CLAUSE 13.—(Exception for sales by auction, or for export.) (Hansard, 25 October 1939)

§ Mr, Silkin
I beg to move, in page 9, line 19, to leave out Sub-section (1).
This Sub-section provides that: This Act shall not apply to a sale, or to an agreement or offer to sell, for an amount fixed by auction. As the Bill deals with price-controlled goods, this Sub-section must provide that if such goods are sold for any amount fixed by auction they shall come outside the provisions of the Bill. "Auction" is a wide term and this Sub-section might be a means of leading to a good deal of evasion. There is no definition of the word in the Bill. There is the public auction which is carried out by a licensed auctioneer, but there are other forms of auction which lend themselves to the possibility of evading this Bill. There is the kind of auction which takes place in markets on Saturday night when, at the end of the day's trading, what is left over is ostensibly sold by auction. Buyers, who are usually the poorest consumers, imagine they are getting bargains. Sometimes they do, but sometimes they do not, and if we permit that kind of auction to be treated as an exception we may very well provide a way by which traders can evade the provisions of this Bill. Then there is the Dutch auction, which sometimes takes place in shops in the Strand, where a price is named and the auctioneer brings it down until he finds somebody prepared to pay it. Unless the article happens to be price-regulated a buyer might purchase at a price above the regulated price. Nobody would say that auctions of that kind should be exempted.

§ Mr. K. Griffith
I am not clear as to the object of this Amendment because auction sales are different from other sales, their whole idea being that somebody is anxious to get a particular lot and the man who bids the highest gets it. I may be misinterpreting the object of the hon. Member, but does it not amount to saying that we shall not have auctions at all? That would seem to me to be the result of his Amendment.

§ Mr. Silkin
The point would be that you would not permit a sale at a price which goes beyond the price which would otherwise be obtainable for price-regulated goods. I cannot see any logical 1504 reason why, because goods are sold by auction, we should permit a sale which would otherwise be an illegal sale.

§ Sir H. Williams
I do not think the Mover of the Amendment has realised what would happen if it were carried. It is not as if in general we know what the permitted increase is. The auctioneer would not know. He produces an article and asks for bidding. The bidding goes up, and he does not know at what stage to say, "I cannot accept any higher bids, because if I do they will go beyond the permitted price." The permitted price can only be ascertained afterwards and the auctioneer would be put in an impossible position.

§ Mr. Silkin
Is not that a problem as much for the vendor, who has to make up his mind what is a legitimate price? He is in no different position from the auctioneer.

§ Sir H. Williams
The auctioneer is not in general selling his own goods, but somebody else's. I do not know whether the Bill will apply to secondhand goods, but the number of goods sold by auctioneers which are secondhand must constitute a large part of the total business. I do not know who will commit an offence. The buyer may make: an offer to buy at a price exceeding the permitted price, and the auctioneer thus knock it down at a price above the permitted price. I am not clear which of the two has committed an offence. Are you going to fine the auctioneer for conniving at the offence? The man who should be punished is the man who was made the offer above the permitted price. A new Bill would be required if auction sales were to be included.

§ Mr. Poole
While we appreciate the point made by the hon. Member for South Croydon (Sir H. Williams), there is another approach to this problem. There may be a very real danger, in the case of what we know as the "Dutch auction," of an evasion of the provisions of this Bill and an exploitation of the present situation. At the end of the day's trading a man may find himself with a surplus of a particular article for which he knows the maximum permitted price is, say, 1s. He may start selling that article by "Dutch auction," asking at first 2s. and 1505 gradually coming down in price, and simply because there is a demand for that particular article and a shortage of supplies there may be people who will be prepared to pay 1s. 6d. for it. By those means the man would get more than the permitted price and those people who desired the article would have to pay more. There is there a clear opportunity of evading the provisions of this Bill.

§ Mr. Ammon
I think a good deal of the trouble here arises from the fact that the word "auction" is not defined. I take it that the hon. Member for South Croydon (Sir H. Williams) and the hon. Member for East Middlesbrough (Mr. K. Griffith) had in mind auctions conducted by licensed auctioneers. What we on this side have in mind is what not uncommonly happens on Saturday nights in butchers' shops where the meat that is left is put up to a kind of auction. There may be a temptation for a trader to withhold some of his stock and then put it up for auction in that way, hoping to evade the provisions of this Bill. If we could define the auction as one conducted by a licensed auctioneer it would to a large extent meet the difficulty.

Major Lloyd George
The Government do not think that it would be practicable to accept this Amendment. I cannot see how the provisions of this Bill could apply to auctions in the ordinary sense of the word, because there the price is fixed by the buyer and not by the seller. I do not know what would happen when the permitted price was reached. It might be very entertaining. With regard to "Dutch auctions," I understand that there the process starts by the man asking "Who will offer me so much for this article?" If the price he asked was above the permitted price, that would be an offence straight away, because he would be making an offer for sale. I think it will be as well to exclude the regular type of auction from the Bill, and we could not possibly accept the Amendment, but if the hon. Member asks me whether we will look into the definition of the word "auction" I will agree to do so.

