that it is very difficult to have a reasonable debate at this hour. I am not sure whether he is filibustering, being funny or feeling confused.

I have an interest in the affairs of the airline pilots, as of any other group. I follow their interests closely because I used to be of that profession and am still a member of the union. I am not and never have been a spokesman for the union, and I do not receive anything to represent its interests.

Photo of Mr Arthur Newens Mr Arthur Newens , Harlow

On a point of order, Mr. Deputy Speaker. Is what the hon. Member is saying germane to the debate?

Photo of Mr Oscar Murton Mr Oscar Murton , Poole

The hon. Gen tleman was challenged about his interest and he is entitled to reply.

Photo of Mr Norman Tebbit Mr Norman Tebbit , Waltham Forest Chingford

I do not think that it was germane, and I was trying hard to find out what it was about. A satisfactory debate on a technical Bill is unlikely in these circumstances.

Photo of Mr Peter Rost Mr Peter Rost , Derbyshire South East

Is not the most important reason for passing the motion the fact that the Government may soon lose their majority as a group of Labour Members below the Gangway move off to Willesden?

4.15 a.m.

Photo of Mr Norman Tebbit Mr Norman Tebbit , Waltham Forest Chingford

One never knows. Some of them may have difficulty in getting back again. The bus services are terribly poor in that part of London. I say that in case anyone should misunderstand me.

In the last few minutes we have clearly established that the House is in no mood to consider serious business. I thought that view prevailed only among some of us on this side of the House, but I have detected a note of tetchiness among Labour Members. It would be under-standable if that tetchiness were directed across the Floor of the House. I am told that such things happen from time to time, although that is not usual in my experience when things are mostly all sweetness and light in the Chamber. But when Labour Members get tetchy with each other and there are disagreements among friends, particularly those below the Gangway who normally stick and sit together, it is very worrying. It indicates that they are not in that properly receptive state of mind to consider an argument on its merits and to discuss and smooth out a few of the rough corners which I am sure they will admit there are here and there in this legislation. Perhaps it is the hour of day.

As I have mentioned before, there is the problem of diurnal rhythms and there are——

Photo of Mr Robert Adley Mr Robert Adley , Christchurch and Lymington

Before my hon. Friend gets too involved with his rhythms, would he perhaps finish dealing with the point made by the right hon. Member for Jarrow (Mr. Fernyhough)—that my hon. Friend's membership of a trade union necessitated a declaration of interest before, during and presumably after he sat down? If we are to understand the position correctly, the Government are pushing this Bill through tonight on the instructions of Mr. Len Murray. Therefore, would my hon. Friend think it right that, following the suggestion made by the right hon. Member for Jarrow, every Minister and Labour Member who is a member of a trade union, let alone a sponsored Member of a trade union, should make a full and clear declaration of that fact before he or she speaks or continues to take any part in this debate?

Photo of Mr Norman Tebbit Mr Norman Tebbit , Waltham Forest Chingford

My hon. Friend has made a valid point which will no doubt have the support of the right hon. Member for Jarrow on future occasions. I think that sometimes these matters are conducted in a somewhat heavy handed sort of way. We perpetually go on about declaring interests, but all, or almost all—the right hon. Member for Down, South (Mr. Powell) is not in his place—are published in a fascinating little book.

Many hon. Members on both sides of the House work for outside employers. Indeed, many of us are trade unionists, and there is nothing wrong with that. I always thought that I was a good trade unionist. I have experience of going on strike. My union had a motto about these things. It was generally said that if one did not picket, things would never get better. However, that is not entirely relevant to this discussion.

I was referring to the problem of diurnal rhythms. Those who have experience of matters medical or biological—it might be useful to get the Foreign Secretary here to discuss this matter—will know that all animals, including human beings—and there are some fair specimens of animals among some human beings—operate on a 24-hour cycle within which there are two sub-cycles of 12 hours each which are broadly related to the rising and setting of the sun. One usually reaches a peak of efficiency at about 9 o'clock in the morning and probably at about 9 o'clock in the evening. But of course there are two troughs in one's efficiency. These occur at about 3 o'clock in the morning—

Photo of Mr Clement Freud Mr Clement Freud , Isle of Ely

Or at about 4.20 a.m.

Photo of Mr Norman Tebbit Mr Norman Tebbit , Waltham Forest Chingford

The hon. Member has made a point that he has made before. He will realise of course that he is talking about British Summer Time and I am talking about Greenwich Mean Time. Diurnal rhythms are related not to artificial clock times but to Greenwich Mean Time. That is why people who undertake long journeys suffer from jet lag and their efficiency falls.

That is what is happening in the House now. We have what could be described as an outbreak of jet lag. One of the characteristics of jet lag is irrational and rude behaviour. I have seen groups of people suffering from jet lag who behave in a totally disorderly manner. They might not be conscious of it but they do. Of course, it is extremely dangerous to the health.

There is a pattern, not only of more industrial accidents at 3 o'clock in the morning and 3 o'clock in the afternoon but of more death. More people die at 3 o'clock in the morning than at any other time. There is always hope. I suspect that more legislation also dies at this time in the morning.

Unfortunately, after indulging in this irrational and disorderly behaviour people often become bored and gradually stop. One has only to stand here and move one's mouth up and down.

