PRICES AND INCOMES BILL

HL Deb 04 July 1968 vol 294 cc466-511

3.13 p.m.

LORD BESWICK

My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.

Moved, That the House do now resolve itself into Committee.—(Lord Beswick.)

On Question, Motion agreed to.

House in Committee accordingly.

[The EARL OF LISTOWEL in the Chair.]

Clause 1:

Continuation of Part II of Prices and Incomes Act 1966

1. So long as this section has effect, sections 7 to 22 of the Prices and Incomes Act 1966 shall continue in force without any extension by Order in Council under section 6 of that Act of the period for which they were brought into force under that section.

THE CHAIRMAN OF COMMITTEES

Before I call Amendment No. 1, I should point out to the Committee that if this Amendment is agreed to I may still call Amendment No. 2 by reference to the decision on Amendment No. 1.

LORD ERROLL OF HALE moved to leave out "7 to 22" and insert "7(1) (2) and (4), 10 and 17 to 21". The noble Lord said: I beg to move Amendment No. 1 on the Marshalled List. I should perhaps explain to noble Lords that we on this side of the Committee have selected only a relatively small number of Amendments. They are, in our opinion, either those which we hope the Government will see fit to accept or those designed to elucidate some of the more obscure points in this Bill concerning which we did not get full explanations during the Second Reading debate.

LORD BESWICK

May I interrupt? Would the noble Lord agree that it would be for the convenience of the Committee if we took Amendments Nos. 1 and 3 together for the purpose of the discussion? They could of course, be moved separately.

LORD ERROLL OF HALE

If that would be for the convenience of noble Lords, then I should be content to follow the suggestion made by the noble Lord, Lord Beswick. I may have one or two suggestions for grouping other Amendments later on; but we can discuss that when we come to them. Although I am speaking to both Amendments, when it comes to voting we are in fact considering only Amendment No. 1. The purpose of Amendment No. 1 is to delete the references to all price and income freeze and penalty sections in Part II of the 1966 Act. It was debated in another place, but what we feel is that the compulsory powers to control prices and incomes should be opposed both on principle and also because past experience has proved them to be ineffective.

During the freeze and the period of severe restraint from July 20, 1966, until June 30, 1967, weekly wage rates went up by 3.8 per cent., and hourly rates by 3.9 per cent. This was, in fact, not very much less than in the same period in 1961–62, when we had what one might call the Conservative freeze, or "pay pause" as we called it, and which had no compulsory powers behind it. The figures show that the effect of the freeze was merely to postpone wage increases but not to prevent them. Between July, 1966, and January, 1968, weekly wage rates went up by 8 per cent. and hourly rates by 8.4 per cent.; while between July 1961 and January, 1963, a comparable period, weekly rates rose by 5.7 per cent. and hourly rates by 6.5 per cent. We were able to get all that was needed without the compulsory powers that the Government now seek to have.

The N.I.E.S.R., the economic body, has commented and confirmed that the effect of these proposals has been only to postpone and not to prevent increases in wages. As they said in their February Journal, the rise in earnings between April, 1966, and October, 1967, was if anything, fractionally higher than the rise during the previous roughly comparable periods of rising unemployment and low economic activity. We make our case for deleting these items in the 1966 Act on the grounds that compulsory powers are not necessary; the same effect can be achieved by a genuine voluntary pay pause.

The other Amendment that we are considering is Amendment No. 3. This raises a slightly different point, although a related one. The Bill contains powers to impose penalties on trade unions and on other persons who strike in support of a wage settlement forbidden under the Act. This can lead not only to severe fines but also, ultimately, to the imprisonment of trade unionists. This is, in our view, quite an unspeakable doctrine for any British Government of any political Party to adopt. We may at times get angry with what the trade unionists or shop stewards do, but I think the concept of actually putting trade unionists in prison for having brought about strikes in opposition to a wage freeze proposal is something that nobody in this country could tolerate.

This has been debated extensively in another place. The Government have said that the powers have never been used and that they are sought only as a kind of long-stop. But if they are never going to be used, why insert those kind of powers into the Bill and thus cause more trouble, mutual suspicion and other adverse factors in the economy to-day? Also, of course, it would be difficult to define just what was the cause of the strike. A particularly interesting example of one pay freeze case was that of the Longbridge car delivery drivers who, noble Lords may remember, refused to carry return loads and to fulfil other parts of their agreement with the employers while their pay increase was by order frozen. The question of prosecutions arose, and I understand that the details were sent to the Attorney General. In fact, no action was taken against these drivers because there was no proof that the drivers' action was intended to force the employers to pay a particular increase.

This difficulty could arise in any future similar situation because the strike or the go-slow, or whatever it was, could always be represented as a dispute over matters other than pay in order to avoid the risk of prosecution. So, in my view, it is an unrealistic additional penalty to impose, one which the Minister in another place has said it is never intended should be used; and I suggest that it would go some way towards easing the strained relations between the Government and the trade unions if at this late stage the Government could accept our Amendment, which is designed to deal with those particular penalties. I beg to move.

Amendment moved— Page 1, line 7, Lave out ("7 to 22") and insert ("7(1) (2) and (4), 10 and 17 to 21").—(Lord Erroll of Hale.)

3.21 p.m.

LORD BESWICK

I was expecting members of the Committee to rise up and follow the noble Lord who made a very concise case in favour of his Amendments. I am bound to say, however, that although normally I am all in favour of brevity, I do not really think that the noble Lord told the Committee just how seriously these Amendments, if carried, would torpedo the whole Bill which we passed without a Division only the other week. This Amendment really would knock the bottom out of the Bill. The noble Lord gave, an assurance to the Committee that, for wider national considerations, he was not proposing to oppose this Bill. But if he succeeded in getting his Amendments carried, the husk of the Bill which' would go forward would not meet the national needs, and the noble Lord knows it.

The noble Lord said that compulsory powers would be removed. Let us see in a little more detail just what would be removed. If we excluded Section 7 from the 1966 Act we should exclude the statutory notification of increases in prices or charges. Does not the noble Lord want us to have the power to require notification of price increases? Is lie really against this? In view of what he said, I cannot believe twat he does not want us to have these powers. Section (7)(3) requires a standst;11 for 30 days. No one has really put up a great argument against the statutory power to ask that there should be a standstill for 30 days on certain price increases. Does the noble Lord really want that to be struck out of a Bill against which he did not vote on Second Reading?

Sections 8 and 9 of the Act, which he is proposing that we should delete, provide powers to impose standstills on prices and charges in association with and with reference to the N.B.P.I. Section 12 regarding the notification of increases in a company's distribution was, he agreed, working very well on L kind of voluntary basis. The noble Lord accepted that this was one item which was going to work satisfactorily. Does he really want to strike this out? And so one could go on right up to Section 22 which he would leave out. The only power that would remain would be that in Section 7, allowing Orders to be made requiring notification of increases in prices and charges, but without any standstill. What kind of a Bill 'would this be? What sort of arrangement should we have if there was power to require notification of an increase but that was all one could do about it? There would be no purpose in having any legislation at all. I cannot believe that the noble Lord really thinks that that kind of shadow power would have any real relevance to the economic situation with which vie are now faced.

If we exclude Sections 8 and 15 of the 1966 Act, we also destroy the powers of Sections 1 to 3 of the 1967 Act to impose or extend a standstill following an adverse report by the N.B.P.I. That means to say that, even assuming we retained power to refer an increase to the N.B.P.I., and if this objective and professional body, after due examination, said that there was no case for an increase, if the noble Lord insists on excluding these Sections, nothing could be done about it. We should have a situation in which the N.B.P.I., which I know is a body for which the noble Lord and others have considerable admiration, having considered the increase referred to it, might say that it was unjustified and an unmerited increase; yet there would be no other action which the Government could take. Surely the noble Lord does not want us to be left with a situation of that kind.

The noble Lord also made some passing reference to his objection to statutory control in general. May I just say that I agree with him. If we could have a situation in which everything was entirely voluntary, it would be much more satisfactory. Of course a world of that kind would be a lovely world in which to live at the present time but we are not putting forward proposals in this Bill as a matter of dogma or principle. It is alien to the sort of Socialist society that I, at least, want to see. But if we are going to look after the economic conditions which the noble Lord knows, and I know, have not been created by this Government alone, we must have some powers of this kind. If a voluntary system worked, we should welcome it, and if, as the result of experience that we get under the provisions in this Bill, a voluntary system can later be shown to stand a chance of working, no one would be happier than my right honourable friend who is really responsible for the Bill. But at the present time a voluntary system is not workable, and I think that what was said by the noble Lord's colleague Lord Molson, and by the noble Lord, Lord Henley, when we discussed this on Second Reading was very impressive and convincing. I hope that the noble Lord will consider what was said by one of his independently-minded colleagues and will feel that it would be wrong to press this Amendment to a Division.

It may be said that we have not the powers in this Bill that we had in the previous Bill but I think that here there is a separate and special consideration. We are working in a period following devaluation which presents its opportunities, but also its special difficulties. We admit that because of devaluation there will be an increase in prices—no one has denied this. An estimate has been given of an overall figure of something like 5 per cent., but the acceptance that there will be a general overall increase of about 5 per cent. makes it all the more essential that when there is an unnecessary increase, the Government should have power to deal with it. Clearly any unnecessary increases at the present time have to be dealt with.

