§ Mr. Pethick-Lawrence
I beg to move, in page 19, line 41, column 2, to leave out "Paragraph (a)," and to insert "The whole section."
I am afraid the Amendment is somewhat technical in character. I was not altogether surprised when someone asked me why I was not dealing with the point that I put on the Second Reading, relating to procedure in Scotland. In fact, this Amendment, in its rather technical terms, is designed to raise that very point. Section 21 of the Act referred to in the 1162 Schedule relates to the application to Scotland. If the whole of Section 21 were repealed, instead of merely paragraph (a), it would get rid of the lengthy procedure to which I made reference on the Second Reading, and would result in a direct application to the Lord Advocate. It is for that purpose that I am moving this Amendment. The point is a very simple one. It is felt in Scotland that the procedure is unnecessarily cumbersome. The local price committee has to go to the Central Price Committee, the Central Price Committee has to go to the Board of Trade, the Board of Trade, presumably after making inquiries, has to go to the Lord Advocate, and the Lord Advocate has then to go to the local price committee before he instructs the Procurator-Fiscal. It has been suggested that that process might be short-circuited, so that the Lord Advocate, who is the initiator of all prosecutions in Scotland, may be approached direct instead of through the Board of Trade. I believe that there is a somewhat technical objection to this Amendment, but I do not think I need say anything further. If the Government cannot accept the Amendment in the form in which it is put down, I hope they will be able to indicate how they propose to short-circuit these proceedings, which in Scotland are unnecessarily long.
§ The Lord Advocate (Mr. J. S. C. Reid)
It is true that there are several technical objections to this Amendment, but it is quite proper that the principle should be discussed. I think that the Amendment could not possibly achieve the object sought, which, I understand, is to cut out two stages of the present procedure. The first is the recourse to the Central Price Committee; and the second, the recourse to the Board of Trade. In so far as the recourse to the Central Committee is to prevent any measure of hardship or injustice to accused persons, so that the local committee shall not indulge in improper prosecutions—as conceivably they might, although they are not likely to—that might be met by the Lord Advocate taking the place of the Central Price Committee to judge of the propriety, from the point of view of equity and justice, of the proceedings. Another reason for the recourse to the Central Committee is to obtain uniformity, as far as may be, of policy in this matter, and so that the Central Committee shall be 1163 kept acquainted with the way the Act is being administered in different parts of the country. If you cut out the Central Price Committee you lose that very great advantage. Therefore, I think it desirable that the Central Price Committee should remain.
As for the recourse to the Board of Trade, it is part of the procedure that in cases of this character the Lord Advocate should consult with the Department before he takes any steps. It is very desirable that that should be so. Perhaps the right hon. Gentleman has omitted to note that there is a short circuit of procedure in the Act at present. When the local price committee does not initiate proceedings, but somebody reports to the Lord Advocate, the Lord Advocate himself takes proceedings. I agree that there have been some cases of considerable delay, but my information is that that delay has not generally been so much in the intermediate stages as in the initial stages, where very careful investigation is necessary. I do not think it desirable to alter the present system merely in order to avoid the possibility of delay in the intermediate stages. There will be inevitable delay in the initial stages, and a little delay in the collection of evidence by the Lord Advocate, though not much; Otherwise there will be very little delay at all, and for these reasons I do not think that the Government can accept the Amendment.
§ Mr. Pethick-Lawrence
In view of what the Lord Advocate has said, I beg to ask leave to withdraw the Amendment.
§ Amendment, by leave, withdrawn.
§ Mr. Moelwyn Hughes
I beg to move, in page 19, line 42, column 2, after "words," to insert:Cost of the provision of materials, whether raw or semi-manufactured, and of stocks of goods, requisite for the carrying on of the business.Liability for duties of customs and excise, rates, and interest on money borrowed.Expense of advertising, employment of salesmen on commission, and other marketing measures.The total volume of the business over which the overhead expenses thereof fall to be spread.This is an Amendment to delete from the Third Schedule to the Bill a number of items which, not necessarily in the form 1164 in which they stand, but in some form or other, must properly be embodied in a system which seeks to assess differentiations of cost. I do not move the Amendment with the desire of eliminating them altogether, but frankly, I put it forward in order to elicit from my hon. and gallant Friend some indication of the principles that the Board of Trade will seek to pursue in amending the Schedule, as amend it they must. I would like to express my gratitude to my hon. and gallant Friend, and to my right hon. Friend the President of the Board of Trade, for the accommodating way in which they have met the Amendments which my hon. Friends and I have put forward. We have secured two Amendments and extracted two very valuable assurances. I hope that that spirit of accommodation will follow in the expression of the views in the minds of my hon. and gallant Friend, and my right hon. Friend as to the method they are going to pursue with regard to this Schedule.
The first item I wish to insert deals with the question of the cost of the provision of materials and stock. The two points which arise under that are the cost of the concentration of production and the purchase of quotas which have already been mentioned. I ask my hon. and gallant Friend to say something about it, particularly with regard to quotas. I anticipate that the purchase of quotas is not a matter which they encourage, but, be that as it may, there is, under the Limitation of Supplies Order, a great deal going on with regard to dealing with quotas. As I read the first item in this Schedule, the cost of the purchase of the quota can properly be brought in under the item of the cost of the provision of stocks and goods. I would like to hear the ideas of my hon. and gallant Friend with regard to putting that matter right.