Photo of Mr Stephen Hastings Mr Stephen Hastings , Mid Bedfordshire

On a point of order, Mr. Deputy Speaker. I should like your advice on a matter of procedure which might help some of the important points that my hon. Friend has been arguing. [HON. MEMBERS: "Speak up."] If hon. Members cannot hear I shall begin again. I should like your advice on a matter of procedure, Mr. Deputy Speaker. There is a risk that some important statements and Questions may be lost because of this debate. We propose an innovation. Could we have Question Time now? That would not be unreasonable. Ministers have to sleep. We could allow them until 5.30 a.m. and then begin Question Time. After that the Secretary of State for Trade could make his statement about the lack of any further air transport across the Atlantic. We could then continue this debate.

Photo of Mr Oscar Murton Mr Oscar Murton , Poole

That is not a matter for the Chair.

Photo of Mr Norman Tebbit Mr Norman Tebbit , Waltham Forest Chingford

It is not a matter for the Chair but it is a matter that we might consider when we are considering this Bill.

Photo of Mr Oscar Murton Mr Oscar Murton , Poole

Order. I think that the House should come to order and proceed with its business.

Photo of Mr Norman Tebbit Mr Norman Tebbit , Waltham Forest Chingford

I was having a great deal of difficulty in making myself heard. I cannot imagine what has come over the House, but every now and again there seems to be a little problem with the acoustics.

As I was saying, the problem of diurnal rhythms is serious. I think that it would be generally agreed that there is considerable hazard to health—[Interruption.]

Photo of Sir Walter Clegg Sir Walter Clegg , North Fylde

On a point of order, Mr. Deputy Speaker. Will you please explain to us why the hon. Member for Islington, South and Finsbury (Mr. Cunningham) is standing up there, by one of the Benches near the Chair, looking like Hamlet's ghost?

Photo of Mr Oscar Murton Mr Oscar Murton , Poole

Order. I must appeal to the House to proceed with the evening's business. That was not a point of order.

Photo of Mr Norman Tebbit Mr Norman Tebbit , Waltham Forest Chingford

It would be a very good idea if we could proceed with the evening's business.

Does the hon. Member for Islington, South and Finsbury (Mr. Cunningham) want to intervene?

It would be a splendid idea if we could get on with the evening's business, but before we can get to the evening's business, we have the day's business before us—probably Question Time and the important statements. Perhaps it would be better if we could take those first. The easiest way to do so would be now to report progress on the Bill and to adjourn the House. We have made quite a bit of progress. It would be a very good thing if we did that.

Photo of Mr John Pardoe Mr John Pardoe , North Cornwall

On a point of order, Mr. Deputy Speaker. I should like to ask a question of you about your conduct of these debates. [HON. MEMBERS: "Oh."] It obviously has not come to your notice that on three occasions in the last 10 minutes the hon. Gentleman who is supposed to be addressing the House, the hon. Member for Chingford (Mr. Tebbit), has been saying nothing at all. Indeed, the hon. Member for Chingford has been on his feet for some considerable periods without saying anything. The only trouble, Mr. Deputy Speaker, was that you did not actually notice it. I therefore wonder whether you intend to conduct these debates in this manner from now on.

Photo of Mr Oscar Murton Mr Oscar Murton , Poole

Order. Mr. Deputy Speaker was not aware that the hon. Member for Chingford (Mr. Tebbit) was not speaking. To the best of my knowledge, he was making his speech. If there was a certain amount of noise from other Benches, that may have been the reason why the hon. Member for Cornwall, North (Mr. Pardoe) could not hear him. However, I suggest to the hon. Member for Chingford that the time has come when we should proceed with the business of the House and come to the Question that has been proposed.

Photo of Mr Gordon Wilson Mr Gordon Wilson , Dundee East

Mr. Gordon Wilson rose in his place, and claimed to move, That the Question be now put.

Question put, That the Question be now put:—

The House divided: Ayes 251, Noes 219.

[For Division List No. 163, see c. 1615]

Question accordingly agreed to.

Question put accordingly, That further consideration of the Bill, as amended, be adjourned:—

The House divided: Ayes 221, Noes 249.

[For Division List No. 164, see c. 1619]

Question accordingly negatived.

Photo of Mrs Margaret Bain Mrs Margaret Bain , Dunbartonshire East

I beg to move Amendment No. 10, in page 4, line 21, at end insert— '(i) the need to safeguard employment opportunities particularly in development areas.'

Photo of Mr Oscar Murton Mr Oscar Murton , Poole

With this amendment we may discuss Amendment No. 12, in page 4, line 38, at end insert— '(e) the function of carrying out, and of preparing a report in consequence of an investigation into the wholesale and retail trades of the reasons for the imbalance of pricing in the various parts of the United Kingdom and in pursuance of such a report of issuing guidelines and recommendations for the eradication of such an imbalance.'

Photo of Mrs Margaret Bain Mrs Margaret Bain , Dunbartonshire East

It is with some relief that we reach this stage, as we consider the amendments to be crucial to the implementation of the price code. We are particularly concerned that we should receive considerable support from the House, as the amendments are of great importance to Scotland. It may be vain of us, but we believe that the last hour was spent in trying to ensure that there would be enough hon. Members left in the House to support us on the amendments, and that the official Opposition were worried that minority parties night disappear should the amendments be reached before the closure.