I hope that my noble friend Lord Brown will have something more to say about prices when we discuss the later Amendments which the noble Lord, Lord Erroll of Hale, will probably be moving. But surely the noble Lord would now agree with me that we have not done too badly on the regulation of prices. There has been a readiness to co-operate on the part of industry and commerce, and it would be wrong if those who have been ready to co-operate see what I call the anti-social characters in our midst benefiting from a situation in which there was no reserve power; and I hope that for that reason, too, the noble Lord will be able to accept that there is a need for this statutory power.

The noble Lord said something about the possibility that trade unionists would go to prison. I do not take that too seriously. I do not feel that he was aching in sympathy with the people who in future are likely to go inside. That is a situation which is unlikely to arise. However, on the question of some kind of interference or intervention, of some kind of umpiring of the weight of increases, as foreseen in this Bill, what I would ask noble Lords opposite is this: do they accept that there is no need for anything at all in the way of supervision, or control, or umpiring of wage increases? The trade unions have accepted a need in principle. We have a T.U.C. Committee now working on vetting wage claims and they have been doing a magnificent job. Once we accept that in a modern society there must be some attempt to control, to regulate, to adjust, wage claims as a matter of principle, surely it is better to have that principle applied. Surely it is better to take such power as will ensure that it is applied fairly. And that is what is proposed in this Bill.

I say again about the statutory powers we propose to lake in this Bill that although they are there, up to now we have been able to rely upon voluntary cooperation. I am told that in only five cases has it been necessary to impose a statutory standstill on wage increases while they were under investigation. In all other cases, the trade unions concerned have co-operated in this policy.

With the first Amendment we agreed to take the third, which, as the noble Lord rightly says, gives power to exact penalties. It puts sanctions behind the other power. So clearly does one hang on the other that I do not feel it necessary to go into detail. We cannot have one clause that says certain things shall be done unless there follows some indication of the sort of sanctions which can be applied, if the law is not accepted. Therefore, we need some penal powers. But there are no new penal sanctions in this Bill. Nothing additional is being written into the law of this land, about punishing anyone, that was not in the previous Bill that was accepted by both Houses of Parliament. Clause 1 simply keeps in force those powers already established in the 1966 Act until the end of 1969.

Although the noble Lord said that trade unionists can be put into prison, I think he knows that that is not a fair description of the situation. The basic sanction, both on wages and prices, relates directly to the actions of employers, because it is they who may act in breach of statutory requirement. It does not relate to the trade unions. What the Bill says is that if a trade union uses its power to compel or attempt to compel an employer to act illegally, then sanctions can be applied to the trade union. But there is no direct sanction upon the trade unions so far as this is concerned. In practice, even though we had the situation in which there was an attempt to compel an employer to break the law—there is no need to go into details because the noble Lord is well aware of them—a trade unionist would have to be very clever indeed to get himself into prison under this provision of the Bill. As a matter of fact, this is wholly a mare's nest. I hope that, if the noble Lord and his colleagues accept that the purpose of the Bill fits the economic requirements of the nation at the present time, he will be ready to withdraw his Amendment and allow the Bill to go forward as something which can be worked.

THE EARL OF DUNDEE

The noble Lord has put forward a vigorous argument to the effect that the incomes policy, which in principle many of us on both sides of the House are agreed on, cannot really be effective without the sanctions which we are questioning in these two Amendments. I could not help wondering, all the time the noble Lord was putting forward these arguments in a most persuasive way, why he a id his Party never put them forward, and in fact suggested that they would do nothing of the kind in the General Elections of 1964 and 1966, in both of which they strongly repudiated the idea that they would reinforce an incomes policy by having these compulsory powers. It was not until four or five months after they had got a large majority and were secure against having another Election for a long time—in July, 1966—that they brought in these compulsory powers, to which we are now objecting and which we have always been against.

The noble Lord reminded us that we said we were not going to vote against this Bill, because we did not think it right to oppose what the Government believe to be an essential part of their economic policy for trying to put our economic affairs right. That is quite true, but we are suggesting to the Government that it would be a better policy without these compulsory powers. We had a voluntary incomes policy in 1962 when the National Incomes Commission was set up. I would remind noble Lords opposite that their Party did not support us, nor did the trade unions support us, on grounds which I think were flimsy and insubstantial. When they brought in their incomes policy in 1965, we supported them, and we thought that as they had the support of the trade unions therefore this policy under the Prices and Incomes Board was more likely to work than under the National Incomes Commission, which did not have trade union co-operation and support.

But it was not until more than a year later that an element of compulsion was introduced. I would ask the noble Lord to consider again whether he really thinks that an incomes policy is going to be more successful with these compulsory powers. The noble Lord referred to a speech on Second Reading of a noble friend of mine, who supported the principle of compulsion, and pointed out that my noble friend was against the compulsory control of rents in this Bill. What he tried to put to the Government was that this just shows how one kind of restraint or compulsion leads to another. We cannot have these powers without other controls which will grow and accumulate. The effect of these controls is to prevent economic growth, which I have always said and believed is one of the essential conditions needed to make an incomes policy successful. We believe that an incomes policy can succeed if there is economic growth, if we can get rid of restrictive practices, and if you can have more competition than we have now. We do not believe that either a voluntary policy or a compulsory policy restraining incomes can succeed if the economy is going to be put in a straitjacket, which is what the Government are doing. We are asking them to relax that stringency which we believe to be contrary both to the principles of justice and good economics.

LORD BLYTON

I have listened to the noble Earl, Lord Dundee, with great interest. He said that it was not in the Election Manifesto of 1966. But I remember quite vividly Sir Winston Churchill in another place, when we were arguing the nationalisation of steel and the mandate, saying: "It does not matter what you put in your Election Address. We must meet the contingencies that arise when we have power." So I suggest to the noble Earl opposite that the argument that he has put forward to-day is most seriously counterbalanced by what Sir Winston Churchill said in another place.

I think this is a political game that is being played by the Conservative Party; and this is the game as I see it. They are dead against sanctions on prices and dividends. They do not want their business associates to go to the Prices and Incomes Board. They know that there is opposition in a section of our Party to the sanctions embodied in this Bill, so they take the line, first: "We are opposed to prices being controlled, and we are opposed to the P.I.B. approving dividends." So they say: "We must attack this Bill, and then we shall get the trade unionists abstaining in the House of Commons when this Amendment goes back, and somebody can move against it," in the hope that the Government will be defeated on major policy. That is the political strategy of the Tory Party in the context of the P.I.B.

So far as sanctions are concerned, if 250,000 miners go on strike for a pay increase there are not sufficient gaols in this country in which to put them. They must be treated with some common sense. These "ghosts" created by the Conservative Party about crushing the poor trade unionist are, in the present context of politics, just a lot of propaganda, in an attempt to get power. I put this point quite seriously to your Lordships. If we are living beyond our income and cannot pay the wages because we are not yet getting growth, in this free-for-all that is advocated by the Party opposite the big unions will get on but the old-age pensioner on a fixed income will get nothing. I listened to the noble Lord, Lord Erroll of Hale, last week talk about Mr. Hambro's increase in wages being referred to the P.I.B., and I was really distressed to hear it. Nevertheless, that is what we mean by a free-for-all. If we are going to have a decent society—and I mean a decent society—in order that people may have a fair share of growth and production, we have to see that the weakest get the same share as the strongest; and because this Bill at least gives us some hope of achieving that ideal, which I believe in, I hope that we shall support it.

3.44 p.m.

LORD INGLEWOOD

I do not suppose that I am the only noble Lord who finds the first part of this Bill, and this first Amendment, with so many references, extremely complicated to understand. It is inevitably so. I listened with great care to the noble Lord, Lord Beswick, because I thought he would explain to us clearly what the Government were asking us to support here. Frankly, at the end of his speech I was not very much clearer. The reason why I have now risen is to ask a quite simple question: whether the noble Lord can make really clear to me what is the Government's policy in this matter. I hope he is not going to say that this is just a political point. It has a political content in it, but it is so important that I should like him to make it clear.

Is it the fact that, up to a short time ago, the Government were against all prices and incomes policies of any kind? Then there was policy "Mark II" (as I may call it), when they supported voluntary measures. Then we had "Mark III", which was a voluntary measure supported by an element of compulsion. Now we have "Mark IV", which has an increased measure of compulsion. If I am wrong, will the noble Lord please tell me; and if I am right, will he also please tell me? And I am not going to ask what policy "Mark V" may be.

3.47 p.m.

LORD SORENSEN

It is with some temerity that I intervene, quite briefly, for I have not been a trade unionist for many years, though once upon a time, believe it or not, I was a member of the Dockers' Union—a very incongruous description of myself. I do not wish to take up the latter part of the discussion, but shall confine myself to an interesting observation made by the noble Lord, Lord Erroll of Hale. He was obviously concerned, as indeed we all are, about the prospect of the imprisonment of trade unionists. This is, of course, in contrast to the indifference of many of his forbears to the imprisonment of trade unionists years ago. But we live and learn and progress, and we are very glad that to-day there are so many enlightened Conservatives who, like Lord Erroll, are deeply concerned about this grim prospect.