The second item I would seek to eliminate is that which deals with liability for duties of Customs and Excise, rates, and interest on money borrowed. I will not open the matter now, but I confess that I find it difficult to see how, on any showing whatever, a bare item of interest on money borrowed can properly be brought in as a costing item on the production of a particular article. It may perhaps be that, if the 1165 borrowing is directly and specifically applicable to the turnover of the article, it could be justified. That I do not know, but, as a general item, it cannot be justified, and I would like some explanation with regard to the future policy on that matter.
The third item of exclusion is that which deals with advertising. What is to be the policy of the Board of Trade with regard to Press advertising? Press advertising was mentioned on the Second Reading, and it can be extended to every kind of advertising. We live to-day in a world which is the sellers' paradise. If you have anything to sell, you can sell it, and I do not think that one-quarter of the advertising that goes on to-day can possibly be justified as an item of cost upon the article. What is the policy going to be? Finally, in the matter of the spreading of overhead expenses, I agree with the hon. Member for Balham and Tooting (Mr. Doland) that, if you take an instance of 100 overcoats and one overcoat, it is going a bit too far, but I think he will agree that it is not going too far to say that there are plenty of cases where turnover has fallen from 100 to 30 or 20, and that that gives one-fifth of the turnover on which to spread the overheads. What is to be the policy of the Board of Trade with regard to that? From the indications that we have had in the course of the Second Reading Debate and on this Committee stage to-day, I gather that at any rate it is not the intention to apply that arithmetically, and they ought not to do so. If they are not going to apply it arithmetically, as is at present justified under this Schedule, it is right that the public and traders should know the principle which is to be applied. I was unable to extract an answer from my right lion, and learned Friend the Lord Advocate, but I hope that by moving the rejection of these four items in the Schedule, I shall be able to extract an answer from my hon. and gallant Friend.
§ Captain Waterhouse
I am afraid that my hon. Friend is going to be unlucky if he expects to have any specific indication of the general principles which we propose to adopt. Clearly we cannot accept the Amendment, and I gather that he did not really expect the Amendment to be accepted. If we were now in a position 1166 to set out our proposals in detail, they would have been included in the Bill, and that would have avoided the necessity for taking powers under this Clause to amend the First Schedule to the Act. There are changing circumstances every week and every month, there are different viewpoints on the various subjects and we have to arm ourselves with the power to alter the items in the First Schedule. The hon. Member raised certain specific points. I understand that it is most unlikely that the purchase of a quota would betaken into consideration in allowing the trader to increase his price. The hon. Member said that he could conceive of no case in which the interest on borrowed money could affect prices. I could imagine a good many cases. If a man borrowed money to build his shop, would it not be reasonable that the interest on that money should be considered as a general expense in the running of the shop and therefore reflected to a greater or less degree in the price of every article he sold in the shop?
§ Mr. Hughes
I agree that it would be an item of cost in the first place, but I doubt whether interest on borrowed money could afterwards be taken to justify an increase in price.
§ Captain Waterhouse
These are items which have to be taken into consideration in the general fixing of the cost. It is true that the borrowings may be private ones, but this does temporarily come into the matter of costs. That must go without saying. With reference to the hon. Gentleman's point about the expense of advertising, quite clearly advertising is necessary in many industries. It may be argued equally well that at a time like this there may be some abuse of advertising and that people may prefer to spend a few thousand pounds, or scores of thousands of pounds, in advertising rather than hand it over to my right hon. Friend the Chancellor of the Exchequer in Excess Profits Tax. I think that, human nature being what it is, it is impossible to rule out that consideration completely. On the other hand, the hon. Member would not say for one moment that advertising costs could not be a proper charge in this regard in any particular industry. Again, the matter of overheads is a very vexed question indeed, but if the hon. Gentleman wants a general ruling I think the only general 1167 rule one can give is that the Board of Trade will approach this matter with an endeavour to secure equity through reason. I hope that will satisfy him.
§ Amendment negatived.
§ Schedule agreed to.
§ Bill reported, with Amendments.
§ Motion made, and Question proposed, "That the Bill be now read the Third time."
§ Mr. Doland
I wish to detain the House for a few minutes to say that as far as retailers are concerned, we have heard of a number of extreme and exaggerated cases of profiteering but I think the height of extravagant statement was reached when the hon. Member for Carmarthen (Mr. M. Hughes) said to-day that there is a "sellers' paradise." Whether he referred to retailers or not I am not sure, but I can assure him that that is far from the case to-day. The President of the Board of Trade spoke of the excellent results of the work of the Central Price Regulation Committee and I agree that they have done splendid work. But I must point out that they had before them for their guidance the standard of prices for goods. If I remember correctly, the standard was pre-war prices, with certain specified additions that were necessary owing to the increase of overhead charges. They have no such standard in this Bill, as I understand it, and I would like to emphasise the urgent necessity, in view of that fact, for very close collaboration with the actual trade organisations and the Central Price Regulation Committee prior to these maximum prices being placed on the Statute Book. While all honest traders welcome this Bill, if it safeguards consumers against the flagrant cases of profiteering, to which the President of the Board of Trade referred on the Second Reading, they hope they will receive equitable treatment whereby they will be enabled to make a living when once the maximum prices are established for specified goods. I thank the President of the Board of Trade and the Parliamentary Secretary for the assurances which have been given to this effect, and I am certain that traders will be very grateful.
§ Question put, and agreed to.
§ Bill read the Third time, and passed.