In Amendment No. 10 we are concerned about the problem of cash flow at the time of implementation of a price freeze. The Secretary of State should examine a situation in which during investigations one measure could be applied at the expense of other criteria. We suggest that employment must be a criterion.

Anyone who has studied today's announcement of the unemployment statistics must be very concerned, as we axe. Scotland, more than half of whose land has special development area status, has 186,218 people unemployed, an increase of 22,000 in the past month. A Written Answer to the hon. Member for South Ayrshire (Mr. Sillars) printed in Hansard on Monday said that in January there were 40,967 young people under the age of 20 unemployed in Scotland, and that 22,411 of them were under 18. We should be very worried if the Government imposed any restriction that would result in a further deterioration in the employment situation.

In considering the amendments we must look at Clause 9, because of the safeguards to be written in there. The Secretary of State did not make clear in Standing Committee exactly what those safeguards should be, but instead chose to make a statement on 27th May, when the House was moving into recess. It would have been useful to those of us on the Standing Committee to have those safeguards made known to us during our debates. In his statement the right hon. Gentleman said: The safeguard levels will not represent, as the Price Code safeguards have done, the maximum level of profit at which many firms can operate. 5.0 a.m.

Of course, if we are not to allow firms the profit levels that they need to operate, there must be a great deal of doubt whether many companies can continue in operation after a price freeze. We are concerened particularly with the liquidity problems of small companies that provide considerable employment in development areas such as Scotland.

In the safeguards, the Government recognise that during investigation, the safeguards must relate not only to the product itself, but, even if indirectly, to the circumstances of the enterprise—[Interruption.] It is obvious from the noise that they are making that hon. Members below the Gangway opposite are not concerned about the problem of providing new jobs in these areas. I ask the House to endorse the view that employment opportunities must be taken into consideration by the Commission when it institutes an investigation of a price increase.

Amendment No. 12 refers to price variation throughout the United Kingdom. I moved a similar amendment in Committee and I do not apologise for returning to the subject. My concern has not decreased, despite various assurances given by the Minister in Committee.

The Price Commission's report on food prices in outlying areas said: Food prices in outlying areas are overall somewhat higher than in more central areas. The north of Scotland shows the greatest disparity, being 73 per cent, above typical national prices. While there are small differences in overall prices and in many outlying areas fresh food can be cheaper because of local conditions, other items, including liquid milk, bread and branded grocery items are much more expensive. People cannot accept that standard goods should cost more in their areas.

One problem is that stores in these areas cannot buy the bulk quantities of goods. This is a problem that the Commission could investigate because many of the special offers for bulk buying militate against the small traders. We believe that they should have the same benefits as the supermarkets.

There are indications that regional variations make prices in Scotland higher and, in addition, the average weekly total household income is lower. According to the 1974 family expenditure survey, the Scots' percentage of average English household income was 95·4 and of house-hold income in the South-East of England it was 85. The percentage of total United Kingdom average household income was 97. It looks as though the Scottish people pay more from lower incomes.

In Committee, the Minister indicated that there was a possibilty of an investigation into this problem and several other hon. Members expressed concern about regional variations in prices not only between Scotland and England but throughout the United Kingdom. We were relieved when the Minister indicated that he would discuss the matter with the Secretary of State and consider the possibility of an investigation, but I have tabled the amendments again because the assurances that we received in Committee were rather vague and I should like to see something more concrete from the Government. I received a letter from the Minister of State who indicated that, instead of pursuing the matter further, I should wait until after 31st July.

In all the circumstances I cannot help feeling that the Department would like me to drop the issue. It hopes that in due course it will go away. Unless the Government can give me a categorical assurance today that they will write in an amendment in another place and that an investigation will take place, I shall have to force the House to have yet another Division. We hope that such a guarantee will be forthcoming. I stress that these issues are extremely important to us in Scotland. Many of us feel that the Government are reneging on all the promises that they made during the election campaign. They have been discredited in virtually every area of policy applicable to Scotland. A positive response from them today would at least redress some of the balance.

Photo of Mr David Mitchell Mr David Mitchell , Basingstoke

The effect of the amendment that has been so eloquently moved by the hon. Member for Dunbartonshire, East (Mrs. Bain) is to seek to put a duty on the Commission in performing its function to safeguard employment opportunities. Although the amendment also refers to development areas, the hon. Lady and the grammar suggest that it applies to other areas. My constituents, like many others, are deeply concerned about unemployment and the way in which the Bill will make it worse.

Record unemployment figures were announced last night. As the amendment recognises, there is a vital and direct link between price control and unemployment. That is one subject of grave concern to my right hon. and hon. Friends. If the amendment were passed, it could mitigate to some extent the damage that the Bill as it stands will do to employment.

We are sitting at 5 o'clock in the morning against the background of a Government who announced, according to the Evening Standard yesterday, a level of unemployment of no less than 1,450,055. That is the highest June figure since the war. It has nothing to do with 13 wasted years or anything of that sort. It is 118,000 up on June last year, and over 100,000 up since May this year. Those are appalling figures. They are figures that are accelerating. Unemployment has doubled since the Government took office. The Bill and the activities associated with it are one of the causes of that situation.

I am prepared to bet Labour Members either above or below the Gangway that there will be 1½ million unemployed by August of this year. Are there any takers?

Photo of Mr John Ovenden Mr John Ovenden , Gravesend

It would be 3 million if the hon. Gentleman's party were in power.