What I should like to hear from the noble Lord, merely by way of enlightenment, is whether or not it is true that his own Party, through their Leader and others, have made it quite clear that if they were returned to power they would introduce legislation to curb the power of trade unionists, particularly those who go on unofficial strike. Is it not true that in those statements there is the implicit assumption that the legislation they would introduce would apply penal sanctions to all those who disobeyed the law in regard to the enforcement of contracts and agreements between trade unions, on the one hand, and the employers' federations, on the other? If that be so, and if in consequence numbers of trade unionists defy the law and presumably, in the ultimate may be sent to prison, would his deep concern be as great then as it is now? I should be glad, for the purposes of consistency, if the noble Lord could enlighten me in that respect.

LORD CITRINE

I was unable to be present on the Second Reading debate, but I was impressed by the words which appeared early on in the speech of the noble Lord. Lord Beswick. He said: It would be difficult to call this a popular measure. Indeed, if ever there was a case of a Government determined to do their duty, as they see it, in the interests of the nation, and regardless of electoral consequences, then this is such a case."—[OFFICIAL REPORT, 27/6/68; cot. 1564.] I think that is putting in a nutshell the problem with which your Lordships are faced.

At first sight, I was under the impression that the purpose of the Amendment which has been moved by the noble Lord, Lord Erroll of Hale, had some bearing upon electoral consequences, and putting the Party that he represents in the position of being the standard bearers of liberty and freedom, as opposed to the compulsory desires of the Labour Movement. Indeed, I have heard it argued that, as a consequence of anything approaching a system of socialism, the element of compulsion would have to be applied to all sections of the community. I cannot help feeling that the Amendments are concerned more particularly with preserving the voluntary principle in the realm of prices and their effects on the business community, than they are with the position of the trade unions and the workers generally.

It is a terrible decision for any Government to have to make, that if certain things take place contrary to a law which has been passed by Parliament, workers or persons infringing that law shot Id be dealt with criminally under the law. I remember that in the various appeals which were made during the period of the wages pause, the wages freeze, and that circle, as it were, of indications of Government policy which they hoped would succeed by the voluntary method there were no specific references to restrictions on the business community and on incomes other than wages and salaries such as now appear in this legislation and in its predecessors.

I cannot help reaching the conclusion—I do so regretfully—that this is a false issue which is being raised by the Opposition. They know full well in their hearts that a system of voluntary restraint in the realm of wages and salaries, in particular—and, judging from what one has read, in the realm of high salaries and high incomes—can result only in a free-for-all. I can conceive of nothing which could more speedily wreck our economy than a return to the free-for-all, where the determining factor would be the power of an organisation and not the equity of the case of the country's economic prosperity.

Your Lordships' House has on many occasions been regarded by its Members, and particularly by those on the opposite Benches, as a body which thinks objectively on this range of questions and as a body which decides matters on the merits and free from political bias. I cannot help wondering what reasoning noble Lords opposite adopt to lead them to the conclusion that a system of voluntary restraint can succeed in present circumstances. There must be sanctions. There is no escape from that. After my long association with the trade union movement, I have reached this conclusion only after very anxious and searching thought.

I cannot see what will be the end of it. Let us suppose that the country returns to a free-for-all and that there is no element of compulsion on any section of the community in respect of incomes and prices. What will happen? Does anybody really believe that there will be voluntary restraint, particularly on the part of organisations which are bitterly opposed to the policy? I think that it is most irresponsible to try to take out of this legislation powers which any Government must possess at some stage. I cannot avoid the conclusion which was reached, evidently, by the noble Lord, Lord Sorensen, that the intention is, if and when it becomes necessary to return to a free-for-all, for the Conservative Party to do their best to see that the powers of one of the contenders in that free-for-all are weakened beyond measure. My Lords, I hate to say these things. I look at the Benches opposite and see men whom I have admired in the past for their objectivity and fairness. I am sorry that they are now advocating a policy which they must know in their hearts cannot succeed but will lead to chaos and industrial strife.

3.54 p.m.

LORD BESWICK

My Lords, I am sure that the whole House is greatly impressed by what the noble Lord, Lord Citrine, has just said. No one has had a greater experience than he in these affairs. Your Lordships' House must pay attention to him when he says that, in the present situation, he is prepared to accept the statutory provision for which we are now asking.

I was greatly impressed by the Second Reading debate, when, after all the furore in the other place, some noble Lords opposite were prepared to say that in their view their own Party were wrong and that what the Labour Government were doing was right. The official spokesman of the Liberal Party in your Lordships' House, despite the line which had been taken in the other place, was also prepared to be counted as one of those who believed that, in the present situation, it was necessary for the Government to have this kind of power.

I am sorry that the noble Lord, Lord Inglewood, does not understand the policy the Government are pursuing. It has been expounded often enough. There was a long debate in the other place. There has been a Second Reading discussion in your Lordships' House. There has been a White Paper, a copy of which I am prepared to send to the noble Lord, which spells out in detail what the Government propose. There has also been a General Considerations Order, which embodies the provisions of the White Paper, but which no one in your Lordships' House took the trouble to challenge. The Order was subject to the Negative Resolution procedure, but no one thought it worth while to pray against it. There have been ample opportunities to find out just what the Government are proposing. It is therefore not justifiable for the noble Lord to say that he does not understand what the policy is.

On Clauses 1 and 2 I agree with the noble Lord (having spent a good many hours last night trying to get the cross-reference) that it is difficult to follow exactly what is intended. I started this afternoon by seeking to explain Sections 7 to 22 of the 1966 Act. I think that it was on Section 11 that I began to think that I was boring the House, and I skipped it until Section 22. I am prepared to go through the list if the noble Lord wishes; otherwise I will send him a copy of the 1966 Act which the noble Lord. Lord Erroll, was able to get without my assistance last week.

My Lords, it has been said that past experience shows that wage demands can be restrained by a voluntary system; and percentages have been quoted—for example, by the noble Lord, Lord Erroll. I am interested in this and should like to get at the truth of the matter. I, too, have asked for figures. One answer can be found by comparing certain figures with certain periods. If another comparative period is taken, another answer is found. The case advanced by noble Lords opposite, and by the Opposition in another place, rested on the findings of a survey carried out by the Economic Institute. The result of that survey does not prove the case which noble Lords opposite seek to prove. It shows that there has been an increase in prices, but it does not prove that the increases are the result of a failure of our wages policy. Other factors are involved.

It is relevant to read to noble Lords opposite, if they are so confident in the findings of this authoritative and independent body, what is said on page 30 of the survey: The paramount need in 1968 and 1969 is to let devaluation work; and, given this need, it is unsafe to let the competitive margin be eroded. This is what the Bill is about. We seek to ensure that our competitive margin is not eroded by creeping wage increases. The survey continues: Under these circumstances, the Government cannot wait for the possible gradual evolution of a central collective bargaining system. It will probably need to take more immediate steps to slow down the rise in incomes. One MOW, the Government could make is to strengthen the N.B.P.I. as a weapon for restraint. It could lengthen the period of statutory delay for claims referred to the Board. That is what the survey concludes, and that is roughly the conclusion which is embodied in this Bill.

One other point in answer to the noble Earl, Lord Dundee. He said that what the Opposition wanted to see was a growing economy. He implied that we do not want to see that, but of course we do, and that is why the emphasis has shifted to productivity. Productivity is the keynote here and the fact is—and I hope we shall get agreement from the Benches opposite on this—that productivity is a word which is now much more readily understood in the factories up and down the country, both on the management side and on the union side. They art genuinely trying to get agreements which take into account the benefits of productivity, and if they can come forward with an agreement which shows that unit costs are not increased because productivity has been increased there will be nothing which will contravene the provisions of this Bill. I hope that, on considering all these matters, noble Lords opposite will see fit not to press their Amendment.

THE EARL OF DUNDEE

Your Lordships will probably feel that we have discussed these two Amendments sufficiently. Our debate has been partly almost a reflection of the Second Reading of the Bill and I want only to make three short points. First, the noble Lord, Lord Beswick, quite rightly said just now that if you take different periods of figures for wage increases you can come to different conclusions because one period will give a different result from another. Of course that is always true and it is one of the difficulties about using statistics, but the ponit which my noble friend Lord Erroll was making, and which was made by the National Institute of Economic and Social Research, is this. They took a good many periods, some of which might seem to result in one conclusion and some in another. The case they made out was that the last period, from July, 1966, until January, 1967, had not prevented but had only delayed a rise in wages, and I think it showed that if you took the period of restriction plus the period that followed in each cas3 the result was very much the same. It is worth making that point.

The noble Lord, Lord Sorensen, again raised the question of the intentions of the Conservative Party about trade unions, which he implied were putting them in much the same position as they are putting people in who do not agree to wage agreements now. I do not think this is so because what our proposals seek to do is simply to enable contracts to be made legally between trade unions and the people with whom they bargain, in exactly the same way as any ordinary business contract is enforcible in law between the noble Lord and myself or between any two citizens of this country. We are not proposing to impose any more burdensome control than that.

LORD ROWLEY

Will the noble Earl give way? Is it not the fact that in the event of these contracts being entered into, and in the event of the breach of those contracts, there may well be a criminal sanction as a result?

THE EARL OF DUNDEE

No more than in any case of a breach of civil contract.

LORD SORENSEN

May I supplement my noble friend's insistence. I thoroughly appreciate the argument here, but if this became law any trade unionist or body of trade unionists who defied the law would then be guilty in the eyes of the law and therefore subject ultimately to imprisonment.