Mr. Alexander
If that is an undertaking to consider words or a definition 1506 Clause to be inserted in another place I think we can accept the Parliamentary Secretary's assurance, but if it does not mean that possibly we ought to divide on this Amendment. The point is that the practice in markets described by the hon. Member for Peckham (Mr. Silkin) is widespread, and if we have not defined "auction" we may get a good deal of evasion of the law by persons setting up in market places to auction boots and shoes, dry goods, fancy aprons and all, sorts of other things, starting them at a price below the maximum permitted price and then asking for bids. Because it was the bidder who made the bid, according to the ruling of the Parliamentary Secretary there would be no offence. The whole purpose of such an auction would be to avoid the maximum price. Therefore, unless we can have a definite undertaking that the Board of Trade will introduce a definition Clause which will confine this exemption to licensed auctioneers I feel that the Government have not met the case.

§ Mr. Pickthorn
I am not very expert in these matters, but is not the whole object of markets and street sales to sell more cheaply than in the shops, and does not the argument which has been advanced from the Opposition benches really depend on the assumption that there is no competition with the markets? Is it not really unthinkable that there should be any considerable number of sales of the kind suggested by the right hon. Gentleman the Member for Hillsborough (Mr. Alexander) so long as there were shops selling the articles at a lower price?

§ Mr. Burke
The Minister suggested that it would be very unlikely that at an auction the permitted price, if it were known, would be exceeded, and the hon. Member for Cambridge University (Mr. Pickthorn) suggested that the object of these auctions is to sell things more cheaply than they can be obtained normally in shops. That may be true in normal times, but it might not be the position at the present time in the case of the markets which are held in towns in the industrial North on Saturday nights. A situation like this might arise. There has been very great competition to get black cloth for black-out purposes and it 1507 has been run up to an enormous price. Let us assume that the Minister fixes a price of 1s. 6d. a yard for 50-inch black cloth for A.R.P. purposes. The demand has been great and there have not been sufficient supplies of cloth coming forward to meet it, and in such a case there might be many people very well prepared to pay 1s. 11d. a yard for it, just as they have been prepared to pay high prices for all kinds of A.R.P. material at a time of shortage. In those circumstances I envisage the possibility of a good deal of evasion of the provisions of this Measure in markets which in normal times supply goods more cheaply but see an opportunity now to get away with a good deal of illicit profit. I think the Government might get round the difficulty by restricting the term "auction" to what is normally regarded as an auction, an auction of second-hand goods in a recognised sale room.

§ Mr. Tinker
I cannot see any reason why this Sub-section should be in the Bill at all. If a person does not exceed the price fixed by law he will not get into trouble, and therefore I do not see why auction should be included at all. I understand that auctions sell goods at a lower price than they would fetch in the ordinary way of trade and if that is so no offence will be committed, but if the prices exceed the prices which have been fixed there will be an offence against the law. I do not see any reason why these words should be in the Bill at all. Let the Act go on upon its ordinary course and, if there is an auction at which the goods are sold at a price which heavily exceeds the permitted price, then an offence will have been committed under the Act.

§ Mr. Griffith
I am a mere child in these matters and I want to be instructed. Is the hon. Member who last spoke really right in saying that the object of auctions is to sell goods at a price below the ordinary? If so I must have been to a very different kind of auction.

§ Mr. Tinker
I was speaking of the ordinary market sales on Saturday nights. The goods that are sold usually go for prices that are lower than those which are charged by the ordinary stall.

§ Mr. Griffith
I imagine that the object of an auction is to get a somewhat higher price. The effect of the Sub-section will surely be to make auction sales impossible. Assuming that you know what the permitted price is, as soon as anybody has bid the permitted price he is entitled to say: "Stop there. I have offered the permitted price under Section 11 of the Act for those goods, and if you proceed to ask anybody else to offer a higher price you are committing an offence under that Section. You have to stop and knock the goods down to me."

Major Lloyd George
I will look into the question between now and the Report stage, and I hope that the hon. Member will be prepared, in view of this promise, to withdraw his Amendment.

§ Mr. Silkin
After that assurance from the hon. and gallant Gentleman I beg to ask leave to withdraw the Amendment.