Photo of Mr David Mitchell Mr David Mitchell , Basingstoke

If the hon. Gentleman listens to what I have to say and reads our policy in "The Right Approach", he will find that that will not be the position. I am asking whether any Labour Member is prepared to take my money on there being 1½ million unemployed by August. Is no hon. Gentleman to take my money?

Photo of Mr John Mendelson Mr John Mendelson , Penistone

It is the school leavers.

Photo of Mr David Mitchell Mr David Mitchell , Basingstoke

Will the hon. Gentleman take a bet with me? If not, what about the hon. Member for Luton, West (Mr. Sedgemore)?

Photo of Mr David Mitchell Mr David Mitchell , Basingstoke

The hon. Gentleman is obviously suffering from the depressed living standards created by the Government. It seems that no Labour Member is prepared to take my money. No one on the Government Benches is prepared to accept my bet. It is against that background that we are debating the amendment.

Photo of Mr William Molloy Mr William Molloy , Ealing North

Is the hon. Gentleman really saying that to win a bet he woud be prepared to see more British people unemployed in August than there are now? The hon. Gentleman should be ashamed of himself?

Photo of Mr David Mitchell Mr David Mitchell , Basingstoke

The hon. Gentleman knows perfectly well that I was deploring the fact that the Government have been such a failure that they have doubled unemployment during the time that they have been in office. I deplore that fact that the school leavers are unemployed. However, it is also the hard core of unemployment that has gone up.

Photo of Anthony Steen Anthony Steen , Liverpool Wavertree

Is my hon. Friend aware that the figure of 1½ million unemployed has already been reached and that but for the Government's artificial measures, by which they have pumped £700 million into the economy and created artificial jobs for young people, the figure would already be well over 1½ million?

Photo of Mr David Mitchell Mr David Mitchell , Basingstoke

There is a great deal of truth in what my hon. Friend said. Accepting the Government's figures, in spite of the artificial reduction to which my hon. Friend referred, the hard reality is that unemployment has doubled since the Government took office. The depressing fact is that the hard core of unemployment, which normally goes down in June by about 30,000, went up by 4,362 in the past month alone. Therefore I am not surprised, against that background, that no Government supporter is prepared to take my money on there being 1½ million unemployed by August. If no hon. Gentleman is prepared to take evens, I am prepared to offer them 2 to 1. I notice that there are no takers.

There is a direct link between the level of unemployment and the price controls in the Bill that we are asked to endorse. [Interruption.] There seems to be a debate about unemployment going on between hon. Members below the Gangway, where hon. Gentlemen's consciences are troubled by the disasterous record of their Government.

Photo of Sir Arthur Irvine Sir Arthur Irvine , Liverpool Edge Hill

Order. There are far too many sedentary interruptions.

Photo of Mr David Mitchell Mr David Mitchell , Basingstoke

There is a direct link between unemployment and the price control measures in the Bill. It destroys confidence and creates uncertainty. Who will invest in a project to create buldings, factories and employment when he does no know with any degree of certainty the price that he will be able to charge for the commodity he makes? He may judge that if the product will command its market price he will be able to build a profitable enterprise, make a return on his money and create employment. If that is the situation he can see his risks and make his judgment. But there is now interposed with this legislation a new uncertainty that the Price Commission will say "No, you may not charge that price even though the market will stand it".

On that basis which board of directors will lay out investment which will create jobs, in view of that uncertainty? If any board of directors even considered doing so it would have before it the Minister's speech on Second Reading when he made it clear that it was an essential qualification for appointment to the Price Commission to have a positive commitment to selective Government intervention in the economy. When it knows that it must come up against that prejudice, a board of directors would be somewhat unusual if it embarked upon an investment project. There is a direct link between this legislation and the destruction of incentives to invest.

5.15 a.m.

The Bill, mitigated I hope by the amendment, will slash the funds available for investment. Business can get its money by borrowing—but it can borrow only to the extent that there has been ploughing back of profits, that is collateral to borrow against, or by going to the Stock Exchange—although that is denied to the small business sector, which creates much employment—or by ploughing back the profits of the previous year's trading. This legislation will make inadequate the ploughing back of profits from previous years, the largest single source of investment for modernisation, expansion and job creation. So the criteria should include the effect on employment.

Recent evidence to the Select Committee on Science and Technology showed that the greatest obstacle to innovation was not lack of ideas or opportunities but shortage of available capital. Every pound cut from profits is a pound less for investment. A firm of agricultural engineers recently wrote to the Small Business Bureau which has been collecting evidence about the impact of this sort of legislation: If we exceed the Price Commission's margins we shall still not be making enough profit to pay any tax at all. One business man wrote to the Bureau: Talking to a number of acquaintences and friends in a similar situation to mine, running their own businesses, we are all heartily sick of bureaucracy and feel that maybe we should dispose of our businesses and let the State keep us, as they seem so keen on keeping so many others. That attitude, unhappily, is growing. Apart from the all-time record number of small businesses going into bankruptcy, the number which have voluntarily gone into liquidation, which have voluntarily given up, has risen by 100 per cent. over the average for 1972–73, the middle of the last Conservative Government.