THE EARL OF DUNDEE

He would be no more guilty than any business or professional man who enters into a contract with another man and then breaks it.

LORD MITCHISON

May I ask the noble Lord one question? Am I right in understanding that, while the Party opposite would not go right back to the Tolpuddle Martyrs, they would like to go back to the Taff Vale judgment?

THE EARL OF DUNDEE

I know the noble Lord is often out of date in his views, and when the noble Lord, Lord Sorensen, was speaking about the desire to imprison trade unionists, which he alleged was felt by some members of our Party, I wondered whether he was going back to the Tolpuddle Martyrs because I could not think of any later examples than that.

My other point concerns the interesting speech made by the noble Lord, Lord Citrine. It seems to me that the whole of his argument led to the conclusion that these compulsory sanctions ought to be permanent. This Bill only goes up to 1969. I believe the Government would have liked it to go up to 1970, and some of your Lordships who spoke on Second Reading would have liked it to go as far as 1971. But now it seems to me that the arguments put forward by the noble Lord, Lord Citrine, if they are followed, lead to the conclusion that these compulsory clauses should not be dropped in 1969, 1970 or 1971, but should be a permanent part of our Statute Law.

LORD CITRINE

I am sorry to intervene, because I know how hateful it is to disturb someone's line of thought, but what the noble Earl has just said presupposes that this country will be in a permanent state of crisis.

LORD ST. OSWALD

Only so long as the present Government last.

LORD CITRINE

These are crisis measures, measures of an exceptional and temporary character, as the Government have repeatedly stated to be the case. They may have to last as long as the crisis lasts—I do not know about that. But to say that I suggested they should be of a permanent character is utterly wrong.

THE EARL OF DUNDEE

I am glad to hear that the noble Lord does not want to make them permanent. But that still seems to me to be what his argument is leading to, if they will only be applied in a crisis, unless the noble Lord thinks that under his Government the crisis will be permanent, which indeed it may be if their present policy is continued. But since the noble Lord, Lord Beswick, has assured us that in his view this Amendment would torpedo the policy of the Government, we do not intend to press it. We certainly want to give the Government every chance of unimpeded action to do what they think right to get us out of the economic mess which, in our view, they have got us into. Therefore, we will do not more than record our view that their present policy is not likely to have that result. I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Clause 1 agreed to.

Clause 2 agreed to.

Clause 3 [Increase in length of standstill under Prices and Incomes Act 1967]:

4.9 p.m.

LORD ERROLL OF HALE moved, in subsection (2), to leave out "eleven" and insert "seven". The noble Lord said: In moving this Amendment I should like to suggest to your Lordships that it might be convenient if we were to take also Amendments Nos. 5 and 6, and possibly 7.

LORD BESWICK

I quite agree.

LORD ERROLL OF HALE

I am glad to have the agreement of the noble Lord to enable us to have a slightly wider discussion, rather than a somewhat repetitive discussion on the related points. In directing the attention of your Lordships to this group of Amendments, I would remind noble Lords that the maximum period of delay for wage and price increases under the 1967 Act is seven months: one month while the Minister considers whether to refer the case to the P.I.B., three months while the Board prepares its report, and in cases where the Board submits an adverse report, a further three months imposed by an earlier Order subject to Negative Resolution.

This clause as it is now drafted would increase the maximum period, in cases where the P.I.B. report is adverse, to twelve months in total. Subsection (4) would permit this extension to be made in the case of Orders already in force before the passing of this Bill, thus extending the freeze for up to a further five months beyond the period for which it was originally intended to last.

The first three of the Amendments, Nos. 4, 5 and 6, have as their object to reduce this maximum period of delay from 12 months to 8. The Government in another place claimed that the longer period of delay was now necessary in order to cover the whole of what they call the post-devaluation period. We are opposed to this on the ground that it represents a further extension of control beyond that properly covered by the Bill itself; and in particular there is a particularly undesirable form of unfairness involved because there is an exemption in the case of those workers who are covered by cost-of-living sliding-scale agreements and who under the terms of the White Paper—which, of course, is not a law, but is a sort of useful work of reference—will be allowed increases over the 3½ per cent. maximum per year if this is needed to keep pace with the rise in the index of retail prices. This particular group of workers are insulated, through having been covered by a cost-of-living index sliding-scale, from the effects of devaluation and the other price increases to which everyone else is also subject. So the longer the standstill powers go on, prolonging the freeze, in other words, the greater the unfairness of this provision as between one group of workers and another. The three Amendments, Nos. 4, 5 and 6, would remove this injustice and set matters right.

The fourth Amendment of this group, that is to say No. 7, has the purpose to limit to seven months in the case of orders made before the passing of this Bill. The reason for that limitation is that otherwise the subsection would allow the Minister to extend the orders for a further five months after they were originally intended to expire. This is a serious matter, because in our belief the power to extend existing freeze orders would constitute a most objectionable retrospective extension of powers under the earlier Act. The Government's intention might well be to extend the freezes already applied in the case of, for example, some of the municipal bus workers, the Bristol dock workers, the Scottish draughtsmen and others who are already the subject of orders under the 1967 Act, which can now be extended under the 1968 Act by a further 12 months, thus making the freeze for these classes of people very much longer than the Government had powers to make it under the 1967 Act or the powers they are proposing to take under the 1968 Act, unless these are modified in the manner suggested by our Amendments. I beg to move.

Amendment moved— Page 2, line 13, leave out ("eleven") and insert ("seven").—(Lord Erroll of Hale.)

LORD BESWICK

The noble Lord, Lord Inglewood, has left the Chamber; otherwise I think he would have had an even greater grievance about the complexity of the Amendments in this Part of the Bill than about the earlier Part. If I am not able to take up all the points the noble Lord made in his speech, it is because I had some other representations being made to me at the same time.

May I say what the effect of this Bill will be so far as the existing provisions of the 1966 and 1967 Acts are concerned. The 1966 Act gave the original power; the 1967 Act extended it. The 1968 Act has the following effect: standstills extended after an adverse report by the N.B.P.I. may run for 11 months from the date of reference to the N.B.P.I. instead of six months; standstills imposed after an adverse report by the N.B.P.I. may run for eight months from the date of the order instead of three; standstills may be imposed under paragraph (b) at any time up to 11 months from the date of publication of the reference to the N.B.P.I. instead of six months as at present.

The effect of the Amendments which the noble Lord is moving is that instead of the 11 months which we are suggesting in the first case he would extend the six months to seven months. In the second case he would extend it from three months to four months; in the third case from six months to seven months. If we are going to make any changes, I think the noble Lord would agree that it is really playing at shops, to suggest that we should have legislation just to put on this additional month's extension. This really does not match up to the situation that we have to face. Briefly, we are now saying that we are dealing with the economic situation which follows devaluation, the consequences of which we want to be able to deal with for a period up to certainly the end of 1969, and to suggest that we should go to the trouble of asking your Lordships to pass further legislation to give an extra month is surely not being reasonable.

The noble Lord also asked about the special provisions in this Bill, which, as he said, might have the effect of catching a standstill order which expires after this Bill reaches the Statute Book. There is an interregnum when the provisions of the present legislation, or orders passed under the present legislation, will come to an end and before any fresh orders are issued under the new legislation. As a matter of general principle, not because there is any specific agreement in mind, it is thought reasonable that we should have power to ensure that there is not a sudden break as from three months to eleven months. At the present time there is a power of standstill for three months and the standstill period will be one of eight months.

If this Amendment were accepted, then we should have a situation under which those having agreements which have been referred to the Board and the period of which expires before the coming into operation of this Bill will then be free to press their claims; they will be free to go above the criterion which we say is fair and reasonable to all concerned. But then the following fortnight we should have a situation in which another group of workers would be caught by the provisions of this Bill, and we say it would be unfair that those whose agreements, for one reason or another, came to a conclusion in the middle of July should not be on the same basis as those who may have an agreement coming to a conclusion at the end of August or who may indeed be caught by the new provisions of this Bill. That is why we think there should be some power to the Minister to have this application, and I hope the noble Lord will think it is not an unreasonable power to grant to him.

LORD ERROLL OF HALE

I am grateful to the noble Lord for what he has said by way of explanation. It looks a little as though our Amendments go a little wide, but on the other hand the noble Lord has failed to satisfy us on the unfairness that will be caused in some of the cases I mentioned. I should like to suggest to the noble Lord that he might undertake to consider the few cases which might be caught unfairly, and between now and Report stage we could perhaps hope that the Government would put forward an Amendment which would save any appearance of injustice to those who might be, to use the word colloquially, unfairly caught, as against the vast majority of people for whom it will be level treatment all round.

LORD BESWICK

I cannot undertake to bring forward any other legislation, because the only way of getting fairness is by having this power in the Bill. But if the noble Lord is so concerned about, as he named them, the busmen in the Midlands, what I can say is that talks are now taking place, and have been taking place for some little time, in the hope of getting an agreement under the reference to and the report from the Board. I hope that there will be an agreement, and that the provisions of this Bill will not apply at all.

LORD ERROLL OF HALE

In agreeing, with permission of noble Lords, to withdraw the Amendment to-day, I would say that we intend to study this matter a little further. In the absence of an Amendment put forward by the Government on Report we may table one ourselves.

Amendment, by leave, withdrawn.

Clause 3 agreed to.

Clause 4 [Power to require reduction of prices or charges]:

4.22 p.m.