§ Mr. Shinwell
I beg to move, in page 9, line 22, to leave out Sub-section (2).
This Amendment, providing for the deletion of Sub-section (2), is moved largely for the purpose of obtaining elucidation. I should be interested to learn why the Board of Trade have excluded goods intended for export from the provisions of the Bill. While they are desirous of limiting, if not of removing, profiteering in this country, they do not appear to be in the least concerned about goods intended for export. As regards that, if these were normal times it would be proper to seek to obtain a higher price for goods being exported, but these are abnormal times. It might be strategically unwise to allow traders to export goods at excessive prices.
I am reminded of what happened on the last occasion that this country was at war, when, as some of my hon. Friends will remember, coal was sold for export to some countries at prices largely in excess of those which the cost of production warranted. In consequence, we incurred the bitter resentment of the countries concerned and eventually, and certainly for some time, lost part of the trade. That resentment in fact still exists. This illustration applies particularly in the case of Italy. We do not want a repetition of that sort of thing. It seems a little invidious to seek to 1509 prevent profiteering—I do not put it higher than that, because I doubt whether the Bill will actually prevent profiteering, in spite of the good intentions of the Government—in this country and yet to allow traders and consumers, in neutral countries friendly to us, to be charged very much higher prices.
I want the Government to exercise the utmost discretion and differentiation in their treatment of our export trade and— I know we cannot really discuss this matter on the Bill—to adapt themselves to the circumstances. Generally speaking, I would deprecate any action such as is suggested in the Clause which would encourage traders in this country to limit their internal trading operations because of this Measure, and to divert that trade to export purposes so that they might reap certain financial advantages. That would be bad for consumers in this country and, what seems to be a point of substance, bad for the Government and the country as a whole in our relations with foreign countries. I mean, of course, neutral countries.
There may be practical reasons why my Amendment cannot be accepted, and if so I should like to hear what they are. Anyhow I am putting the Amendment before the Committee largely for purposes of elucidating what is in the mind of the Government, and in order to make abundantly clear that on this side of the Committee we are concerned not merely with an attempt to limit profiteering at home but with conducting our trading relations with friendly countries, for the duration of the war at least if not for long after, on terms fair to them and equally fair to ourselves.

§ Mr. Pickthorn
I could not support the Amendment, nor would I agree with all the arguments used in moving it, but perhaps it is not altogether a waste of one minute of the Committee's time for me to try to make it clear that some hon. Members, ideologically on the other side from the last speaker, think that the Government ought to give very serious consideration to their means of controlling prices of goods intended for export. There certainly have been manufacturers —cotton manufacturers have certainly been scandalously bad—who have put up prices even upon pre-war contracts so as to make extremely difficult that flow of 1510 export which is essential if the whole enterprise is to be carried on. Although I agree with the authorities responsible for drafting the Bill, yet I suggest that more consideration should be given to the potentialities for limiting that kind of price-raising in the export market.

§ Mr. Mander
I wish, if possible, to incorporate into the Bill some Amendment of this kind, because from many points of view it is obviously undesirable that there should be excessive prices in regard to exports, particularly when one remembers that customers abroad in neutral countries, apart from any price they will have to pay for the goods, will have to pay large sums in the way of freight and insurance—sometimes very large sums owing to the conditions which exist—in order to get them over there. I therefore hope the Minister will be good enough to see whether it is possible to incorporate this Amendment in the Bill. I do see great difficulties. Who is going to complain? Is it the importer in a neutral country? There are all sorts of problems of this kind which make it difficult to see how the machinery will operate.

§ Sir Joseph Nall
I do not think the hon. Member need be unnecessarily alarmist about this matter, nor do I see why the hon. and gallant Gentleman should not give immediate attention to it. I hope that in the cotton export trade which has been mentioned the responsible organisations are very much alive to damage which may be done if undue raising of prices should take place, and that bodies such as the Chambers of Commerce have got these matters in hand, particularly with a view to seeing that the foreign buyer gets a square deal. So long as one realises the damage which would be done if an improper course were taken, that would be far more effective in ensuring that we take the best chance of continuing our exports without irritating the consumer abroad.

Major Lloyd George
I am impressed by the remarks which have been made on the question of the export trade, but I do not think it is necessary for me to say that this Sub-section was not drafted for the sort of thing which took place at the 1511 end of the last war. The sole reason why this Sub-section is in the Bill is that we do not think that this legislation is appropriate. The question of machinery is difficult. In certain cases I am not sure who would make the complaint. I suppose the complaint would be made to the local committee or to the central committee in London. I would be grateful if the hon. Member could make any suggestions on this point.

§ Mr. Shinwell
I appreciate the difficulties as regards machinery. I saw the difficulty when I put the Amendment on the Paper, but I urge the hon. and gallant Gentleman to consider one point, namely, the possibility of traders refusing to sell goods and diverting them to export. I do not know how you are going to deal with that.

§ Mr. Charles Brown
You could refuse the export licence in a case of that sort.

§ Mr. Shinwell
I am obliged to the hon. Member for that suggestion, and I hope the hon. and gallant Gentleman has noted it. With regard to the machinery which must be devised, I am convinced that unless we prevent a rise in the price of goods for export we shall do ourselves harm, and that is what I am anxious to avoid. This is not the occasion for discussing the matter at length. If the hon. and gallant Gentleman will look at the matter closely and see whether something can be done, if not in this direction in some other direction, I shall be quite content.