A third example—practical examples show what we are talking about—is that of a firm which deals in machinery and has been accused by the Price Commission of exceeding its profit limits. Its main line of equipment cost £10,500 in 1974 per unit: the same unit now costs £19,600. The Price Commission's activities will prevent the firm from accumulating enough capital to be able to buy the new equipment it needs in order to deal. It is therefore paying off labour. People are being made unemployed in a situation in which this amendment could have a significant and helpful effect.

I turn to another aspect—the delaying powers which the Government have put into the Bill while an investigation takes place. This has considerable significance in terms of the likely effect on jobs. In this respect I should like to quote the experience of an agricultural feedstuffs manufacturer in or near my constituency. The firm's raw material index went up 26 per cent. between May and December last year. About 85 per cent. of the cost of animal feedstuffs is represented by the imported raw material which is handled. Most of that raw material went up by £19 a ton in the five months between May and October last year. [Interruption.] The hon. Member for Ealing, North (Mr. Molloy), who makes quips from below the Gangway, may not be concerned about unemployment. We certainly are. As a Member of a party which has created so much unemployment and being asked to push through legislation which will create even more unemployment, he ought to be ashamed of himself.

Photo of Mr William Molloy Mr William Molloy , Ealing North

I was attempting to enlighten the hon. Gentleman. He referred to a firm in his constituency which complained that it might go bankrupt because of the high prices that it has to pay for certain raw materials and machinery. I suggest that it might be helped when this Bill is law, because it will not then have to go bankrupt.

Photo of Mr David Mitchell Mr David Mitchell , Basingstoke

I suppose it is true that the road to hell and mass unemployment is paved with good intentions and a total non-understanding of how the business community works! The firm concerned deals in imported machinery, the prices of which have gone up partly because of the Government's incompetence in managing our currency.

If there is a five-month freeze while an investigation takes place, this agricultural feedstuffs manufacturer tells me that he may have to consider closing more than one of his factories. That ought to make the hon. Member for Ealing, North, who is sitting there so smugly, sit up and think, because that is unemployment being caused as a direct result of this legislation. We are dealing not with a couple of pence in the housewife's purse but the numbers of people who will be unemployed as a result of this legislation.

A major factor which is often overlooked in respect of unemployment and the creation of jobs is the small business sector. The pattern of unemployment today has changed. We have large industry turning out no more production than it did during the three-day week. British industry has an inbuilt factor of a 3 per cent. increase in productivity year by year because of investment and the like. We need an increase in demand in excess of 3 per cent. before we start to take up the slack in productive capacity which is not being used. We have to go a long time before large industry will take on more people.

We shall have to rely on small firms, particularly in the regions—Scotland, Wales and the West country—as the best potential for creating jobs. Where do small firms get their money from to expand and to create jobs? They cannot go to the Stock Exchange. They get their money overwhelmingly from ploughing back the profits of the preceding year.

The Minister may say that this legislation does not apply to very small firms; that prices decided by the market and other competitive factors affect them. That is so. But one competitive factor is that if a large company, trading at a notional break-even point and not making a profit because of this legislation, is under investigation for five months and has to keep its prices at an artificially low level, small firms in the industry will be driven to the wall because their cash flows will not enable them to sustain such a period of operation at an uneconomic level. That is how, bit by bit, unemployment mounts.

I warn Labour Members below the Gangway that during the next six months they will have letters from constituents who have become unemployed as a direct result of this legislation which they will have tramped through the Lobbies to support. I hope that hon. Members will support the amendment. At least it may do a little to mitigate the damage being caused by the measure before the House.

Small businesses are cash hungry. Inflation means that they need more money to do the same volume of business and more money to carry the same volume of stock. Where does that money come from when the Chancellor is taking more in corporation tax, plus the two per cent. national insurance surcharge and in all the means by which inflation affects business. The money comes from the profits that will be depressed lower as a result of this legislation. It means fewer jobs, less investment, less production and the destruction of incentives.

If the amendment is carried, I see a hope that the Price Commission might act upon it. It might change its role from seeking to cut profits to explaining their importance. It might run courses for the benefit of hon. Members below the Gangway explaining the direct relationship between profit and jobs and how one may be traded off against the other. This Government have chosen to put profits down and unemployment up. That might be a useful new role for the Commission.

The Commission could act as defender of the profit motive, seeking to create the rejuvenation of British industry and perhaps spearheading a massive job creation programme which was based on incentive and free from Government interference and which would restore profits and confidence and the recreation of investment. That would be a role that even my right hon. and hon. Friends could support. I hope that they will support the amendment, which is designed to mitigate some of the damage caused by the Undersecretary of State who looks so lonely sitting on the Government Front Bench.

Photo of Mr Robert Maclennan Mr Robert Maclennan Parliamentary Under-Secretary (Department of Prices and Consumer Protection)

It is right for me to intervene early in the debate which has so far mirrored debates that we had in Committee on similar amendments.

The hon. Member for Basingstoke (Mr. Mitchell) exaggerated the effect that the Bill will have upon the profitability of companies operating in this country. Indeed, it is fair to say that his speech amounted to little more than scare-mongering.

The attractiveness of the price control measures that this Government are proud to have advanced is that they will not only be effective in restraining unjustified price increases—more so than measures introduced in the Price Code by the Conservative Government—but they will do so in a more discriminatory way and ensure that companies receive adequate profits. That is specifically written into the Bill.