LORD ERROLL OF HALE moved, in subsection (1), after the second "charges", to insert: except in so far that they shall apply only to retail margins of goods which are covered by resale price maintenance arrangements". The noble Lord said: I seem to be on my feet for most of the afternoon. In moving Amendment No. 8 I should like to ask noble Lords if they would find it convenient to take Amendments Nos. 9, 10 and 11 at the same time.

THE MINISTER OF STATE, BOARD OF TRADE (LORD BROWN)

I should find that rather diflicult.Certainly we could deal with Amendments Nos. 8 and 9 together, but to debate those Amendments with Amendment No. 10, seems a little difficult to me. So far as I can see, these two groups are quite contrary.

LORD ERROLL OF HALE

Would the noble Lord like me to deal with Amendments Nos. 8 and 9 now, and then Amendment No. 10 separately? Then what about Amendment No. 11?

LORD BROWN

I think it would be more simple to have a discussion on Amendments Nos. 8 and 9; then on Amendment No. 10, and then on Amendment No. 11.

LORD ERROLL, of HALE

Then I will do that.

THE PAYMASTER GENERAL (LORD SHACKLETON)

We are always in this difficulty even when it is necessary to take Amendments separately. I am quite sure that the noble Lord should feel free, if he wishes, to go beyond the Amendments and to refer to later Amend- ments. From my own reading of them I share the view of my noble friend that it will be necessary ultimately to settle them separately.

LORD ERROLL OF HALE

I think it is the wish of the Committee that we should talk about them separately, as well as settling them separately—that is to say, to have three debates on Clause 4, taking Amendments Nos. 8 and 9 together, and then Amendment No. 10 and then Amendment No. 11, and then to settle them individually.

LORD BROWN

I do not want to put the noble Lord in difficulties. I am quite prepared to deal with them in the way he wishes. I did think it would be simpler if we followed my course, but I leave it to him.

LORD ERROLL OF HALE

That is most accommodating of the noble Lord. Knowing that his briefing is probably far more extensive than mine I think it will probably help him if we split up these Amendments, and he can speak in accordance with the advice that he has received. So, with the agreement of your Lordships, I will deal first with Amendments Nos. 8 and 9.

Amendment No. 8 has as its purpose to limit the power to refer retail prices to the Board, for consideration of a reduction in price, to those goods which are still covered by resale price maintenance. This is an attempt on our part to show Her Majesty's Government that retail price increases should be considered, if they are to be considered, separately from increases in the prices ex-works or by manufacturers. In all cases, except where there is resale price maintenance, there is of course fierce competition between retailers, and that in itself keeps down the retail margins. But where there is resale price maintenance, by definition the retail margins are fixed in fact by the manufacturer, and of course that gives him an opportunity, if he so wishes, to increase the return to the retailer. So we think that this power to refer retail prices to the Board should be restricted to gods still covered by resale price maintenance agreements.

The other Amendment, Amendment No. 9, deals with the power to require the Prices and Incomes Board to consider whether prices or charges referred to them should be reduced, and, if the Board so recommend, to make orders directing that they should be reduced. This is a new power, and one that was not included in previous Acts. It is one to which, I should point out, the Confederation of British Industry, although broadly in favour of legislative powers to control prices and incomes in present circumstances, are strongly opposed. They do not see, nor do I, how this can be made to be an effective measure, because it will take a long time to bring it into operation, and the powers under the Bill may well have expired before any substantial reductions can be brought into effect.

We suggest in our Amendment that the retail prices of goods for which there is no resale price maintenance or recommended selling price should be excluded from reference to the P.I.B. for consideration of price reduction. We believe that the forces of competition between retailers will be sufficient to ensure that these margins are kept down, and that to take this power is an unnecessary complication. It shows that the Government fail to appreciate how competition works in this country, and in my belief it is unlikely that they will ever use this power. We suggest that it should be restricted in the way suggested by Amendments Nos. 8 and 9, the first of which I now beg to move.

Amendment moved— Page 3, line 25, after ("charges") insert the said words.—(Lord Erroll of Hale.)

4.27 p.m.

LORD BROWN

I was a little surprised to read the substance of these Amendments because, as the noble Lord has said, it would limit the power of the Government to refer to the Prices and Incomes Board the great bulk of retail prices, since the coverage of retail prices and resale price maintenance or recommended prices is a quite small proportion of the whole retail prices. The noble Lord is fully aware that we live in a period when we are urging our manufacturers to export more. Indeed, I have christened him on one occasion "the redoubtable Lord Erroll" owing to his great efforts on behalf of exports, for which I am always grateful. If firms in fact do so, there may be instances when a few of the firms who are not helping in this great export drive will take advantage of the home market.

I do not agree with the noble Lord that that state of competition in the retail trade is such as to ensure that on all occasions retailers will not be able to increase their margins to an extent which would be unjustified in any circumstances one can think of. And although I should not expect this power to be used on a large number of occasions—because there is good will among retailers, and we are dependent largely on them—I nevertheless think that we must be able to deal with a few who are going to take advantage of the current situation. To deprive the Government of powers with regard to the great bulk of retail prices would, I think, in current circumstances, be disastrous, because it would lead to some being able to take advantage of the situation. We should then have the well-known psychological situation in which those who would have otherwise held to the line, so to speak, of reasonable retail margins say: "Well, these people have been playing hell with prices. The Government apparently are unable to do anything about this. Is it right for us to penalise ourselves on the basis of our withholding when these other people get away with it?" This is always the way the rot sets in. In these circumstances, I hope that the noble Lord will withdraw this Amendment, because I think it would introduce an undesirable situation. It is a simple matter to give the Government these powers, and I think that their main effect will come not so much in their use as from their existence.

LORD ERROLL OF HALE

I thank the noble Lord for what he has had to say. I feel slightly inhibited from comment because some of my comments will arise on discussion of Amendment No. 10. In the circumstances, I beg leave to withdraw Amendment No. 8.

Amendment, by leave, withdrawn.

4.31 p.m.

LORD ERROLL OF HALE moved, in subsection (1), after the first "prices or charges" to insert: and if the Board recommends that there should be a reduction in all or any of the prices or charges, the Board shall consider also whether there should be a reduction in the resale prices of the goods concerned, and if the Board thinks fit, include in the Board's report recommendations for the reductions of such prices".

The noble Lord said: I beg to move Amendment No. 10 on the Order Paper. I was rather concerned when the noble Lord said that some of our Amendments appeared to him to be contradictory. They are not, of course, because we are not to know until the arrival of a particular Amendment whether previous Amendments have been accepted or not, so we have put down a fairly broad sweep of Amendments, never being quite certain which we are going to get and which we are not. The purpose of Amendment No. 10 is to show up what I believe is a very real weakness in this part of the Bill, because the Government claim to be controlling prices for the consumer, but in fact it is manufacturers' prices only that are covered by an ordinary reference to the P.I.B. The fact is that the Prices and Incomes Board is unable to consider and make recommendations on retail prices, including margins, without a specific and separate reference to the Board.

While I think it would he a mistake to increase the Government's powers to refer retail prices to the P.I.B., the fact that references at present exclude retail prices I think makes a mockery of the Government's claim to be restraining prices to the consumer as distinct from restraining prices which are charged by manufacturers to retailers. The control over manufacturers' prices could, of course, help exports, as indeed the noble Lord, Lord Brown, mentioned in the debate on the previous Amendment—and I should like to thank him for his kind remarks about my small contribution to the export drive. But if that is to be so, then an increase in retail margins would, in fact, absorb purchasing power which is, we know, one of the objectives of the Chancellor of the Exchequer. So by holding down manufacturers' prices it would help exports, let the retail margins rise if the Government wish, and thus achieve the Chancellor of the Exchequer's objective.

But of course that is not a concept which is publicly accepted by Her Majesty's Government, although it is quite clear it is part of the strategy, and to that extent we should not press this Amendment because it will achieve what the Chancellor of the Exchequer wants. On the other hard, the Government in the Bill as it is at present constructed is, I think, in a very weak position to say that it is controlling prices for the con- sumer because that it is not doing, unless it also makes individually in each case a separate reference to the retail margins which must be separately reported on by the Prices and Incomes Board. This is the main purpose of tabling Amendment No. 10, so that the matter can he seen in a clearer light than I think is at present the case. I beg to move.

Amendment moved— Page 3, line 25, after ("charges") insert the said words.—(Lord Erroll of Hale.)

LORD BROWN

I am sorry that the noble Lord took a little amiss my suggestion that these Amendments were contradictory. I am still puzzled because the previous two Amendments, so far as I could see, sought to exclude the Government from referring to the Prices and Incomes Board retail prices in certain categories. This Amendment seeks to insist on any occasion when the Minister refers the manufacturer's price to the Prices and Incomes Board, that, notwithstanding any comment he may choose to make about looking also at the retail prices, the Prices and Incomes Board are bound to consider the retail prices of those manufactured goods at which they are looking, and if they see fit they must make a recommendation to the Minister. This is why I thought they seemed contradictory.

I am not against the fundamental basic purpose of the Amendment, but I think it is unnecessary. The noble Lord suggested that manufacturers' prices only are to be controlled by reference to the Prices and Incomes Board, and by inference not retail prices. This is not so. There may be some misunderstanding here. There is every possibility of retail prices being referred to the Prices and Incomes Board for a recommendation to the Minister as to whether those retail prices are appropriate in the light of the mark-up which has been added to the manufacturer's price. The legislation is quite clear on the matter. The criteria of reference, it is quite clear, includes in their ambit submitting a reference of retail prices. But I do not see that it is necessary to enact that whenever the Minister refers manufacturers' prices to the Prices and Incomes Board the Prices and Incomes Board must always also review retail prices, because if they are always to do so—and in many cases it will be clear they are doing so when it is not necessary to do so—it will prolong the whole business of review very substantially indeed, because these matters take time.

The review of retail prices is in any case, I freely admit, a difficult matter. So I think that we shall get the effect of the noble Lord's Amendment; that is, we shall get reference of retail prices where, in fact, it is considered to be appropriate, and we shall not get it where it is time consuming and inappropriate. Whereas if we accept the noble Lord's Amendment we shall have time wasted and we should be referring too many retail prices where it was quite unnecessary to do so.

The noble Lord made one further comment on the disinflationary effect of rising prices. Of course he is partially right there, though not altogether, because not all the results of rising prices go straight to the Exchequer; some of them are let loose. But the fact of the matter is this. If, as he said in discussing the previous Amendment, we are to be placed in a position where some few may take advantage of an economic situation which we have all got to fight our way out of, notwithstanding the fact that higher prices can be disinflationary, it is essential to stop this "free for all" in terms of prices being allowed to develop among manufacturers or retailers; and if we are to ensure the drive for exports, which is going very well, then we must have justice among these people who could possibly damage that drive. It is for that reason that we must control and stop unwarranted increases in prices, whatever their broad economic effect, for the sake of the general morale of industry, the retail and distribution trades and the export drive. In the light of these comments it may well be, in the light of the explanation I have given, that the noble Lord now realises that this Amendment is not as essential as he thought when it was drafted, and I hope he will be able to withdraw it.

LORD ERROLL OF HALE

I must admit that I am not happy about the explanation, because I think there is a very serious point here. The Government say we can look at manufacturers' prices in certain cases, or we can look at retailers' prices in certain cases, or look at the way the mark-up goes, but it will very often be a waste of time to do both.

LORD BROWN

May I butt in? The noble Lord has given two alternatives. There is also a third. We can ask the Prices and Incomes Board to look at the manufacturers' prices and, at the same time, to look at the retail prices; that third one is not excluded, and that may be the point of misunderstanding.

LORD ERROLL OF HALE

If I have it right the Board can be asked to look at the retail prices, which would include the manufacturers' prices in the survey, or it could look at manufacturers' prices alone, or look at retailers' margins alone. There are virtually three alternative ways of doing it. It follows that if one is looking only at manufacturers' prices and holds them down, as in the case of the report which was published yesterday on cocoa, sweet and chocolate prices, that is no guarantee to the public that the prices in the confectioners' shops will be held down unless a separate reference is made to the National Board for Prices and Incomes covering retail margins in chocolate and confectionery. So that here is a good example where the Government are aiming at showing that they can keep prices down. They have received from the N.B.P.I. a report saying that manufacturers' prices must not go up, but even if that report is enforced or acted on in agreement with manufacturers it is no guarantee to the public that the prices of sweets in the shops are going to stay down. It will therefore be necessary to have another examination by the Board of retailers' margins in the confectionery trade. It looks as though the report will achieve only a very limited part of what presumably is its main objective. I hope the Government will look at this matter again and perhaps clarify it on Report. If we could have an undertaking that that will be done, I should be happy to withdraw the Amendment.

LORD BROWN

I do not want to prolong the discussion. Obviously we can look at it again, but I do not think that is necessary. The Minister concerned has to consider these matters carefully, and in considering whether he should make a reference of particular manufacturers' prices to the N.B.P.I., he would also consider whether at the same time there was a prima facie case for considering the retail price of the same article. It is open to him to do all these things.

Possibly the noble Lord is worried that the Government intend to attack the price structure of the manufacturer and to shrug their shoulders over the price margins of retailers. That is not the case. In the Bill as it stands, the Minister has power to do what he wants. It is the intention to protect the public from unjustified price increases all along the line. The Minister has all these powers, without having to carry out a double investigation which at times will be quite unnecessary. I hope that the noble Lord will not insist upon further consideration being given to this matter. I assure him that the Government have power to do what he wants, and that in appropriate cases they will use this power.

LORD CARRON

I welcome the indication by the noble Lord that he will give further consideration to the Amendment put forward. The assurance that there is power to carry this policy through is helpful. But I should like to stress that the matter of prices causes great concern to people in general. Price rises affecting the individual who is purchasing goods in the shops are of the first importance to him. The success of the prices, incomes and productivity policy, a policy which I strongly support, is governed in large degree by the level of prices. Although I hope that the Amendment will be withdrawn, I should still welcome the Minister's assurance that this matter will be given very close scrutiny.

LORD BROWN

I can certainly give an assurance that we will look at this Amendment again. I do not want to hold out too much hope of a reconsideration for the reasons I have given; but it would be discourteous for me not to say that the matte; will be considered. I give that assurance.

LORD SOMERS

Would not the noble Lord agree that wholesale prices and retail prices are inevitably bound up together? Imagine what happens if a retailer receives a statement from a wholesale supplier saying that as from next month the price will be so much more. Naturally, the retailer will have to increase his price. I cannot see how there can be any alteration in the one without there being an alteration in the other. It is almost impossible to consider one without the other.

LORD BROWN

If you cannot consider one without the other, then the noble Lord's difficulty has been resolved. If the N.B.P.I. recommended a reduction of price by the manufacturer and this was brought about by Order, then there would be an automatic reduction in the retail price, which is what the noble Lord wants. In fact I do not think this is strictly true, but a reference of a manufacturer's price to the Board is not done in a vacuum. There are possibilities of discussions with the major retail organisations, and if an Order goes a rough reducing or restricting a price increase discussions can take place and can lead to reassurances from retailers that if prices are held or brought down there will be no increases in margins. Is it then worth while making a reference of that matter to the Board with all the delay which would be entailed? If it is necessary, the Government have power to do so. I do not think that it is necessary to double-up on the process and to bring in a rather bureaucratic situation so that every time you do one thing you have to do the other, quite apart from whether, in the judgment of those who investigate the matter, it is necessary.

LORD ERROLL OF HALE

I thank the noble Lord for all he has had to say. I should like to look at what he has said and consider it. I am not wholly satisfied, but so that we may proceed with our business, I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn

4.45 p.m.

LORD ERROLL OF HALE moved, in subsection (3), after "subsection (2) above", to insert: nor shall it restrict a price or charge to a level lower than that prevailing immediately prior to the last increase in the price or charge before the reference under subsection (1) above was made.

The noble Lord said: One of the problems in connection with price reductions —and this is a new power—is how far the Government might wish to go in enforcing a price reduction. As the Bill stands, the Government could have an investigation made, and a price reduction recommended by the Board and enforced by the Government with its statutory powers could bite a lot deeper than the previous price level before the increase which was the cause of the investigation being made. I know that it is an important aspect of Government policy to try to secure these price reductions, but we must also consider the importance of giving some degree of certainty and confidence to industry, any part of which at any time may find its pricing policy being investigated by the Board with the possibility of severe reductions in price being enforced later on. I suggest that the Government would be able to achieve their main objective if they were to accept this Amendment, the effect of which would be to restrict any reductions to those ruling before the increase which in itself gave rise to the inquiry. In that way industry would have some confidence that these powers would be used in a reasonable way. The Government, on the other hand, would still be able to prevent price increases above the previous ruling level before they had this power. I beg to move.

Amendment moved— Page 4, line 5, after first ("above") insert the said new words.—(Lord Erroll of Hale.)

LORD BROWN

With respect to the noble Lord, this Amendment ignores the fundamental relationship between costs and prices which it has been an essential part of Government policy to stress. The criteria for price reductions are set out in the White Paper, and the N.B.P.I. are required to have regard to Schedule 2 of the 1966 Act in their investigations. These criteria broadly require reductions where overall costs are decreasing and where profits are based on excessive market power. Thus, if an undertaking's costs have declined below the level prevailing immediately prior to the last price increase before its prices were referred to the Board, the Board might well recommend that its prices should be reduced below that particular level and that the Government should not be precluded from requiring a reduction to the same extent.

May I simplify the point by saying that if we pass this Amendment we shall open up the possibility not only that the Orders would be too little on a minority of occasions, perhaps very exceptional occasions, but we should also open up the possibility of a serious form of chicanery. It is going to be difficult for the Government to keep an eye on every price increase. One of the smart ways of evading the situation would be to try to get a price increase through and very shortly afterwards, before it was detected, to introduce another price increase. If you did that and had two price increases in a short period, both of which were wholly unjustified, then the effect of this Amendment would be to say that, whereas a Government directive based on the advice of the N.B.P.I. could take away from the retailer or manufacturer the last of those price increases, the first one would have to remain sacrosanct. I do not know whether the noble Lord has seen the possible effect of this Amendment, but I hope that, in the light of the fact that this is really a very dangerous avenue for chicanery (which I think was the word I used earlier) he will see fit to withdraw his Amendment.