The purpose of the clause is to safeguard the position of industry, particularly in respect of making adequate profits. Of course, it is necessary to make adequate profits to secure and safeguard employment. That reality is as much recognised by my hon. Friends and me as it is by the Opposition. It is not only guaranteed by the clause but it has also been further underwritten by the safeguards to which the hon. Lady referred. The whole thrust of this policy is directed to safeguarding the position of firms that might feel threatened by inadequate profits, and I believe that we are successfully protecting their position.

5.30 a.m.

I fully understand and sympathise with the motives of the hon. Lady the Member for Dunbartonshire, East (Mrs. Bain) in bringing forward Amendment No. 10. The desire to protect employment at present must be genuinely a prime consideration of every hon. Member. It is perfectly reasonable to seek whatever means are to hand to underline and emphasise that point. But the Bill is primarily concerned not with the creation of employment but with safeguarding the British consumer from unjustified price increases. We see no incompatibility between that objective and safeguarding employment, but we do not see the Bill as a means of creating employment.

Photo of Mr Robert Maclennan Mr Robert Maclennan Parliamentary Under-Secretary (Department of Prices and Consumer Protection)

The hon. Gentleman spoke at great length, and I am still answering his points. It will simplify matters if I answer some of the points raised.

Photo of Mr David Mitchell Mr David Mitchell , Basingstoke

On a point of order, Mr. Deputy Speaker. Is it in order for a Minister to accuse an hon. Member of scaremongering and to refuse to allow him to reply to the point?

Photo of Sir Arthur Irvine Sir Arthur Irvine , Liverpool Edge Hill

There is no point of order.

Photo of Mr Robert Maclennan Mr Robert Maclennan Parliamentary Under-Secretary (Department of Prices and Consumer Protection)

As I was saying, I greatly sympathise with the hon. Lady's motives in bringing forward the amendment. However, I think that she will realise that if one incorporated a provision of the kind suggested among the criteria in Clause 2(2), there would be a genuine risk that firms wanting to make price increases unjustifiably would go to the Price Commission and threaten redundancies if they were not permitted to get the price increase for which they were applying. It is to protect the community, the consumers—many of whom are unemployed consumers, admittedly—from that kind of threat that one has come to the conclusion that it is not appropriate to include in the Bill a provision of the kind suggested. But employment is clearly embodied in the criteria as a consideration to which the Price Commission would animadvert in arriving at its decisions.

Clause 2(2)(c)(ii), which we debated earlier and which refers to the need for the provision of money for the encouragement and promotion of innovations, technical improvements and new expansion of enterprises in the United Kingdom, is directly dealing with the provision of employment. I think that the hon. Lady will, on reflection, see that we have struck a balance in the clause between prevention of unjustified price increases and meeting the needs of industry for adequate profits.

Photo of Mr Tim Smith Mr Tim Smith , Ashfield

What would there be to prevent a company from threatening redundancies even if the amendment were not included?

Photo of Mr Robert Maclennan Mr Robert Maclennan Parliamentary Under-Secretary (Department of Prices and Consumer Protection)

Nothing at all. It is perfectly possible that a company can do that, but the criteria which are spelt out in Clause 2(2) are mostly of a measurable kind and the Price Commission will have to exercise its judgment on individual claims which it is open to companies to advance.

Amendment No. 12 would impose on the Price Commission the task of carrying out a particular study into regional price variations. Naturally, this is a subject in which I have a great interest. Under the existing powers, the Price Commission, as the hon. Member fairly said, carried out such a study of variations in food prices in the United Kingdom, particularly in remote areas.

It is open to us, within the terms of the Bill, to make a general reference to the Price Commission, when it is established in its new form, to look into precisely the matters to which the hon. Lady referred. It seems to me appropriate, if such a reference were contemplated—and as she was told in Committee such a reference is being considered—to do it at a time when, the Bill having been enacted, there are powers to do something about the recommendations of the Commission. At this time, no such powers exist.

We have an interesting and valuable report from the Commission on regional food price variations, but the present panopoly of powers is inadeqate to act on it. It is fair to say that the Commission, in looking at prices in outlying areas, found no evidence of wholesalers and retailers exploiting the situation of their relative freedom to the detriment of consumers, but the problem to which the hon. Lady referred is real and the matter she attributed as a cause of part of the difficulty—for example, the larger discounts available to the larger firms operating in more densely populated parts of the country—is precisely the sort of issue for the new Commission to consider.

Photo of Mr Timothy Raison Mr Timothy Raison , Aylesbury

This is an interesting and important subject. It is interesting that the SNP wants uniform pricing throughout the United Kingdom and a uniform economy. However, whereas food prices may be more on the West Coast of Scotland, their housing costs may be much cheaper. It is nonsensical to feel that one can abolish imbalance in this field but have a substantial imbalance in other fields, outside the scope of the Bill.

Photo of Mr Robert Maclennan Mr Robert Maclennan Parliamentary Under-Secretary (Department of Prices and Consumer Protection)

I fully accept what was said about differing variations within the total cost of living but that, it seems to me, would not be a reason for not looking at such variations as occurred and which would fall within the scope of the Price Commission's powers. However, the nub is that one wants to be in a position to do something about what is unjustifiable and we shall be better placed to do something about it after this Bill becomes law.

Because I very much share the hon. Lady's objectives, I hope that we shall make progress towards them in the debate.