LORD ERROLL of HALE

The noble Lord displays his usual ability to detect chicanery and roguery in the industrial and business community, and I have to concede that it would be possible for a firm to do that. But no big, reputable firm would do anything of that sort, because it would not be in the interests of its customers or of its future business relationship with them. So it is really a very theoretical exercise which the noble Lord has "cooked up" in order to defeat my very modest Amendment. However, we have to put up with that sort of thing. I am sure he got great pleasure out of finding a new way of defeating this poor man on this side of your Lordships' House.

I suggest that, in order to get round this difficulty which looms so large in the noble Lord's thinking, one could say that it would have to be a price increase made before this Bill became an Act, and one could sweep into consideration any price increases—whether one, two, three or four—made after the Royal Assent was given to this Bill. In that case, one would be able to deal with the rogues such as the noble Lord has described, and, at the same time, all manufacturers would know that prices ruling on the date of the Royal Assent to this Bill were the base line, so to speak, in their own price structures.

The noble Lord also said that he thought there would be some drastic decreases in costs, which might justify a considerable fall in price below the level ruling, say, to-day. Here again I think the noble Lord is in a dream world, because every business is to-day struggling against a very large number of price increases quite beyond its own control. The great struggle is to keep prices down in the face of price increases for fuels and, in many cases, raw materials, and particularly Government impositions, such as the increased burden of selective employment tax. So to talk about being able to find large cost decreases is just living in a dream world. That position just does not exist, and is not likely to exist in this country until we have a Conservative Government back in power.

Having said that, I hope that if I withdraw this Amendment the noble Lord will look at the possibility I suggested earlier, that at least the Government should not go back behind the passage of this Bill into an Act for seeking price decreases. In that way he would get around the difficulty of the "rogues" he has talked about, and would give some practical certainty to the vast majority of honest and well-intentioned firms. Am I not to have that assurance?

LORD BROWN

I would leave the matter like that. The noble Lord will have his little political foible on this. I am almost hesitant to answer, because I like to let him have his pleasure; and, as he knows, he pleases me exceedingly on other occasions with his visits abroad. But since he has insisted on my answering him, may I point out—although I do not wish to accuse him of insincerity—that he knows a great deal about industry and knows perfectly well that, in spite of the fact that basic costs of raw materials, and indeed forms of taxation, and salaries and wages are rising, technological change sometimes brings about drastic reductions in the cost of production of goods. We should be in a very sorry way if the price of all goods went up every time the cost of wages, salaries, fuels or raw materials went up. Prices fall at times, in spite of the rising costs of some of the elements, because engineers and scientists are clever people. As I say, the noble Lord knows this perfectly well, and to get up and say that there is no possibility of the cost of anything coming down until a Conservative Government are elected is just political stuff. Honestly, are we not above that sort of thing? I never mix economics with politics, and I always thought the noble Lord was the sort of man who avoided that.

I am sorry that he got me on my feet, and I am bound to leave it in that way. If he wants me to think about it, may I point out that the argument I gave him about the "chicanery" course which his Amendment opens up is not the only one. There is the other argument I gave him: that cases will arise where, owing Lo technological innovation and a whole host of other matters, it may be reasonable to suggest that a manufacturer brings his price down more than the last increase. I admit that that is unusual, but why should a Government who are trying to maintain a fair economic situation deprive themselves of the opportunity of doing that in the exceptional case? Why is he so anxious, if indeed there is no chance of costs falling during the period of the Labour Government, to protect a manufacturer who will never be attacked if his costs never fall? I am saying that costs might fall, but he denies it. I think he is wrong in denying it, and the Government need this power. I think the Bill as it stands is correct, and I do not think that the noble Lord has faced the two arguments which I put forward against his Amendment. I think he accepted one of them, but looked upon it as a sort of trick which I had "cooked up". However, it is a very real thing, and the other argument is also valid. So I hope the noble Lord will not press this Amendment.

LORD ERROLL OF HALE

I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Clause 4 agreed to.

Clauses 5 to 8 agreed to.

Clause 9 [Restriction on rent increases under regulated tenancies]:

THE DEPUTY CHAIRMAN OF COMMITTEES

I must inform the Committee that if Amendment No. 12 is agreed to I cannot call Amendment No. 13.

4.57 p.m.

THE EARL OF DUNDEE moved, in subsection (5), to leave out "exercisable by statutory instrument, which shall be subject to annulment in pursuance of a", and insert "subject to affirmative" [resolution]. The noble Earl said: I do not want to start a discussion on the general subject of rents, but Clause 9 introduces new powers which are not contained in any Prices and Incomes Act. This clause restricts the rents of privately owned accommodation let under regulated tenancies and endows the Government with very sweeping powers for adapting and modifying the provisions of the Rent Act by means of regulations made under this clause. It would thus enable the Minister to set aside the provisions for settling fair rents which have been made under the Government's own Act.

The Bill as it stands provides that this can be done by Statutory Instrument, unless it is thrown out or annulled by Resolution—that means under the Negative Resolution procedure. My first Amendment, No. 12, proposes that the procedure of an Affirmative Resolution should be substituted. I think it is right to make sure that if these very wide powers are given to the Minister to supersede the provisions of the Rent Act they should be debated by Parliament before they take effect. Under the Negative Resolution procedure it is quite possible that they may never be debated. On the other hand, the Affirmative Resolution procedure would ensure that they were, as I think they ought to be.

We thought that Amendment No. 13, which could not be moved if Amendment No. 12 were carried, might be an alternative more acceptable to the Government. In that Amendment we propose that the Order should lie on the Table for 28 days and should then expire unless approved by a Resolution of each House of Parliament. I should be quite willing to let the Government choose between these two Amendments. I hope they will consider at least one of them favourable, and I beg to move the first one.

Amendment moved— Page 9, line 26, leave out from ("be") to ("resolution") in line 27 and insert ("subject to affirmative").—(The Earl of Dundee.)

THE PARLIAMENTARY SECRETARY, MINISTRY OF HOUSING AND LOCAL GOVERNMENT (LORD KENNET)

I see the force of what the noble Earl is saying. One must be careful to avoid the risk of amending Statute Law in any meaningful sense by regulations, and one must always be sure that Parliament has good opportunity to discuss any regulations which are of substantial content and which otherwise go undiscussed. There are two reasons against proceeding in the way the noble Earl's Amendments suggest. One is practical, and the other is not so much a reason against proceeding that way as a defence of the preferability of proceeding the way the clause as unamended proposes. If the first—Amendment No. 12—which we are talking about, is adopted and we have the Affirmative rather than the Negative procedure, we are up against the fact that there is a complete freeze on increases in the rents in question until the regulations come into force to break that freeze. The Bill says "Freeze", and only the regulations can show the way to thaw out of the freeze—by these phased stages with which the Committee is familiar.

The Government intend to have regulations ready to be laid immediately the Bill comes into operation. If they are subject to the Negative Resolution procedure they may come into force at once but will, of course, be subject to annulment in pursuance of a Resolution by either House. But if the regulations are made subject to the Affirmative Resolution procedure, as the Amendment proposes, they will not come into effect until approved by each House. One must think now of what would have to be done before they could be approved by either House. They would need first to be referred to the Select Committee on Statutory Instruments in the Commons and to the Special Orders Committee in this House, and after these Committees had reported a Resolution would have to be debated and passed in each House approving the regulations. I do not know how long all this would take, how long it normally takes, but it is clearly a matter of months rather than weeks, and during that time none of the rents affected could be increased at all, even to the extent which will be allowed in the regulations. It seems clear to the Government that this is bound to cause confusion to everybody and injustice in particular to landlords.

I think it is very natural for the Committee to expect in these circumstances —that is, circumstances of Negative Resolution procedure—that they should have an outline of what the Government intend to put in the regulations. This has been given to the House of Commons by the First Secretary, and I will repeat virtually what he said here. There would be four elements in the regulations. First, the limit on a rent increase for the first year after registration would be 10s. per week. Second, any significant balance to bring the rent up to the fair rent level as registered would be split between the two succeeding years if the regulations were still in force for that rent at the end of the first year. Third, increases due to higher rates and cost of services would be exempt—and whether an increase is due to higher rates is, of course, a matter which is not open to dispute; whether it is due to the cost of services is a matter which would be settled either by the contract between landlord and tenant or by rent officer determination. Fourth, the scheme would come into operation immediately the Bill becomes law and would apply throughout the country irrespective of rateable values within the familiar Rent Act limits. That is the practical reason against doing it by Affirmative Resolution, and much of it will also apply when we come to discuss the alternative Amendment, No. 13.

THE EARL OF DUNDEE

I hope the noble Lord may agree to discuss the two together. I think it would save time. I am grateful for his explanation on the first one, but I should like to hear what he says about the second, and I have no more to say about it.

LORD KENNET

Willingly. The difficulty about the second (and it is a difficulty rather of the same nature) is that I am advised it is not at all clear from the way this Amendment is drafted whether the 28 days are just calendar days or whether they are sitting days of Parliament—and, of course, the Committee does not need reminding that we are, we hope, already within 28 sitting days of the end of this Session. So if all this is to be held over until next autumn, I think this may have an effect which would be very undesirable. It may be that the noble Earl will tell me that he meant 28 calendar days, and, if that is so, then that is that. But even in the case of 28 calendar days we are still up against the point that we—I beg the noble Earl's pardon; it is the other way round in this case. It comes into effect at once and then goes out of effect after 28 days unless it is explicitly confirmed by Parliament.