Photo of Hon. Tim Sainsbury Hon. Tim Sainsbury , Hove

It is clear from that performance that the Minister of State has acquired some of the arrogance of the Secretary of State without acquiring any greater understanding of his Department's responsibilities than he had three or four years ago when I first listened to him in Committee on a prices matter. It was a lamentable performance.

As this is my first intervention on this Bill, I should start by declaring an interest as a director and substantial shareholder of—dare I say?—a well-known multiple food retailer and I have a number of other interests as director and shareholder of companies which can be affected by the Bill. Those interests are substantially the same as those which are listed in the register of Members' interests; it has not been up-dated for a long time but there is no substantial difference, as I recall. [Interruption.] Perhaps I ought to pause for the commercial that I am getting from Labour Members below the Gangway. Does the right hon. Member for Jarrow (Mr. Fernyhough) wish to intervene?

Photo of Mr Ernest Fernyhough Mr Ernest Fernyhough , Jarrow

I merely said to my hon. Friend that after the hon. Gentleman fulfilled all the obligations to which he referred he occasionally found time to come to the House of Commons.

Photo of Hon. Tim Sainsbury Hon. Tim Sainsbury , Hove

We would be better employed addressing our minds to the Bill than to that sort of intervention.

I should like to address my remarks primarily to Amendment No. 12, but before doing so I should like to say a few words about Amendment No. 10, particularly in support of what my hon. Friend the Member for Basingstoke (Mr. Mitchell) has said.

I suppose the first thing one might ask is whether Amendment No. 10 is necessary. It seems astonishing that we should find it necessary to include in a Bill of this type the need to safeguard employment opportunities at all, let alone the need to safeguard employment opportunities particularly in development areas". If there were any sense, meaning or coherence in what passed for the Minister's reply, it was that this was necessary. The hon. Gentleman told us that adequate profits were written into the Bill beyond a doubt. If he can believe that after three years in office, British industry and commerce, whatever their size, have a great deal to fear from any Department in which the hon. Gentleman has any responsibility.

I can assure the Minister that both British industry and commerce have a totally different opinion. I believe that opinion is soundly based on a study of the Bill and on the totally inadequate safeguards that have been presented to the House. One has only to go through the Bill to see how inadequate they are. There is the need to recover costs". That is a splendid incentive to invest. A person can get his money back if he is lucky. If a person is lucky he can be allowed to recover his costs. Big deal!

We then move on from subsection 2(a) to subsection 2(b), which refers to the desirability of encouraging reductions in costs". That does not exactly sound the sort of thing which ensures that a person has an adequate profit.

Subsection 2(c)—this was the one point on which the Minister seemed to attach particular importance—refers to the need to earn, from selling goods and providing services in the United Kingdom, profits which provide a return on the capital employed". That does not refer to an adequate return but to a totally unquantified level. What does that mean? Does it mean 3 per cent., or 1 per cent. or half of 1 per cent., or 0·1 per cent.? Will the Minister tell me? I would willingly give way to receive further illumination from the hon. Gentleman's lips about the wonderful safeguards written into the Bill.

Photo of Mr Robert Maclennan Mr Robert Maclennan Parliamentary Under-Secretary (Department of Prices and Consumer Protection)

I refer the hon. Gentleman to Clause 2(1) which refers to adequate profits".

Photo of Hon. Tim Sainsbury Hon. Tim Sainsbury , Hove

That refers to "adequate profits" in an undefined way. I do not think an investor would regard that as any sort of safeguard. One can go right the way through the safeguards that are so far written into the Bill. It is quite clear that the hon. Member for Dunbartonshire, East (Mrs. Bain) was well advised to introduce Amendment No. 10 because it is very extremely necessary.

Photo of Mr Robert Adley Mr Robert Adley , Christchurch and Lymington

When my hon. Friend asked the Minister to give an answer to his question we were regaled by the single word "adequate". Perhaps my hon. Friend can ask the Minister what the word "adequate" means in terms of the profit levels that he was talking about?

5.45 a.m.

Photo of Hon. Tim Sainsbury Hon. Tim Sainsbury , Hove

I doubt very much whether from such an inadequate Minister we should get an adequate reply about the meaning of the word "adequate". 11 the Minister wishes to answer that point I shall be only too happy to give way. But I think that he feels that silence is the better option on this occasion.

The Minister has lamentably failed to understand the fundamental aspect of investment and job creation. I do not expect that lot below the Gangway to understand—[Interruption]—they are not interested—but the Minister should have some idea——

Photo of Mr Russell Kerr Mr Russell Kerr , Hounslow Feltham and Heston

That is the last time that I shop at Sainsburys.

Photo of Sir Arthur Irvine Sir Arthur Irvine , Liverpool Edge Hill

Order. Unless we hear what the hon. Member is saying, we shall make no progress at all.

Photo of Mr Ernest Fernyhough Mr Ernest Fernyhough , Jarrow

But, Mr. Deputy Speaker, the hon. Member referred to us as "that mob" below the Gangway. All I said was that he was an arrogant millionaire, using phraseology of that kind.

Photo of Mr Ian Gow Mr Ian Gow , Eastbourne

Should not the right hon. Member for Jarrow (Mr. Fernyhough) withdraw the slights about my hon. Friend? With these Ministers in power it is impossible to have that amount of money.

Photo of Hon. Tim Sainsbury Hon. Tim Sainsbury , Hove

The word that I used was "lot", not "mob". I said that I did not expect that lot below the Gangway to understand. But I had hoped that after three and a half years in office the Minister had begun to have an inkling of understanding of what will help investment and jobs. He appears to be totally unaware of, and fails to appreciate, the vital role of uncertainty. Every investment decision involves an element of judgment. I have never known or heard of any business decision being made with all the information that one would like. It is not obtainable, and if it were it would take so long to get it that one would never get around actually to making a decision. There is always an element of judgment—about the demand for a product, the competition, the relative movement of raw material prices, and the relevant movement of any input prices affecting output prices for the commodity. These are essential elements of uncertainty.

When one looks at more important investment decisions one is usually looking at the question of using new machinery, or existing machinery adapted or linked together in new ways. Then one enters another area of uncertainty—the rate of production per hour or per week out of that particular piece of machinery. What down-time is one to allow? There are a large number of uncertain factors in any investment decision. Because of this it is inevitable that there will be occasions when an investment decision proves somewhat unprofitable. It may be so unprofitable that it has to be abandoned. One hopes that that will not happen in too many cases. In many cases it will prove unprofitable in the early stages when things do not come up to expectations, and they have to be put right. In these circumstances it may be a number of years before investors can begin to show a reasonable rate of return on profit.

The investor will face an additional degree of uncertainty as a result of the provisions of this Bill because, when he has finally reached the stage when he might be able to start earning a reasonable profit, the Commission will step in and take away from him the opportunity of earning that profit. It will be the final straw that will deter many investors, large or small, from making an investment because they cannot be sure that they will be allowed to make a reasonable profit. For this reason I entirely support the hon. Member for Dunbartonshire, East on Amendment No. 10.

I also support what was said by my hon. Friend the Member for Basingstoke about the importance to small firms of the amendment. Smaller firms are more prone to the factors of uncertainty to which I have referred because they do not have such a dominant position in the market and they take on an added importance in development areas to which the hon. Lady's mind was addressed.

I wish to tell the hon. Lady, before she leaves the Chamber, that I cannot find the same degree of warm-hearted support for her Amendment No. 12. Indeed, I would urge her, if it comes to it, to consider withdrawing it. That amendment would seek to give the Commission the function of carrying out, and of preparing a report in consequence of an investigation into the wholesale and retail trades of the reasons for the imbalance of pricing in the various parts of the United Kingdom and in pursuance of such a report of issuing guidelines and recommendations for the eradication of such an imbalance. Therefore, that amendment would give the Commission that major function. We might first seek to determine whether in practice there are differences on such a scale and of such importance that that sort of function might reasonably be given to the Commission.

I have with me a copy of Which?, a magazine which could fairly be said to be on the side of the consumer, particularly when one bears in mind the fact that it is published by the Consumers Association. Once a year Which? conducts a survey into grocery prices. I do not wish to go through the whole survey, although there are one or two phrases in it that I find particularly attractive—for example: There were a few J. Sainsbury Superstores that got the highest rating of all". However, I do not want to dwell on that part of the survey but, instead, on the findings on regional differences. In the last two years the survey appears to have been carried out in October, and therefore we have not yet had the results for this year. However, if we examine the findings in October 1975 in terms of regional differences, the survey says: Chains do not necessarily have uniform pricing policies in all branches, so a chain can be cheap in one region and expensive in another". The survey carried out in October 1975 did not find enormous differences in regional prices taken overall. Only four out of eight chains surveyed operated in all the regions. A number of the general stores surveyed by Which? did not operate outside their own areas. Of the four chains operating in all the regions that were surveyed, it was found that the cheapest sample shopping basket could be bought in Scotland. I do not know whether I should be advertising, but the cheapest of the sample included one from a large multiple chain, next followed two of the independent groups and one of the retailers better known for non-food operations. According to the Which? survey, all four stores were found to have the cheapest prices in Scotland. One could reasonably conclude that at least at the time of the survey there were not substantial regional differences throughout the United Kingdom.

Photo of Mr Gordon Wilson Mr Gordon Wilson , Dundee East

Does my hon Friend the Member for Hove (Mr. Sainsbury) accept that, as shown by the Price Commission report on food prices in outlying areas, it is the outlying areas that suffer most because there is no access to the chain stores referred to by the hon. Gentleman?

Photo of Hon. Tim Sainsbury Hon. Tim Sainsbury , Hove

I am grateful for that intervention. I have a copy of that report and I shall deal with that aspect of the matter in a moment.

I should like to report on what was said by the October 1976 Which? survey which further confirmed my point. I quote:

We found that the prices of own brands within a chain were very consistent throughout the country, so this year we have not given regional own brand pricing reports but just a regional figure. It appears that the difference in prices was not enough to justify giving a separate regional figure for different groups, although the report said that the price of other brands within a chain may vary considerably from one part of the country to another.

As usual, the North of England was generally the cheapest place for branded food and the South-East the most expensive area. Hon. Members may get a surprise if they go to shop in the North of Scotland. It might surprise many hon. Members to learn that London was the most expensive area for branded food.

Photo of Mr Geoffrey Finsberg Mr Geoffrey Finsberg , Camden Hampstead

Can my hon. Friend the Member for Hove (Mr. Sainsbury) please tell us about prices in Wales where there was a Carrefour operation which indicated a substantial reduction in the price of the shopping basket for most areas there?