It seems to the Government that for the rather small advantages to be gained by this increase in perfection of democratic procedure, which I admit it is, it would be tempting providence, given the congestion of Parliamentary business that there is at the moment, to do it in this way. We are all rather subject to sudden shifts in the necessities of the timetable in both Houses; we are very much subject to a dependence upon each other as between the two major Parties in both Houses; and I, for one, should not like to entrust the entire future of this rent-phasing scheme to the ability of the Government and Opposition to find time to get on with it within the 28 days. I am worried about that, and I must say that frankly to the Committee. Also, of course, there is the point about the Recess, that, as drafted, it could mean 28 sitting days of Parliament.

To turn to the minor constitutional point which the noble Earl raised, about whether we might find that we are amending a Statute in these regulations and that therefore it ought to be done by Affirmative Resolution procedure and not by Negative Resolution procedure, I think it is true, first, that one should avoid amending a Statute by regulation at all; and, secondly, that if one is carrying any permanent, real or substantial change into Statute Law then certainly it should be done by Affirmative Resolution, as the first Amendment proposes. But it seems to the Government that a temporary expedient like the present Bill is substantially different from rewriting the Rent Act for all time by regulations. We are not doing that: we are simply slowing down the rent increases more or less as an emergency measure and for a limited period, and in this case the regulations should not be regarded as having that kind of fundamental effect on the Rent Act which would justify their being subjected to Affirmative rather than Negative Resolution procedure.

THE EARL OF DUNDEE

May I ask the noble Lord one question? Suppose, under the Bill as it stands, when they are subject only to annulment by Negative Resolution, the regulation was made in, say, the middle of August. Would it still be possible to have a Negative Resolution moved if Parliament was not meeting until October? Would there be anything to stop that?

LORD KENNET

I speak subject to correction, and I will correct myself later this afternoon if I get it wrong; but it would of course be possible to carry a Resolution under the Negative Resolution procedure when Parliament next met. These things have to lie on the Table for so many sitting days.

THE EARL OF DUNDEE

In these circumstances, I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Clause 9 agreed to.

Clause 10 [Restriction on increases in local authority rents]:

5.10 p.m.

LORD ILFORD moved, in subsection (1), at the beginning to insert "Subject to subsections (12A) and (12B) of this section". The noble Lord said: I beg to move Amendment No. 14, which stands in my name and in the name of my noble friend Lord Molson. This Amendment and the next three Amendments, Nos. 15, 16 and 17, deal with the rents of houses belonging to the local authorities. They are at first sight a little complicated, but I think I can tell the Committee quite shortly what the local authorities are asking in this Amendment.

Clause 10 of the Bill provides that: … it shall not be lawful for a local authority to charge in respect of any houses to which this section applies rents exceeding the former rents, unless the increases accord with proposals submitted to and passed by the Minister … That means that the local authorities have to get the approval of the Minister for any increases in their council house rents. The local authorities are responsible for a very large number of weekly tenancies. The Greater London Council which I take as an example, are responsible, I think, for something like 225,000 weekly tenancies and about 15,000 tenancies of other types. The Council are constantly carrying out on their property improvements of different sorts. If in the case of all these houses where they carry out improvements they have to obtain the approval of the Minister, it will involve a very considerable volume of administrative work, both for the Council and for the officers of the Ministry. The result of their labours is likely to be that the Minister would approve of rent increases in respect of the proposed improvements.

What the local authorities are asking in these Amendments is that where a rent increase is based upon the cost of an improvement they should be entitled to increase the rent to cover the cost of the improvement without having to seek the approval of the Minister. The Greater London Council make it a rule, before they increase a council rent in respect of improvements, to obtain the approval of the tenant and his agreement to the rent increase which will cover the cost of the improvement. I have no doubt that that is done by other local authorities as well; but it appears to be the case that if some procedure of that sort is adopted there is really no reason why the local authority should not be permitted to increase its rents by the sum required to meet the cost of the improvement.

I think that that really puts the point which I desire to put to the Committee. If an application has to be made to the Minister in respect of every one of these improvements, it will, as I say, involve a very considerable volume of work both for the staffs of local authorities and for the staff of the Ministry. I hope that it may he possible for the Government to agree to this relatively small Amendment and so make the great volume of work which will otherwise have to be undertaken unnecessary. I beg to move.

Amendment moved— Page 10. line 1, at beginning insert ("Subject to subsections (12A) and (12B) of this section").—(Lord Ilford.)

LORD KENNET

The noble Lord has spoken to Amendments Nos. 14 and 17 together, and I propose to follow him in that. I should first inform the Committee that identical Amendments were moved and rejected in the House of Commons on Report. I am very much in agreement with a great deal of what the noble Lord has said. It would be absurd to bring to an automatic standstill all local authority rent increases after improvements; but this is simply a question of where we put it. The Minister already has powers under subsection (1) of this clause to except by direction from the limitations of the clause rent increases in such cases as the noble Lord prescribes. It seems to the Government far better that excepted cases should be dealt with by direction than that they should be written in detail into the Statute in case experience should show that some variation ought to be made. If you are "lumbered" with a definition in the Statute you cannot very easily make a variation.

The Greater London Council are at present being consulted about the content of the direction which the Minister will make under Clause 10, including the classes of rent increases which might be excepted from this clause without affecting the fundamental purpose of the clause. It will be obvious to noble Lords on all sides of the Committee—and I agree with this—that there is a case for excepting by direction rent increases related to the cost of improvements. The Housing Ministers will consider this favourably when they have received the views of all the associations concerned. I hope that, with these assurances, the noble Lord may be prepared to withdraw his Amendment.

LORD ILFORD

Am I right in thinking that it is the intention of the Minister to give directions to deal with this question of improvements?

LORD KENNET

It is the intention to give directions to except certain classes of rent increase. It appears to me likely that among those classes, as I have said, will be rent increases related to cost of improvements. I am not at present free to say that he intends to do so whatever happens, because he has not completed his consultations.

LORD ILFORD

I think I agree with what the noble Lord said, that directions are the right way to deal with this. I will withdraw the Amendment in the hope that the Minister will give an appropriate direction for dealing with this matter.

Amendment, by leave, withdrawn.

5.18 p.m.

LORD MOLSON moved, in subsection (7), to leave out "two months elapse" and insert "one month elapses". The noble Lord said: I think it might be convenient if I spoke to Amendments Nos. 15 and 16 at the same time, if that is agreeable to the Committee. I beg to move Amendment No. 15. The purpose of this is to reduce from two months to one month the time during which the Minister may consider these matters without issuing a direction. Under the Bill as drafted, if he has not given a decision before the end of two months then he is deemed to have given his consent. The purpose of these two Amendments is to reduce that period of time from two months to one month. This is an Amendment that I am moving on behalf of the Greater London Council, who are of the opinion that this is really too slow a process.

Apart from the time taken at the outset to prepare and submit all the information which must be submitted to the Minister he has, under the clause, two months in which to make a decision. The local authorities will need anything from two to three months to prepare and issue the notices of increase when they have been agreed by the Minister. Under the provisions of the Rent Act 1957, these cannot become effective for a further minimum period of four weeks; and, as I understand it, in this Bill there is nothing to reduce that additional period. The period is likely to be even longer if the local authority is introducing a new rebate scheme.

The Greater London Council are trying to devise a satisfactory new rebate scheme and it is the policy of Her Majesty's Government to encourage rebate schemes. This always involves a good deal of discussion and investigation in order to ensure that the rebate applications are all investigated and amounts calculated in time to operate simultaneously with the increases in rent. This is a very long time, and the lapse of every week during which increases of rent do not take place results in a heavy loss to the housing fund, and consequently places an additional burden on the rates. I hope the Government will consider that this is not an unreasonable Amendment. It is not directed against the spirit of the Bill, but is an attempt to speed up the procedure, which in any case will be fairly lengthy. I beg to move.

Amendment moved— Page 11, line 37, leave out ("two months") and insert ("one month").—(Lord Molson.)

LORD KENNET

No, the Government do not consider the Amendment unreasonable in any way and would willingly accept it were it not for the fact that one cannot promise that there may not be hard cases and exceptionally complicated ones. There is no doubt that the Minister will normally reach a decision on these proposals well within the two-month period and probably within a month. A month would be the normal time. But I do not think that the Minister would welcome being bound by Statute to do that in every conceivable case, first, because unusually complex proposals for rent increases—and sometimes they are terribly complex—may call for longer examination than the normal; and also there is the fact that these applications will bunch at certain times of the year, and with the need to keep down the number of civil servants it may be physically impossible for them to be dealt with within a month at the "bunching season". Because of difficulties caused by one or two really "tough nuts" in the way of complications cropping up at the "bunching season" when applications are coming in in their hundreds, I would ask the noble Lord to consider withdrawing his Amendment.

LORD MOLSON

I think the noble Lord has given a reasonable answer. I am glad to have an assurance that in all normal cases the Minister would expect to be able to give a decision in less than a month. I realise that there may be some particularly difficult cases, and if they coincide with a very large number of applications, it may be impossible for the Ministry to deal with the matter in time. Having regard to the assurance which the noble Lord has given, that there will be no avoidable delay in dealing with these matters, I beg leave to withdraw the Amendment.

Amendment, by leave withdrawn.

Clause 10 agreed to.

Remaining clauses and Schedules agreed to.

House resumed: Bill reported, without amendment.